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E-CONVEYANCING - Hit or Miss?
|Without a doubt, technology is the way forward and at Cripps Harries Hall LLP we have for some time been appreciating the benefits of on-line searches, email communications with clients, solicitors and agents as well as software that assists in the tedious yet vital day-to-day administrative tasks which drown the whole procedure.
So, how much further into cyberspace will e-conveyancing take us and what will it involve?
We are told that its purpose is to achieve:
· Electronic documents – a paperless system
· Quick and secure exchange of information electronically – with less opportunity for fraud
· Access to a chain matrix providing information on progress to interested parties – to provide transparency
· Automatic simultaneous payment of monies
· Automatic simultaneous completion and registration
The seller’s solicitor will submit the draft contract electronically . It will be lodged at the Land Registry who will immediately create a new version of the legal title (a ‘notional register’) showing the buyer’s details and any other information relevant to the title contained in the contract. As and when amendments are made to the contract the notional register will change accordingly.
Each transaction will be part of an electronic chain matrix to which solicitors and agents will have access. The level of access is still to be agreed but the matrix will show the stages to exchange and allow users to signal when a stage has been reached and their readiness to proceed to the next stage. Any additional information relevant to the rest of the chain (for example an explanation for a delay) can also be published to the matrix. Once all parties in the chain have signalled that they are ready to exchange it will be effected simultaneously and deposits distributed by electronic funds transfer.
Once contracts have been exchanged the Land Registry will then apply all the relevant data to create the transfer document. A completion matrix will indicate all parties’ ability to progress to actual completion on the contractual date. On the day itself, when each transaction has reached the appropriate stage completion and registration will take place automatically. All completion payments including payments to solicitors, the Inland Revenue and the Land Registry will be made by electronic funds transfer.
The electronic funds transfer service will be designed to provide a much more immediate payment mechanism than current methods. It aims to enable simultaneous settlement of payments relating to transactions in a chain that are mutually dependent. A single financial agent is likely to be appointed to provide the service which will have to be available 24hours a day 365 days a year.
Crucial to the success of e-conveyancing will be the public’s acceptance of the use of e-signatures. Fraud exists in the current system but are our clients prepared to believe that e-signatures are more secure? There is a question mark over whether all clients will be issued with an e-signature – there is talk of a ‘chip’ and ‘pin’ system – or whether many will end up authorising their solicitor to sign documents electronically on their behalf. Whilst this is not unusual currently, such authorisation under e-conveyancing would have to extend to mortgage documents and Land Registry transfers. The public may not want to pay solicitors for taking on that additional responsibility. Indeed, it is a responsibility solicitors are likely to be wary of.
Going back to the government’s promise, if e-conveyancing does prove to be problem free and efficient, will it reduce the number of delays and problems that arise? The current system is undoubtedly cumbersome but many of the delays we experience will not be eradicated by the application of advanced technology. Sellers and buyers all have their own agendas and a standardised procedure cannot even hope to accommodate each individual’s whim.
The chain matrix offers transparency, a feature the current system is criticised for lacking, but whether, as the government hopes, it will also improve conveyancing standards (presumably by shaming conveyancers into efficiency) is difficult to say.
Much work is still to be done to create a system which both the public and the property profession can trust. However, e-conveyancing is a reality and we all have to start preparing ourselves now for its introduction in 2008. At least by then Home Information Packs will hopefully be proving to be a hit and not a miss.
More Home Truths…..
Although there may be no written agreement between a lodger and the property owner, an assured shorthold tenancy agreement may have been created in law. A seller who contracts to give vacant possession puts himself at risk of being in breach of contract if the tenancy is not terminated properly.
Personal representatives of a deceased’s estate face sanctions if the actual sale price of the property differs from the value on the inheritance tax return and this is not reported to the Inland Revenue.
The CML Handbook requires all searches to be no more than 6 months old at the date of completion. Indemnity insurance may be acceptable to a lender where a search is out of date.
Beware a ransom strip between the boundary of a property and the public highway. Often the extent of the public highway does not extend as far as the boundary of the property and this can result in there being no legal right of access to the property.
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Cripps Harries Hall LLP
Telephone: 01892 515121
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