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Land Registration and E-Conveyancing

27th February 2018

Anita Smart, Senior Associate in our Residential Property team looks at the development of digital land registration and using digital documents and electronic signatures.

The Land Registration (Amendment) Rules 2018 (SI2018/70) were made on 22 January 2018 and will come into force 6 April 2018.

The new rules are intended to facilitate the development of digital land registration (e-conveyancing) including the use of digital documents and electronic signatures (e-signatures).

HM Land Registry was created in 1862. The Land Registry contains more than 25 million titles showing the evidence of ownership of approximately 85% of the land in England and Wales. The Land Registration Act 2002 laid down the framework to move from a paper based conveyancing system to e-conveyancing on the basis that transition would be a gradual process.

Whilst e-conveyancing plans were first muted in the 2002 legislation, they were put on hold in 2007 due to the cost of implementing the new process, but there is now a desire to accelerate the provision of a wholly digital system as part of the government’s review of the conveyancing process and how it can be used to stimulate the housing market and, more particularly, house building.

Currently, conveyancing transactions rely on physical signatures to paper documents, albeit that most applications to register those deeds at the Land Registry are now carried out online via the Land Registry Portal.

From 6 April 2018, once the Chief Land Registrar is satisfied adequate arrangements are in place and a notice to that effect has been issued, applications relating to registered land may be carried out using electronic documents with e-signatures. This is the next step to moving away from the need for paper deeds and documents to making the whole conveyancing process digital from offer to completion. In time, the intention is for there to be a digital link between all parties in a transaction or chain of transactions (sellers, buyers, mortgage lenders and their respective conveyancers) to enable the simultaneous transfer of funds to the relevant parties, including the payment of stamp duty land tax and Land Registry fees, so that buying and selling a home becomes quicker and simpler.

There are concerns about security and the potential for fraud, all of which will have to be addressed before a completely digital process can be implemented. However, the firstly digitally signed contract in a residential property transaction was exchanged in April 2017 having been uploaded onto a registered secure system which was then sent to the respective seller and buyer to sign electronically using a code (previously assigned to each party) in place of a physical signature.

E-conveyancing will only be possible if both sides in a sale and purchase are able to accommodate the required systems and they agree to conduct the transaction in that manner. It remains to be seen when e-conveyancing will become the norm and whether it will resolve the frustrations often experienced in the current paper based process, but the digital age marches on.

The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2018.

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