e-conveyancing - the future of conveyancing?

The long term and admirable vision of the Land Registry is to create  “Easier conveyancing for all” . This is the essence of the e-conveyancing goal. Specifically, this will involve re-engineering the system of conveyancing in England and Wales, with the aim of:

• speeding up the conveyancing process;
• better value for money as a result of reduced costs;
• bringing greater communication  transparency and certainty in a
• conveyancing transaction; and
• reducing stress and anxiety for people in the conveyancing process .

To achieve this aim, the conveyancing system for the future is expected to have six main features:

• paperless communication;
• no “registration gap”;
• conveyancing transparency ( the chain matrix );
• connection between all parties in the conveyancing chain;
• increased high level  security; and
• automatic, simultaneous payments.

The above features of the e-conveyancing are to various degrees interdependent, although they are planned to be introduced gradually. They are described in greater detail below.

Paperless conveyancing
Whist there will still be a need for telephone calls, communication between conveyancing solicitors, mortgagors, buyers and sellers, Land Registry and other parties involved in the conveyancing process will be capable by electronic means, as will all exchanges of formal documentation.

No completion/registration time lag

On completion of the conveyancing transaction (the point at the seller’s lawyer receives the completion monies and keys are handed over)  it is anticipated that  registration will be instantaneous, resulting in greater accuracy with the  information on the land register up to date. During the conveyancing process there will be a system of validation of documents, which will ensure that, on completion, all the conveyancing documentation is in order and the vast majority of conveyancing transactions will lead to immediate update of the register.

This will lead to significant benefits for conveyancing solicitors, property lawyer s, the Land Registry and the public, all of whom in one way or the other suffer due to the current system in which requisitions and uncertainty often persist months after completion with inherent risks to all.  Professional insurance companies who insure conveyancing lawyers  will also benefit as a high area of professional negligence claims  is in the area of post completion work . Absolute  removal  of the gap will depend on the development of an automatic, simultaneous payments system.

Conveyancing  transparency and the chain matrix

It  believed that only 30% of all of the 1 to 1.5 million annual residential purchases are not part of a conveyancing chain. The proposed electronic conveyancing system will seek to make the remaining 70% of conveyancing  transactions in a chain transparent through the development of a shared , but as yet undeveloped, portal called the “chain matrix”. This will give buyers sellers , conveyancing solicitors and  relevant  persons instant access to the progress of each conveyancing chain transaction and will facilitate a simpler, more co-ordinated exchange of contracts and completion.  For buyers and sellers, this should mean improved communication, greater certainty and less stressful conveyancing.

Nexus between conveyancing solicitors and the Land Registry

All parties involved in the conveyancing process will be networked electronically.  Two way communications and information will ideally exist. Conveyancing practitioners will, in real time have the facility to observe the developing state of the register of the relevant property . At the same time, Land Registry will be able to cross check and validate the conveyancing transaction details as they are submitted.

High level security

The  e-conveyancing  system depends upon key players being confident that the system is sufficiently secure. All electronic systems raise security issues that are very different from traditional paper systems. Technology also offers new ways of protecting the security and integrity of data and conveyancing transactions, which are expected to be more secure than the traditional paper system. The e-conveyancing system will  have to adopt levels of security that match the needs of stakeholders. Please see various articles published by Fridaysmove   in relation to Property Fraud.

Automatic, simultaneous payments

Instant Electronic Funds Transfer (EFT) will support a system of e-conveyancing by improving the financial aspects of conveyancing transactions at exchange and completion. It is a challenging but essential feature of the vision if the full benefit of an e-conveyancing system to be realised. It will enable the whole nexus of payments associated with a conveyancing  transactions to be agreed in advance and then settled electronically and with immediate effect at the time when all the funding is confirmed as being available and the conveyancing  transaction is complete.

The Re-engineered Conveyancing Process

The detail of the new infrastructure that will underpin the vision remains  to be seen and subject to further research and consultation ( and there has already been significant delays ) , the intended e- conveyancing process is expected to incorporate the following new features:

• At the time the seller’s conveyancing solicitor or property lawyer uses the e-conveyancing service to transmit the draft contract from his case management system to the buyer’s conveyancing solicitor , automatic validation checks would compare contract data with Land Registry data and electronic messages would indicate any discrepancies. At this time, a new notional register would be built on the system indicating, as each document is prepared, what the new register would look like.
• There would also be a facility for conveyancing solicitor or property lawyer   to view Land Registry’s Day List prior to exchange of contracts, in order to ascertain whether or not there is a pending application which may adversely affect the transaction – for example a bankruptcy notice.
• At the contract stage, there would be an electronic equivalent of the present exchange of contracts. Contracts would be exchanged electronically when buyer’s and seller’s conveyancing solicitor or property lawyer   had signalled that agreement had been reached and contracts had been signed and released for electronic exchange. The system would provide for automatic exchange of contracts relating to all conveyancing  transactions in a property chain. For this and other purposes, conveyancing solicitor or property lawyer   might need to have electronic signatures and authentication from a recognised Certification Authority. Buyers and sellers might need to empower their   conveyancing solicitor or property lawyer   to sign by written authority.
• A substantive register entry would be made to note the conveyancing contract; the Register would automatically be frozen and would provide a priority period for the ensuing registration on completion. Provision to extend the priority period may be necessary for delayed completion.
• During this period the draft electronic transfer and any draft electronic charges will be agreed and finalised. These documents will then be signed electronically in anticipation of completion just as they are in the existing paper system. Shortly before completion the parties to the conveyancing transaction (and all parties in the conveyancing chain) would signal their readiness to complete in accordance with the terms of the contract. They will do so probably by using an extension of the chain matrix, which will indicate first that all necessary conveyancing documentation is signed and secondly that all the financial arrangements are in place.
• Registration would take place with completion. The changes signalled in the notional register would be verified and the new edition of the register would be finalised on the system.
• All financial obligations, including Stamp Duty Land Tax and Land Registry fees as well as payments between buyers, sellers, lenders and conveyancing solicitor or property lawyer , would be settled through an Electronic Funds Transfer system. With the help of e-conveyancing, the amounts of Stamp Duty Land Tax and Land Registry fees would be correct in virtually all cases. This would contrast with the present high incidence of errors.
• Post-completion – It is envisaged that no further action would be needed for transfers relating to registered land. When the purchase of unregistered land is included in a conveyancing chain of transactions, it will only be possible to achieve simultaneous completion and conditional registration for that transaction. The reason for this is that the unregistered title needs to be examined by Land Registry.
• The Conveyancing solicitor or property lawyer   would also record on the system the stage reached on each conveyancing transaction. This would enable the conveyancing solicitor or property lawyer   and Land Registry to see the progress of all the conveyancing transactions linked together in a chain. Conveyancing chains would thus become transparent. The conveyancing solicitors task in synchronising exchange and completion dates should be simplified, with any blockage points being immediately identifiable to facilitate enquiries.