e-dealing Audit Methodology consultation closes

LINZ would like to thank all law firms for their feedback and interest during the consultation phase for the proposed e-dealing audit methodology.

Following the consultation period, and discussions with the NZ Law Society's Land Titles Committee, the new audit methodology was introduced to law firms in December 2007.

This methodology may be defined as a risk, system and controls-based method, which encourages continuous improvement of conveyancing practices for e-dealing allowing the Registrar-General of Land (RGL) a higher level of audit coverage and assurance.

This approach is recognised internationally as good audit practice. It has been shown to effect positive change in compliance practices and provide a greater level of regulatory assurance.

Selection of law firms for audit

Law firms engaged in conveyancing and recorded as high users may be invited to participate in an audit. LINZ will also consider as part of the selection process past instances of non-compliance or qualified compliance reviews.

Participating law firms can access the e-dealing audit methodology document (pdf 103KB) on the LINZ website prior to an audit.

RGL requirements

Statutory responsibility for maintaining the integrity of the land titles registration system lies with the RGL, along with a requirement on LINZ to have systems and controls in place to ensure proper compliance with statutory requirements and associated standards.

To date, routine audits have been conducted by periodically selecting a sample of conveyancers' transactions for compliance review.

Compliance reviews

The recent evaluation of the compliance review process revealed that a more effective regulatory approach is to encourage law firms to develop their own internal e-dealing systems and controls.

LINZ will continue with the traditional compliance reviews by sampling a law firm's e-dealing documentation but will consider scaling back the level of compliance reviews for law firms audit who have received a satisfactory report from an audit visit.

Law firm responsiveness on e-dealing compliance reviews

It was noted in the November/December 2007 edition of Landwrap that only 66% of the law firms using the e-dealing system had experienced at least one compliance review. However, to increase this percentage, LINZ will be completing an initial review of at least one practitioner in each of the remaining firms by June 2008.

LINZ has requested that law firms improve their response times in completing their compliance review. In December, 76% of law firms had responded in the statutory timeframe and, in January, this rate had lifted to 87%. However, further e-dealing information was required from 91% of those respondents.

LINZ will continue to monitor this situation and if there is no significant improvement by the end of March, a more stringent policing arrangement may need to be introduced.

Release 3.0 is on the way – who should attend the presentations?

LINZ will be delivering presentations and workshops for Release 3.0 nationwide from 31 March 2008.

This is an opportunity for firms to see the new application and what new functionality will be available with this release. Once again, we recommend that each firm sends two representatives, someone with Certify and Sign privilege and your firm's e-dealing champion.

Presentations

Presentations will look at the new functionality from a strategic viewpoint and are targeted more towards customers with Certify and Sign privilege.

Alongside LINZ staff, representatives from the NZ Law Society will be on hand to discuss how the new functionality will affect your firm and any legal impacts you may want to consider.

Workshops

Workshops are a practical session with customers sitting at laptops, being taken through the new functionality using the e-dealing Practice Tool. This is targeted at those who prepare e-dealings, generally your firm's e-dealing champion.

Pilot groups previewed the workshops at the beginning of February and feedback received was extremely positive. Recognising that people have different learning styles led us to develop resources that enable everyone to learn in an environment suitable to them.

Sharon Cottrell, General Manager Customer Services, says, "The presentations and workshops are a good way for each firm to learn how to incorporate the new functionality into their business processes. We strongly recommend that every firm sends at least one representative along."

Invitations to the presentations will be sent out by email later this week. To book your place, make sure you complete the registration form as soon as you receive the email.

We look forward to seeing you there.

The journey to 100% e-lodgement is changing

Change is constant and that applies to even world leading projects such as LINZ's 100% e-lodgement Programme.

LINZ has made many changes to the 100% e-lodgement Programme since its inception in February 2006 – changes that improved the way LINZ delivered information to customers as well as the technical functionality in the e-dealing application. Most changes have been a direct result of feedback from customers.

Sharon Cottrell, General Manager Customer Services, says, "We have established pilot firms around the country who review our customer training and support materials, and ensure that they are going to meet our customers' needs. We take all our customers' feedback very seriously, and this has resulted in us introducing new functionality. For instance, with Release 2.10, we brought in the ability to sign once for multiple instruments in a dealing, which was a customer suggestion."

LINZ needs to make a change to the way in which some remaining 100% e-lodgement functionality is delivered to customers. Originally, we planned to deliver functionality in five releases. Two releases, Release 2.9 and 2.10, have been successfully implemented and the timings for the last three releases were planned for...

• Release 3.0 – 31 March 2008
• Release 3.1 – mid 2008
• Release 3.2 – late 2008

Sharon says, "We've had to make some changes to the proposed release strategy and will be merging the last two releases. Training for Release 3.0 will still be delivered from 31 March 2008 and the functionality will be available in April. In August, Release 3.1 will combine almost all the functionality originally planned to be delivered with the original releases 3.1 and 3.2."

Why did this change have to be made?

Release 3.0 is a significant release from a technology point of view and will change the registration process for LINZ to incorporate Lodge functionality. The size of the build for this release, coupled with LINZ's continued focus on ensuring that a high quality release is delivered to customers, has impacted on the time available to develop and test the following releases.

"It's really important to LINZ that the quality of each release is high and that customers experience minimal impacts when new functionality is introduced," Sharon says.

"By combining the last two releases, LINZ will reduce the risk and complexity of managing three releases in various stages of delivery. We'll continue to carry out robust testing to maintain the quality of each release and we will still complete the 100% e-lodgement Programme by the end of October 2008."

What are the impacts for customers?

The NZLS Property Law Section's Land Titles Committee is supportive of the change.

Tim Jones, Land Titles Committee convener says, "Conveyancing professionals are a lot more comfortable with the e-dealing application now. The proposed change shouldn't impact firms because of the increased scope for Release 3.1 training and follow-up support that will be available. We know that most firms want the new functionality as soon as possible, but we also understand that the quality of the release is just as important."

This change means that implementation of some functionality customers want to use, such as Transmissions, Change of Name and Variation of Mortgage, will be delayed by two months to August 2008.

However, there are also benefits of combining both releases. Customers will...

• have more time to familiarise themselves with the changes in Release 3.0 (four months instead of two) before the next release, and
• receive additional training on the new Titles and Easements process, which wasn't originally planned.

Sharon advises, "We've reviewed the training and support we will provide to customers. Originally, we planned to do presentations for Release 3.0 and 3.1 only. Now that we've combined Release 3.1 and 3.2, we will increase the information covered in the presentations. We will also monitor customer uptake of functionality, and where we can see that a customer needs some extra support, we'll provide them with assistance."

LINZ discussed the change with the NZ Law Society's Land Titles Committee and they understand the need and support it.

Tim Jones, Land Titles Committee Chairman says, "Conveyancing professionals are a lot more comfortable with the e-dealing application now, and the proposed change shouldn't impact firms. We know that most firms want the new functionality as soon as possible, but we also understand that the quality of the release is just as important."

What's next?

LINZ will communicate shortly with all firms about what they can expect on the remainder of the journey to 100% e-lodgement. This will include things that firms can do in advance to prepare for each release.

Firms should already have an indication of who they'll send to release presentations. We recommend that each firm's e-dealing champion and someone with Certify and Sign privileges come along. Invitations to Release 3.0 presentations will be sent out to firms in March.

If you have any questions regarding the combined release, please contact our Customer Support team on 0800 ONLINE (0800 665 463).

Are you using all of the e-capable instruments?

With Release 3.0 just around the corner, now is a good time to look at how conveyancing professionals are using the instruments that are currently e-capable.

In Release 2.10, a further 17 instruments became e-capable taking the total to 35. Although we have seen a steady increase in the usage of these new instruments, uptake is still quite slow. In December 2007, there was an increase of 14.1% in usage of the new instruments taking the total usage of e-capable instruments to 74.7%.

The main reason uptake of these instruments has been slower than expected is because more of the transactions involved a new title registration and these are not yet e-capable. Also, some firms were still lodging instruments by paper because they were unaware they could use e-dealing.

LINZ is confident that usage of the new 17 instruments will increase as more instruments become available.

Sharon Cottrell, General Manager Customer Services, says "All firms should now be completing as much work as they can by e-dealing to ensure they are familiar with the system and are fully prepared for the 100% e-lodgement mandatory date."

The current list of e-capable instruments can be found on the Landonline website.

Authority and instruction processes

As a refresher, the following provides some information on what you, the Conveyancing Professional, should do when you come across situations out of the ordinary when receiving authority and instruction (A&I) from your client.

What to do if you have an overseas client...

Anyone can witness an A&I as long as they are not a party to the transaction and the solicitor certifying the dealing must be comfortable that the witness will complete all the necessary checks noted on the A&I.

The A&I does not need to be notarised as it is not a Land Transfer Act document. If the client is new to the firm, then consideration should be given to having the A&I witnessed by a solicitor or JP.

What to do if your client has no photographic ID...

In the case of a new client who has no other means of identification, it may be appropriate to have his or her identity formally verified by a reliable witness. The procedure required in order to obtain a New Zealand passport is a useful model:

• The witness should be an independent person (i.e. not a relative, partner or spouse), aged 16 or over, whose identity you can verify by reference to a reliable form of photo ID (preferably a passport) and who has known your client for at least a year.
• The supporting evidence should take the form of a statutory declaration with a recent photograph of your client attached and witnessed.

What to do if you are unable to save the A&I form to your computer...

Use the process you had in place prior to Release 2.10. The functionality to generate an A&I form within e-dealing was introduced as an alternative option. We recommend that firms complete an A&I form with their clients as soon as reasonably possible.

More information on the NZ Law Society's guidelines can be found on their website.

Notice fee reminder

If you are lodging a manual dealing that requires LINZ to serve notice e.g. notice of caveat or notice of claim under s. 42 Property (Relationships) Act 1976, the current fee rate is $3.

The Notice fee rate reduced from $10 to $3 from 1 September 2007. If you are undertaking manual lodgements, please ensure you provide payment for the correct amount.

e-dealing watch points for practitioners

e-dealing watch points are continually being added to. You will find these and links to other e-dealing related articles on the Landonline website.

e-dealing – one party's interest

Landonline Release 3.0 will include the option of dealing with part interests. This will encompass dealing with one or more proprietor's interest, or part of their interest, and various options will be available on the Preparation screen.

Practically, this means that all relationship property settlements should be able to occur via e-dealing. Each party will be separately represented in the e-dealing. Currently any such transaction must adopt the ‘artificial' approach of one lawyer obtaining the authority (A&I form) from all proprietors and making certifications on behalf of all of them.

Checking transferors and transferees

A new feature for dealing with complex part interest options means that the final result of transferors or transferees' respective shares can be displayed. This is particularly helpful where there are multiple proprietors with different holdings on different titles and only one party's interests are being dealt with. It also provides a convenient check to ensure the correct interests are being disposed of or acquired.

In addition, there is the existing Display Resulting Ownership option that effectively shows the names and shares as they will be shown on the title when registered. This option is helpful even for a simple transaction. Simple errors such as showing the family name first (i.e. transposing given and family names) will become immediately apparent. This error occurs regularly and firms should consider including the use of Display Resulting Ownership on the client file checklist as standard practice.

There should be no reason for an e-dealing to be rejected if you use pre-validation. You can do this after the dealing has been created and the instruments prepared or at the time of certifying and signing. You can also pre-validate your e-dealing transaction immediately prior to settlement or before you submit your e-dealing to LINZ.

When you pre-validate prior to settlement or before you submit your e-dealing transaction, it will check all of the instruments in the e-dealing including any other party's instruments.

The quickest way to pre-validate your e-dealing is to right click on the dealing in Workspace and select the pre-validate option.