A compliance review is a request from the Registrar General of Land (RGL) to sight a copy of the documentation supporting the certifications made in an e-dealing for review purposes. The statutory authority for this process is set out in ss 164A to 164C of the Land Transfer Act 1952. It is a straightforward process if you set yourself up from the beginning with a system for making sure you get the right documents to start with, and that they are easy to locate at the time of the review.

Statute requires that the documentation be retained for 10 years. Any inquiry more than 12 months after registration would usually only arise if a specific concern was raised about a particular e-dealing.

The review process

• An initial compliance review is undertaken after sign-up to ensure practitioners understand the document retention requirements and to provide further guidance where required. There is no site visit unless there is a significant non-compliance.
• Practitioners will be requested to complete a questionnaire and supply supporting documentation for the certifications they have given in the e-dealings selected for review.
• The Landonline Dealing number and client reference or parties will be supplied to the firm when the review request is made.
• The evidence must be supplied to the RGL within 10 working days of the request being received.
• The RGL will issue a compliance certificate at the end of the review.

Frequency of reviews

• Every practitioner will be subject to an initial compliance review within six months of commencement of e-dealing.
• A sample of three e-dealings will be selected for review.
• Further routine reviews will be conducted on an annual basis.
• A practitioner will not be subjected to higher levels of review unless there is a significant instance of non-compliance.

Evidence that must be retained

For discharge of a bank or institutional mortgage:

• A copy of the discharge of mortgage signed by the mortgagee (with certificate of non-revocation as appropriate) or
• Written authority from the mortgagee authorising registration of the discharge.

For discharge of a private mortgage:

• In the case of a private (non-institutional mortgage) mortgagee, an Authority & Instruction (A&I) form completed accordance with the NZLS Guidelines for the Use of Landonline for an Electronic Transaction.
• Any other evidence relevant to the dealing (eg a copy of a power of attorney and certificate of non-revocation)

For transfers:

• An A&I form completed by the transferor or transferee in accordance with the NZLS guidelines (with copy of photo ID attached where required).
• Any other documents relevant to the Transfer, for example:
• Power of Attorney and certificate of non-revocation
• Any statutory consents or Orders.

Note:  A separate A&I must be obtained from the transferor and transferee, if the practitioner is acting for both parties. If the transferor and transferee are the same people, then LINZ accepts one A & I for both functions, so long as the A & I states that it is for both transferor and transferee.

For mortgages:

• An A&I form completed by the mortgagor in accordance with the NZLS guidelines.
• A letter of instruction from the lending institution authorising registration of the mortgage, which identifies the mortgage details and title / computer register.
• In the case of a private (non-institutional) mortgagee, an A&I form completed in accordance with the NZLS guidelines.
• Any other evidence relevant to the dealing, for example:
• Copy of Power of Attorney and certificate of non-revocation
• Any statutory consents.

Note: 

Common compliance review oversights

• Mortgage - not attaching the letter of instruction from the mortgagee (or only attaching the front page).
• No photo ID is provided where the Authority & Instruction form (A & I) is witnessed by someone other than the instructed lawyer who has known the client for more than 12 months.
• The name on the A & I does not match the registered proprietor's name.
• Transfer ¡V no A & I from the transferee.

If the e-dealing is a discharge from a bank or institutional mortgagee, the paper discharge constitutes sufficient authority. An A & I is required from a non institutional lender for a discharge.

The term "institutional mortgagee" includes banks and building societies and any other organisation that has money lending as its principal business. If in doubt, an A & I should be used.

Duncan Terris
NZLS e-dealing Consultant
The Property Lawyer
Volume 6, Issue 3, October 2005