New identity verification for real estate disposal – considerations for Local Governments
Following the registration of a series of fraudulent land transactions in recent years, various reforms have been implemented to establish more stringent identity verification processes for the disposal of real estate. Changes have been made to the Code of Conduct for Agents and Sales Representatives 2011 and the Settlement Agents Code of Conduct 1982, each of which effectively require agents and licensees respectively to make all reasonable efforts to verify the identity of each person who is to dispose of any real estate and verify that person’s authority to do so.
More importantly from a local government perspective, the Registrar of Titles has published the Western Australian Registrar and Commissioner of Titles Joints Practice: Verification of Identity (Practice), which will establish identity verification requirements for the registration of transfer of land documentation. These requirements are intended to prevent the successful registration of fraudulent land transactions.
Following a 6 month transitional implementation period for the Practice commencing on 1 July 2012, documents lodged with Landgate will need to fully comply with the practice by 2 January 2013. Thereafter, local government signatories will need to comply with the identity verification process set out in the Practice for any sale of real estate.
While the amended codes of conduct for real estate agents and settlement agents will require those persons to satisfy themselves as to the identity of persons executing transfer documents, those codes of conduct do not specifically prescribe the basis for verifying the identity of relevant persons. Therefore, if the real estate or settlement agent in question has a previous or ongoing relationship with a local government, the verification process may be relatively simple, as that agent may already be satisfied as to the identity and authority of the signatories.
Even if an agent requires some identity verification, the agent’s requirements will almost certainly be less rigorous than the process imposed by the Practice. Unlike the more general provisions contained in the respective codes of conduct, the requirements of the Practice are definitive and will need to be strictly complied with in order for transfer documents to be registered from 2 January 2013.
As a statutory body, local governments will need to comply with clause 4.4 of the Practice, which provides that, in respect of any transfer of land documentation, the conveyancer and/or lawyer dealing with the transaction must satisfy themselves:
- of the continued existence of the body at the relevant time;
- that the persons signing on behalf of the body are duly authorised to sign; and
- of the identity of the natural persons signing on behalf of the body.
Whilst the first two requirements may not be too onerous, the identity verification process is very rigid and prescriptive. The Practice effectively establishes two base requirements for verification of identity. The ‘identity document production’ process will require the production of a person’s original passport and driver’s licence or, in the absence of either of those documents, such other original documentation as is prescribed.
The ‘visual verification’ process actually requires the agent in question to compare the photograph on current identity documents with the person being identified, by a visual ‘face-to-face’ identification process. Therefore, in addition to producing the necessary identity documents, the executing persons will need to physically meet with the agent prior to registration of documents at Landgate.
Landgate has indicated that, in the future, the standard transfer of land documents will include a form of certification covering the verification processes referred to above. However, this will not overcome the requirement for visual verification and production of identification documents. Therefore, local governments should review the Practice during this transitional period to determine whether their processes can be amended or refined to streamline this process.
For example, the Practice contains some exceptions in relation to satisfying some verification requirements through ongoing or continuous business relationships. Therefore, it may be beneficial for local governments to use the same real estate agents and settlement agents for all real estate transactions, if they are not already doing so. Local governments could also establish a process whereby the duly authorised signatories can be made available for document production and visual verification at pre-arranged, regular times, during which the verification requirements for multiple transactions can be addressed simultaneously.
The best approach for an individual local government will depend on the type and frequency of real estate transactions being entered into and its existing processes for those transactions. However, all local governments should review the Practice during this transitional period to begin implementing measures to ensure that these requirements can be satisfied as efficiently as possible.
If you would like any further information or advice, please contact Tim Beckett on 9424 6208.