Changes are happening to the conveyancing process. Please read this information together with the overview on the Reforms to Conveyancing Process webpage.
Subscribers – legal practitioners, licensed conveyancers, financial institutions – will be required to verify their Client’s or the mortgagor’s right to deal, respectively. Subscribers who are Self-represented parties will be required to verify their own right to deal.
Right to deal is the entitlement of a Person to be a particular Party to a particular Conveyancing Transaction, including capacity and authority. By undertaking verification of right to deal, the risk of a fraudulent transaction is greatly reduced, in addition, other Parties to a Conveyancing Transaction are given additional confidence that they are transacting with the party who has the right to transact.
This requirement applies to both paper-based and electronic conveyancing processes by virtue of the Recorder’s Directions and Participation Rules, respectively.
As each Conveyancing Transaction may differ in type and/or circumstance, there is no standard approach to undertaking verification of right to deal. As such, conveyancing professionals must take reasonable steps to verify their Client or mortgagor's right to deal.
Please note: any capitalised term has the meaning given to it in the Recorder’s Directions, the Participation Rules, the Operating Requirements, or the Electronic Conveyancing National Law (ECNL) as applicable.
Frequently asked questions
The following information does not constitute legal advice, nor does it replace prudent conveyancing practice. Nothing written below overrides the Recorder’s Directions, Participation Rules, any other relevant legislation, or Registrar’s Prescribed Requirements.
For this information and more, including a comprehensive list of Frequently Asked Questions, please see the ARNECC Guidance Note on Right to Deal.
What is right to deal?
Right to deal is the entitlement of a Person to be a particular Party to a particular Conveyancing Transaction.
The Recorder’s Directions for paper-based conveyancing and Participation Rules for electronic conveyancing require a Subscriber to take reasonable steps to verify the right to deal of their Client, and/or the mortgagor for a mortgage.
When is verification of right to deal required?
Right to deal must be verified whenever you are representing a Client in a Conveyancing Transaction, or if you are a mortgagee taking a mortgage (or a Subscriber whose Client is a mortgagee).
A Representative must verify the right to deal of their Client. A mortgagee, or a Representative of a mortgagee, must verify the right to deal of a mortgagor. However, a Representative of a mortgagee need not take reasonable steps to verify that the mortgagor has the right to deal if the Representative is reasonably satisfied that the mortgagee it represents has taken reasonable steps to verify the mortgagor’s right to deal. It is for a Subscriber to assess how it can be reasonably satisfied in the circumstances.
Verification of right to deal is closely linked to verification of identity. Prudent conveyancing practice would be to conduct these processes simultaneously.
How should verification of right to deal be undertaken?
A Subscriber is required to take reasonable steps to verify the right to deal.
Where a Subscriber is an organisation, any Person duly authorised by the Subscriber can undertake the verification of right to deal.
“Reasonable steps” is a commonly used legal concept. When applied to Subscribers and mortgagees, it means the taking of such steps as an ordinarily prudent Subscriber or mortgagee would have taken in the circumstances and in the ordinary course of his or her business. Whether ‘reasonable steps’ were taken will be a question of fact depending on the circumstances of the individual case. Ultimately, this would be determined by a Court on an objective basis.
Verifying right to deal will require you to sight supporting evidence that includes the name of the Person whose right to deal is being verified and the property or transaction details. The supporting evidence should allow you to link the registered interest holder or transacting Party to the land.
More extensive checks and enquiries should be made where doubt arises, or should reasonably have arisen, in relation to a transaction and a Person’s right to deal.
The following examples may help establish right to deal for parties involved in common transactions.
This list is not exhaustive and what constitutes reasonable steps to verify right to deal will depend on the circumstances.
Outgoing Party and Mortgagor
For a Party that is relinquishing their interest, such as a transferor or a mortgagor, supporting documentation that may assist in establishing right to deal could include originals, copies or records of the following:
a current local government rates notice
current utility bills for the property
a current land tax assessment notice for the property
loan documentation
the mortgage granted by the mortgagor (if one exists)
the certificate of title/duplicate certificate of title for the property (if one exists) and/or a recently issued registration confirmation statement for the property.
A copy of a title search should be obtained to check who is named as a registered interest holder to ensure the correct Person’s right to deal is being verified
Incoming Party
For a Party that is coming onto title, such as a transferee or a mortgagee, supporting documentation that may assist in establishing right to deal could include the following:
To verify right to deal for a caveator, you should take reasonable steps to ascertain that your Client may have a caveatable interest capable of registration.
Caveator (withdrawal of Caveat)
If you are the Subscriber that represented the caveator named in the Caveat, you should take reasonable steps to ensure that the caveator is the same Person you initially represented.
If you are a different Subscriber to the one that represented the caveator named in the Caveat, in addition to verifying the identity of the caveator, production by the caveator of supporting documentation for the Caveat could assist in establishing the caveator’s right to deal.
Reliance on any one Document is not conclusive evidence and how much evidence is required is dependent on the circumstances. For example, reliance on a certificate of title may only show that Person has access to that title, not that they are the Person who has the right to deal with the land. Such evidence would need to be coupled with verification of identity and sufficient supporting evidence to satisfy yourself of their right to deal.
If my Client provides a certificate of title, will this constitute reasonable steps for establishing my Client’s right to deal?
A certificate of title may be relevant as part- only evidence when verifying a person’s right to deal alongside additional evidence. Reliance on a certificate of title may only show that Person has access to that title, not that they are the Person who has the right to deal with the land.
Further considerations should be given regarding the production date of a certificate of title, version number and other relevant factors if it is to be used as part-only evidence when verifying a Client’s right to deal.
How do I know that my Client John Smith is the same John Smith that is the proprietor on title who has the right to deal?
What is reasonable depends on the circumstances. You need to take steps to satisfy yourself which may include:
This is done by obtaining supporting evidence to link John Smith to the property, such as one or more of the Documents referred to under Outgoing Party or Mortgagor above.
You should also make further enquiries where doubt arises or should arise in relation to the instructions and transaction. For example, the purported transferor is too young to have purchased the property at the time it was purchased and therefore suspicion should arise that they may be John Smith junior.
What should I do if I doubt my Client has the mental capacity to enter into the transaction?
As a Subscriber should verify that its Client has the mental capacity to enter into the transaction, you should make further enquiries if you doubt that your Client has the mental capacity to enter into the transaction.
Such enquiries could include obtaining a medical certificate to verify that they have the mental capacity to enter into the transaction.
I am a Subscriber representing an incoming mortgagee, what are my obligations in relation to right to deal?
You must verify the right to deal of your Client, in this instance the mortgagee. This could be done by obtaining loan documentation and any other supporting documentation that shows they are the intended incoming mortgagee for that property.
In addition to this you must take reasonable steps to verify that the mortgagor has the right to enter into the mortgage. However, if you are representing a mortgagee you do not need to take reasonable steps to verify that the mortgagor has the right to deal if you are reasonably satisfied that the mortgagee you represent has taken reasonable steps to verify the mortgagor’s right to deal.
Verifying that the mortgagor has the right to enter into the mortgage could be done by obtaining the contract of sale and other related documentation if they are the incoming proprietor. If they are the current proprietor, documentation tying that proprietor to the subject property is required. For example, documentation may include:
a current local government rates notice
current utility bills for the property
a current land tax assessment notice for the property
previous loan documentation
a certificate of title or registration confirmation statement for the property