Background

As e-dealing becomes more widely used there are more complex scenarios being conducted electronically. This usually arises in a commercial context, where the mortgagee and mortgagor are separately represented. It can also arise in residential transactions where a non-bank mortgagee may elect separate representation.

The same applies where a chargeholder wants a separate lawyer, other than the proprietor's lawyer, to act on the e-dealing for the discharge.

For example, it is possible to have five or more separate lawyers in one dealing where there are only four instruments.

Who does what and when ?

Creating the dealing

The key to establishing who does what, is mapping out who would be performing each task if it were done in paper. Once that has been decided, it is simply a case of setting up the appropriate responsibilities in the e-dealing.

Discharge(s) & Transfer

Assuming there is a transfer as part of the transaction, the transferee creates the dealing as standard practice.

The purchaser (transferee) knows from the title which discharges are required from the vendor. The vendor should advise their Primary Contact (PC) and Conveyancing Professional (CP) as soon as the agreement is unconditional. If the existing chargeholder is to be separately represented, the vendor should advise the purchaser of the PC and CP for the chargeholder so they can be shown by the relevant discharge in the dealing.

Even if the chargeholder advises they want separate representation after the dealing is created, the vendor can access the dealing and change the PC and CP names for that discharge.

There should be no need for any direct liaison between the purchaser and existing chargeholder(s). All undertakings should be between the parties with whom the direct relationship exists. Namely, the chargeholder would give undertakings to the vendor. The vendor would provide the relevant undertakings to the purchaser in reliance upon the undertakings from the chargeholder.

Mortgage

If the mortgagee for a new mortgage is separately represented, reference to 'single' in the mortgage row on the Create Dealing screen should be changed to 'multi'. This allows for different lawyer names to be noted for the mortgagor and mortgagee.

Responsibility for Release

There can only ever be one lawyer (CP) for any discharge, satisfaction or withdrawal etc. That is because there are only certifications for the chargeholder in a discharge. No certifications are required on behalf of the proprietor.

That means only the CP for the chargeholder can release the discharge.

Accordingly, if an existing chargeholder is represented by a different solicitor from the proprietor, that CP will need to be named in the Create Dealing screen for that discharge.

The chargeholder would prepare, certify and sign the instrument well before settlement. The chargeholder also undertakes to release the discharge immediately upon confirmation of repayment being made from the vendor to the chargeholder.

The purchaser will be able to see the status of the discharge by clicking the dealing in the Workspace tree, including whether it has been signed, and also be able to pre-validate the dealing as a whole, including all discharges.

Any transfer will be released by the transferor.

A new mortgage will be released by the mortgagee if separately represented.

Responsibility for Fees

The check boxes for responsibility for fees default to the vendor being responsible for all discharges and to the purchaser being responsible for the transfer and any new charges. These defaults can be altered to cater for a specific transaction. Registration fees for any instrument can be allocated to any party to that instrument.

Responsibility for Submit

As for a paper dealing there can only be one party responsible for submitting a dealing. That defaults to the purchaser's or mortgagee's firm if they are different. This default can be changed.

Where a mortgagee is separately represented they will usually wish to be in control of registration.

Responsibility for Instrument Preparation

If a mortgagee is separately represented it would be usual for that mortgage to be prepared by the mortgagee. Either party however would have access to the mortgage to prepare. As the mortgagee will normally be rendering an account for acting for the mortgagee, that would usually include preparation of the mortgage. Given that there is minimal effort required to prepare it should not be a significant issue either way.

Client Authority and Instruction Form

The party certifying the instrument holds the Authority and Instruction (A & I) from the client.

Any party can submit the dealing and an A & I is not required by the submitting party. The wording in the A & I authorises electronic registration, and depending on the nature and complexity of the transaction the submitting party may vary.

Summary

Virtually any option of who does what and when is catered for in Landonline. In a complex or commercial transaction it is best to understand clearly what the expectations of the mortgagee(s) are prior to creating the dealing. This will save on potential rework.

Duncan Terris
NZLS e-dealing Consultant
The Property Lawyer
Volume 8, Issue 2, September 2007