Buying and selling property is equal parts tense and exciting. For a first time buyer it’s a whole new world of real estate terms, mortgage documents and big decisions in what is the most expensive investment they’ll probably ever make. For a first time seller, the process of putting a property on the market, meeting a desired sale price and subsequent negotiations is a rite of passage in itself. In both cases, the process rarely gets easier, just familiar. However, recent reforms introducing new Verification of Identity (VOI) requirements are changing the conveyancing settlement process.
In order to understand the changes and the reason behind their implementation, it’s important to understand how property transaction work.
The idea of a ‘paperless society’ was first coined in the late 70s, but within the property realm, a movement toward less paper is nothing new. The introduction of the Torrens title system in Australia in the late 1850s and in NSW in 1863, removed the need for title documents, with purchases and sales of property, including property details, all recorded on a register of land holdings. Land ownership is therefore transferred through registration rather than deed documents.
Today, property transactions are still recorded in the same way on an electronic database and in NSW this is governed by the Real Property Act 1900. Although there is still a significant amount of paper associated with buying or selling property, the existence of a registry offers landowners a secure and efficient process.
When property is bought or sold, generally, a solicitor arranges the title transfer. They will prepare all necessary transfer documents to ensure a property is rightfully and legally transferred within the registry. In order for the system to work correctly, and the rightful transfer of title to take place, the identity of those involved in the transaction must be verified before settlement. Problems arise when falsified identities are used within property transactions, which perpetuates identity fraud and leads to land title fraud. Recent VOI reforms were introduced as a way of combatting these issues.
What are the VOI Changes?
Section 56C of the Real Property Act 1900 (NSW) requires a lender to take reasonable steps to confirm the identity of borrowers. New reforms give greater meaning to that by defining ‘reasonable steps’. Under the Real Property Regulation 2014 (NSW) lenders or verifiers (including solicitors and conveyancers) are considered to have taken reasonable steps to verify the identity of their clients, borrowers and persons to whom certificates of title are provided, if they have complied with Verification of Identity Standards.
What are the VOI Standards?
The VOI Standards include a table of minimum document requirements for verification of identity. Documents set out in the table include identification like a driver’s licence, birth certificate or passport. The new reforms amended the existing table to include an additional category, but in general, at least two original identification documents are required.
Reforms to the VOI Standard also introduce a face-to-face interview requirement in which at least two original identification documents (as set out in the table of minimum document requirements) must be produced. The face-to-face check represents the biggest change when buying and selling property. However, the law reforms recognise the practical burden this may have, and the reforms also include provisions to accommodate this requirement. Under the new reforms a verifier may use an agent to verify identification on the verifier’s behalf.
In NSW, Australia Post acts as an agent, providing a verification of identity service. A buyer or seller need only make an appointment at their local participating Australia Post branch to complete the VOI interview. The verifier will then have access to their clients completed VOI report. This makes it simple for all those involved in a property transaction. The report is kept on file for 9 years to comply with new VOI reforms that require evidence supporting a verification of identity be kept for at least 7 years.
What do the Changes mean for you?
Whether you are buying, selling or transferring property it’s important to be aware of the new VOI changes to ensure your property transaction is a smooth process. Key changes mean you will need to:
- Ensure you have up-to-date identification documents that meet the minimum requirements as set out in the table of minimum document requirements.
- When the time comes have a face-to-face interview to verify your identity with your solicitor (this can also be done at a participating Australia Post branch).
We note VOI will also be required when signing mortgages.
Find out what to expect in your interview and the identification documents you will need here.
Taylor & Scott’s cost-effective and competitive conveyancing and property services can help you navigate the complicated processes that surround buying and selling a home. The experienced property law team are always across changes and able to advise you in plain language to ensure a successful future in the property market.
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