One of the most recent changes to conveyancing practice in NSW has been the introduction of priority notices in electronic conveyancing.

On 1 October 2016, Part 7B Priority Notices (ss74S-74Z Part 7B) of the Real Property Act 1900 (NSW) (RPA) came into effect. At this stage priority notices are only available for electronic lodgment via the electronic conveyancing platform, PEXA (Property Exchange Australia).

A priority notice alerts anyone who searches the land titles register of a person’s intention to register a specific dealing for a legal or equitable interest in land. For example, if you are selling property, you can lodge a priority notice with the Land and Property Information before settlement of your intended lodgment of a transfer of land.

Once registered, a priority notice will temporarily prevent the registration of other dealings (with some exceptions). Your priority notice will not stop someone else from lodging a later dealing or priority notice. The later dealing or priority notice will just be registered later in time to the dealing to which your priority notice relates.

The priority notice must be lodged in registrable form. It is not a dealing, but once lodged the priority notice will receive a distinct reference number.

A priority notice is valid for 60 days. If you need longer, you can apply for an extension for a single 30 day period. You must apply before the initial 60 days end.

After the priority notice expires it will be removed from title. It will also be removed when the dealing to which it relates is registered, or by Supreme Court order, or if the Registrar General determines that there is a lack of evidence to support the priority notice. You do not need to provide supporting evidence when you lodge the priority notice. You will only have to provide supporting evidence if the Registrar General requests it.

The person (or their solicitor or conveyancer) who lodged the priority notice can withdraw it at any time.

Dealing with the land with an existing priority notice

As mentioned above, your priority notice will prevent the Registrar General from registering other dealings or priority notices on title for the duration of your priority notice.

However, you should be aware that a priority notice will not always protect you. A priority notice will not prevent the Registrar General from registering (s74W(2)) the following:

• a dealing in registrable form that was lodged before the notice;
• the dealing/s to which the notice relates;
• a caveat or the withdrawal or lapsing of a caveat;
• a vesting or dealing effected in accordance with a court order or law of NSW or the Commonwealth;
• an application under section 93 in respect of the estate or interest of a deceased registered proprietor;
• an application under section 12 of the Trustee Act or court order or dealing which, the Registrar-General believes effects or evidences a change in trustee/s;
• an application under section 101 (survivor of joint proprietors);
• a dealing effected by a power of sale or right under a mortgage or charge when that mortgage or charge was lodged in registrable form before the priority notice; or
• a dealing effected by lessee’s right under a lease when that lease was lodged in registrable form before the priority notice.

 Practical Considerations

Priority notices may seem simple on the surface, but below are some practical considerations that may arise:

1. Do I lodge a caveat or a priority notice? A priority notice does not function like a caveat. The RPA does not stop you from lodging both a caveat and priority notice in respect of your interest.  So if you are a purchaser or incoming mortgagee, you can lodge both a caveat and a priority notice to protect your interest. A priority notice may not be suitable for Off-the-Plan contracts because it will automatically expire after 60 days unless a further 30 day extension is granted (which even then may be an insufficient period);
2. What if there are existing priority notices? Can I lodge a new priority notice? If the existing priority notice is yours, you cannot lodge another one at the same time in respect of the same dealing. However, you can withdraw and lodge a new one simultaneously. The new priority notice will restart the 60 day period. If the existing priority notice is not yours, you can lodge a priority notice in respect of the same dealing but it will sit second in time. You will then not be able to lodge that dealing until any prior priority notice has expired or is withdrawn.
3. Can I obtain Court orders for the removal of a priority notice? Yes. The most sensible first step may be to request the lodger of the notice to withdraw it, however, any person with an estate or interest in the relevant land can make an application to the Supreme Court of New South Wales pursuant to section 74Y for withdrawal of a priority notice.
4. A party is refusing to withdraw the priority notice without reasonable cause. Who is liable? A person who lodges a priority notice and/or refuses or fails to withdraw a priority notice without reasonable cause may be liable to pay compensation to any person who sustains pecuniary loss. This liability may extend to solicitors.
5. I have a registered interest on title, will I get notice of a new priority notice lodged? No, the Registrar-General is not required to give anyone notice of the lodgment or recording of the priority notice (section 74T(6)).

In summary, priority notices are an inexpensive way to give notice of your intention register new legal interests. Although they are not required by the RPA, it is expected they will become prudent practice in electronic conveyancing. Priority notices provide early notification of pending transactions which will increase and simplify detection of fraudulent activity.

Practitioners should be aware that priority notices are not compulsory and so it cannot be assumed that the lack of a priority notice on title means the lack of an intention by any third party to register a dealing. All practitioners should still remain diligent and lodge any dealings without delay.

If you need assistance with priority notices or more information on your specific circumstances, please contact us.