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Your home may not be your own, says expert

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  • Your home may not be your own, says expert

    Your home may not be your own, says expert

    By Anne Gibson
    4:00 AM Wednesday Jun 16, 2010
    Land Information New Zealand says it has robust security measures and systems in place. Photo / Janna Dixon

    Safe as houses, right?
    Not according to a legal expert who holds fears about the system which says who owns a property.
    Rod Thomas, a barrister and senior lecturer at the Faculty of Business and Law at Auckland University of Technology, said the property registration system was open to abuse.
    Land transfer is prone to fraud or error and while you might own your house and think your name is registered on the title, you could be wrong, he says.
    Title registration is at the mercy of dishonest or incompetent conveyancers, he says, criticising the electronic system operated by the Government's Land Information New Zealand.
    Either through fraud or a lawyer's mistake, someone else could be the legal owner of your property, Thomas said.
    Even if your name is on the title today and you have a copy of the title to prove that, the property could easily be transferred into someone else's name without your authority or knowledge, Thomas claims.
    "We've heard of leaky-home syndrome, well this is leaky-title syndrome," Thomas said.
    A lawyer can fill out a transfer form, saying they are representing the homeowner and transfer the title, he says.
    The system is ripe for exploitation, he says. He recommends it be changed so homeowners each have a unique code which has to be put into the automated title system to certify the change of ownership is authorised by the home owner.
    This code would be known only to the homeowner and a legal adviser. Now, the system allows any lawyer with access to the system to transfer land belonging to anyone without anyone else knowing, Thomas says. The older manual system which has been abolished had more checks and balances, he said.
    Problems arose after the Land Transfer Amendment Act was passed eight years ago, he said. Titles are now transferred electronically by any lawyer having access to the computerised system, but no safeguards or checks and balances are in place to ensure mistakes are avoided, he said.
    The way the system operates, unless the new owner is found to have knowledge of the fraud, the registration cannot be reversed, and homeowners have to try for compensation from the Government for the loss of a home.
    Thomas cited a case recently where a lawyer was penalised by the Law Society disciplinary body for removing a caveat placed on a title without the consent of the person who put the caveat on. The lawyer then transferred the land to his client.
    Not everyone in the profession shares the fears.
    New Zealand Law Society communications manager Geoff Adlam defended the system. "I would be surprised if it was insecure. The Torrens system is a well-established one," Adlam said.
    However he found two possible complaints on the issue.
    "The first was a decision under the old Law Practitioners Act 1982. However, no orders were made for it to be published and it cannot therefore be provided. The second is a case where the Standards Committee has decided that details can be published, but not names. To complicate things, the appeal period for this decision has not yet expired, meaning that the details cannot be provided until that happens at the end of this month," he said.
    He provided a ruling from the High Court at Auckland last year over the removal of caveats on a title to a property.
    Robbie Muir, Registrar-General of Land, said although he was aware of concerns, he was satisfied with the way titles are registered and transferred.
    "We have a very secure and efficient land registration system. Landowners' titles are guaranteed by the Crown under the Land Transfer Act 1952. Land Information New Zealand has robust security measures and systems in place to support this. We register in the region of 750,000 land title transactions per year. Cases of fraud happen very rarely. The statutory guarantee of title protects landowners' interests in these circumstances," Muir said.
    But Thomas said an article in the NZ Law Journal's April issue gave weight to his fears.
    Benito Arrunada, a Spanish academic, and international expert on automated title registration systems, wrote about the New Zealand leaky- title syndrome, citing the system of property transfer and questioning aspects of it.
    The Law Commission is reviewing the workings of the Land Transfer Act, but it is not thought they will be looking at shortcomings of the automated title system.
    Thomas said the situation was similar to the leaky home fiasco, as it would take some years for frauds to be uncovered. By then, the consequences for homeowners could be catastrophic and the losses significant.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    why would it take so long to discover ?
    Doesn't the council get advised of ownership changes, cos they seem to send out rates to the new owner within a couple of months.
    This would alert the "new owner " pretty quickly, but then i suppose it could be a long time before the real owner realised they werent getting rates notices.

    Similarly, all the "welcome to your new home" junk mail that arrives from building & rennovation companies etc & everyone else that seems to pick up on ownership changes, should alert the occupant.
    Maybe the land transfer office should just use whatever system these guys (spammers) are using to send out a confirmation of ownership change.
    Last edited by Keithw; 16-06-2010, 08:42 PM.


    • #3
      i bought a property recently and promptly got a rates notice

      while trying to pay the rates online i realised that i had no record of any rates charges from council for my 1st property, bought a year before

      i called the council rates section and they confirmed that i was not listed as the "rate payer" and that the last set of rates had been paid by the previous owner. they advised me to call the lawyer who had done the paperwork for me

      my lawyer said that it was the vendor's lawyer's job to inform council of to change the rates address to the new owner and they would chase them up

      vendor's lawyer replied that they had told council at time of transfer but sometimes council didn't do everything they should, so they would tell them again

      i then asked my lawyer to send me the title with my name on it

      which they have finally done

      but still no rates notice from council.....

      so imho the current system is as leaky as hell and a bad lawyer could cause a lot of grief by simply photoshopping title jpegs

      guess i should call council again and start taking names and asking to speak to bosses


      before calling i thought i would try to use the acc website again and after fighting my way through the igovt logon i was able to check that the paperwork has now been cleaned up and i am listed as the "ratepayer" for both props now!

      automated systems, when set up correctly, work well

      but the human data entry is still the weak link

      now i guess i can look forward to the rates demands(
      Last edited by eri; 16-06-2010, 11:45 PM.
      have you defeated them?
      your demons


      • #4
        Seems like a bit of a nothing complaint to me. Under the paper system the lawyer could easily forge the owner's signature and sign the witness section him or herself. LINZ didn't check signatures so the forgery wouldn't even need to be good.

        Really all he is complaining about is the way the torrens system deals with fraud, which he hasn't suggested an alternative too. Unsurprising given there aren't any better alternatives.


        • #5
          Originally posted by Keithw View Post
          This would alert the "new owner " pretty quickly,
          The 'new owner' then goes to the bank and gets finance, then is never seen again.

          Some of the former Hanover investors should take 'ownership' of Hotchins properties.


          • #6
            Originally posted by Xav View Post
            Really all he is complaining about is the way the
            torrens system deals with fraud, which he hasn't
            suggested an alternative too. Unsurprising given
            there aren't any better alternatives.
            The way I read it also implies that the redress
            process is cumbersome-to-non-existent. If
            fraud or error occurs, is it not better to have
            some remedial process readily available at no
            cost to the defrauded?

            How can there not be better remedial measures?
            Or is it more like that no one has really tried?
            We have seen lots of statutory knee-jerk efforts
            at such things: the RE industry being one very
            contemporary example.
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            • #7
              You will either get your house back (if you can show the person who now owns it is complicit in the fraud) or you will get compensation from the government. There is no middle ground whereby you lose your home and yet may not get compensation. I can certainly see how you would get that impression (eg. "have to try for compensation from the Government") but the way it is worded is misleading (funny that).

              I have no idea of the efficiency of the system because as far as I am aware it has to be used very infrequently. The simple fact of the matter is that due to the torrens system you are a heck of a lot better off losing a property to fraud than you are losing anything else of similiar value.