Paper Certificates of Title Gone – Watch Out Parental Loans

Many parents lending money to their kids to buy a house would accept the paper certificate of title as security for the loan.

Although the loan is not secured by a registered mortgage, parents usually take some comfort that while they held the certificate of title, the property could not be transferred from their child’s name.

Such informal security, sometimes called an equitable mortgage, has just become even riskier now that paper certificates of title have been abolished.
Paper Certificates of Title were abolished in NSW on 11 October 2021.

The Certificate of Title listed the owner, and those with a registered interest, such as the bank mortgagee, the lessee and those with rights of access such as easements.

If you held a Certificate of Title, you would keep in a safe place. Why? You had to have the certificates of title to legally sell, mortgage, lease or subdivide your land, that’s just how it went.

However, Certificates of Title were occasionally lost, or were hard to find, or were taken by fraudsters to transfer property.

From now on, your ownership, or your interest in a mortgage or lease, will not be recorded on a paper document.

It will remain recorded on the register maintained by Land Registry Services (the old Land Titles Office), but it will be transacted electronically using Property Exchange Australia (PEXA), an electronic conveyancing platform.

So, watch out!! That bundle of Certificates of Titles (or land title deeds) is not worth the paper it is written on!

If you are holding paper Certificates of Titles, check the reason why, and get legal advice about how to protect your interest in the property represented by them.

Written by Peter McNamara, Partner at Clark McNamara Lawyers, 12 November 2021