Landwrap August 2010 - e-dealing

Compliance review - what evidence to keep and for how long?

Compliance review trends have shown that approximately 65% of reviews require further documentation from practitioners as initial documentation is either omitted or is incomplete.

Resulting follow-up activity is time consuming for both LINZ and practitioners. This can easily be avoided when law firms maintain efficient file systems, and take additional care to respond on time and with all relevant documentation in the first instance.

Section 164C of the Land Transfer Act 1952 sets out the statutory authority for the Registrar-General of Land (RGL) to conduct compliance reviews, and the obligation on practitioners to:

1. Retain evidence showing the truth of their certifications.
2. Provide the RGL with the evidence requested within 10 working days of a request.

Regulation 14 of the Land Transfer Regulations 2002 requires the certifying lawyer to retain this supporting evidence for 10 years. 

A compliance review request will specify three transactions by dealing number, client reference and client name(s).  Practitioners must provide their supporting evidence for all aspects of the specified transactions. This means that in addition to the client A&I form, it is necessary to provide all other relevant supporting material, for example:

• discharge instructions including the original email for emailed authorities
• new mortgage instructions
• consents to e-instruments (e.g. from a mortgagee, caveator, territorial authority)
• statutory declarations for transmission instruments.

Evidentiary requirements vary from instrument to instrument.  For further guidance, refer to Registrar-General of Land e-dealing Compliance Review on this website.

What is the most efficient method of storing documentation?
LINZ encourages law firms to retain all of the relevant authorities, including discharge and mortgage instructions, together with the A&I form inside the front cover of the client file in the pocket or on separate clip, or alternatively in an electronic file. The advantages of this practice include:

• saving time without the need to trawl through the entire file to obtain the requisite documentation
• reducing the chance of incomplete documentation being sent to LINZ for compliance review
• allowing the certifying practitioner to be sure that all documentation necessary to support each certification is held at the time of certify and sign, and
• making it easy to take the bundle of compliance review documentation off the front of the file if a client uplifts a file.

Guideline N of the NZLS Property Law Section’s e-dealing guidelines 2008 provides further commentary on electronic retention and protocols for when a client uplifts a file or a practitioner leaves a firm.

e-dealing watch points for practitioners

e-dealing watch points are continually being added to, and cover a variety of topics.

Severing joint tenancies

One of the most common e-dealing questions asked is:

"How do I sever a joint tenancy without having to get A&I (Authority and Instruction) forms from both parties?"

A joint tenant may sever their interest in a joint tenancy by transferring their interest to themselves.

Below is an example of how to process a transfer from A to A severing joint tenancy in Landonline.

In this scenario, Donald Malcolm Duck and Daisy May Duck jointly own the land. Donald is transferring his interest to himself (half share of the whole title).

In the Prepare Transfer screen:

1. In the transferors' area, select Share/Interest mode.
2. Check the Transferor column for the registered proprietor's interest you are transferring.
3. Click the Display Transferor button and check the details.
4. In the transferees' area, select the correct tenancy option. In this scenario 'Sole or Joint tenants'.
5. Enter the name of the transferee (in this scenario, the transferor is Donald Malcolm Duck).
6. Click the Display Transferee button and check the details.
7. Click the Display Resulting Ownership button and check the details.

Note: A common mistake in the scenario where A transfers to A is to enter both proprietors as transferees with a tenancy of Tenants in Common. Only the selected transferors interest is being transferred (to that same person) therefore sole tenancy is used. Landonline automatically breaks the joint tenancy and creates the transferee and the unaffected proprietor as tenants in common.

The A&I form that you will hold on file with your photo identity and any other supporting evidence is by the person whose interest you are dealing with.