South Australia has introduced Priority Notices commencing on 27 April 2015.
Priority Notices are designed to remove the risk of the ‘registration gap’ between settlement of a transaction and registration, and also to ‘reserve’ a title for a forthcoming settlement. Priority Notices are expected to become uniform throughout most or all of Australia over time. The notices lapse on the earlier of registration of the ‘reserved’ dealings or 60 days from lodgement (unless an extension to 90 days is granted).
South Australian Priority Notices operate similarly to the Settlement Notice regimes which have been operative for many years in Tasmania and Queensland (but note the different name – we use the term Priority Notice for ease of reference).
Mortgagees of land will need to decide whether to change their processes and lodge Priority Notices in South Australia. The usual scenario in Queensland and Tasmania is as follows.
- If a mortgagor is purchasing a property, mortgagees rely on the Priority Notice lodged by the borrower’s solicitor. They ask for a copy of the notice and lodgement number to check it.
- If the purchaser’s Priority Notice is defective in any way, mortgagees ask for a withdrawal at settlement or ask for a withdrawal and lodge their own Priority Notice (depending on the circumstances).
- If there is no Priority Notice lodged by purchasers, mortgagees lodge their own Priority Notice.
- On refinances, mortgagees lodge their own Priority Notices. (In some cases where a title deed is issued in Queensland, mortgagees rely on possession of the title and don’t lodge a Priority Notice.)
South Australian Priority Notices will automatically lapse when the relevant dealings are lodged. It is important that all the dealings notified in the Priority Notice are lodged. For example, if the Priority Notice identifies a discharge of mortgage, transfer, and mortgage, all three dealings should be lodged. If the Priority Notice only identified a discharge and a transfer, the Priority Notice would need to be withdrawn in order to allow a mortgage to be registered.