In brief - Identify borrowers with appropriate documents
and keep records for seven years
Amendments to the Real Property Regulation 2008 (NSW) were introduced in
July 2012 and specify what constitutes "reasonable steps"
to identify borrowers both for natural persons and for
Consequences of failing to take reasonable
Section 56C of the Real Property Act 1900 (NSW) underlines the importance
of confirming the identity of the person executing the mortgage -
It is now more important than ever for mortgagees (the persons
taking mortgage security) to take reasonable steps to ensure the
person executing the mortgage, the mortgagor is, or will become,
the registered proprietor of the mortgaged land.
Your mortgage may be useless if you do not keep records to show
that reasonable steps were taken.
This is because the Registrar may refuse to register your
mortgage. If the mortgage is already registered, it could be
cancelled where execution involved fraud or a notation may be made
on title (Section 56C(5) and (6)).
What constitutes reasonable steps to confirm the
You can be certain that you have taken reasonable steps if you
Written records of compliance need to be kept for seven years
from registration (see section 56C(3)). These provisions apply
equally to a person taking an assignment of mortgage (see section
Your lawyer can create and keep the necessary records for
Reasonable steps to identify borrowers who are natural
Obtain full name, date of birth, residential address
Verify with a primary photographic identification document (ID)
– or primary non-photo ID and secondary ID
The document must be legible, unaltered, with no apparent
discrepancy unless reasonably explained and supported (eg recent
marriage / change of name)
A photo must be a "true likeness"
The document must not have expired – other than an
Australian passport that has been expired for less than two
All documents must be originals or copies certified by a person
authorised to take and receive statutory declarations under section
21 of the
Oaths Act 1900
There is no requirement for verification in a face to face
Reasonable steps to identify borrowers which are
For a body corporate, you need to collect from the Australian Securities and
Investments Commission (ASIC): the registered name, registered
office address, principal place of business address in Australia
(if any), Australian Company Number (ACN) or Australian Registered
Body Number (ARBN), registration status and the name of each
director and secretary.
For an incorporated association or co-operative, you need to
collect the same information from the relevant registration body,
but in lieu of director and secretary, you need the name of the
chairperson, secretary and treasurer and the name and address of
the public officer.
All information must be verified by an ASIC or registration
body search made within the previous 30 days. You need to be
"reasonably satisfied" that the document is legible,
unaltered, with no apparent discrepancy
Reasonable steps to verify the attorney
Verify both the mortgagor (whether as an individual or a
corporation) and the attorney (whether as an individual or a
corporation), using the steps described above
Verify that the execution of the mortgage was authorised by the
power of attorney
No apparent discrepancy between borrower's
information and ID documents
The mortgagee must resolve any apparent discrepancy between the
mortgagor's personal information and identification documents.
Mere mechanical compliance is not sufficient.
Here are some examples of discrepancies that will need further
the mortgagor claims to be the registered proprietor but the
name recorded on their ID is not exactly the same as that on a
the mortgagor appears to be younger or older than the current
registered proprietor, as indicated by any information
Keeping records verifying that you established the
Records can include any written documentation, copies of
identification sighted, or driver's licence and passport
numbers. These records must be kept for seven years and be produced
on request to the Registrar General.
If you are doing a Will, or you are the executor of a deceased estate, consider what taxes and duties could be payable.
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