Property Exchange Australia, more commonly known as PEXA, is an electronic lodgement network that assists lawyers, conveyancers and representatives of interest holders in preparing and lodging electronic dealings to facilitate the electronic settlement of real property transactions in Australia.
When engaging in property transactions on PEXA, workspace participants should perform a final title search or a title activity check before signing off on a workspace. This will confirm whether a seller has a legal right to sell a property and reveal encumbrances (and in particular, any new or unexpected encumbrances) affecting the title of a property.
NSW Supreme Court case highlights the importance of final title searches
The recent NSW Supreme Court decision in Cui v Salas-Photiadis [2024] NSWSC 1280 highlights the significance of conducting final title searches and title activity checks – this is particularly relevant when government is purchasing land.
In this case, the plaintiff entered into a contract to purchase a home in Blakehurst, NSW, for $4,350,000. To complete the purchase, the plaintiff borrowed funds from Westpac who, in the usual course, agreed to lend against the plaintiff's promise to grant a mortgage over the property.
On 1 May 2024, a PEXA workspace was created to facilitate settlement. Later that month, the first defendant lodged a caveat against the property, which identified their interest in the property as a "charge" granted under a loan agreement. No participant in the PEXA workspace noticed the first defendant's caveat had been lodged and proceeded to settlement as usual.
Post settlement, Westpac received a requisition from Land Registry Services (LRS) informing them that the transfer and mortgage could not be registered because of the first defendant's caveat.
This case serves as a reminder to all participants (government and non-government) in a PEXA workspace, including interest holders, incoming and outgoing mortgagees, incoming proprietors, proprietors on title – to conduct a final title search before a PEXA settlement. Failure to do so can lead to a party's interest not being registered with the LRS, and may prevent or delay the settlement process or result in legal proceedings being initiated by an aggrieved party.
Final title searches and government department name changes
As noted above, final title searches and title activity checks are an essential part of the settlement process and should be completed prior to completion. This process will also assist government departments that undergo official name changes as a result of Administrative Arrangement Orders. For example, Administrative Arrangement (Second Perrottet Ministry – Transitional) Order 2021, meant any reference in a document to the Minister for Education and Early Childhood Learning (or any previous iteration of this Minister's title) is to be read as a reference to the Minister For Education and Early Learning. This was, in effect, a name change and impacted all land titles held in this Department's name.
For instance, any contract entered into by the Minister For Education and Early Learning as vendor after this Administrative Arrangement came into effect may list the Minister For Education and Early Learning as the registered proprietor of the land. However, a title search may still show a previous iteration of the Minister's title. A final title search would reveal any discrepancy between the vendor's current name and the registered proprietor listed on title.
Prior to completion, it is best practice to obtain a final title search and, if necessary, lodge a Change of Name form with the LRS to update the registered proprietor's name to match the current name of the relevant government department.
Key takeaway
When engaging in property transactions on PEXA, all workspace participants should ensure they conduct a final title search or perform a title activity check before signing off on a PEXA workspace. This critical step in the settlement process should not be overlooked by lawyers, conveyancers and representatives of interest holders.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
