Verification of Identity in property transactions

Verification of Identity (VOI) is a process used to confirm the identity of a person. The VOI process is essential in land and property dealings as it helps to reduce identity theft and land title fraud. Verification of Identity practices include confirming a person’s capacity to act as agent for a company or as an attorney.

Land Victoria is the central body responsible for the administration of land and property information in Victoria and houses some 3.4 million electronic land title documents.

The Transfer of Land Act 1958 (Vic) provides for the Registrar to set out VOI requirements with respect to paper transactions. All documents signed and lodged with Land Victoria are subject to VOI processes. This means that reasonable steps must be taken by mortgagees, conveyancers or lawyers to verify the identity of a person or corporation claiming the right to deal with land.

The practice of carrying out VOI checks has always been common place within the property industry, however in November 2015 these requirements were formalised.

E-conveyancing

The introduction of electronic conveyancing enables property transactions to take place through an electronic platform. Traditional methods of property settlement require lawyers and other parties to meet personally to exchange documents. Electronic conveyancing will revolutionise the conveyancing process by providing for the electronic signing, verification and registration of documents and payment of settlement funds through a virtual settlement room. As with any new system however the opportunity for fraud, particularly in a technology-based environment cannot be ignored.

Following effective VOI measures plays an integral role in both traditional and electronic conveyancing frameworks.

Why does my lawyer need me to prove who I am?

The VOI regulations for lodging paper transactions in Victoria now reflect the guidelines produced by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) for electronic conveyancing. The Registrar’s requirements for VOI may be met by lawyers or conveyancers applying the VOI Standard produced by the ARNECC.

If you are involved in a property transaction such as the sale or purchase of land or the borrowing of money secured by a mortgage your lawyer or lender will ask for certain documents to prove your identity. Your lawyer must be satisfied that he / she is dealing with the person claiming to be authorised to enter transactions regarding the property.

Lawyers acting for the party on the other side of a property transaction have reciprocal obligations to confirm the identity of their clients. This creates, as far as possible, an ‘even playing field’ in the conveyancing setting. By ensuring all sides to a transaction undertake diligent VOI measures the parties are better protected against property fraud.

How does it work?

During the VOI process you will be asked to produce original documents, in most instances, at a face-to-face meeting with your lawyer to confirm your identity using a photo identification document. As with most proof of identity requirements there are various categories and combinations of documents which may be used to prove your identity. These include an Australian or foreign passport, drivers licence or photo card, birth or citizenship certificate, Medicare, Centrelink or Department of Veterans’ Affairs card. For those persons who are not Australian citizens or residents other types of documents may be used. Higher category documents (i.e. Australian passport, driver’s licence and full birth certificate) should be satisfied in the first instance. However, if higher category identity documents are not available, Identity Declarations may be used in conjunction with certain other documents. There are also processes that can be used to identify clients residing overseas, such as agents that carry out VOI procedures on behalf of lawyers. If you are one of two or more parties with an interest or proposed interest in property, then the VOI process applies to all owners or proposed owners. If dealing with property through a company then your lawyer should conduct further checks to confirm registration of the company and the agents (i.e. directors) authorised to sign on its behalf. Similarly, persons signing under a Power of Attorney should produce the document signed by the principal appointing the attorney. The VOI information must be retained by your lawyer for seven years and may be relied on for transactions for two years following the VOI process. Your lawyer will let you know the documents required and guide you through the VOI process.

Conclusion

Identity theft leading to the registration of fraudulent documents and dealings over land is not a new phenomenon and can have devastating financial and other affects. Verification of Identity is an important safeguard against fraud and is an essential risk management tool, particularly in both the electronic and paper conveyancing environment.

By imposing standard and reciprocal requirements for all lawyers to identify their clients in a property transaction, VOI is likely to offer better protection and safeguard you against a possible fraud in connection with your property transaction.

For more information about VOI, talk to one of our experienced property lawyers. If you or someone you know wants more information or needs help or advice, please contact us on (03) 9600 0162 or email info@lordlaw.com.au.