Focus: New rules for mortgagees and
witnesses Services: Financial Services, Disputes &
Litigation Industry Focus: Financial Services
Mortgagees and parties witnessing land dealings should be aware
that the following amendments to the Real Property Act 1900
commence operation on 1 November 2011:
Confirm identity of mortgagors
The new section 56C of the Real Property Act 1900 will require
mortgagees to take "reasonable steps" to confirm the
identity of persons signing mortgages as mortgagors.
The mortgagee will be considered to have taken reasonable steps
to ensure the identity of a mortgagor if it has complied with the
new Part 3A of the Real Property Regulation 2008. This provides
that a mortgagee must either comply with the Anti-Money Laundering
& Counter-Terrorism Financing Act 2006 (Cth) or, alternately,
the provisions of Part 3A which essentially mirror that Act.
Broadly, from 1 November 2011, a mortgagee must:
collect from the person their full name, date of birth and
verify that information against either one original primary
photographic identification document (such as a driver's
licence or passport), or two non-photographic identification
documents (such as a birth certificate and a pension card),
satisfy itself that the document/s have not been altered, that
the information correlates and that the photograph is a true
likeness of the mortgagor.
Mortgagees must keep records of the steps taken to comply with
the section. A failure to comply with s56C may result in the
cancellation of the registration of a mortgage if it is found that
execution of the mortgage was fraudulent.
Witnessing land dealings
Section 117 of the Real Property Act 1900 has been amended to
strengthen the requirements for persons witnessing the signing of a
land dealing or caveat, to identify the person whose signature they
The new provisions require a witness to have either:
known the person signing the dealing or caveat for more than 12
taken reasonable steps to ensure the identity of that
The witness will be considered to have taken reasonable steps to
ensure the identity of the person if the witness has taken the
steps set out in the new regulation 16A of the Real Property
Broadly, Regulation 16A requires the witness to sight either an
original primary photographic identification document (such as a
driver's licence or passport) or two non-photographic
identification documents (such as a birth certificate and a pension
card) that confirm the identity of the person signing the land
Failure to comply with the new provisions may result in a fine
of up to $2,200.
Mortgagee's obligations when exercising a power of
Finally, a reminder that the new section 111A of the
Conveyancing Act 1919 also comes into effect on 1 November
Under the new section 111A, a mortgagee or chargee in exercising
a power of sale in respect of land, must take reasonable care to
ensure that the land is sold for no less than its market value.
Alternatively, if it is not possible to ascertain the market value,
the best price that may reasonably be obtained in the circumstances
can be used.
This new provision broadly mirrors the provisions of section
420A of the Corporations Act 2001, which apply to Controllers.
Note that the new provision applies to an agent appointed by a
mortgagee or chargee and only applies to a sale arising as a
consequence of a default occurring after the commencement of the
section on 1 November 2011.
A person who suffers loss or damage as a result of a breach of
the duty will have a remedy in damages against the mortgagee or
chargee exercising the power of sale or selling the land.
The above amendments have been effected by the Real Property and
Conveyancing Legislation Amendment Act 2009 and the Real Property
Amendment Regulation 2011.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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