The announcement by Land Use Victoria that all land transactions will be conducted electronic by July 2019 is a timely reminder that practitioners need to implement a process to either destroy any paper titles or make them invalid in accordance with clause 6 of schedule 3 to the ARNECC Model Participation Rules.
*The ARNECC Model Participation Rules, Operating Requirements and corresponding Guidance Notes may have been updated since this article was published. Please refer to their most recent versions via the links provided at the bottom of this page.
There are a number of ways a title may be made invalid. Land Use Victoria has for many years perforated redundant paper titles with the words ‘destroyed cannot be used for any legal purpose’. The duplicate (once perforated) was handed back to the lodging party with the new title and a letter stating that:
This paper duplicate certificate of title has been superseded by a computer folio. This historical document has been returned to you to keep for your family or personal reasons. It cannot be used for a legal purpose.
The method some banks used to make a paper title invalid was by rubber stamping it with the words ‘Destroyed – cannot be used for any legal purpose’.
Redundant paper titles may also be destroyed by tearing them into numerous pieces or burning them. Before physically destroying a paper title it is advisable to seek the clients’ consent as they may want to retain the hard copy even though it has no legal purpose.
Best practice to avoid a dispute would be to include a special condition in the contract of sale specifying what is to happen to the paper title if the conveyance is being conducted electronically now.
