The focus of property professionals over the last 12 months, in the residential sphere at least, has been on the fated Home Information Packs (HIPs).

Trumpeted by ministers as the much needed solution to “the conveyancing problem” in terms of speed and cost, government has steadfastly ignored the views of the professionals involved who have said from the start that, whilst the concept is laudable, the proposed methodology was deeply flawed. Government ultimately resorted to defending the HIP on environmental grounds and finally gave way in the face of judicial review proceedings commenced by RICS, with the result that a watered down process will be implemented in phases from August (rather than June) this year. It is even possible that the HIP will wither and die in the glare of PM Brown’s new empire, although I believe that the Energy Performance Certificate will remain as it ticks one of the government’s Kyoto Conference pledge boxes.

Contrast this with the almost staid, and certainly measured, progress of e-conveyancing, which has been quite content to remain in the shadows whilst its more glamorous younger sister HIPs has grabbed the limelight.

So what exactly has been going on in the world of e-conveyancing?

The pace of progress has significantly slowed, mainly for technical reasons but also I think because it has been realised by some at the Land Registry (LR) that conveyancing is more complicated than they at first thought. The good news is that, unlike many other government technology projects, stakeholders’ views are being taken into account.

Electronic discharges (EDs)

The original pilot involving Nationwide and Abbey worked well and those two lenders plus one other secondary lender are using the system. However LR’s hope that there would be increasing take up amongst the lenders has not yet been realised. This seems to be not because the lenders view the system as flawed, but just that they have a lot of other things to deal with at the moment (changes required by the FSA, commercial pressures requiring changes to working practices, etc) and the EDs system is not high on the priority list as it is not required by the regulator nor does it deliver significant commercial benefit to the lenders. The feeling is that lenders will adopt EDs in due course when the time is right for them.

LR has decided to introduce an interim solution involving an “electronic form”, the EDS1. This is a lot simpler for lenders to introduce, without needing the complex data synchronisation that the full blown EDs system requires.

E-lodgement

Use of the e-lodgement system, which enables conveyancers to effect non-dispositionary changes to the register, has also been disappointingly low. This may be because of the requirement in certain cases to submit paper-based evidence in support of the electronic application. This is being addressed by permitting digital images of supporting evidence, appropriately certified by the conveyancer, to accompany the electronic application. LR hopes that this will improve take up.

Network Access Rules

The Registry has been very careful to consult stakeholders at all stages of this massive project. The consultation on the draft Network Access Rules (which will regulate participation in the e-conveyancing system) closed at the beginning of June. Although the subject matter of the consultation was the Rules themselves, to give meaning to these a suggested sample Network Access Agreement and some explanation as to how LR sees the system working in practice, was also included.

At the time of writing the responses are under consideration but early indications are that comments on the Rules themselves were limited and respondees concentrated upon the sample Agreement. Not surprisingly, one of the main issues is the question of liability which, the consultation appeared to suggest, LR was attempting to avoid. LR appears to realise that this will not work and they need a fundamental re-think on how to deal with this issue. It would not, for instance, be acceptable to guarantee 98 per cent “uptime” for the system and then say that if the 2 per cent permitted downtime happened to fall during the middle of a Friday (the busiest day of the week for residential conveyancers), so causing massive disruption and expense, LR would not be liable.

Chain Matrix

A pilot of the Chain Matrix (the system which enables permitted users to view the status of all transactions in the chain) commenced in May 2007 in Bristol, Fareham and Portsmouth. LR reports a good take up amongst practitioners. Early indications are that, as anticipated, there is some difficulty in getting complete chains on to the matrix because either a property in the chain is outside the area of the pilot or because a conveyancer within the chain is not participating in the pilot. This is providing valuable data upon the typical length of chains and the geographical spread of the properties within them.

Initial feedback indicates that users are experiencing some minor issues but are suggesting remedies for these issues. The pilot is scheduled to finish in early winter 2007 at which point LR will decide whether they have gathered enough data or whether the pilot should be extended.

Further consultation

Whilst considering the response to this consultation, LR are already drafting the next consultation document which focuses upon the proposed modest release of enhanced electronic services during the first half of 2008. This will involve:

Chain Matrix – possibly adding a mechanism for releasing and exchanging contracts on the system.

E-lodgement – permitting evidence in support of applications to be submitted in electronic format.

New discharge form EDS1 – see above.

Electronic charges – the introduction of the first electronic disposition using a standard form electronic charge. This is aimed at the remortgage market and, initially at least, the conveyancer will sign the form electronically having been authorised by the Chargor on an “execution only” basis. Firms will be sought to pilot this project. It is anticipated that take up will depend upon the degree to which firms will need to tailor their systems in order to participate.

Practitioners interested in responding to consultations should go to www.econsultations.e-conveyancing.gov.uk.

Electronic/digital signatures

As mentioned above, e-signatures will be used in the e-charges pilot; initially the conveyancer will execute the document on behalf of the borrower, having received their (paper based) authority so to do. Ultimately it is hoped to enable “citizen signatures”, where the conveyancer will undertake identity checks on the client who will then be authorised by LR to sign a document digitally.

LR is likely to use different technological tools for the conveyancer and its client, both utilising PKI standards; the conveyancer will have a USB token whilst the citizen will use an “identicard” which is a printed code matrix which, when used with a unique PIN, will enable authentication and e-signature.

This reflects the growing awareness of digital signatures in Europe, with the Council of Bars and Law Societies of Europe in January 2007 issuing guidelines for their adoption and use and stating that a greater scheme to help with electronic communication is inevitable. Scotland is pushing ahead with a system of smartcard and digital signatures proposed for its new conveyancing system.

Electronic funds transfer (EFT)

LR appears ahead of the game in connection with EFT which is, of course, essential for any full system of e-conveyancing. It is talking to two potential suppliers and it is hoped that there will be an announcement later in 2007. Matters in this connection are not likely to progress very quickly; it is for once not the technology causing the delay, but the requirement to satisfy the regulators before any system can be implemented.

Stamp Duty Land Tax

The most recent Finance Act contained the main enabling legislation required to allow electronic SDLT returns to be submitted to LR, although secondary legislation is still needed to deal with the “nuts and bolts” as to how this will work. Once implemented, the delay conveyancers currently experience in the supply of the SDLT certificate before being able to proceed with the registration process, should disappear.

Continuing enhancements

As well as these headline grabbing changes, LR are working hard to make their existing systems, such as LR Direct, less “clunky” and more user-friendly.

Conclusion

So, despite being off our radar for a while, there is a lot going on in the further development of e-services and e-conveyancing by LR. Steve Kelway, General Counsel and founder member of LR’s e-conveyancing Task Force says that “momentum is gathering”, although initiatives will not be pushed through before they are ready. The frequency and amount of consultation being undertaken by LR (and the fact that responses are listened to) differentiates e-conveyancing from some other government technology projects and does, I believe, mean that there is a much higher likelihood of the project succeeding where others – mentioning none in particular – have not.

Alastair Rhodes is a partner in Blake Lapthorn Tarlo Lyons. He is a property lawyer with a particular interest in law firm management and the use of technology to assist in the achievement of objectives. He holds an MBA from Nottingham Law School and lectures on topics including e-conveyancing.

Email Alastair.Rhodes@bllaw.co.uk.