Practitioners and parties should be alert to several traps in the Act.
Failure to verify identity can destroy indefeasibility: Under section 69(i), if the mortgagor is not the registered proprietor and the mortgagee failed to comply with verification requirements (under the Act or the Electronic Conveyancing National Law), the mortgagee’s interest is not indefeasible. This applies even if the mortgagee took in good faith. The onus may shift to the mortgagee to prove compliance. The same applies to transferees of mortgages (section 152A).
Client authorisation must be properly obtained: Under section 240F, a legal practitioner or registered conveyancer who executes an instrument without a properly completed client authorisation, or without first verifying identity and authority, commits an offence with a maximum penalty of two years imprisonment. The defence of honest mistake (proving no negligence) is available but may be difficult.
Unrepresented parties must prove authority: Under section 273AA, a party not represented by a lawyer or conveyancer must satisfy the Registrar-General that they are authorised to enter into the transaction. Failure to do so can block registration. The party must also retain documentation, with a penalty of $10,000 or two years imprisonment for non-retention.
Division of land: contravention is void: Section 223LB makes it an offence to grant, sell, transfer, convey, mortgage or encumber an estate or interest in land that does not constitute the whole of an allotment (or a compliant part). Any transaction entered into in contravention is void, and no instrument purporting to give effect to such a transaction may be lodged for registration. This is a strict prohibition; even a mortgage of a part of an allotment (without prior division) may be void.
Caveat pitfalls: A caveat does not automatically extend indefinitely. The caveatee may apply to the Registrar-General to remove it after 21 days’ notice (section 191(e)). A caveator who fails to act may lose protection. Further, a caveator cannot lodge a further caveat relating to the same matter without court permission (section 191(k)). The liability for wrongful caveat is strict: if the caveat is “wrongfully and without reasonable cause,” compensation is payable.
Priority notice trap: A priority notice lasts only 60 days, extendable once for 30 days (section 154G). If the identified instruments are not lodged within that period, the notice ceases, and priority is lost. The person who lodged the notice may also be liable if they were not entitled to do so or unreasonably refused to withdraw it (section 154I).
Assurance Fund exclusions: The Fund does not cover losses from breach of trust or improper exercise of a power of sale (section 211). It also excludes misdescription of boundaries unless the person liable cannot be found or is insolvent (section 212). Contributory negligence reduces or defeats a claim (section 216).
Witnessing requirements: Under section 267, the witness must either know the signatory personally or be satisfied as to their identity. The witness must be aged 18 or over and not a party to the instrument. Improper witnessing is an offence (section 268). The witness’s full name, address, and telephone number must be legibly printed under the signature.
Implied covenants: The Act implies covenants in mortgages, leases, and transfers that parties may not expect. For example, a transferee of mortgaged land impliedly covenants to pay the mortgage debt and indemnify the transferor (section 97). A lessee impliedly covenants to repair (section 124(b)). These can only be excluded or modified by express declaration in or endorsed on the instrument (section 262).
No title by adverse possession except under Part 7A: Section 251 prohibits any acquisition of title by adverse possession to registered land. The only avenue is an application under Part 7A, which requires a formal process with notice, caveat, and satisfaction of the Registrar-General. This is a radical departure from the common law.
Crown lease consistency: A Crown lease registered under Part 9 has the benefit of section 95 indefeasibility, but only if any consent required under a designated Act was obtained. If the instrument is inconsistent with the designated Act, the Crown lease holder cannot rely on indefeasibility (section 95B). This is a significant qualification.
Vexatious priority notices: The Registrar-General may determine a person to be a vexatious lodger of priority notices (section 154A(12)). Subsequent notices by that person may be rejected. The person may seek review by SACAT (section 221(2)).
Execution by corporations: Section 270 provides that a corporation “may execute instruments under the provisions of this Act in any manner permitted by law.” This leaves scope for reliance on the general law of corporate execution, but practitioners should confirm compliance with the Corporations Act and the company’s constitution.