The Government Administration select committee has released a report on the Land Transfer Bill, with a recommendation that it be passed with amendments.

The bill seeks to repeal the Land Transfer Act 1952 and two subsequent amendment Acts - the Land Transfer Amendment Act 1963 and the Land Transfer (Computer Registration and Electronic Lodgement) Amendment Act 2002. All the legislation would be replaced with a new Land Transfer Act.

The bill would implement the Government's response to the recommendations from the 2010 Law Commission report, A New Land Transfer Act.

The committee says the bill aims to aims to modernise, simplify, and consolidate the land transfer legislation to improve its clarity and accessibility. 

"The Land Transfer Act 1952 is outdated. It was based on paper-based registration, although the present system is now almost all electronic. The Act contains provisions from legislation dating back more than 100 years, and much of the language is complex."

Changes would be made in most of the areas of the law relating to registration of land titles under the Torrens system including:

• Compensation.

• Indefeasibility of title.

• Identify verification.

• Covenants in gross.

• Withholding information for a person's safety.

• Liability of estate administrators for certain costs.

• Adverse possession process.

• Registrar's power to correct the register.

Among its recommended amendments, the committee proposes deleting a clause which would have imposed a new requirement on mortgagees to take reasonable steps to verify the identity of the mortgagor and the identity and authority of any person who executes the mortgage.

It also proposes deleting a clause which sets out the terms by which the transferee of a mortgage can acquire an estate or interest in land.

The committee says concerns were raised about the significant compliance costs which these proposed provisions could have introduced for banks.

"Because of the low occurrence of mortgage fraud, it is likely that the costs of these new requirements would outweigh the benefits," it says.

"Consequentially, we recommend removing any requirements and penalties about verifying the identity of mortgagees from the bill as introduced. The occurrence of mortgage fraud should, however, be monitored on an ongoing basis to ensure that the absence of requirements and penalties does not lead to unintended consequences."

Amendments are also proposed to two clauses which would give the High Court discretion to alter the land titles register where necessary to avoid manifest injustice. This would enable the court to make an order cancelling the registration of a person as the owner of an estate or interest.

The committee says it is aware there was some uncertainty about when this exception to indefeasibility of title would apply, so the amendments are recommended to clarify the intent of the provisions.

The committee also says it has decided against including Fellows of the New Zealand Institute of Legal Executives in the list of persons authorised to certify instruments.

It says this would provide signing and certification rights for registered legal executives who have at least eight years' experience, are employed by a lawyer or incorporated law firm, and work under the direct supervision of a lawyer. 

"The rights sought would allow Fellows of the New Zealand Institute of Legal Executives to effect sales and purchases of land, among other transactions, by certifying instruments that are lodged for registration with Land Information New Zealand. Currently, only lawyers and conveyancers have these rights as certification under the 1952 Act relies on the occupational regulation of lawyers and conveyancers under the Lawyers and Conveyancers Act 2006."

The committee says conferring these rights on Fellows of the Institute of Legal Executives and making them subject to the same regulatory oversight as lawyers and conveyancers would require changes to the Lawyers and Conveyancers Act 2006. It has decided against doing this as the Land Transfer Bill was not an omnibus bill at introduction, and it is outside scope.

"However, it is our view that further review and potential legislative change to resolve this issue is necessary," it says.

The bill was referred to the committee on 15 March 2016, with submissions closing on 28 April 2016. The committee received 20 submissions, including one from the New Zealand Law Society.