Second Mortgage Loans : The effect of the 2021 Amending Act

30 August 2025 in Banking and Finance | 5 min read | skip to FAQs

In 2021, the New South Wales Parliament passed the Real Property Amendment (Certificates of Title) Act 2021 (NSW) (Amending Act). The 2021 Amending Act abolished paper certificates of title (which were previously known as title deeds) in NSW and mandated that all property dealings must be lodged electronically. This article describes the practical effects of this change on the registration of a second mortgage loan on a property’s title, and how the consent of the first registered mortgagee is generally no longer required for the registration of second mortgages.

Property Transfer prior to the Amending Act

Prior to the Amending Act, title deeds were the official legal documents that served as proof of ownership of land. Under the former section 33 of the Real Property Act 1900 (NSW) (RPA), the Registrar General had the power to issue these deeds of title for land. Under the former section 38, the Registrar General had the power to request the production of the title deeds for the purpose of registering a dealing that related to the land and had the power to refuse to register the dealing if the deed was not produced. Put simply, prior to 2021, the paper copy of the title deed needed to be provided to the Registrar General to register the mortgage loan. Title deeds are now referred to as certificates of title.

Lenders often Retained the Title Deed/Certificate of Title

It was common practice for lenders to retain the paper copy of the title deed for properties that they held a mortgage over. This served as a physical confirmation of the lender’s interest in the property and also acted as means to regulate transactions involving the land. Traditionally, a major bank who had provided a housing loan, held the title deed (now known as the certificate of title) for that home.

Permission was required to Register a Second Mortgage Loan

In order to register a second mortgage on a property, permission had to be obtained from the first registered mortgagee, the lender. This was necessary so that the certificate of title could be released to the new mortgagee, allowing them to register their own interest.

The 2021 Amending Act

1. Schedule 1 of the Amending Act removed the need for a paper copy of the title deed and all related requirements from the relevant sections of the Real Property Act 1900 (NSW) (RPA). As a result of this, all existing paper title deeds, now known as certificates of title, were cancelled and the Registrar General has ceased to issue paper title deeds. There are still certificates of title, but these are now held in the electronic form.
2. Schedule 1 of the Amending Act mandates that all property dealings are lodged electronically (sections 3, 12 and 12E(1)(e) of the RPA). Property transfers are now conducted electronically via Electronic Lodgment Network Operators (ELNO). ELNO are approved companies who operate an Electronic Lodgment Network (ELN). The most widely used ELNO in Australia is PEXA. The transfer and registration of the property title at the time of settlement, including any associated mortgage discharges or registration associated with the property, must be conducted via PEXA.
3. The system of registering dealings, and the registration requirements for such dealings have changed. Section 56 of the RPA states that the Registrar-General may register a mortgage if the mortgagee (lender) has signed and certified that they hold a mortgage from the mortgagor (borrower) on the same terms as the one lodged for registration. This means separate identical copies of the mortgage document may be signed separately by each party. This is known as signing counterparts.

Significance of the Amendments

1. The transfer and registration of a property’s certificate of title (previously known as the title deed), including any associated mortgage discharges or registration can only be lodged electronically through a registered ELNO, commonly PEXA.
2. This electronic lodgement is with the NSW Land Registry also known as Land Registry Services (LRS).
3. To access PEXA, you must be a subscriber to the service, primarily lawyers or conveyancers.
4. Therefore, vendors and purchasers must use lawyers or conveyancers to buy and sell property.
5. The requirements of section 56, coupled with the Amending Act’s removal of the need for paper certificates of title means that second mortgage loan lenders generally no longer need to request the consent of the first registered mortgagee in order to register their own mortgages on the title of a property.

Registration of Second Mortgages

All mortgages require the completion of a form called the National Mortgage which is found on the website of the Australian Registrars’ National Electronic Conveyancing Council (ARNECC). This form must be completed and signed by the mortgagee and mortgagor and witnessed by an eligible witness, such as a lawyer. These forms are then lodged via an approved ELNO, such as PEXA to be recorded on the title of the property by the NSW Land Registry. It is worth noting that banks and finance companies may have additional requirements for the signing of these documents.

Priority of Second Mortgages

The general rule, as outlined under section 36(9) of the RPA, is that registered mortgages are prioritised “the one over the other” in accordance with the order of registration. That is, the order in which date that they are listed on the property title,  not according to the individual dates of each mortgage. In simple terms, the mortgage registered on title on the earliest date will take priority over any other mortgage that is registered subsequently.

Key Takeaways

1. Abolition of Certificates of Title: In 2021, NSW abolished physical title deeds, now known as certificates of title, through the Amending Act. As a result, land ownership and interests are now lodged and recorded entirely through electronic systems. Loan and property documents are still prepared as paper documents by lawyers. However, when a property purchase settles and the certificate of title is transferred, the lodgement to the NSW Land Registry is electronic and via PEXA.

1. Electronic Lodgment is Mandatory. All property transfers, including mortgages if applicable, must now be lodged electronically via an Electronic Lodgment Network, such as PEXA. This requires involvement from a lawyer or conveyancer who is a registered subscriber. All mortgages are now recorded via the National Mortgage form lodged via PEXA and registered on the electronic certificate of title.

1. Consent from First Mortgagee is Generally No Longer Required for a Second Mortgage Loan Due to the removal of paper certificates of title, second mortgagees generally no longer need consent from the first registered mortgagee to register their mortgage. Consent may be required if the first mortgagee’s mortgage or loan terms by the bank or finance company specifically require consent.

How can BSM Sydney Lawyers assist you?

The banking and finance lawyers at BSM Sydney Lawyers remain up to date with all changes in legislation affecting property transfer and remortgaging with a second mortgage loan. Our lawyers have used electronic processing, PEXA, since its introduction. BSM Sydney Lawyers will seamlessly guide you through what can be a stressful process in negotiating a second mortgage loan. BSM’s senior finance lawyers offer a free 20-minute consultation to discuss your individual matter.

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BSM Lawyer Sydney have offices conveniently located in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.