Banking & Finance Update - January 2006.
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Problems with new measures to counter identity fraud in Queensland Guarantees: another one bites the dust! PROBLEMS WITH NEW MEASURES TO COUNTER IDENTITY FRAUD IN QUEENSLAND Gadens Lawyers has identified a number of problems with the proposed amendments to the Land Title Act (Qld) 1994. A fundamental problem is the prescribed process of checking identification needs to be clarified. As a $1,500 penalty applies for each non-compliance, clarity is essential. The amendments are intended to address the rising incidence of identity fraud in relation to mortgages. The amendments are expected to commence in February 2006. There may be changes prior to commencement. Key issue Do lenders need to repeat identification procedures when the mortgage is signed? If so, will it be necessary for mortgagors to attend the offices of the lender or its lawyers? Background The Torrens system has a concept of indefeasibility, meaning that the interest of a person who becomes registered is protected by statute. If an owner or mortgagee suffers loss as a result of fraud or defect in the register, the State will pay compensation (subject to conditions). Indefeasibility applies to mortgagees as well as owners. A mortgagee’s interest is indefeasible even if the mortgage is a forgery and the “real mortgagor” did not sign the mortgage. Where a title becomes subject to a fraudulent mortgage, normally the owner makes a claim for compensation equal to the debt owing under the mortgage and then pays out the mortgagee. In several cases in NSW, the NSW Registrar General has taken the position that even if the mortgage is indefeasible, there is no money owing under it, and the real owner can demand a discharge. This is because there is no money… |