UK: E-Conveyancing

Last Updated: 20 November 2008
Article by Richard Gilchrist

The Land Registry has been planning on restructuring the process of conveyancing for a number of years now. By developing an electronic system of conveyancing the Land Registry aims to make it faster, easier and more secure than its paper equivalent. The Land Registry Act 2002 laid down the legislative foundations for the transformation of the buying and selling of property in England and Wales into a paperless system. The bringing in of the electronic system is to be phased and by 2010 it is hoped that e-conveyancing will be functional for use by the general public, conveyancing practitioners and all other parties involved in the process.

The key ideas behind e-conveyancing are that it is to be paperless, there is to be no time lag between completion and registration and this will allow for 'chain transparency'. This is to be achieved in a number of ways. There will be network access agreements for users to sign up to and submit their electronic documents online. Parties will be able to execute documents using electronic signatures. An automated validation check will ensure that deeds, forms and applications are more accurate. There are to be enhanced e-lodgements and registration will be produced instantly on completion. There is to be a link to HM Revenue and Customs for the payment of SDLT. Eventually the Land Registry proposes for an Electronic Funds Transfer (EFT). This will allow for the simultaneous transfer of purchase and sale funds, as well as the payment of professional and mortgage fees. This would be of great benefit especially when dealing with long chains.

The Land Registry aims to make chain transactions more efficient. It proposes to introduce a 'Chain Matrix'. This will to allow buyers, sellers, their legal representatives, estate agents and lenders to view the progress of every transaction in the property chain. The Chain Matrix will be automatically updated with any changes and a completion calendar will show when each stage is due to be completed. In March 2007 the Land Registry launched a pilot scheme of the Chain Matrix prototype.

The results of the Chain Matrix prototype have been published in an evaluation report. The prototype did not produce the results the Land Registry anticipated. The main conclusions were that users were not given sufficient training. Many users failed to use the system. Out of the 229 complete chains that were entered, only 15% of clients and 31 out of 99 estate agents, who had access, viewed their transaction. The report found that there was no integration with firms' case management systems and many users were discouraged to use and enter data on the system. It is clear that the Land Registry need to increase their external training so that users fully understand and can utilise the system.

One of the major changes to be introduced is that of electronic signatures. These will be used to execute electronic documents and to verify the particular party signing the document and that the document has not been altered since the signing. A document can be signed electronically either by the client or by the conveyancer on behalf of the client. The main benefit of electronic signatures is that they cannot be forged.

Electronic signatures will be complex, which may mean they are costly to use. Private individuals are unlikely to have the technical support systems in place to facilitate electronic signatures. It seems likely that in most cases it will be the conveyancer who will sign the electronic document on behalf of its client. This will lead to increased risk and liability for the conveyancer. The conveyancer will require authorisation from their clients to sign documents on their behalf so the paper element of the transaction is merely displaced. This is not the only concern when it comes to e-conveyancing.

Critics have envisaged other problems with e-conveyancing. Many of the reforms are focusing on transparency, especially within a chain transaction. However, in some circumstances there may be complex reasons for a delay and there may be difficulty conveying these reasons to other parties within the Chain Matrix. Some parties to the transaction may not wish to reveal their true situations, which are not necessarily fraudulent, or for the chain to complete at a rapid rate. Also, a chain is always only as fast as the slowest party. If one party is unnecessarily holding up the chain, there are no built-in mechanisms to penalise them.

E-conveyancing is a very ambitious project. It will require heavy IT investment. There has been some concern that smaller firms may find it difficult to facilitate the necessary changes. Smaller firms will need to be provided with guidance and support on how to accommodate the changes so that it is inefficient, not small, firms which are pushed out of the conveyancing market. Another technological problem which may arise is that the e-conveyancing system will need to be integrated into other aspects of the process. It must be compatible with other aspects and reforms of conveyancing, such as Home Information Packs, SDLT submission, EFT and other potential changes to buying and selling properties. The process is currently fragmented through various different Government departments and agencies. It is unclear whether there is sufficient coordination between various aspects.

However, E-conveyancing is inevitable. The first electronic deed to be introduced in the near future is the electronic charge in standard form (e-CSF), complete with electronic signature. The full benefits of e-conveyancing may not be realised for a number of years yet and there is likely to be a number of significant changes as the system progresses. As the Land Registry has not just been focusing on speed and cost, but the overall efficiency and transparency of conveyancing, the change is likely to bring positive changes to buying and selling a property. However, before the Land Registry's objectives can be met, it will need to raise awareness and provide much more information and training.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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