Conveyancing transactions involve the sale and purchase of property. In most transactions, the seller will end their existing mortgage and the buyer will begin a new mortgage over the property. The seller’s mortgagee (such as their bank) will present the certificate of title to the property. The buyer’s lender or bank will then take this certificate of title once the settlement is complete. With the introduction of e-Conveyancing comes the electronic Certificate of Title or e-CT. The e-CT and the concept of Control of the Right to Deal (CORD) replaces the traditional paper certificate of title in certain states and territories. In this article, we will explain how an e-CT works.
Control of the Right to Deal (CORD)
If a property owner takes out a mortgage, the lender or bank will be noted on the Certificate of Title. This shows that the bank has control of the right to deal with the land until the property owner releases or repays the mortgage. With electronic settlements, the land titles office may issue an e-CT to the bank or lender instead of a paper certificate, depending on the state or territory. On the e-CT, it will state who holds the Control of the Right to Deal (CORD).
Granting CORD Holder Consent
An electronic document called a CORD Holder Consent is required each time a CORD Holder grants their consent to another registration on the e-CT. This document is prepared, digitally signed and lodged electronically by the CORD Holder or their representative using the Property Exchange Australia platform (PEXA). To do so, the CORD Holder must have the details about the registration and the parties involved in the transaction. The CORD Holder must specify this information on the CORD Holder Consent. There are three different types of CORD Holder Consent depending on the circumstances.
1. Transacting Party Consent
The CORD Holder uses this consent document where they are involved in the transaction and they are giving up their right to control the land. For example, if a person took out a mortgage with a bank, the bank would use this form when the person finishes with their mortgage.
2. Third Party Consent
This consent document is used where the CORD Holder is not involved in the transaction but wants to keep their right to control the land. For example, the registration of a lease or second mortgage.
3. Conversion to No Certificate of Title
Banks or mortgagees can use this consent document to convert a paper certificate of title to an e-CT. It is a standalone document, so banks do not need to use any registration documents when lodging it on PEXA.
To confirm that the CORD Holder Consent has been lodged correctly, it is recommended that all of the parties involved in the settlement should carry out a Certificate of Title inquiry at least three days before settlement.
Changing or Withdrawing CORD Holder Consent
CORD Holder Consent cannot be changed once it has been lodged in PEXA. However, the consent can be replaced as long as the documents have not been lodged for registration. It is possible to withdraw CORD Holder Consent. However, the CORD Holder must withdraw this manually (i.e. not electronically) and only where:
- the transaction for which the consent was granted is not going to proceed; or
- the CORD Holder Consent has been lodged for a paper settlement and then it is decided that an electronic settlement will occur using PEXA.
Benefits of an e-CT
There are many benefits in having an e-CT over a paper Certificate of Title including:
- the promotion of e-Conveyancing or electronic settlements;
- banks and lenders do not have to worry about losing their paper Certificate of Title;
- it is cheaper to store and retrieve e-CTs compared to paper Certificate of Titles; and
- there is increased security against fraudulent transactions.
An e-CT and CORD Holder Consent replace the need for a paper-CT in a traditional settlement. Therefore, it is important that buyers and sellers that have a mortgage understands how these new systems work. If you have any questions about e-Conveyancing or e-CTs, you can contact LegalVision’s property lawyers on 1300 544 755 or fill out the form on this page.
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