What do the PLS Guidelines advise?
Guideline Y (para 6.90) of the PLS Guidelines puts an obligation on lawyers to co-operate with each other to perfect a transaction.
‘Lawyers are required to co-operate with the lawyers for the other parties to a transaction to ensure that registration is completed as intended by the parties.’
If after settlement and possession an outage occurs, certified and signed instruments may no longer be available and all parties will need to work together to certify, sign and release the dealing again.
How to settle if funds are yet to be paid
In the event that Landonline is unavailable on settlement day and funds have not yet passed, it would be prudent not to settle. The contractual rationale is that the vendor would be unable to access 'workspace' to 'release' the instruments. Accordingly, the requirements of the ADLS/REINZ Agreement for Sale and Purchase could not be met; namely the ability to pass clear title to the purchaser.
If settlement monies were passed, the purchaser's lawyer could be considered negligent if he or she knew prior to passing funds that, as a result of the outage, the vendor could not give clear title. If mortgage funds were involved, the lawyer could be in breach of the mortgagee's instructions and would almost certainly be in breach of the Solicitor's Certificate.
However, the circumstances of the outage are relevant in determining the appropriate course of action. For example, if the outage is temporary, with a time estimate that would allow settlement to occur on the same day, then waiting until it is accessible would be prudent.
It is relevant to consider that LINZ uses and accesses the same database and underlying software internally as all external users. Accordingly, if there is a major outage of Landonline as opposed to merely the external user portal into Landonline, then any paper dealing submitted would also be prevented from registration until the outage is rectified.
The next relevant issue to consider is to the appropriateness of allowing a purchaser into possession in the above scenario. Effectively, the contractual position would be a 'no fault' inability to settle and therefore the parties should not be penalised.
If the parties are agreeable, the option of placing funds on an interest bearing account for the benefit of the vendor could be made, with possession then being given to the purchaser. It would not be unreasonable for the vendor to request an undertaking from the purchaser to settle in full without deduction and also confirmation that insurance risk passes upon taking possession.
Regrettably, this option will not extend to other parties further down the chain if there are ongoing transactions.
There are a number of circumstances that can arise on settlement day that preclude settlement from being effected and the arrangements made between respective solicitors to accommodate their clients is dealt with on a case by case basis. It is not possible to identify all the scenarios and options.
How to settle if funds have been paid
Where settlement funds have passed and the vendor has not yet released the transfer and discharge of mortgage (if any), the PLS Guidelines indicate that the instruments should be 'released' on the same day as settlement occurs.
Please note that Landonline is available on most days of the year, however lodgement of title dealings can only be done between the hours of 7am and 7pm Monday-Friday. See the Landonline hours of operation.
If the form and content of the undertaking given by the vendor to the purchaser is as indicated in para 5.11c of the PLS Guidelines, the purchaser has the protection of both contractual obligations and the undertaking.
The purchaser also has protection by the Departmental Dealing freezing the title pending confirmation from the lawyers involved that it is appropriate for registration to proceed. The vendor's lawyer has the obligation pursuant to the undertaking to release the documents as soon as practicable following settlement. If it is clear that the outage is affecting the whole Landonline system, including internal LINZ processing as well as external access, then the parties should wait until Landonline is again available. If, as part of the reinstatement process of Landonline, the internal processing is available to electronic registration, the parties should consider perfecting the transaction on the basis of paper. Priority for electronic registration would be given to those dealings that were in the process of finalisation and again that should address the purchaser's concerns
How to prepare in case Landonline goes down
There are three fundamental practices that can help mitigate the impact of the unavailability of Landonline. These are:
- Obtain guaranteed searches prior to settlement day
- Certify and sign the e-dealing prior to settlement day, and
- Settling without Landonline.
A guaranteed search may be obtained under section 60 Land Transfer Act 2017 at any time and it is recommended that this occur before the day of settlement. Compensation may be sought pursuant to section 60(4) in relation to any search made during the “first period” i.e. 5 working days commencing on the fourth working day preceding the date on which the transaction is settled.
Settlement - Certify and Sign in advance
It is recommended practitioners certify and sign any instruments in advance of settlement day.
This practice is secure, in that registration can only be effected once all in an e-dealing have been released.
Settling without Landonline
Settlement can still occur between the parties using an undertaking regardless of access to Landonline – see guidelines 5.11(v) and 5.23(d)(vi) of the PLS Guidelines.
All documents can then be released as soon as practicable when access to Landonline is restored.
Improvements to Landonline
LINZ works to continuously improve the internal factors that impact the robustness and performance of Landonline.
- Capacity upgrades, to monitor various areas of the system and schedule upgrades accordingly. To ensure suitable capacity ahead of additional customer numbers using Landonline, LINZ monitors key areas such as the Citrix servers, the processing units and our databases.
- Scheduled releases, which include major technology updates to the Landonline application and database. An example is the change of the image storage system from FileNet to Centera.
- Reactive improvements, where we improve things quickly, particularly if a fault has occurred. These improvements may be carried out prior to an upgrade or release.
LINZ also monitors the performance of its vendors to ensure they are managing our systems effectively and efficiently on our behalf.
Unfortunately, there are also other factors that impact our customer's experience of Landonline, which LINZ does not have control over. These include the set up and performance of a customer's internet service provider (ISP) connection, the performance of the ISP itself, and the set up and maintenance of customers' computer systems.
It is important that firms read Landonline technical support information to ensure their IT structure is optimal, especially operating systems and internet connections.