Historically it was suggested that all discharges be registered as e-dealings even when the solicitor on the other side was not e-dealing capable.

Now that we are in a mandatory environment, where both sides 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 lodgement 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 and 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 confirming or selecting 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 of the instruments . . . including the vendor's discharge(s)" and in the Commentary ". . . the 'create dealing' screen should be treated like a lodgement abstract form and make reference to all instruments."

Guideline Q's commentary says that "The vendor's discharge(s) should be in the same dealing as the purchaser's transfer and mortgage. This allows the purchaser's lawyer to pre-validate the whole dealing, including the vendor's discharges. It also puts the lawyer in control of the whole dealing, the same as it would have occurred in paper."

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.

Where there is a caveat on the title that is being discharged on settlement there will be problems if the withdrawal is not in the same dealing. An additional certification will display for any instruments in a dealing that includes a title containing a caveat. That requires certification to the effect that the certifier holds the caveator's consent. That certification will not display if the withdrawal of caveat has been prepared. That applies even before the withdrawal of caveat has been signed.

If the vendor creates the withdrawal of caveat in a different dealing it has the effect of requiring the certifying parties to give a certificate that they are unable to provide; namely that they have the caveator's consent.

Even if the caveator is separately represented the Conveyancing Professional and Primary Contact for that party should be noted in that 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 create 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)).
• Where there is a caveat the certification required cannot be given if the withdrawal is in a separate dealing.
• 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 registration of the whole transaction 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.

Duncan Terris

NZLS e-dealing Consultant

The Property Lawyer

Volume 8 Issue 3, December 2007