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.


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"!

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