Common compliance review issues

Common compliance review issues and suggestions on how you can avoid requests for further information when you have a compliance review.

Practitioners generally comply with compliance review requirements, but often fail to provide all relevant supporting information in the first instance. The resulting follow-up activity and rework is time consuming for both LINZ and practitioners. This can easily be avoided if law firms and conveyancers take additional care to respond in full, with all relevant documentation, within the 10 day statutory timeframe.

 

Instrument TypeCodeCommon faultsSuggested prevention methods
General 
  • Authority and instruction (A&I) form or letter of authority authorises another firm to act – commonly seen in discharge and mortgage instruments
  • A private individual A&I form is used for a private corporate client
  • A&I form does not contain sufficient detail of the transaction being registered (e.g. record of title references of the land affected omitted, transaction details not recorded in full)
  • Consent to registration is omitted
  • Land transfer tax statements are provided. 

Ensure:

Powers of attorney 
  • Power of attorney or supporting documentation is omitted
  • Instrument signed by attorney not identified as high risk transaction
  • Ensure that powers of attorney/enduring powers of attorney (EPA) are retained with the A&I form as well as
    • Certificate of non-revocation/certificate of non-revocation and non-suspension
    • Certificate of witness to donor’s signature (for EPA)
    • Health practitioner’s certificate of mental incapacity (for EPA activated upon donor’s incapacity)
  • Ensure staff are familiar with procedures for high risk transactions as set out in the  Authority and Identity Requirements for E-Dealing Guideline 2018 – LINZG20775
Identification requirements 
  • Relying on expired photo identification
  • Relying on a form of photo identification that does not comply with LINZ requirements (e.g. 18+ card, student/work identity card, bank/credit card, Supergold card without photo)
  • A Declaration of Identity is not obtained for clients without sufficient photo identification
  • Further evidence not obtained connecting client to land if required
  • Transaction not identified as high risk or further evidence not obtained for high risk transactions
  • The name of the owner differs from the name of the client as recorded on the photo identification obtained
  • Ensure staff are familiar with the Authority and Identity Requirements for E-Dealing Guideline 2018 - LINZG20775 and Authority and Identity Requirements for E-Dealing Standard 2018 - LINZS 20018
  • Provide additional evidence/explanation where;
    • an Equally Effective Means approach is used to verify identity
    • the landowner does not have an acceptable proof of identity, that being a declaration of identity
    • the landowner is not previously known to the firm
    • the transaction is designated as a high risk transaction
    • the practitioner is relying on a witness outside their firm (delegated witness)
    • documentation connecting the client to the physical address has not been sought
  • Discrepancies in client names should be formally recorded by having the client give a statutory declaration. The declaration should account for the discrepancy and confirm that the client as named on the title and in the photo ID is one and the same person. Corroborating evidence (e.g. certificate of marriage or dissolution of marriage, name change certificate) should be attached as an exhibit. The declaration should be retained with the A&I form as supporting evidence
  • Note:
    Correction/change of names should be registered where appropriate (see Change of Name guidance material below)
Discharge of MortgageDM
  • Institutional chargeholders letter of authority is not sent to LINZ
  • Institutional chargeholders letter of authority, sent via email, is not accompanied by the lender's original email (e.g. ANZ instructions sent via SOLD system)
  • Signature page of the authority is omitted from documentation
  • A&I form for a private mortgagee is not obtained
  • The practitioner relies on delegated authority from the mortgagee's practitioner without proper evidence of authority from client
  • Retain a copy of the original email from the chargeholder (such as those sent via ANZ's SOLD system) together with the letter of authority,
  • Ensure that letters of authority for discharges are signed or accompanied by a covering email from the chargeholder as specified above, and a full copy of the authority is sent to LINZ.
  • Obtain A&I forms for private chargeholder’s in accordance with the PLS Guidelines
  • Ensure the letter of authority is from the mortgagee and authorises your firm to act
Partial Discharge of MortgagePDMSpecifically in regards to boundary adjustment subdivisions:
  • The instrument is set up incorrectly causing the mortgage to be discharged from all of the land in the head title
Withdrawal of CaveatWX
  • Authorities are not sent to LINZ
  • A&I form for private caveator is not obtained
  • A&I form authorises another firm to act for the caveator
  • Obtain A&I forms for private chargeholder’s in accordance with the PLS Guidelines
  • Ensure the authority authorises your firm to act
Transfer - Transferor requirementsT
  • A&I form is not sent to LINZ
  • Transfer of an interest/share - all registered owners are included in the transfer instrument as transferors but authority and instruction has been obtained from only the registered owner transferring his/her interest
  • The incorrect estate is transferred, e.g. a transfer of the fee simple is registered instead of a transfer of the leasehold interest
  • Relying on a Deed of Trust as authority to remove existing trustees and appoint new trustees on the Register
Ensure staff are aware of:
Transfer - Transferee requirements 
  • A&I form is not sent to LINZ
  • Transferee recorded is not a legal entity
  • The purpose (e.g. conservation purpose, for use in connection with a road) is entered as part of the transferee name
Ensure:
  • The transferee is a legal entity capable of holding land e.g. for corporate names such as a company or charitable trust that the name can be found on the Companies Office website

Only the name of the transferee is entered – additional text, e.g. ‘as Executor’, is inappropriate (see Transfer to executor is not permissable)

  • Any additional information (such as a purpose) should be recorded in the Additional Clauses, Conditions or Intent field
MortgageM
  • A&I form from the mortgagor is not sent to LINZ
  • Institutional chargeholder's letter of authority is not sent to LINZ
  • A&I form for private mortgagee is not obtained
  • Incorrectly rely on the term loan agreement as authority to act (without obtaining the requisite A&I form and/or mortgagee authority)
  • Practitioner relies on delegated instructions from the mortgagee's practitioner without proper evidence of authority from the client
Change/Correction of NameCN
  • Appropriate evidence to support the application is not sent to LINZ (e.g. certificate of incorporation, marriage certificate)
  • Corporate change of name is not accompanied by a statutory declaration
  • A change of name of a company is incorrectly registered when the company has amalgamated with another or others – a TSM following the amalgamation of companies should be registered

Ensure staff are familiar with Applications to Correct or Change Names in the Register Guideline 2018 - LINZG20780
See Changes of Name, Transmissions, Transfers - what should be used when

TransmissionTSM
  • A statutory declaration is not obtained, and/or evidence of death is not provided
Obtain a statutory declaration from the applicant in accordance with Certification of Electronic Instruments (Statutory Requirements and Retention of Evidence) Standard 2018 – LINZS20012
Variation of MortgageVM
  • Consent of the mortgagee/encumbrancee has not been obtained contrary to the certification being made that consent has been obtained
Obtain consent where appropriate

 

Last Updated: 21 November 2019