Real Property and Conveyancing Legislation Amendment Bill 2009

On 6 May 2009 the Real Property and Conveyancing Legislation Amendment Bill 2009 was passed by the NSW Parliament. The Bill received assent on 13 May 2009.

The Bill introduces a number of important amendments to the Real Property Act 1900 (NSW) (RPA) and the Conveyancing Act 1919 (NSW)(CA), particularly in relation to “indefeasibility” of title and access to compensation from the Torrens Assurance Fund. The Bill has also made a number of changes in relation to mortgagees exercising a power sale. We will comment on the amendments relating to mortgagees in our next issue of The Connection.

Infeasibility – Overriding Statutes

Whilst the object of the Bill is to “reaffirm the principle of indefeasibility of title as contained in s 42 of the RPA” the Property Law Committee of the New South Wales Law Society have expressed concern over the affect of the amendments. In essence, the Bill provides that indefeasibility of title, as provided in s 42 of the RPA, shall not be overridden by later (or ‘overriding’) statutes, unless the later statute expressly provides that it is intended to override the RPA.

Whilst ‘overriding statutes’ have always constituted an exception to indefeasibility of title, the determination of whether a later statute was actually intended to override the RPA was a matter for the Courts to determine. The Property Law Committee of the Law Society of New South Wales have highlighted the worrying development that the amendments introduced by the Bill effectively allow a government department to override the RPA simply by passing express ‘overriding’ legislation for its own convenience without a proper examination of the likely impact upon the integrity of the and reliability of the Torrens Register.

Accordingly, rather than “reaffirming” the principle of indefeasibility the effect of the Bill may well be to “erode” the principle of indefeasibility.

Limits on claims against the Torrens Assurance Fund

Access to compensation from the Torrens Assurance Fund (TAF) has always been controversial. The Bill introduces amendments which further limit access to compensation from the TAF. In particular:

• No compensation of loss arising from the recording of a caveat or removal of a caveat by the Registrar General
• No compensation for loss arising from the execution of an attorney where the attorney acts outside of the authority conferred on him or her by the power of attorney
• No compensation for loss for loss arising from acts or omissions by an information broker
• Administrative appeals against decisions concerning claims against the TAF may only be heard in the Supreme Court rather than any court of competent jurisdiction
• The limitation period to bring an appeal against a decision concerning a claim against the TAF is now 3 months rather than 12 months

The Benefits of Title Insurance

Title insurance provides coverage to the insured in relation to both ‘title’ and ‘off’ title risks, including loss of title through unknown exceptions to indefeasibility of title and through fraud and forgery.

Unlike the TAF, a title insurance policy is a policy of insurance and therefore the policy and the conduct of the title insurer in relation to processing the claim are subject to the provisions of the Insurance Contracts Act 1984 (Cth) and the provisions of the title insurance policy will be construed strictly against the title insurer in accordance with the contra proferentem rule.

The advantage of claiming under a title insurance policy rather than the TAF in the event of loss through fraud and forgery is that a title insurance policy is a “no fault” policy and the coverage is not limited where the fraud or forgery is occasioned by the insured’s legal practitioner, conveyancer, real estate agent or information broker, nor is it necessary to commence administrative proceedings or legal proceedings in order for compensation to be payable. As long as the insured has suffered “actual loss” as a result of a matter covered under the title insurance policy and the insured is able to provide proof of loss then the title insurer is obligated to pay the claim.

The time has never been better for your clients to protect their investments against title related losses with a title insurance policy.