The Natural Resources and Other Legislation Amendment Bill 2005 Queensland was introduced into Queensland Parliament on 8 November 2005. When passed, it will amend the Land Title Act 1994 with the aim of improving the operation of this Act in relation to the conduct of inquiries into fraud and errors in the freehold land register by requiring mortgagees to adopt procedures to identify mortgagors.

It will reduce the State’s exposure to claims for payment of compensation for land title related frauds in circumstances where reasonable due diligence measures were not taken by a mortgagee.

Under the Bill there is an obligation on a mortgagee (whether it becomes a mortgagee by the
transfer of an existing mortgage or by the registration of a new mortgage) to take reasonable steps to ensure that the person signing as mortgagor is in fact the mortgagor. The Registrar of Titles will
specify steps that are deemed to be reasonable. A mortgagee is required to keep written records (in the approved form) of all steps taken to verify the mortgagor’s identity, and to keep for 7 years copies of all
documents and other evidence used for this verification.

If a mortgagee does not comply with the investigative and record-keeping requirements, and the mortgage or transfer of mortgage is fraudulently executed, the mortgagee loses the ‘indefeasible’ title it would usually enjoy by having its interest registered. The Registrar would also be able to remove the mortgage from the title. The practical effect of this is that all registered interests (including subsequent mortgages) would prevail over the mortgage. 

The mortgagee also commits an offence if it does not keep the records  required.

The Bill also restricts a mortgagee’s power of sale where the mortgage involved (or was associated with) fraud against a landowner or crown lessee (for example, where the landowner’s signature was forged) even if the mortgagee has complied with the procedures. The Bill caps the amount of interest that is recoverable, and limits the recoverability of other costs associated with exercising power of sale.