30/11/2011

Land Titles Office - Identity of Mortgagor (Borrower)

From 1 November 2011 the NSW land titles authority, Land and Property Information, requires new obligations on mortgagees and people witnessing signatures on dealing documents.

Mortgagees must collect information from the mortgagor in order to verify their identity.  This is more often a responsibility of the lending financial institution, however when a related party loan is made and a mortgage is executed as security, the mortgagee is also subject to these requirements.

If the mortgagor (borrower) is a company the mortgagee (lender) must verify through a company search issued by ASIC within the 30 days prior to the mortgage being signed the following details about the mortgagor, namely: company name, registered office, principal place of business, ACN, registration status of the company and the name of each director and secretary.

If the mortgagor (borrower) is an individual the mortgagee (lender) must verify the individual’s identity (including full name, date of birth and residential address) by sighting an original or certified copy of approved identification which shows their photograph, such as a passport, driver’s licence or birth certificate.  

It is not an offence if you do not comply with these requirement and you will not be fined.  Land and Property Information will not check that you have carried out these identity checks.  However, if you do not comply with these identification requirements and the mortgage is subsequently found to be fraudulent the lender will lose their indefeasible interest and any ability to seek compensation from Land & Property Information and the mortgage will be removed from the land titles register. 

If the lender and the borrower are related (such as where a member lends to their super fund to purchase property) the member will know that the mortgage is not fraudulent and will be at liberty to take the view that compliance with these requirements is unnecessary for the particular transaction.

Land Titles Office - Witnesses

When a witness is required for individuals signing a dealing document such as a mortgage, transfer etc that witness must take reasonable steps to ensure the identity of the person signing in front of them. 

If the person who is witnessing a signature has known the signing party for at least a year no further steps need to be taken. 

If the person witnessing a signature has known the signing party for less than 12 months the person signing the document will be required to show the witness the approved identification, such as their driver’s license, passport or birth certificate.

The witness must not be related to the party signing and must not be involved in the transaction; they must be an independent witness.

If the witness does not take reasonable steps to verify the person’s identity this may result in fines of up to $2,200.

For further information on verification of identity and witnessing requirements, Land and Property Information have released fact sheets which can be located on their website.

Duties Office

From 12 December 2011 the NSW Duties Office (Office of State Revenue) has mandatory client identification requirements which must be satisfied before they will stamp documents which have been lodged.

Documents which require client identification include: Agreement for Sale of Land, Transfer of Real Property, Agreement for Sale of Business, Transfer of Lease, Transmission Application, Trust Deeds, Surrender of Lease, and Assignment of Lease.

The person whose identity must be verified is the person acquiring the interest, or for deeds - the Trustee.  If that party is an individual the OSR requires an originally certified copy of an approved identification document such as a current Australian Drivers Licence or passport.  If that party is a company no further evidence of identity is required if the ACN is shown.  If it is not shown then the OSR will require an ASIC extract or certificate of incorporation of the company.

OSR have advised that your matter will be rejected if you fail to submit this client identification information as it is mandatory for assessment purposes.

For further information on client identification requirements please contact Caroline Harley at TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.