Iden­ti­fi­ca­tion guide for New South Wales

In Brief

Fraud in land deal­ings has long been an issue in New South Wales. Now the leg­is­la­ture is tak­ing a pre­ven­ta­tive approach to try to min­imise the inci­dence of fraud. 

Whether or not these ini­tia­tives accom­plish a reduc­tion of fraud­u­lent prop­er­ty relat­ed trans­ac­tions is to be seen.

Land trans­ac­tions – sec­tion 117

Wit­ness certification
From 1 Novem­ber 2011, sec­tion 117(1)(b)(i) of Real Prop­er­ty Act 1900 (NSW) (RPA) requires that a wit­ness cer­ti­fy that the wit­ness is an ​“eli­gi­ble wit­ness”.

Eli­gi­ble witness
Sec­tion 117(4) of the RPA pro­vides that a wit­ness is an ​“eli­gi­ble wit­ness” if the person:

• is at least 18 years of age;
• is not a par­ty to the trans­ac­tion; and
• has known the sig­na­to­ry whose exe­cu­tion they are wit­ness­ing for more than 12 month or has tak­en rea­son­able steps to ensure the iden­ti­ty of that person.

Rea­son­able steps
The Real Prop­er­ty Act Reg­u­la­tions 2008 (NSW) pre­scribes the rea­son­able steps to be tak­en by a wit­ness to ensure the iden­ti­ty of a sig­na­to­ry of a land dealing.

If the wit­ness has known the sig­na­to­ry whose sig­na­ture they are wit­ness­ing for more than 12 months, that wit­ness need not take fur­ther steps to ver­i­fy the iden­ti­fi­ca­tion of the signatory.

In essence, a wit­ness will have tak­en the rel­e­vant rea­son­able steps if the wit­ness has sight­ed pre­scribed iden­ti­fi­ca­tion documents.

The Reg­is­trar Gen­er­al may reject or refuse to accept the land deal­ing for lodge­ment if the land deal­ing does not bear the appro­pri­ate cer­ti­fi­ca­tion.

Record keep­ing obligations
There is no oblig­a­tion on a per­son who is a wit­ness to a land deal­ing to keep any record of the steps tak­en to ver­i­fy iden­ti­fi­ca­tion, although we rec­om­mend that the wit­ness retain a record of the steps.

Mort­gage trans­ac­tions – sec­tion 56C

Con­fir­ma­tion of iden­ti­ty of mortgagor
From 1 Novem­ber 2011, a mort­gagee is required to ver­i­fy the iden­ti­ty of a mort­gagor before lodg­ing a mort­gage under the RPA. In this regard, a mort­gagee must take rea­son­able steps to ensure that the per­son who signs the mort­gage (or on whose behalf the mort­gage is signed) as mort­gagor is the same per­son who is, or is to become, the own­er of the land that is secu­ri­ty for the pay­ment of the debt to which the mort­gage relates.

Rea­son­able steps
A mort­gagee has tak­en the nec­es­sary rea­son­able steps if the mort­gagee has com­plied with the Anti-Mon­ey Laun­der­ing and Counter-Ter­ror­ism Financ­ing Rules under the Anti-Mon­ey Laun­der­ing and Counter-Ter­ror­ism Financ­ing Act 2006 (Cth) (Financ­ing Act).

If the mort­gagee has not com­plied with the Financ­ing Act, the mort­gagee is required to imple­ment a régime where­by rel­e­vant iden­ti­fi­ca­tion of the mort­gagor is verified.

Record keep­ing obligations
A mort­gagee is required to keep a writ­ten record of the steps tak­en by the mort­gagee to com­ply with its oblig­a­tions under the RPA and keep copies of the doc­u­ments obtained to ver­i­fy iden­ti­fi­ca­tion for a peri­od of 7 years.

Con­se­quences of fail­ure to con­firm identity
The con­se­quences result­ing from a fail­ure by a mort­gagee to com­ply with the new oblig­a­tions are severe. Con­se­quences may include a rejec­tion of lodge­ment of the mort­gage by the Land and Prop­er­ty Man­age­ment Author­i­ty and even a can­cel­la­tion of the record­ing of the mort­gage in the reg­is­ter in cer­tain circumstances.

Duty transactions

Iden­ti­fi­ca­tion required
From 12 Decem­ber 2011, the OSR requires that all par­ties liable to, or exempt from, trans­fer duty under the Duties Act 1997 (NSW) pro­vide cer­tain infor­ma­tion. The kind of iden­ti­fi­ca­tion that must be pro­vid­ed is depen­dent on whether the lodg­ing par­ty is a com­pa­ny or an individual.

Caution

Mov­ing for­ward, whether act­ing in the capac­i­ty of a wit­ness, for mort­gagees, com­plet­ing due dili­gence pri­or to the release of funds or sub­mit­ting rel­e­vant instru­ments for assess­ment with the OSR, you should be aware of the oblig­a­tions and require­ments that must be sat­is­fied in order to ensure that the rel­e­vant trans­ac­tion is com­pli­ant with the new State regimes.