Bills

Real Property (Priority Notices and Other Measures) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 12 March 2015.)

The Hon. J.A. DARLEY (16:59): I rise briefly to speak on the Real Property (Priority Notices and Other Measures) Amendment Bill. The bill provides the first stage of amendments to the Real Property Act 1886, as required before the commencement of the national electronic conveyancing system in this state. It introduced the first of two significant reforms that are said to lay the foundation for the introduction of electronic conveyancing, namely, the introduction of priority notices and strengthening the procedures around verification of identity.

At the outset (and the government ought to be fully aware of this by now) I note that there are some aspects of this scheme that I find concerning, particularly as it relates to verification of identity. When I was initially briefed on this bill last year, I raised a number of issues with the Registrar-General regarding increased costs and safety concerns, ironically over the VOI process. The concerns were similar to those expressed by the Law Society of South Australia during the consultation phase for electronic conveyancing.

The Law Society expressed the view that any move to electronic conveyancing should be accompanied by a reduction in cost to consumers and an increase in the speed and efficiency of transactions, no increase in the liability of practitioners (that is, solicitors and registered conveyancers involved in land transactions), and no increase in risk or compromise to the Torrens system of government guaranteed security of title.

According to the Law Society the current proposals do not meet any of these criteria. It is concerned that: compliance with the verification of identity policy will subject all parties to lands transactions, to greater expense and delay, and in some cases, particularly when signatories are in remote areas or overseas, considerable inconvenience; despite the general increased expense, delay and inconvenience to all parties, there will be little or no reduction in fraud since, in the paper environment, the signature of a solicitor or conveyancer on the VOI statement on a document could easily be forged; solicitors and conveyancers are not trained or qualified in defecting forged passports, or any other identity documents, or in detecting forged signatures; and, liability in the event of fraud or forgery should be borne by the insurance fund established under the Real Property Act for that purpose, not by individual practitioners and their insurers.

At this stage the VOI process itself it will be undertaken by one of three agents: Australia Post, ZIP IP and ID Secure. I did raise with the Registrar-General concerns that had been put to me about identification material falling into the wrong hands, especially as there is no requirement that couriers employed by at least two of the companies mentioned undergo any sort of character checks. Whilst I am not suggesting that those employees may not be of good character, it is easy to understand why a person would be hesitant to provide another random person who shows up at their door with their identifying information, and it is also easy to see how this information potentially could end up in the wrong hands.

Last year I had a series of meetings with the Registrar-General where we discussed these concerns, and he undertook to raise them at the national level. It would appear, based on my most recent meeting, that no changes have been made to take into account the concerns raised. The Registrar-General has also been quick to dismiss any concerns around increased costs on the basis that it is anticipated that around 80 per cent of conveyancers will undertake their own VOI. Whilst I do not intend to hold up the progress of this bill, I think these are valid concerns, which warrant contented monitoring by the Registrar-General with a view to addressing them if it becomes necessary.

On the issue of fraud, in my experience and from past history, cases where there has been fraud generally occur within families and amongst relatives, not by third parties. That is not to say that fraud does not occur in other instances, but it occurs more so amongst parties who are related to each other—that is certainly my experience. That said, I understand from my discussions with the Registrar-General that there may be one case under investigation at the moment involving fraud between third parties. Overall, however, and as alluded to by the Hon. Tung Ngo, there have been few instances of fraud in this jurisdiction.

For the record, I think it would be worthwhile for the Registrar-General to provide details of how many instances of fraud have been detected in this state over the past 20 years, and what is the composition of those cases in terms of the relationships between the parties concerned. I ask the government to provide this information if possible. Further: how many instances of payments have been from the government's assurance fund; what were the amounts paid out; and what is the current balance of the fund? This is especially important given that, going forward, if there is a case involving fraud, the onus will rest solely on the practitioner. The Registrar-General's office does not accept any responsibility whatsoever and, in most cases, the practitioner involved will bear all of the financial risk.

I note also that, under the next raft of amendments, the government is also proposing that there be no duplicate titles. For property owners, that will mean that any time they want to have a look at their title, they will have to pay a search fee to search titles in the Lands Titles Office. Currently, the original title remains with the Lands Titles Office and a duplicate title remains with the bank or financial institution that holds a mortgage over the property, or the owner themselves where the property is freehold.

For the record, I will not be supporting this measure when it is introduced. Aside from saving on a bit of paper, I can see absolutely no reason why a property owner, or indeed a financial institution, should not receive a duplicate title. I would ask the government at this stage to also provide details of the feedback it has received about this proposal from financial institutions that would ordinarily hold the duplicate title until the mortgage over the property is discharged. With that, I look forward to the committee stage of the bill.

The Hon. K.J. MAHER (Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Aboriginal Affairs and Reconciliation) (17:06): I wish to thank honourable members who have made contributions on this bill to date. It is an important bill, as other honourable members have noted in their contributions. The national electronic conveyancing project is a COAG initiative. South Australia is party to an intergovernmental agreement which commits the state to participate in electronic conveyancing.

To complement the Electronic Conveyancing National Law (South Australia) Act 2013, this bill provides for the amendments to the Real Property Act to ensure consistency between electronic and paper transactions during the transitional period towards electronic conveyancing. This bill introduces the first two significant reforms necessary for electronic conveyancing: the implementation into the Real Property Act of the existing verification of identity (VOI) requirements, and the introduction of priority notices. The remaining reforms will be the subject of a separate bill, as honourable members have noted in their contributions, which is currently being developed.

Both VOI requirements and priority notices will help prevent fraud and dishonest conduct that can occur during property transactions. In recent years, there have been cases of fraud that have resulted in people's houses being listed and sold on the market without the owner being aware that the sale has occurred. In one example, a trio from South Africa were arrested after emailing a Western Australian real estate agent and convincing them that they were the true owners of a property. Agreements to put the property on the market were made using forged signatures, and it was only by chance that the owner of the property found out about the impending sale when the agent forwarded some documents to his postal address.

In another example, scammers were able to complete the sale of a property in Canberra without any face-to-face contact whatsoever, by either posting or emailing the necessary documents to the agent. Whether the victims of these scams are entitled to their property back remains unclear, and they may have to undertake expensive legal action to gain any compensation for their losses. These reforms will help ensure that these fraudulent activities do not happen. In particular, the VOI requirements ensure that international scammers will be unable to convince an agent to put a property on the market because they will be unable to produce the required documentation, such as a passport or a driver's licence.

I wish to emphasise that these VOI requirements have already been in place since April 2014. Amendments to the Real Property Act 1886 merely confirm the Registrar-General's power to impose verification of identity. Since April 2014, approximately 80,000 dealings have been lodged, involving approximately 200,000 VOI processes. A number of VOI agents have become available in the marketplace, providing a range of options in the conduct of the verification process. I am pleased to be able to inform the chamber that, with the passage of time, there seems to be a general acceptance of the VOI requirements.

For regional landowners, a number of options are available to conduct the VOI process. Landowners in remote areas can either meet with their lawyer or conveyancer, or any other lawyer or conveyancer, to conduct the VOI process. If this is not possible, the landowner can use a VOI agent and have their identification verified. Both Australia Post and ID Secure currently act as VOI agents in regional and remote areas of the state. All Australia Post outlets that provide passport services provide this service. A regional landowner's lawyer or conveyancer can also choose to use any other method to verify the identity of the landowner that, in the lawyer or conveyancer's opinion, amounts to 'reasonable steps to verify the identity' of the landowner.

For landowners overseas, VOI can be undertaken by a number of commonwealth officers, including Australian consular officers and Australian diplomatic officers. Where the person being identified is a member of the Australian Defence Force, the VOI process can be undertaken by an officer who may administer oaths to, take affidavits of, and attest the execution of documents by a member of the Defence Force while on service outside Australia.

The Attorney-General has confirmed that he supports the proposal that registered proprietors should be notified when a priority notice is lodged in relation to their land. The Attorney-General believes that this proposal could be expanded to provide an alert service to other instruments to land transactions as well. The Attorney-General undertakes that he will work with the Registrar-General on the implementation of such a policy. A second bill that deals with further electronic conveyancing reforms is set to be introduced in the near future, and the Attorney-General has confirmed that he intends for this proposal to be implemented in this bill.

The Property Committee of the Law Society of South Australia has recently written to the Attorney-General and to the Registrar-General in relation to this bill. The issues raised by the Law Society are of a technical nature and would be difficult to implement into the bill at short notice. The Registrar-General will hold further discussions with the Law Society in relation to any of their concerns and make necessary amendments in the second bill, which is currently being developed. I commend the bill to members.

Bill read a second time.