There have been amendments to the process which mortgagees and transferees of mortgages may adopt to satisfy their obligation under sections 11A and 11B of the Land Title Act and sections 288A(3) and 288B of the Land Act to take “reasonable steps” to verify the identity of a mortgagor before the relevant mortgage documents are lodged for registration.
The amendments will take effect from 1 March 2016.
In this Alert, Partner Paul Cullen and Associate Nicholas Hew highlight some of the significant aspects of the revised verification of identity requirements.
Key points
- A face-to-face in person interview must take place between the mortgagee (or its authorised agent) and the proposed mortgagor (VOI Interview).
- At the VOI Interview, the proposed mortgagor must produce original documents to verify their identity. The documents that may be produced are categorised, with the first category requiring production of an original version of an Australian or foreign passport, Australian driver’s licence or photo card and a change of name or marriage certificate (if necessary). If these documents are unable to be produced, the subsequent categories provide for the production of alternative identification documents, with the final option including provision of a statutory declaration by a person that meets certain requirements. The mortgagee (or its authorised agent) must sight the original versions of the documents and retain copies for seven years after registration.
- Corporate entities must also have the identity of their authorised signatories verified. The mortgagee (or its authorised agent) is required to undertake an ASIC company search, take reasonable steps to establish who is authorised to sign or witness the affixing of the company seal on behalf of the corporate entity and verify the identity of the individuals signing or witnessing the affixing of the company seal in the manner referred to above.
- Similar verification of identity requirements apply if the relevant mortgage documents are to be executed by an individual or a corporate entity under a power of attorney.
- A mortgagee must take steps to verify the identity of the proposed mortgagor beyond those described above where they ought to reasonably know that any identity document is not genuine, a photograph on an identity document is not of a reasonable likeness to the proposed mortgagor, the proposed mortgagor does not appear to be the person to which the identity documents relate or if it would otherwise be reasonable to do so. For example, it may be considered reasonable to undertake further steps if the person who executes the mortgage appears not to be the same gender or appears to be younger than the current registered owner or holder of the interest, based on information reasonably available to the mortgagee.
Conclusion
The amendments to the verification of identity requirements are consistent with the requirements that have been adopted in New South Wales, Victoria, South Australia and Western Australia (which have been based on the verification of identity standards under the Electronic Conveyancing National Law).
Lenders should take this opportunity to review their verification of identity procedures and consider the steps they need to take in order to ensure their procedures will comply with the requirements of the revised guidelines, as a failure to do so may result in loss in the event of forgery or fraud which would be avoidable if the appropriate verification procedures were followed.
For more information or discussion, contact HopgoodGanim Lawyers' Banking & Finance team.