Since 24 September 2014 a
mortgagee in Victoria has been required to take reasonable steps to verify the
authority and identity of a person executing a mortgage as mortgagor to ensure
that person is the same person who is the registered proprietor of the land
that is the security for the payment of the debt. See: s.87A(1) of the Transfer of Land Act 1958.
If the Registrar is satisfied that the mortgagee
did not take reasonable steps and the registered proprietor of the land did not
grant the mortgage the Registrar may:
(a) if the mortgage has not been registered, refuse to register the
mortgage; or
(b) if the mortgage has been registered remove the mortgage from the
Register.
See: s.878A(3)
If the mortgage is removed from the Register the
mortgagee no longer has an indefeasible interest in the mortgaged land and the
mortgage is void. See: s.84A(5).
A mortgagee is considered to have taken reasonable
steps taken to have to verify the authority and identity of a person executing
a mortgage if it has taken steps consistent with any verification of identity
and authority requirements:
(i)
determined by the Registrar
under s.106A; or
(ii)
set out in the ‘participation
rules’ within the meaning of Electronic
Conveyancing National Law (Vic).
The Registrar has not yet made a determination
under s.106A.
The participation rules refer to a face to face
interview in the case of an individual and the sighting of identification
documents such as a passport, birth certificate, Medicare card, drivers licence.
See: schedule 8 “Verification of Identity Standard”. Where the mortgagor is a
company confirmation of the existence and identity of the body corporation by a
search of ASIC’s records must be undertaken together with reasonable steps to
establish who is authorized to sign or witness the affixing of the common. The
identity of the person affixing the common seal must also be verified. There
are also provisions for the establishing the identify and powers of attorneys
acting on behalf of mortgagors.
Mortgagees should establish procedures to ensure
that they can comply with the new procedures also maintain records that prove
they have complied with the new procedures.
