Paper titles becoming obsolete in QueenslandAug 2019 | Commercial Property
In an attempt to increase efficiency and prevent unnecessary duplication, on 26 March 2019 the Queensland Parliament made a further effort to transition to an electronic conveyancing system by passing the Land, Explosives and Other Legislation Amendment Act 2019 (Amending Act). As a result, a number of amendments to the Land Title Act 1994 (Qld) (Act) will commence operation on 1 October 2019 and paper certificates of title will no longer have any legal effect.
A certificate of title is a paper record of ownership and current registered interests of a lot recorded on an infeasible title held in the Freehold Land Register. From 1 October 2019, paper certificates of title will cease to be issued and the only legal record of title will be held electronically on the Freehold Land Register.1
Who will this change affect?
Despite Queensland operating an electronic titling system since 1994, paper title certificates have continued to be available upon request. The changes introduced by the Amending Act will mainly affect the 11% of land owners who hold a paper certificate of title,2 however it will also affect lenders and other parties who hold a certificate of title as a form of security over real property.
Currently, if a paper certificate of title has been issued, it must be presented to the Titles Registry before a dealing in respect of a lot can be registered. The Amending Act removes this requirement,3 as certificates of title will cease to be instruments under the Act and they will no longer be evidence of an indefeasible title for the lot upon which it is issued.4
Land owners and mortgagees to keep paper titles until 1 October 2019
Whilst these changes are likely to remove the potential stress involved in circumstances where a party loses a paper certificate of title, parties who currently hold a paper certificate of title as a form of security should seek legal advice as the paper certificate of title will cease to have any legal effect from 1 October 2019. Notably however, registered owners or security holders should retain paper certificates of title up until 1 October 2019, as any transaction where a paper certificate of title has issued will still require that title to be presented at lodgement. Alternatively, if a party attempts to lodge an instrument prior to 1 October 2019 and lodgement is rejected pursuant to s 157 of the Act for failure to present the certificate of title, that party can simply wait until 1 October 2019 and then lodge the instrument for registration.5
Ongoing security for mortgagees
Pursuant to s 75 of the Act, an equitable mortgage over land can be created by leaving a certificate of title with a mortgagee. This allows the mortgagee to rely on the certificate as security by preventing any dealings with the land without the mortgagee’s consent. However, the removal of paper certificates of title from 1 October 2019 will likewise see s 75 also removed from the Act.6 This will not affect parties’ rights or obligations under existing equitable mortgages created prior to 1 October 2019.
Similar adoption in NSW and VIC
Each Australian state and territory has similarly adopted the Electronic Conveyancing National Law (ELNC) in their own jurisdictions in one way or another.
In 2018, as part of the adoption of the ELNC, New South Wales and Victoria commenced the process of converting paper certificates of title to electronic certificates as part of the broader transition to electronic conveyancing. This has required the development of electronic lodgement network operators (ELNO) to facilitate electronic lodgements. Property Exchange Australia Limited is the main ELNO being used but Sympli Australia Pty Ltd became Australia’s second ELNO in November 2018. Both New South Wales and Victoria jurisdictions are moving towards a complete take up of electronic lodgements however, at this stage, those states have not fully phased out paper certificates of title.
1 See s 241 and s 247 of Land, Explosives and Other Legislation Amendment Act 2019.
2 ‘Titles Registry: Paper certificates of title’, Queensland Law Society (Web Page, 3 April 2019) <https://www.qls.com.au/About_QLS/News_media/News/Titles_Registry_Paper_certificates_of_title>.
3 See s 243 of Land, Explosives and Other Legislation Amendment Act 2019.
4 See s 247 of Land, Explosives and Other Legislation Amendment Act 2019.
5 See s 247 of Land, Explosives and Other Legislation Amendment Act 2019.
6 See s 242 of Land, Explosives and Other Legislation Amendment Act 2019.