The Conveyancing Voice Issue 17 by AICSA

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September 2016

Contents •

Cyber Crime – Fact Rather than Fiction

•

Frequently Asked Questions

•

Foreign Resident Capital Gains Withholding: Clearance Certificate

• Are You Opening The Correct LTO Form? • AICSA Conference 2016 •

Don’t be lured into binary options scams

•

Calender Click here to find out how you could win a roof top climb at Adelaide Oval

WARNING: Fraudsters target weakest links in VOI

The Canberra Times reported recently that a registered proprietor whose identity was stolen...

WARNING: Fraudsters target weakest links in VOI The Canberra Times reported recently that a registered proprietor whose identity was stolen and house was sold by overseas scammers has been forced to sue the government for compensation. If this had happened in SA where the VOI Standard applies and the conveyancer could not provide evidence of safe harbour VOI, they would be exposed to the fraud risk. We’ve identified 5 recurring risk areas for you to avoid, ensuring consistent smooth sailing to VOI safe harbour. 1. No firm-wide policy A written policy on your firm’s approach should be a central pillar of your VOI compliance strategy. This policy will provide guidance and direction to all staff on how your firm and Identity Agents such as ZipID appointed by your firm will identify your clients for land dealings. The existence and consistent application of a VOI policy will be a relevant consideration if any fraud claims arise. 2. Client pressures to make exceptions Bending on your VOI policy when the client shows urgency, raises unavailability as an excuse, or otherwise applies pressure may seem to be helping your client at the time. However, the ramifications to your firm if a fraud claim arises can be extremely serious. 3. Inadequate or insecure record retention It’s critical to satisfy the 7 year record keeping obligations outlined under the VOI Rules should your firm’s steps taken to identify a client ever be challenged or audited. Storing paper copies of ID documents, single server storage or relying on unsecured email may leave you without evidence of VOI or expose your client’s personal information to a privacy breach. 5. Failing to verify the client’s right to deal It remains your responsibility to check the person whose identity has been verified also has the requisite right to deal (e.g. under Power of Attorney, Company Directors or Trustees). For instance, checks should be made by you to ensure that the transaction is permitted under a Power of Attorney by sighting the grant document. Similarly, when verifying Company Directors, it’s prudent to conduct ASIC checks to confirm they are recorded as a current Director. >>>>>>> When the VOI Standard is applied by you or your appointed Identity Agent (e.g. ZipID), you are deemed to be in the “safe harbour”. This status protects your firm against any challenges or claims unless you were on notice of any special individual circumstances giving rise to the need to make further enquiries. About Us ZipID (part of the Veda Group) makes safe harbour VOI consistent and convenient for over 800 lawyers and conveyancers nationally via its market leading VOI Mobile App and its ‘come-to-you’ Identity Agent (operating in 5 states). ZipID is a VOI partner to PEXA.

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What if The Lift & Replace Did Not Occur When The Vendor Acquired The Land? Conveyancers sometimes are uncertain about various aspects of restrictive covenants including the application of the ‘lift and replace’ process. However, if we think about a particular situation in the context of the basis of restrictive covenants, the answer usually becomes clear. The basics: Encumbrances registering restrictive covenants include covenants that – • are personal (ie bind the parties but do not involve an interest in the land), and • Run with the land (ie create an interest in the land, thereby binding whomever is the registered proprietor). A personal covenant only binds the parties to the covenant: when the land is transferred, and the obligation remains with the vendor (as a party to the covenant). A purchaser may only bound by a personal covenant if he/ she agrees to be bound by it. If successive owners are intended to be bound by the personal covenants, the encumbrance includes a personal covenant to release the owner of the land from the covenants if his/her purchaser enters into an encumbrance in the same terms. This is known as a ‘lift and replace’ covenant because the existing encumbrance is discharged (ie lifted), and a new one (to which the purchaser is a party) is registered upon transfer to the purchaser (ie replaced). However, personal covenants are not an interest in land and consequently cannot be registered on the certificate of title by themselves. Hence, they are included in an instrument that creates an interest in the land and is consequently able to be registered. The personal covenants are simply tacked on. Indeed, mortgages typically include numerous personal covenants which are not be registrable by themselves. Typically, a registered restrictive covenant includes a rent charge which creates a liability charged against the land to pay rent (usually a nominal amount payable if demanded). However, there may be various other covenants that affix to the land. Often they involve a building scheme in which the covenants are designed to ensure and preserve the value of the other land in the development. For example, Delfin’s Golden Grove residential encumbrances include covenants on building materials, set-back of buildings, building commencement and a prohibition against division of the land. Beware; covenants supporting a building scheme do not run with the land unless they meet specific criteria – see City of Mitcham v Clothier 1994 SA Supreme Court (click here) and the cases cited in it. (Discussion of building schemes is beyond the scope of this article. It is a highly technical area and legal advice is required if any doubt arises!) Covenants that run with the land continue to apply until discharged – ie they still apply to the land where the ‘lift and replace’ does not occur. The ‘lift and replace’ is designed to ensure that successive owners are bound by the personal covenants. Of course, there may be some doubt about whether a particular covenant is personal or runs with the land. If so and your client needs it clarified, legal advice is required.

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Resolving issues Against the above background, we can resolve most issues. However, I will mention two. Where the ‘lift and replace’ process did not occur when the current vendor acquired the land, the land continues to be encumbered by the covenants that run with the land but the current vendor, not being a party to the personal covenants in the encumbrance, is not bound by those personal covenants. In particular, the ‘lift and replace’ covenant may only be enforced between the parties to that encumbrance: it does not apply to the current vendor who should not endeavour to get the purchaser to enter into an encumbrance in the same terms. Simply put, the covenants that run with the land continue to apply in the same way as a right of way and the personal covenants are not relevant to the current transaction. A vendor who is a party to the encumbrance including the ‘lift and replace’ covenant must ensure that a condition is included in the contract of sale requiring the purchaser to enter into an encumbrance in the same terms. If the vendor has failed to do so, depending on the circumstances the purchaser is likely to be able to refuse to enter into a new encumbrance. Notice of the existence of the encumbrance in a Section 7 Statement will not in itself be sufficient because the covenants that run with the land will continue in any event until discharged. A postcontract agreement to enter into an encumbrance in the same terms is a variation to that contract and depending on the circumstances the purchaser is entitled to request the vendor to bear the cost of the variation and the new encumbrance. If agreement cannot be reached quickly on this issue, legal advice should be sought. Hope this helps! Geoffrey Adam EC & Projects

Are You Opening The Correct LTO Form? It’s easy to do. You want an LTO Form and access it using the Favourites button that you have used for years or you do a Google/Safari/whatever search and click on LTO Forms Online. That may deliver the LTO Form you want– but only if you want the old format forms and their associated Guidance Notes. If you want new format forms and associated Guidance Notes, you need to go somewhere else. It’s easy to make the mistake. I have done it myself with a Google search and clicking on LTO Forms Online when I wanted to access a form in the new format. For Old format forms – referred to as LTO Forms Online on LSG website – (click here). For New format forms –referred to as LTO forms relating to the Real Property (Electronic Conveyancing) Amendment Act 2016) on the LSG website but also used for paper lodgements – click here. Geoffrey Adam EC & Projects

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Cyber Crime – Fact Rather than Fiction Many Hollywood movies have focused on plots involving cyber-crime and identity theft. Today the threat is very real and doesn’t always come with a happy ending. Billions of people around the world have become victims of stolen data and fraud. Organised crime has gone high-tech; some holding companies’ records to ransom. Other criminals steal passwords and identities and hack into financial accounts. Some lure their victims by posing as legitimate businesses through phishing sites or various scamming emails. The financial and personal loss worldwide is astronomical. For Australia specifically in 2016, “$2.64 million is the average total cost of a data breach” for a company, with $142 being “the average cost per lost or stolen record.” The good news is that there are very effective, actionable measures you can take now to be proactive about your security. Confidential data and privacy precautions go together like bacon and eggs. It is always a good time to focus on renewing your company’s efforts to protect itself from cyber-crime. Each industry faces their own unique challenges when it comes to privacy, including protection of private client data, credit card details, and employee contracts, etc. Technology is growing at such a rapid rate that it seems laws and privacy standards sometimes cannot keep pace with each of the many dynamic and evolving complexities in the digital space. Nations focus on various strategies to combat these problems globally. In Australia, the government has now extended the Verification of Identity (VOI) standards to the property industry. The VOI provides a framework to authenticate the identity of people or organisations involved in a conveyancing transaction, thereby reducing the risk of land title fraud and other improper land dealings. For instance, don’t hold unsecured paper copies or scanned images in-house: this exposes your company to the risk of hefty fines through accidental loss or theft. Instead, create a VOI episode in the Report Vault and upload images or information directly to the TIMG secure website. VOI’s can be easily retrieved online via name, subject matter, file number, and even date. Once found, upload, comply, and relax! Cyber-crime is a reality. All businesses are liable under the Privacy Act to ensure data is secured and disposed of safely. In the event that data privacy has been compromised by another party, businesses may still be held accountable. Offsite secure storage of documents, data tapes, or media is still the most efficient method to protect against accidental loss or theft of sensitive information. Having reliable back-ups and disaster recovery systems is paramount.

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Ultimately, investing in professional privacy and security measures buys you a peace of mind, so you can work with that free feeling of reassurance, knowing that there is a cushion of security around privacy. Talk to Chris King, TIMG Business Development Manager about how TIMG’s VOI App can help you overcome your document management issues on 0421 396 701 or visit www.timg.com

Foreign Resident Capital Gains Withholding: Clearance Certificate - Period covering the time the transaction is entered to A number of legal practitioners have contacted the ATO querying the validity of the clearance certificate with respect to section 14-220 of Schedule 1 to the TAA 1953, and the ATO approach. The ATO responds as follows: Pursuant to subsection 14-210 of Schedule 1 to the TAA 1953, a purchaser may technically rely on a clearance certificate issued under section 14-220 where (i) the period specified in the clearance certificate covers ‘the time the transaction is entered into’, and (ii) the certificate is provided to the purchaser before an amount is paid to the Commissioner under section 14-200 (e.g. before settlement). The phrase ‘the time the transaction is entered into’ can be read as ‘the date the contract is exchanged’ and it is not necessary that the time period covered by the clearance certificate covers the completion date. It is also important to note that clearance certificates are not transaction specific and can be used by an applicant for any number of relevant transactions entered into during the 12 month period. In addition to technically relying on clearance certificates in the circumstances set out above, the ATO has developed an administrative approach to ensure that vendors can apply for clearance certificates after the date the transaction has been entered into. Under this approach a purchaser may rely on a clearance certificate where (i) the date the certificate is provided to the purchaser falls within the 12 month period specified in the clearance certificate, and (ii) the clearance certificate was provided to the purchaser prior to the date the purchaser became the owner of the asset (e.g. settlement). This administrative approach was developed following consultation with stakeholders where the ATO was advised of difficulties that may be faced by vendors selling at auction who do not know before exchange that their transaction would be subject to the withholding requirements (for example, because the ultimate sale price equals or exceeds $2 million). Our administrative approach addresses this concern by allowing a vendor to apply for a clearance certificate at any stage up to settlement. Our approach also recognises that the measure is newly enacted and that vendors may not be aware of the legal requirement at contract date”.

Published with permission from the La Society of South Australia InBrief Issue 33 - 8 September 2016

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Welcome Reception Sponsor:

Welcome Reception Venue: Audi Room Adelaide Oval Date: Friday 21 2016 Join us Friday night at the Audi Room for cocktails & immerse yourself in the atmosphere of Adelaide Oval. Hosted by Grand Slam Coach Roger Rasheed Purchase your ticket for the welcome recepion to be able to go into the chance to win a roof climb at Adelaide Oval.

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BOOK NOW For Early Bird– AICSA State Conference

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Tomorrow’s Firm: let’s be creative, let’s diverge and differentiate Venue Adelaide Oval Date Friday 21 – Saturday 22 October 2016 FRIDAY An afternoon of Pre-Conference workshops looking at innovating your business… Followed by a Welcome Function at the magnificent Adelaide Oval with guest Roger Rasheed talking about his adventures in the tennis world. Attendees have the chance to win a Rooftop climb over the glorious Adelaide Oval Proudly brought to you by Vero & Marsh.

SATURDAY Business Leadership – Conveyancing Fundamentals – Conveyancing Diversities. Book now for our early bird prices

For Full Program details click here. Tel: 08 8359 2090 Email: project@aicsa.com.au W: aicsaconference.com.au

Conference Major Sponsor:

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Data breach notification laws a step closer to reality - is your business cyber-ready? (McCullough Robertson) The High Court of Australia has now had the final say in the ongoing saga of the restaurant tenant who leased premises at Crown

Australia six weeks from a housing collapse, US report warns (News.com) AUSTRALIA has roughly “six weeks” to prevent a housing market collapse caused by the banks’ crackdown on foreign investor lending....

6 Ways to Protect Your Business Reputation With Social Media (Social Media Examiner) There are easy ways to avoid potential problems that could negatively affect your business and reputation online.....

Frequently Asked Questions on RPA Reforms & EC- Updated We h ave re ce nt l y a dded n ew FAQ ’s to the site. You c an access t hem via t his link ;

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NEW PLANNING LAWS SEMINAR AICSA is pleased to invite you to attend the New Planning Bill Seminar DATE: Tuesday 20 September 2016

DETAILS Come along and hear about the new Planning, Development & Infrastructure Act 2016. Find out what it means for you

Presented by: James Levinson & Tom Game

TIME: 4:00pm - 6:00pm LOCATION: AICSA INVESTMENT: Members: $99.00 (Incl. GST)

Principal Partner for Professional Development Series:

Non-Members: $165.00 (Incl. GST)

Professional Development & Event Cancellation, Change & Refund Policy

Diary Dates 6 September - Alignment Part D 13 September - Workshop - AM & PM

PLEASE NOTE: No refund will be given unless more than 7 days notice is received by AICSA in writing. Cancellation may invalidate discount.

Conversions Work shop 21 October - AICSA STATE CONFERENCE TICKETS AVAILABLE BOOK NOW!

Changing between events (including from seminar to recording) after registration and less than 48 hours prior to the event will incur an administration fee of $25.00 (+ GST). The AICSA reserves the right to cancel sessions that do not reach the minimum number of participants required (full refunds given).

Settlement Dates Click here for settlement room dates.

Member Event Photos Click on the link to view photos from our recent events Click Here

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Real Property Act Alignment Series - PART A & B:

To book your event click here to visit our website to register

SEPTEMBER DATE

TIME

LOCATION

SESSION NAME Real Property Act Alignment Series - PART A Sept 27th

2:00pm – 5:00pm

AICSA Training Room

Real Property Act Alignment Series - PART B Sept 28th

2:00pm – 5:00pm

AICSA Training Room

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AICSA Professional Development Calendar 2016 (September-November)

Principal Partner for Professional Development Series:

SEPTEMBER DATE

SESSION NAME

CPC

TIME

LOCATION

Workshop - Conversions - SPACES OPEN

9:30am – 12:30pm

AICSA

Workshop - Conversions - SPACES OPEN

1:30pm – 4:30pm

AICSA

Seminar New Planning Bill

4:00pm - 6:00pm

AICSA

CPC

TIME

LOCATION

OCTOBER DATE

SESSION NAME

1:00pm - 5:00pm (Business sessions)

AICSA CONFERENCE

TBA

5:00pm - 6:15pm (Welcome cocktail reception)

Adelaide Oval

6:30pm - 8:00pm (Popeye Cruise on the River Torrens + Olive Oyl Paddleboat Challenge)

AICSA CONFERENCE

TBC

8:00am - 5:00pm

Adelaide Oval

4:30pm – 6:00pm

AICSA

NOVEMBER 15

Retirement Villages

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Australian Institute of Conveyancers South Australian Division Incorporated

CONTACT

AICSA STAFF Rebecca Hayes Chief Executive Officer e: ceo@aicsa.com.au

6th Floor, 68 Grenfell Street Adelaide SA 5000 GPO Box 2402 Adelaide SA 5001

Geoffrey Adam E-Conveyancing & Legislative Projects Officer e: ecl@aicsa.com.au

Tel: 08 8359 2090

Glenys Jackson Business Manager e: business@aicsa.com.au

Fax: 08 8232 8618 DX 58223 L.T.O. Email: assist@aicsa.com.au Web: www.aicsa.com.au

Matthew Netherwood Membership & Sponsorship Manager e: matthew.netherwood@aicsa.com.au Renzo Rigano Marketing and Communications Coordinator e: communications@aicsa.com.au Karen Holt Membership Coordinator e: membership@aicsa.com.au Megan Whitford Professional Development & Events Coordinator e: project@aicsa.com.au Janette Wale Finance & Administration Officer e: assist@aicsa.com.au

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