Verification of Identity in property transactions

Verification of Identity (VOI) is a process used to confirm the identity of a person.

Lawyers and other parties involved in property transactions have an obligation to ensure that the person claiming authority to deal with land is legally permitted to do so. This includes confirming a person’s capacity to act as agent for a company or as an attorney.

The VOI process is particularly important in land and property dealings as it assists in reducing identity theft and land title fraud. Verification of Identity has always formed part of good practice however from 1 August 2016 it became mandatory for land transactions.

Lawyers and other parties must take ‘reasonable steps’ to verify the identity of their clients, their client’s agents and persons to whom title deeds are being provided.

This means that your Lawyer will need to formally verify your identity during a face to face interview or use other approved methods to confirm your identity and authority to enter into the contemplated transaction. The VOI requirements extend to any person authorised to act on behalf of the client.

When do I need to prove my identity?

Land and Property Information (LPI) is the central registration authority for real property (land) dealings in New South Wales. The LPI registers hundreds of transactions affecting land every week.

New provisions under the Real Property Act 1900 (NSW) allow the Registrar-General to make rules (Conveyancing Rules) regarding the verification and identity of particular classes of persons with respect to certain transactions (Conveyancing Transactions).

The Conveyancing Rules set out the framework required for VOI processes which also reflect the methods used by recently-introduced electronic conveyancing procedures.

Broadly, a Conveyancing Transaction is a transaction between one or more parties involving the creation, disposal or transfer of an interest in land. A typical conveyance, mortgage, charge or lease over property falls within this category.

The registration, recording or removal of an interest or notation in the titles register are also Conveyancing Transactions and will be subject to VOI processes. Examples include the registration of an easement, caveat or plan of subdivision.

The VOI process must also be used for documents that do not require registration at the LPI (such as a contract for sale and purchase of land and agreement for lease).

How does the VOI process work?

Your Lawyer must be satisfied that he / she is dealing with the person claiming to be authorised to enter transactions regarding the property. Likewise, Lawyers acting for the party on the other side to your property transaction must confirm the identity of their client. The idea is to create an ‘even playing field’ in the conveyancing and property transaction setting. By ensuring all sides to a transaction undertake diligent VOI measures the parties are better protected against property fraud.

If you are involved in a property transaction such as the sale or purchase of land or borrowing money secured by a mortgage, you will need to meet personally with your Lawyer or other agency to provide documents and formally prove your identity.

During the VOI process you will be asked to produce original documents so that your identity can be compared (ideally) with a document containing photo identification.

The documentation required for the VOI process is similar to the present ‘100 points’ system commonly used for banking and other identification processes. There are various categories and combinations of documents which may be used to prove your identity. These include an Australian or foreign passport, drivers licence or photo card, birth or citizenship certificate, Medicare, Centrelink or Department of Veterans’ Affairs card. For those persons who are not Australian citizens or residents, other types of documents may be used.

The types of documents you need to produce are categorised with the higher category documents being the preferred VOI source, for example an Australian passport and driver’s licence.

If sufficient identification documents are not available, an Identifier Declaration may be used which enables another person to identify you. Your Lawyer can advise you on this process.

Verification of Identity documentation relating to a property transaction must be kept securely by your Lawyer for seven years. Once the VOI process is carried out, further verification need not take place for two years. This means that you need not undertake a further VOI process for a subsequent property transaction that occurs within two years of the initial VOI.

What if I cannot visit my Lawyer?

If you are unable to attend a face to face interview with your Lawyer, an Identity Agent can be used to confirm your identity. This is practical for clients who are travelling or do not reside close to their Lawyer’s office.

Australia Post and other reputable agents offer this service and your Lawyer can refer you accordingly. The Identity Agent will complete the VOI process in a similar manner as required by your Lawyer and provide an Identity Agent Certification.

What about companies and attorneys?

If a party involved in a Conveyancing Transaction is a corporate entity, a company search will be obtained to confirm the existence of the company and to establish those persons authorised to sign on behalf of the company. The authorised representatives will then need to undergo the VOI process.

Similarly, attorneys entering transactions on behalf of their principal must provide the document authorising such a transaction and complete the VOI process to verify their identity.

Conclusion

Identity theft leading to the registration of fraudulent documents and dealings over land is not a new phenomenon and can have devastating financial and other affects. Verification of Identity is an important safeguard against fraud and is an essential risk management tool.

By imposing standard and reciprocal requirements for Lawyers and Conveyancers to identify their clients, mandatory VOI rules are likely to offer better protection and safeguard you against a possible fraud in connection with your property transaction.

For more information about VOI, talk to one of our experienced Property Lawyers or if someone you know wants more information or needs help or advice, please contact us on (02) 6621 2481 or email info.lismore@sll.com.au or at Ballina on (02) 6686 2522 or e-mail info.ballina@sll.com.au.