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The COVID19 crisis shows the need for the modernisation

24 June 2020

In my recent article about the modernisation of the land registration process, I highlighted how the current system of land registration in England and Wales is outdated, and argued that it is vital to the property market, to businesses, and to the wider economy for us to have an efficient and dynamic system which takes advantage of new technologies.

One of the key areas that my article touched on was how the introduction of a fully electronic conveyancing system would help deal with a number of the issues which are created due to our arcane and complicated system, and I encouraged the Land Registry to bring forward their plans to introduce electronic conveyancing to ensure that it keeps apace with the needs of the property industry.

The Covid-19 crisis has had a dramatic impact on transactions in all legal sectors, and there has been a significant reduction in the volume of all transaction work. Many transactions have been put on hold, and are unlikely to proceed further until there is more clarity around when and how the Government restrictions will be relaxed and there is a better understanding of what the market and the economy will look like after the crisis has passed.

Where transactions are still proceeding the restrictions which have been brought in by the Government have created a number of practical issues, and lawyers and their clients have had to try to adapt accordingly. 

One area that has been particularly difficult to deal with is the issuing of engrossments and signing of documents. The lockdown has made the production of hard copy engrossment documents extremely challenging as both lawyers and their clients are not able to access the printing facilities in their offices. 

Most legal sectors have been able to take advantage of the various technological solutions (such as the issuing of electronic engrossments and electronic signing of documents) which have been developed in recent years, and the use of electronic signatures is becoming common practice for the legal teams operating in these areas in most major law firms. This has enabled transactions to proceed in many sectors despite the difficulties in producing hard copy engrossments.

The lawfulness of such an approach has been supported by the Law Commission in their September 2019 report on electronic execution: 

Electronic execution of documents | Law Commission

Unfortunately, these technologies cannot be used on property transaction which are registrable at the Land Registry as the Land Registry does not currently generally accept electronically signed documents save for their digital mortgage service for some domestic properties. This has had an impact on the property market and has resulted in property transactions either being delayed or put on hold until the crisis has passed. 

The Land Registry clearly recognises that the current system is not perfect and needs to change. Over the past three years they have had a research and development project called Digital Street which aims to work with the property industry to identify innovative ways and technological solutions to solve some of the key problems with buying and selling land and property. One of the areas that the project is looking at is the use of electronic signatures on registrable transactions, and small steps have been taken with the introduction of the digital mortgage service for some domestic properties. 

We are currently living in unprecedented times, and it is likely that the Covid-19 crisis is going to have long lasting and profound implications for the country and for the economy as a whole. It has highlighted just how important it is for the Land Registry to keep up with the pace of technological change, and has shown that the consequences of failing to do so can be significant. 

The Land Registry has acknowledged the difficulties around signing of documents due to the Covid-19 crisis, and has made some temporary changes to their rules so that they now accept documents which have been signed pursuant to the 'Mercury' procedure (which only requires the signature page to be printed and signed).

It is the writer's view that execution via electronic signature platforms such as DocuSign offer a solution with the same legal effect, but via a route that is significantly more efficient and secure than a 'Mercury' document. The Land Registry should therefore seek accept documents executed by this route as soon as possible.

The prospect of electronic signatures has recently been discussed in a Land Registry blog post:

Legal Challenges in challenging times >

Whilst many of the changes that will result from the Covid-19 crisis will be negative, it also gives us an opportunity to try to learn lessons and make positive changes. The crisis will have shown the Land Registry the areas where they need to improve, and we hope that the Land Registry take advantage of this and decide to bring forward their plans to adopt new technological solutions and modernise the land registration system.

Further Reading