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The future with e-Conveyancing
Electronic Conveyancing
[Reproduced from "e-Conveyancing", Copyright John Lambert, Northern Intellectual Property Chambers, with thanks.]
1. Background
1.1 Introduction
Electronic conveyancing is a type of electronic or e-commerce. A good definition of electronic commerce is suggested in the following EC Commission paper :-http://ec.europa.eu/information_society/ecowor/ebusiness/index_en.htm
"any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact".
Some transactions may take place between two or more businesses ("B2B"), others between businesses and consumers ("B2C") and others between businesses and the public and national and local government ("electronic government").
1.2 Importance of E-Commerce
In its report e-commerce? Its.best.uk the Performance and Innovation Unit ("PIU") of the Cabinet Office noted that B2B e-commerce in the United States was expected to reach US$1.3 trillion by 2003, B2C was thought to have reached US$7 billion in 1998 and to be on track to reach between US$40 billion and US$80 billion by 2002. In the UK, e-commerce revenues were expected to reach US$4.5 billion for calendar year 1999, rising to US$47billion by 2002.
1.3 Government's Strategy
In its competitiveness white paper, the government set itself the task of making the UK "the world's best place to trade electronically by 2002". Responsibility for drawing up a strategy was a legislative framework for the development of e-commerce. The cornerstone of this legislative framework is the Electronic Communications Act 2000, which received Royal assent on 25 May 2000.
1.4 Electronic Conveyancing
Electronic conveyancing will embrace all three types of transactions:-
Business to Business : Transactions between Solicitors or licensed conveyancers and estate agents, Mortgage lenders and Solicitors or licensed conveyancers and Commercial landlords and business tenants.
Business to Consumers : Estate agents and vendors and purchasers, Mortgage lenders and house buyers and Solicitors, licensed conveyancers, surveyors and other professionls and house buyers.
Electronic Government : HM Land Registry and Solicitors, house buyers and Mortgage lenders; Local authorities and Solicitors and licensed conveyancers and Inland Revenue and house buyers.
2. The Legacy of the Statute of Frauds
2.1 Statute of Frauds 1677
After the economic and social, as well as political, turmoil of the English Revolution, Parliament enacted the Statute of Frauds in 1677 to provide some stability in commercial dealings. The Act is still in force though much of it has been repeated or re-enacted in other legislation. S.4 provided that certain types of contract, including in particular contracts for the sale of land, could not be enforced unless they were recorded in writing and signed by the person(s) to be bound. S.4 of the Statute of Frauds was re-enacted by S.40 of the Law of Property Act 1925 ("LPA"). The requirement that a contract for the sale of land could only be enforced if recorded in writing remained in force until the Law of Property (Miscellaneous Provisions) Act 1989.
2.2 Law of Property (Miscellaneous Provisions) Act 1989
S.2(8) of that Act repealed S.40 of the LPA and replaced it with a new requirement that a contract for the sale of land should actually be in writing: "2. - (1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each."
Although sub-section (2) permitted the incorporation of terms from another document: "The terms may be incorporated in a document either by being set out in it or by reference to some other document."
Sub-Section (3) required the document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) to be signed by or on behalf of each party to the contract. The only exceptions to this rule were short leases covered by s.54(2) of the LPA, contracts made in the course of a public auction and contracts regulated under the Financial Services Act 1986. Also, the new section did not affect the creation or operation of resulting, implied or constructive trusts.
2.3 Deeds and Dispositions
Two other important provisions of the LPA, which remain in force, are s.52 and s.53.
S.52(1) provides: "All conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed."
The concept of a "deed" has been modified considerably by s.1 (1) of the Law of Property (Miscellaneous Provisions) Act 1989 which abolished rules of law that restricted the substances on which a deed might be written, required a seal for valid execution or required to be given by deed authority by one person to another to deliver an instrument as a deed on his behalf. In place of sealing, section 1(2) required an expression of intention:
"An instrument shall not be a deed unless -
(a) it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and
(b) it is validly executed as a deed by that person or, as the case may be, one or more of those parties."
A further sub-section required witnessing and delivery to authenticate execution:
"An instrument is validly executed as a deed by an individual if, and only if:
(a) it is signed
(i) by him in the presence of an independent witness who attests the signature; or (ii) at his direction and in his presence and the presence of two witnesses who each attest the signature; and
(b) it is delivered as a deed by him or a person authorised to do so on his behalf."
The only exceptions to s.52(1) are:
(a) assents by a personal representative;
(b) disclaimers made in accordance with sections 178 - 180 or sections 315 to 319 of the Insolvency Act 1986 are not required to be evidenced in writing;
(c) surrenders by operation of law, including surrenders which may, by law, be effected without writing;
(d) leases or tenancies or other assurances not required by law to be made in writing;
(e) receipts other than those falling within section 115 below;
(f) vesting orders of the court or other competent authority;
(g) conveyances taking effect by operation of law."
S.53(1) of the LPA provides that without prejudice to the laws relating to the creation or operation of resulting, implied or constructive trusts:
"(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will."
2.4 Incompatibility with E-Commerce
Clearly these and similar rules in other legal systems are incompatible with the development of e-commerce. To tackle those restrictions, the United Nations General Assembly urged member governments to adopt a Model Law on Electronic Commerce that provides legal validity to electronic transaction.
3. Electronic Communications Act 2000
3.1 Legislative Context
This Act is one of four recent statutes that lay the foundation for electronic commerce. The others are:
The Data Protection Act 1998
The Regulation of Investigatory Powers Act 2000, and
The Freedom of Information Act 2000.
In so far as they attempt to balance the desire of business for secure communications against the public interest in detecting, suppressing and preventing crime, subversion and antisocial behaviour and individuals' need for privacy they should be read together with the Human Rights Act 1998.
3.2 The Act
The Act is intended to build confidence in e-commerce and its underlying technology by providing:
an approvals scheme for cryptography services, such as electronic signature authentication and encryption;
legal recognition of electronic signatures and their verification and communication; and
removal of obstacles in other legislation to the use of electronic communication and data storage as an alternative to paper.
For the purposes of this paper, the last of these provisions is the most important.
3.3 Power to amend Legislation
S.8(1) of the Act enables a minister to modify by statutory instrument the provisions of any enactment or subordinate legislation in such manner as he or she may think fit for the purpose of authorising or facilitating the use of electronic communications or electronic storage instead of other forms of communication or storage such as paper. This power may only be exercised for one or more of the following purposes, which are set out in s.s.(2):
(a) the doing of anything which under any such provisions is required to be or may be done or evidenced in writing or otherwise using a document, notice or instrument;
(b) the doing of anything which under any such provisions is required to be or may be done by post or other specified means of delivery;
(c) the doing of anything which under any such provisions is required to be or may be authorised by a person's signature or seal, or is required to be delivered as a deed or witnessed;
(d) the making of any statement or declaration which under any such provisions is required to be made under oath or to be contained in a statutory declaration;
(e) the keeping, maintenance or preservation, for the purposes or in pursuance of any such provisions, of any account, record, notice, instrument or other document;
(f) the provisions, production or publication under any such provisions of any information or other matter; or
(g) the making of any payment that is required to be or may be made under any such provisions.
The minister's power to amend legislation by secondary legislation is subject to the following limitations. First, he or she may not make an order under s.8(1) unless he or she considers that the use made of electronic communications or electronic storage will be no less satisfactory than in other cases. [S.8(3) Electronic Communications Act 2000]. Secondly, an order under s.8 may not require the use of electronic communications or electronic storage. However, an order may provide that a period of notice must expire before effect is given to a variation or withdrawal of an election or other decision which has been made for the purposes of such an order and is an election or decision to make use of electronic communications or electronic storage.
4. Lord Chancellor's Proposals
4.1 LCD Consultation Paper on Electronic Conveyancing
In March 2001 the Lord Chancellor's Department published on its website a consultation paper that it had prepared in conjunction with the Land Registry and Law Commission setting out proposals for amending the Law of Property (Miscellaneous Provisions) Act 1989 and the Land Registration Act 1925 by an order under s.8 of the Electronic Communications Act 2000. Responses were invited by the 25 June 2001 to the Lord Chancellor's Department.
4.2 Draft Order
The purpose of the consultation paper is to canvass the views of conveyancers and others on the provisions of a draft order that the Lord Chancellor proposes to make under s.8(1). The effect of the order is to insert a new section 2A into the Law of Property (Miscellaneous Provisions) Act 1925 and a new section 144A into the Land Registration Act 1925.
4.3 Effect of the Order
A large part of the conveyancing process is or can be carried out electronically. The draft order will plug two important gaps by obviating the need for the physical exchange of paper at the contract stage and the execution and delivery of a deed on completion.
5. National Land Information Service (NLIS)
The National Land Information Service is a joint initiative between central and local government to provide on-line one-stop searches. It will allow all searches to be carried out via the Internet, including Land Charges and Local Searches. In time there will be a definitive index of land and property, and online maps. The intention is that a conveyancer will be able to retrieve all relevant information including environmental or geological data.
NLIS has processed 10 million searches, 3.5 million of these in 2006 alone.
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