Each week, national law firm Simpson Grierson answers commercial property questions which can be emailed and headed "property problems". This week's question is answered by senior associate Fiona Burton who can be contacted at fiona.burton@simpsongrierson.com
Q. I have recently returned to New Zealand from overseas and been appointed as a director of a property development company. I was a director of a similar company before I went overseas and often signed documents such as transfers when the company sold land.
However, things have changed while I was away and I now sign something called an "A&I" with the other director of the company. We have to have our signatures witnessed and each attach a copy of our driver's licence to the A&Is.
I don't recall having to do this for the transfers under the prior system.
Can you explain how an A&I results in registration of a document like a transfer and the rationale behind the witnessing and photo identification requirements. Finally, is it possible to have one A&I that deals with numerous transactions so we don't have to sign as many forms?
A. A new system requiring electronic registration of land documents (instruments) was phased in by the Government between 2003 and 2009. The system is known as "e-dealing". The e-dealing system dispenses with traditional paper instruments in many instances and an "Authority and Instruction Form", or A&I, is required instead. An A&I is a form in which clients authorise and instruct their lawyer to create and register electronic instruments against the land titles specified in the form.
The transfer instruments you mention are now electronic instruments in the e-dealing system and therefore A&Is are required to enable them to be created and registered.
After obtaining an A&I a lawyer will create the electronic instruments by logging into the Landonline website run by Land Information New Zealand's (LINZ) and completing the appropriate e-dealing screens. Although instruments created here exist in electronic form only, once they are registered they become part of the public record for the land concerned and are able to be searched in the same way as traditional paper instruments. Also, once registered, electronic instruments are deemed to have the same effect as a deed.
Before registration of electronic instruments can be completed, the lawyer is required to certify that certain things have been done. One of the certifications is that the lawyer has the authority to act for the client in creating and lodging the electronic instruments and another is that the lawyer has taken reasonable steps to confirm the identity of the persons who gave the authority to lodge the instruments.
LINZ requires lawyers to obtain their client's authority to act and to verify the client's identity before giving these certifications. A correctly signed and witnessed A&I with photo identification attached is evidence to support the certifications given. LINZ conducts compliance reviews from time to time and checks A&Is held by lawyers as part of this process.
You mention that you used to sign paper transfer instruments under the old system. Different requirements apply to A&Is to those that applied to the old paper instruments. There were statutory rules that allowed paper instruments to be signed by two directors without a witness. These rules do not apply to A&Is because they are authorities to lawyers to create electronic instruments, not the instruments themselves.
A&Is are not covered by statutory requirements but, as mentioned above, they relate to the certifications required in the e-dealing system and are covered by various guidelines and regulations administered by LINZ.
There were also no requirements to attach photo identification to paper instruments under the old system, although lawyers were required to be satisfied about the signatory's identity.
One A&I can be used to authorise a combination of instruments, provided the details are clearly set out in the form. However, it is not possible to prepare a blanket A&I to apply, for example, to "all transfers in 2010". LINZ requires the specifics of the instruments to be set out in an A&I so that the client's authority to the lawyer is clear.
Although LINZ prefers that directors sign A&Is on behalf of companies, if you do not want to sign as many A&Is you may wish to consider delegating authority to sign to authorised signatories or to an attorney, under power of attorney. This is something you should discuss with your lawyer.
The information contained in Commercial Property is intended to provide general information in summary form current at the time of printing. The contents do not constitute legal advice and should not be relied on as such. Specialist advice should be sought in particular matters.
