Retention of Documents, Post Registration under Landonline

Background
Issues
Transfer
Mortgages
Discharges of mortgage
Leases (Cross Lease and Registered Leasehold interests)
Variations of instruments
Any other documents

Background
With the introduction of Landonline, certain records that would have historically been retained by LINZ as part of the Register are now returned to the lodging solicitor. The basis of such return is that the computer register is the definitive and authoritative record. Following capture and electronic entry in the Register the paper document has no legal status as regards LINZ. This was initially introduced by the Land Transfer Act (refer to section 19 of the Land Transfer (Automation) Amendment Act 1998) which has since been repealed by s 64 (3) of the Land Transfer (Computer and Electronic Lodgement) Amendment Act 2002.

The current provision that removes the requirement for the Registrar-General of Land to note duplicate instruments (and therefore to require production) is section 16(7) of the Land Transfer (Computer and Electronic Lodgement) Amendment Act 2002. This is reinforced by regulation 17(3)(e) of the 2002 Regulations.

The legislation does not actually say that certified copies should be requested in lieu of provisional copies, but that is certainly the practical effect. If an authoritative version of the document is required, a certified copy issued pursuant to section 35 of the 2002 Act would suffice.

"35 Computer printout, etc, admissible in evidence

If an instrument is recorded or registered in any medium other than paper, a document that records the contents of the instrument is admissible in evidence if the document-
(a) is generated by or produced from the computer system; and
(b) is in a readily understandable form; and
(c) is certified by or on behalf of the Registrar as a true representation of the instrument."

The search fee for any instrument is currently $2 irrespective of the number of pages. That search would suffice for most circumstances. The cost for a certified copy is $23. That would normally only be required in a court or arbitral situation although there is a possibility that some lenders may require copies.

As the production requirements have been removed, a provisional copy issued under section 88 of the Land Transfer Act would have no greater legal status.

It would simply cost more and take longer to obtain.

Accordingly, mortgagees should not require duplicate instruments, in particular, leases. Similarly, solicitors should not demand those from mortgagees on repayment of the mortgage.

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Issues
There are several common documents routinely registered at LINZ that will require to be treated in a different way once registration has been completed under Landonline. These documents are:

• Transfers
• Mortgages
• Discharges of Mortgages
• Leases
• Variations of Mortgages
• Variations of Leases

The purpose of this paper is to assist practitioners in the storage and retention of these documents post-registration under the new Landonline environment. All the above documentation will have been lodged at LINZ for registration. The documents will be scanned, the details registered and the scanned documents will be returned to the lodging firm once registration has been completed. For documents that were formerly registered in duplicate, e.g. mortgages and leases, there is nothing particularly unusual about documents being returned. However for transfers and discharges, this is new and requires guidance. LINZ will not require the production of mortgages and leases for any further dealing with that mortgage or lease in the case of discharges, surrenders or variations. Therefore, retention of the mortgage or lease is not required for LINZ purposes in the future.

It is helpful to evaluate the reasons why documents might be retained by practitioners. These could be identified as follows:

(a) to satisfy a statutory requirement;
(b) to ensure safekeeping of important documents; or
(c) to preserves records of the transaction.

All the documents that have been referred to in this paper evidence a legal obligation between various parties and are produced in the course of a retainer between the practitioner and the client. For these reasons it is not recommended in any instance that the documents be destroyed once they are returned by LINZ. If the practitioner was seeking to destroy the documentation as a matter of convenience the client’s permission would have to be sought. For that reason alone, it is likely to be simpler to retain the document. In other instances there may be a requirement from the party benefiting from the legal obligation to require the document to be retained or to be held by that party, e.g. mortgagee in the case of a mortgage.

This paper endeavours to identify each of the documents and give guidance as to the retention requirements in each with a brief explanation as to the reasons for the guideline.

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Transfer

Guideline
Practitioners can retain the transfer on the file. Transfers containing more sophisticated provisions may be retained in deeds for safekeeping which will survive the destruction of the file, e.g. transfers containing grants of right of way or restrictive covenants. This is not mandatory as LINZ retains the authoritative record and either a standard or certified copy can be obtained.

Explanation
The transfer, once registered, does not have to be retained for any other statutory requirement. Once registered, it is no longer an important document with any legal status under the Land Transfer Act. It does form part of a file on which a client has paid a fee and the retention on the file at the least could be a client’s expectation.

Whilst the registered document will always be available for evidentiary purposes or for consultation as to the terms and conditions of any more sophisticated provisions, e.g. the terms of the right of way, practitioners and the practitioner might find it more expedient to have the original document in deeds to consult from time to time, if necessary.

Note: historically the client could never have obtained the original transfer from LINZ but only a photocopy.

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Mortgages

Guideline
Mortgages should be returned to the mortgagee along with the duplicate title on the completion of registration or if the firm acts for the mortgagee, retained in its deeds for safekeeping.

Explanation
Under Landonline the new computer register is the authoritative record and a certified copy of the mortgage can be obtained for evidentiary purposes. The duplicate title will evidence registration. On any discharge or variation of the mortgage, LINZ will NOT require the mortgage to be produced. Mortgagees have yet to appreciate this change in the procedure. However, for the time being, they will still require to retain the mortgages as part of their security documentation. In time this may well change, especially when evaluated with the removal of duplicate titles.

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Discharges of Mortgage

Guideline
The practitioner acting for the purchaser cannot require the mortgage along with the discharge of the mortgage as a document on settlement. Only a registrable discharge is required.

The practitioner for the lodging party should retain the discharge of mortgage and mortgage (if it is handed over on settlement, although it should be retained by the borrower’s solicitor) following registration.

Explanation
Under Landonline the duplicate mortgage is not required for registration of a discharge. The discharge of mortgage itself will be returned to the lodging party. Therefore there is no statutory obligation to retain the documentation.

A copy of the discharge of mortgage can be obtained from LINZ if needed in the future. The importance of this document is not sufficient to recommend that the document should be retained in deeds for safekeeping but merely with the lodging firm’s file. The document itself does not have any status and it will only be very rarely that the borrower’s solicitor will need to refer to the discharge of mortgage. To adopt a practice of sending the documents back to the borrower’s solicitor adds extra work for the purchaser’s solicitors and leads to possible confusion and complication if the documents were to go missing. For that reason, it is not recommended that the documents be returned to the borrower’s solicitor following registration.

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Leases (Cross Lease and Registered Leasehold interests)

Guideline
As the lease (registered leasehold only or cross lease) is not required by LINZ for any purpose, it should not be not required by any party, be it the landlord, tenant or mortgagee. The scanned original returned by LINZ after registration may be retained on file or forwarded to the tenant or their solicitor. However, there is no statutory obligation to retain this lease document once it has been registered at LINZ.

For settlements of cross lease properties or registered leases where a lease has been lost, the purchaser cannot require the lease or a provisional copy to be obtained as a prerequisite of settlement.

Explanation
As LINZ no longer requires the lease (registered leasehold only or cross lease) for variations, renewals or surrenders, the lease is no longer a settlement document required to give good title. The Computer Register is the authoritative and definitive register. A standard search copy may be obtained (currently $2) which should suffice for most purposes. A certified copy may be obtained for admission into evidence for court proceedings.

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Variations of instruments

Guideline
Deal with the variation instrument in the same manner as the original instrument.

Explanation
Once the variation is registered, there is no legal status for retaining the documentation.

Both the mortgage and the lease variations have no further legal status at LINZ once they have been registered.

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Any other documents

These guidelines are not intended to cover every single situation and permutation of documentation. Practitioners should decide how to retain the documents based upon the examples given above and if in doubt seek the assistance of the Committee.

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Land Titles Committee
2.9.02