Making conveyancing easier for all
Alice Kirwan, solicitor and assistant land registrar at Land Registry’s Nottingham (West) office, explains the current state of play in relation to e-conveyancing.
June 2006
The driving force behind e-conveyancing is the desire to develop an electronic system of conveyancing that makes buying and selling houses easier for the general public and conveyancing professionals. The intention is to retain the good parts of our existing conveyancing system and build on those to make a better system.
Most people in England and Wales are able to co-ordinate their sale and purchase. However, this does inevitably mean that there are chains of transactions. It is particularly in this area that e-conveyancing can improve on the existing system. A ‘chain matrix’ service will enable all the parties in the chain to see the current state of play and which stages have or have not been completed. Are searches satisfactory? Have finance conditions met?
Where are we now?
Having obtained HM Treasury approval last year, Land Registry is now proceeding with the development and procurement of new services, including the first stage of the chain matrix and the vital e-signature solution. IBM has been appointed as IT support partner to Land Registry’s in-house experts.
The range of services to be provided by e-conveyancing and how these will be accessed has been defined. These services fall into three main categories:registration unrelated to buying/selling, such as change of name by deed poll, remortgage work
buying/selling, this will be managed through the chain matrix
related services including training and support packages. E-lodgement of many forms, where no fees are payable, is now well-established.
The Tranche approach
The component parts of the e-conveyancing service are being developed in stages, known as ‘tranches’. This will ensure that each component has been carefully tested before additional components are added.
Tranche 1: Prototype chain matrix
Tranche 1, to be launched in autumn 2006, will introduce a prototype, information only, chain matrix. To see an illustration of the process, click here
The chain matrix will show all the participants in a chain of transactions and, for each of those participants, their progress in passing the key stages. For example, when a buyer obtains his mortgage, the field showing the status of the finance arrangements will be updated.
Participating conveyancers will be able to see other parts of the chain in which their client is involved, and will be able to update the matrix as key stages are achieved in both pre-exchange and pre-completion phases. The chain matrix will be able to display information about more complex arrangements, such as contract races and branched chains when two sales are required to finance one purchase or a divorcing couple each acquire a new property.
At this early stage the chain matrix will only give information. Later developments will allow it to be used as the mechanism for exchange and completions, ultimately linked to the passage of funds through the Electronic Funds Transfer (EFT) service including all completion moneys, Land Registry fees and stamp duty land tax.
Useful features in Tranche 1 are:a completion calendar in which all parties will be able to identify available dates for completion
a notepad facility enabling conveyancers to give supplemental information about the transaction and its progress
an alert messaging service which can generate an automatic message to the conveyancer so that they are aware of key changes to a matrix.
Tranche 2
Tranche 2, to be launched in late 2007, will test the basic elements of most of the components of e-conveyancing with the major exception of EFT. It will extend the e-lodgement facilities and will enable the submission of e-contracts, other e-documents and e-fees. Land Registry is also looking at integration with case management systems as part of Tranche 2, and is currently researching this with industry representatives.
A central feature of Tranche 2 will be front end validation, the checking of data contained in e-documents against records already held by Land Registry. This will enable the preparation by Land Registry, using a combination of manual and automatic processes, of a notional register. It will also mean that many requisitions can be raised before exchange of contracts. The notional register will be viewable only by the parties to the transaction and their advisors and it will provide reassurance that title issues have been properly and fully addressed.
Tranche 2 will also provide an interim stamp duty land tax solution. The responses to the EFT service consultation last year indicated that our preferred solution needed to be looked at again. Land Registry is now working on the solution and intends to include the EFT component in a later tranche.
Secondary legislation will be required to regulate the use of Tranche 2 services and a formal consultation paper will be issued to enable practitioners to comment on the proposals. The format of network access agreements, permitting conveyancers to participate in the e-conveyancing system, will be finalised as part of the legislation. Land Registry is also planning a range of training packages and support services to assist users of both Tranches 1 and 2.
E-signatures
This issue raises many questions and concerns. E-signatures are crucial to the success of e-conveyancing and the solution we adopt needs to be both secure and affordable. Various mechanisms that fulfil these criteria have been identified, including smart cards and USB tokens based on public or private key infrastructure. Land Registry recently tested a prototype system with a small number of firms, using forms submitted through the e-lodgement service. The trial was designed to test which system works best for clients and conveyancers and to compare the costs and practicalities of the alternative systems. Lessons learnt from this test have enabled Land Registry to move forward towards formal procurement of the final solution.
Earlier consultation exercises indicated that practitioners would be reluctant to sign on behalf of their clients. This is likely to be necessary in the pilot phase and recent anecdotal evidence suggests that conveyancers are becoming more comfortable with that suggestion. The signing of the document is not the ‘committing act’ as it is the exchange of contracts or completion that gives rise to legal responsibility and conveyancers already carry out these acts on behalf of clients.
Fees
Land Registry is currently working on the charging strategy for the new services. The aim is to revise the existing fee structure so that the overall cost of transactions remains about the same as they are now.
Are you in Portsmouth, Fareham or Bristol?
We are currently looking for up to 80 firms in these areas to join the 2006 trial to test the information only version of the chain matrix. The areas have been chosen because they have:a high percentage of registered land, where freehold dealings predominate among the registered transactions
a balanced mix of urban and rural land
a variety of residential conveyancing practices. For further information, please contact the E-conveyancing Team at enquiries@e-conveyancing.gov.uk
If you are not in one of these areas, please be assured that there will be other opportunities for participation in the future.
Preparations you can make at this stage
You can use the electronic services that are already available, for example Land Registry Direct, NLIS, e-requisitions and e-notices. Use of electronic services raises new issues, such as how to store information. It will also help to identify training and equipment needs within your office, and, dealing with these issues is part of the preparation. For more information see: Practice Guide 23 - Electronic lodgement of applications to change the register
Practice Guide 45 - Receiving and replying to notices by email
Practice Guide 59 - Receiving and replying to requisitions by email.
Have a look at the e-conveyancing website www.landregistry.gov.uk/e-conveyancing for information and the latest news. If you want to consider how your firm or organisation stands with regard to preparation for e-conveyancing, you can consult ‘Planning Book 1 - Where are you starting from?’ which is also available from the website. You can also join the e-conveyancing forum by logging onto http://communities.e-conveyancing.gov.uk and participate in online debate and future consultation exercises or read records of live debates at past events.
If you are interested in attending a presentation and there is not one proposed in your area, contact the E-conveyancing Team at enquiries@e-conveyancing.gov.uk to see if one can be arranged for you.
Best of all, participate in one of the pilots and consultation exercises.
Training and support
Within Land Registry, alongside the E-conveyancing Team, the Education and Training Group is working on plans to support the introduction of both the limited chain matrix service and the fuller pilot service. The group is also developing presentations and online packages.
E-conveyancing will not appear overnight. But, in consultation with you, we will build a service that will ultimately transform the way in which conveyancing is undertaken and takes full advantage of the electronic age. A service, which, with your help, will make conveyancing easier for all.
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