UK: Electronic Conveyancing Is Just A Click Away

Last Updated: 5 July 2001

(a perspective from an e-commerce lawyer and a property lawyer - a variation of the article that appeared in the May edition of the Solicitors' Journal and the June edition of Negotiator Magazine)

New Technology, New Opportunity

We hope that doesn’t sound too new Labour because electronic conveyancing will happen and with the right will it could happen quite soon. Like Marvin the paranoid android, your computer probably has a brain the size of a planet, which you rarely get to use to anywhere near its full potential. The development of electronic conveyancing could be good news for both you and your computer. But how real is the government’s commitment to this technological innovation?

Consultation Paper

On a more serious note, on March 5th 2001 the Lord Chancellor’s Department issued a consultation paper entitled "Electronic Conveyancing, a draft order under section 8 of the Electronic Communications Act 2000", a grand-sounding piece of subordinate legislation with less grand, though important, content. In this article we will review the draft regulations in the context of "true" electronic conveyancing, namely the overall conveyancing process being conducted electronically, not the mere contract for sale and transfer of legal title. The consultation paper follows the Homes Bill, currently before Parliament, which deals with another key element in the process of speeding up conveyancing, the highly controversial "seller’s packs".

Call it "spin" or otherwise but the Government has declared its intention to make the UK the leading environment for e-business by the end of 2002. As part of that initiative, the Electronic Communications Act 2000 ("the Act") was brought in to provide a legal infrastructure for e-business. An essential element of the Act was to give electronic signatures and contracts equal status to written contracts. It requires substantial subordinate legislation to realise its goal and these draft regulations regarding electronic conveyancing ("the draft regulations") are part of that enabling legislation.

The Government has also announced plans to improve substantially the system by which property is bought and sold in England and Wales. In particular it wants to see the whole process speeded up, supposedly to help avoid "gazumping".

Current Position

To sum up the current law regarding the form of contracts and conveyances:

  • Section 2 (1) of the Law of Property (Miscellaneous Provisions) Act 1989 ("the 1989 Act") provides that "A contract for the sale or other disposition of an interest in land can only be made in writing…"
  • Section 52 of the Law of Property Act 1925 provides that "all conveyances of land or of any interest therein are void for the purposes of conveying or creating a legal estate unless made by deed".
  • Section 36A of the Companies Act 1985 allows a company to execute deeds by affixing its common seal or alternatively by the signatures of a director and the secretary or of two directors.
  • Section 1 (3) of the 1989 Act specifies that a deed is not validly executed by an individual unless it is "signed by him in the presence of a witness who attests the signature" and "delivered as a deed by him or a person authorised to do so on his behalf".
Draft Regulations

All of these statutory rules are covered by the draft regulations. The core elements are:

Section 144A of the Land Registration Act 1925 requires dispositions in electronic form to "have precisely the same effect as those made on paper" and Subsection 144A (5) deems that any document be "regarded as a deed for the purposes of any enactment" if it meets the following conditions:

  1. that the document makes provision for the time and date when it takes effect;
  2. that the document has the electronic signature of each person by whom it purports to be authenticated;
  3. that each electronic signature is certified; and
  4. that such other conditions as may be prescribed are met.

Section 2A to the 1989 Act states that an electronic contract will be as effective as an equivalent paper one if it meets these conditions:

  1. that all the terms of the contract are set out or referred to in the document;
  2. that the contract states when it will take effect; and
  3. that the contract is signed with the certificated signature of each signatory.

Draft regulation 2 provides for dealings with the Land Registry in electronic form.

The Whole Conveyancing Process

Conveyancing is a whole process, not merely certain documents transferring title. The consultation paper disappoints the reader from the start by confining itself to discussing only the "legal framework for electronic documents", when its title holds out false promises of more far reaching reform in property law.

Constituent Parts

Admittedly the Homes Bill, which we mentioned earlier, adds another piece to the electronic jigsaw. Many others have commented on this so we will only briefly refer to it. However, it has to be accepted that if the conveyancing process is to be speeded up significantly, the use of electronic contracts and signatures is not going to be the main factor – it will be down to the rapid flow of information in a standard form to facilitate quick delivery of that information to the end user, i.e. the homebuyer. Whether this achieves the politically attractive goal of discouraging gazumping remains to be seen – it could be argued that greater speed could facilitate it.

The Homes Bill obliges the seller of property to produce a "seller’s pack" comprising a survey report, searches, basic enquiry replies and a draft contract. Until a pack has been prepared it will not be possible to market a property – indeed it is proposed to make it a criminal offence to do so. It will also be a criminal offence to fail to supply a pack to an interested party within 14 days of being asked to do so.

Further important details about seller’s packs have yet to be hammered out, including who will prepare the pack, and of course who will pay for it. It is suggested that seller’s packs might be produced and supplied by estate agents, being the first in line in the conveyancing system. We will comment on this later.

Another essential element in the home buying process is the local search. Whilst innovative services like "Searchflow" have contributed significantly in that process and promise to be proactive in reforming the conveyancing system, there is a long way to go. Until every local authority is able to offer "on-line" searches with all of their records digitised, local searches will be the weak link in the conveyancing system.

Flow of Information

The conveyancing process may be viewed as the flow of reliable information from various sources to the homebuyer to enable him or her and any lender to make an informed decision regarding purchase. The Internet is the ideal medium to facilitate that flow. The providers of that information have traditionally been surveyors, solicitors, lenders, local authorities and HM Land Registry.

In recognition of the "flow" concept, the National Land Information Service has been set up to license communication channels. There are currently three licence holders (Searchflow, Teramedia and MacDonald Dettwiler & Associates). Essentially these bodies provide search packages. As progress is made in the digitisation of information (especially at local authority level), the NLIS channels will become faster and more effective – it is a gradual process culminating in the "promised land" of fast, safe transfers.

To date the Land Registry has embraced the electronic revolution the most warmly. Much information is now available electronically and the Registry is better prepared than any other body to play an effective role in "e-conveyancing". Alteration to the land registration rules is pretty much all that is needed.

An Elegant Swan

As Richard Susskind, the legal IT guru, says in his latest book, "Transforming the Law", it does not matter that early developments in the provision of electronic legal services are not perfect in a purist’s sense of "e-business" – he likens some current moves to a swan moving gracefully across water – what does it matter that underneath the swan is frantically paddling to make it move as long as it achieves the desired effect? His point is that even if the back office systems are not yet in place to do everything electronically, we have to start somewhere and as long as it gives an outward appearance of professionalism, the fact that much infrastructure has yet to be built does not matter.

Mark Riddick, CEO of Searchflow, is clearly of the Susskind school of thought and believes that the key to the success of the e-conveyancing initiative is the integrity and security of the flow of information – it needs a "trusted custodian" of that information. "Seller’s packs are not rocket science. It is the facility, the method of delivery that is the "magic". What counts is the reliability of the information", says Riddick. That may be true but clearly the task needs to be handled by someone with at least some basic legal understanding (not necessarily a qualified lawyer) and an eye for detail. Everyone seems to be focusing on the availability of the pack rather than the quality. Although one can conceive of others who could fulfil that role, lawyers are an obvious choice for managing the creation of the packs with agents distributing them.

The Future Role For Lawyers

Riddick still sees a role for the profession: "Lawyers are uniquely placed to be trusted custodians – their reputation for integrity is exceptional in the context of the conveyancing process". In true Susskind style, however, he believes that a solicitor’s role in conveyancing will need re-defining; it would involve information management (in terms of both its "flow" and "integrity") and communication. That is effectively what most practitioners do today but in a different manner. For lawyers to participate in the process in the future they have to be innovative and consider how they may add value, not look at how to keep their hands on supposedly lucrative conveyancing work. IT and the Internet offer lawyers the perfect opportunity to improve their knowledge and communication skills, using intranets (for internal knowledge management), extranets (for client communication) and "deal rooms" (for dealings with multiple parties (clients, the other lawyers and estate agents)).

The Government has not insisted that certification authorities for digital signatures be "approved". Whilst this "lightness of touch" might be acceptable or even praiseworthy in the general commercial context, it is another matter in relation to land. One’s own home is for most people the most valuable item they ever buy or sell, and buying/selling a house may be one of the few occasions on which they will instruct a solicitor. In order to foster public confidence, any electronic method of conveyancing must be, and be seen to be, of the utmost integrity. Therefore perhaps the Law Society itself should seek to be an "approved" certification authority.

Conclusion

In conclusion, increasing the speed of conveyancing has to be balanced by the need for reliability. The draft regulations address only a small part of the conveyancing process and a part that will not greatly increase speed. With email, contracts can now be exchanged almost as quickly without formal "e-regulations" – both lawyers sign on behalf of their client and away you go.

Slowly but surely the infrastructure is being put in place to realise the grand plan of a rapid land transfer system but we do not believe it is appropriate to describe the draft regulations as pertaining to "electronic conveyancing". People are probably as sick of hearing the Government being accused of "spin" as they are of the Government supposedly relying on it, but the broad ambitions of the Government in this field are not evidenced by its uncharacteristically timid and even piecemeal approach to electronic conveyancing challenges. It does not add to their credibility.

Reliability will only be maintained if the issuance of digital signatures is strictly controlled and the flow of other information has "integrity". Once all else is in place, to ensure the quickest take-up of the technology and the earliest introduction of a fully integrated e-conveyancing system, it is essential to set a strict but reasonable timescale for all concerned, by the end of which e-conveyancing would be compulsory, not optional.

The 2000 Act empowers the Government to introduce facilitating regulations but does not envisage compulsion – with other "e-contracts" that is fine but in the context of e-conveyancing that will not be enough and further legislation will, in our view, be required. Compulsion may sound frightening but without it e-conveyancing will be slow to take off and from the profession’s point of view it would leave some firms out in the cold – being forced to update and re-appraise their position (with reasonable advance warning) could well be their salvation. Without compulsion the Government will fall far short of its stated objectives. The changes are coming whether lawyers like it or not. We should not shy away from them. Rather we should embrace them and work towards the benefits they can bring – or as Riddick of Searchflow says, we should "wake up and smell the coffee"!

The contents of this site are intended to be informative and interesting but by their very nature are general. You are strongly advised to seek independent advice on any problem you may have as we cannot accept responsibility for any loss arising from reliance on anything set out on the site, even errors or omissions

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.