Conveyancing is archaic. Conveyancing lawyers are traditionalist and stuck in their ways. The conveyancing process hasn’t evolved much, despite the quantum evolution of technological advancements.

As a client of property legal services, you would be forgiven if you’ve had at least one of the above thoughts. As a property solicitor myself, I have struggled with the glacial speed at which the conveyancing sector evolves.

I fully recognise that property is a much sought after asset class throughout the world. UK property in particular offers a very appealing asset class. Two large factors enabling the UK to hold that accolade are the stability of the conveyancing process and the Government-backed title guarantee that the Land Registry provides to all titles registered with it.

Given the stability of the conveyancing process, it is no surprise that all the key stakeholders - the Land Registry, the conveyancers, the financial institutions, to name but a few, have a vested interest in ensuring that any modernisation of the conveyancing sector only happens after careful consideration of all the permutations and at a pace that doesn’t make the change irreversible, just in case the change goes pear shaped. So whilst the conveyancing sector evolves slowly, recognise that the pace of change is right to preserve the stability of the sector and thus enhance the appeal of UK property as a valuable asset class.

The Covid-19 pandemic has however forced all of us (the whole world in fact) to change and for many of us to evolve to survive. The Land Registry, arguably the nucleus of the conveyancing process, has not been spared. 

In this article, I will share with you what they’ve done, how it’s going with some real ‘life lessons’ from my colleagues in legal practice, including some pinch points and what to look forward to as the conveyancing sector continues to evolve.

First and foremost, much has been written about blockchain and artificial intelligence (‘AI’). They do hold the potential for the makings of a world-class conveyancing sector in the UK. Alas, whilst even the Land Registry has been very keen on blockchain technology and AI, they remain fairly young technologies and thus too young to unleash upon a sector whose stability must be safeguarded.

The Land Registry has however implemented a change that, at least amongst property legal professionals, is a bold step forward in the right direction. At the point of writing this, the change has in fact been in play for well over a year. My aim in this article is not only to increase awareness of this change but also to reflect on over a year’s worth of practical data and flag some measures, as a consumer of property legal services, you should do to ensure evolution continues apace.

In response to extended Covid-19 lockdown measures, the Land Registry, recognising that people moving around was legally prohibited, which in turn was stifling property transactions, started accepting electronically signed property deeds. Electronic signatures (e-signing) is not new of course. The technology has been around for a couple of decades and legislation passed in 2000 (in the form of the Electronic Communications Act) permitted e-signed contracts, as legally admissible evidence thus making it a valid form of contract. Indeed, this has been the norm in letting residential properties by way of Assured Shorthold Tenancy agreements for some time.

The legal transfer of title to property, in the form of a deed of transfer, however has always required ‘wet ink’ signatures. The deed must be signed in the presence of a witness, who must also place their ‘wet ink’ signature followed by writing their name and address in ‘wet ink’. All rather tedious of course, especially when you’re socially distancing to safeguard against Covid-19.

That all changed in July 2020, when the Land Registry started accepting ‘Witnessed Electronically Signed’ deeds. The Land Registry is also actively looking into ‘Qualified Electronic Signatures’ but more on that later.

So how do Witnessed Electronic Signatures work? The following are requirements extracted from the Land Registry’s Practice Guide 8:

• all parties in the transaction must agree to the use of an electronic signature;  

• all parties must be represented by a conveyancer in order to use e-signatures;

• one  conveyancer must set up and control the e-signing process; 

• the conveyancer should upload the agreed document (with all plans) and populate the platform with the name , email address and mobile number of the signatories (and any known witnesses);

• fields to be completed are to be highlighted and the order in which they are to be signed is to be determined;

• six digit authentication codes (described in the guidance as 'one time passwords' (OTP)) must be used for both signatories and witnesses (who should receive the same by mobile);

• witnesses must be physically present with any person electronically signing (notably the guidance requires the witness to be invited to sign via email, 'in person' signing by a witness is not provided for) ; 

• witnesses must record their name and address details on the signature platform; 

• a conveyancer's certificate is required to accompany any Land Registry application to certify that the terms of the Land Registry's policy have been followed, this must state as follows: 'I certify that, to the best of my knowledge and belief, the requirements set out in Practice Guide 8 for the execution of deeds using electronic signatures have been satisfied';

• 'mixed signings' – one party electronically, one party wet ink, are permitted, and also 'mixed platforms', these routes will generate additional due diligence;

• where a deed is being signed by a company by way of two authorised signatories (i.e. two directors, or a director and secretary) then (in the usual way) no witness will be required; 

• the guidance provides that the Land Registry will accept e-signatures for transfers of property, leases for 7 years or more, deeds of easement, charges, discharges of charges, and powers of attorney (but not lasting powers of attorney).

The Land Registry recommends (but does not mandate):

• including the words next or beneath a witness signature block  'I confirm that I was physically present when [name of signatory] signed this deed' ;

• that conveyancers retain with their conveyancing file a copy of the completion certificate or audit report produced at the end of the signing process to record the email addresses the documents were sent to, the one time password method used, the fields that were completed, and the IP address of devices used.

 

So what does this mean in reality?

Instead of your property lawyer printing and mailing to you or emailing to you for you to print the legal deed for ‘wet ink’ signing, your property lawyer or the lawyer on the other side, could send you the final version of the legal deed for ‘witnessed electronic signature’. The lawyer sending the deed can specify the name, email address and mobile number of the witness (assuming you provided this information previously) or you could specify this upon receipt of the deed for e-signing. The witness must be in your presence and this is usually proven by both you and your witness having the same IP address. Of course, if you’ve not shared your Wi-Fi password with your witness (tsk! tsk!) and one or both of you are on separate mobile networks, and thus you both have separate IP addresses, then some other evidence of both of you being in the same room will be required. This could take the form of a simple email by both of you to the lawyer sending out the deed of e-signing or you could take a selfie of both of you and email it to the lawyer.

Your witness must see you e-signing the deed and once you’ve done that and clicked ‘finish’, the e-signing platform will email your witness to review and countersign the deed. Your witness then places their own e-signature, completes their name and address details then clicks ‘finish’.

The deed can then be ‘completed’ by the relevant lawyer or it could be sent to the other party in the transaction to e-sign as you have done.

Think about all the time that could be saved by this change!!

 

What are the pinch points?

Both your lawyer and the other party’s lawyer must be willing to have deeds signed in this way. I can foresee a number of lawyers giving the following reasons not to adopt this approach:

• We don’t have access to the e-signing platform

• We don’t understand the process

• There is too much risk on us as a business

• We are concerned the Land Registry will not accept how it has been done

We also do not yet know if financial institutions will accept mortgage deeds and related documents to be signed in this way. I am aware that at the very least, they would want personal guarantee deeds to have ‘wet ink’ signatures.

Nevertheless, the above are, in the round, simply excuses and they are not difficult to overcome. Yes, some time will be required to educate the stakeholders but it is a change in the right direction and not too bold that it wouldn’t be irreversible.

 

What are the risks?

The BBC recently reported “Luton man left shocked as his house is ‘stolen’”. Briefly, the identity of the property owner had been stolen, which then led to the ‘fake’ Luton property owner instructing the sale of the property. This is not the first of such reports, there have been several in recent years and I dare say, it will not be the last.

We live in a time when much of our life is lived online, in digital format. That lends itself more easily to identity theft, which will be made easier with electronic signing of property transfer deeds. 

To enable this change, the Land Registry has had to place the obligation and thus the risk on verifying the identity of the signer on the property lawyer who instigates the electronic signing process. Whilst this may be easy enough for the property lawyer to comply with for his/her own client, it will be more difficult to do with the witness or the other party to the deed, who is represented by the other property lawyer. The other property lawyer may have much less demanding identity verification processes and thus could be the ‘weak link’ in the chain. You can see why some lawyers would be loathe to agree to accepting the risk with the Government-backed Land Registry being the party to whom the obligation is owed.

This valid concern is why the Land Registry is looking to evolve further to the much preferred ‘Qualified Electronic Signature’ platform. The primary difference between this e-signing platform and the Witnessed Electronic Signature approach is that the identity of each signer of the deed (including the witness) must be verified using one of the Government’s approved digital identity providers. Requiring a digital identity verification should, in theory, also reduce the risk of identity theft and thus property fraud, which in the round, must be a good move forward for such a valuable sector in the UK economy.

 

What should you do?

The next time you apply for a mortgage/finance or engage a property lawyer, ask if they are happy to use witnessed electronic signatures for the legal documents. If not, ask them to explain why and if you’re not convinced by their reason, educate them, try to convince them and if they’re unwilling to evolve, consider whether you should be engaging with a professional who is more willing to move with the times.

What has been your experience? I would love to hear your thoughts. Comment below or Get In Touch