December 2005

To assist firms in getting started with e-dealing and to maximise use and familiarity with the system, it is often suggested that all discharges are registered as e-dealings when the other solicitor is not e-dealing capable.

However, where both solicitors are e-dealing capable, there should only be one e-dealing.This directly emulates the paper system where the vendor's discharge is passed to the purchaser and lodged with the purchaser's transfer and mortgage (if any). The only difference is that the purchaser 'creates' the electronic list of all instruments (analogous to the abstract form) in the dealing, including the vendor's discharge(s) at the start of the dealing in the 'Create dealing' screen.

(This also serves as a handy cross check for the purchaser to ensure that all discharges, releases of withdrawals required for settlement are flagged at the outset.)

The purchaser will identify that a discharge needs to be prepared. The vendor then prepares the actual electronic discharge instrument as part of the purchaser's e-dealing. This includes inserting the correct instrument number and noting whether the personal covenant needs to be reserved etc.

Guideline C of the NZLS Guidelines for the Use of Landonline for an Electronic Transaction provides:

"The e-dealing needs to be created by the purchaser . . . and all instruments . . . including the vendor's discharge(s)" and in the Commentary ". . . the 'create dealing' screen should be treated like an abstract and make reference to all instruments."

Guideline Q's commentary says that ". . . where the vendor's lawyer only is registered to perform e-dealings or the purchaser's lawyer is unwilling or unable to conduct the whole transaction as an e-dealing" the vendor is able to register a discharge by setting up an e-dealing for the discharge only. This applies when the purchaser is not e-dealing capable.

Guideline Q makes reference to the vendor ". . . being responsible for preparation of the Discharge".That is preparation of the actual discharge within a multi-party e-dealing, not the creation of a new or separate e-dealing.

In summary, where there are two sides there should be one e-dealing. To split it into two e-dealings creates the following additional work or problems:

• The vendor needs to do more work by creating a separate dealing as opposed to simply accessing the dealing created by the purchaser.
• The vendor must access two separate e-dealings to Certify, Sign and release the Transfer and Discharge instead of working in the one e-dealing.
• The purchaser cannot pre-validate the discharge dealing prior to settlement as they are not a party to that separate dealing created by the vendor. (When all instruments are part of one dealing, the purchaser can determine when the vendor has prepared and signed the discharge(s)).
• The purchaser is not in control of registration when there is a separate dealing. When there is one dealing, the vendor 'releases' the transfer and discharge into the control of the purchaser. The purchaser can then instantly 'submit' (i.e. register) and the matter is complete. Where there is a separate dealing for the discharge the purchaser would have to wait until the vendor registers the discharge before the purchaser can register their documents, thereby undermining the efficiency of instant registration by the purchaser on settlement.
• NB: The same problem does not arise where the purchaser is not e-dealing capable. The earliest that the purchaser can lodge the paper transfer and mortgage is the business day after the settlement. The vendor can register the discharge electronically on settlement day before the purchaser's paper documents are lodged without disadvantaging the purchaser.

Duncan Terris
NZLS e-dealing Consultant
The Property Lawyer
Volume 6, Issue 4, December 2005