Identity and the Land Registry

For the past 150 years, Land Registries^ have not conducted or insisted on identity checks in respect to the Register. How many titles are registered in false names? How many titles are registered in names where the proprietor is long dead. No one knows. And how does it matter? 

With anti-money laundering legislation and the advent of electronic conveyancing , identity has become a front and centre issue. Especially with the likelihood of the elimination of the duplicate certificate of title, the right to deal with the land is the central issue.

Today's rules are quite simple

1. The right to deal with the land is you can produce the duplicate certificate of title
   
2. The right to be registered on title is premised on production of the duplicate certificate of title and a transfer of land executed by the registered proprietor
   

Under an electronic conveyancing regime, the first premise is the duplicate certificate of title will not exist. (If this is not to be the case, what's the point to all this?) Legislation will have to be passed, which states, "upon this date the duplicate certificate of title will no longer be required to convey title" or words to that effect. The right to deal with land will solely be adduced by the entry on the Register. 

The rules under an electronic conveyancing regime

1. The right to deal with the land is you can prove you are the person who is registered on the Register; and
   
2. The right to be registered on the Register is an electronic transfer executed by the person, or his agent, who is registered on the Register
   

The right to deal with the Land

A vendor or borrower will no longer have to produce the duplicate certificate of title.

The right to deal with the land might be a combination

• Security number issued to the registered proprietor 
• as is the current practice with shares, a Shareholder Reference Number (SRN)
  
• administratively, the SRN is sent to the address shown on the Register
• the SRN is not publicly searchable
• Proof of Identification
  
• What standards will be set?
  
• Who is qualified to carry out the test?

Proof of Identification (POI) 

What standards will be set?

FTRA (or 100-point) Standard

It is widely acknowledged the FTRA (or 100-point) Standard is an inadequate standard.

NECS and the Land Registries agree on this point.

The FTRA (or 100-point) Standard, although widely known and used, is more than 20 years old. It was devised before the development of desktop publishing and the wide availability of inexpensive, high-quality colour printing. It is generally considered to be from an era when identity fraud was much less of a problem generally and to Land Registries than it is today. While still a useful general-purpose standard, it is considered by Land Registries to be insufficiently rigorous for deterring fraud in land title transactions.

Unless the client is known to the conveyancer, production of identity documents does not cut it. Especially in an age where every student, from the age of 15, for the past 10 years or more has been dealing in false IDs.  How hard is it, or how easy is it, to produce false identity documents. Google "false ID" and GET YOUR FAKE ID HERE! screams out in capital letters. Scan, photoshop, print and laminate.

The FTRA standard is simply inadequate for an electronic conveyancing regime. 

**The Gold Standard

The Gold Standard recently developed by the Commonwealth Government as part of its National Identity Security Strategy (NISS) goes at least one step forward in solving the POI issue. And that is adding verification. A key principle of the Gold Standard is POI credentials and other information provided by the applicant should be verified with the relevant issuing authority or other authoritative source.

Which raises the question what are the procedures for document verification? Which also begs the question that at present, there are no systems which allows conveyancers to verify clients' credentials. In fact a conveyancer calling any government agency to verify a client's credentials will be met with a barrier of privacy concerns.

Which also raises the question are lawyers and conveyancers qualified to identify clients? Not beyond asking for  a copy of drivers licence or other identification.

The Gold Standard envisages enrolling agencies would enrol a person to a a Gold Standard (only once). This individual becomes a known customer. As a result, once an individual has been enrolled, this could be used to streamline enrolments with other agencies (ie Land Registries and applied to land registry transactions).

Who is qualified to carry out the test?

From the above analysis, It is clear that lawyers and conveyancers are not qualified to carry out POI tests, beyond attesting to knowing long standing clients.

It cannot be left to lawyers and conveyancers to carry the responsibility and liability for identity checks (at least not along the lines of the present FTRA 100 point standard)

Government and the Land Registries need to implement as part of its EC system a point of entry for lawyers and conveyancers to conduct verification checks^^ on credentials presented to them. 

Ipso facto, Land Registries are therefore hamstrung until government itself implements the essential elements of the NISS which covers verification checks, being what I believe is the minimum standard for electronic registration systems. 

Is there an alternative?

The government is concerned about the least possible call upon Torrens Assurance Funds for compensation in the event of registration fraud.*  I would suggest that in the absence of a system that permits lawyers and conveyancers to simply carry out verification checks (as iterated in Principle 7 of the NISS), the government will need to extend the Torrens Assurance Fund to cover and indemnify for losses due to identity fraud.

** NISS Gold Standard Paper 

Brett Hayton - 247legal

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* The principles of Client Identity Verification are collectively intended to provide:

• users of NECS with confidence in the authenticity of the transacting parties they are dealing with
  
• transacting parties with confidence in the use of NECS by their representatives
  
• the community with confidence in the integrity of the land title registers
  
• the least possible call upon Torrens Assurance Funds for compensation in the event of registration fraud.
  

Source NECS paper

^ Exception - Lands NSW now has an identity check using the FTRA 100 point standard

cf. SA - The instrument must be witnessed by a person who either knows the executing party personally or is satisfied as to her or his identity.

Qld - A mortgagee intending to take a mortgage over freehold land as security for a debt or liability, must, prior to lodging a mortgage instrument for registration, take ‘reasonable steps’ to ensure that the person who executed the instrument as mortgagor is identical with the person who is, or who is about to become, the registered proprietor of the lot or the interest in the lot. Under the Land Title Act 1994, a mortgagee takes ‘reasonable steps’ if they comply with the practices included in this Manual. In essence, these practices reflect the ‘100 points of identification’ provisions under Commonwealth legislation governing certain financial transactions, namely, the Financial Transaction Reports Act 1988 (FTRA) and the Financial Transaction Reports Regulations 1990 (FTRR).

NECS National Project Team 

Client Identity Verification (CIV) Standard – a purpose built standard should be developed based on current practices in financial institutions under the Anti-Money Laundering legislation (March 2009)

^^ Identity Security and the National Document Verification Service

Impersonation - an article by bruce schneier