The Government recently approved legal changes which will allow full digital conveyancing to come into effect on 6th April 2018. This will mean that digital documents with e-signatures can be used for both land transfers and land registration.
While this greater flexibility is welcome, Else Solicitors urge a degree of caution when deciding on whether to use full digital conveyancing. Head of Commercial Property at Else, commented “There are some benefits to digital conveyancing and digital mortgages. However, they do raise some concerns, especially given the recent rise in property fraud which we highlighted in an article last year.
“This includes the use of emails to send and receive documents. Emails are generally insecure, and can be hacked by smart fraudsters who send you fake messages that appear to be from your solicitor. We highly recommend that you double check any e-mails that request payment or sensitive information, and check they are genuine by phoning your solicitor. You should always use the number they gave you when you met or the one on their website. Fake e-mails often contain fake phone numbers so do not use the number quoted in the e-mail.”
Our property team is very experienced in conveyancing and protecting private owners, landlords and property investors from the growing wave of property fraud. If you have any questions or concerns then please contact our Commercial Property Team.
Below are some of the key facts about digital conveyancing:
Why is it being introduced? The law currently requires that conveyances and legal mortgages of land must be carried out by a paper deed. The Land Registry is introducing digital conveyancing as it is simpler, faster and cheaper than the traditional approach. These rule changes will allow HM Land Registry to introduce fully digital conveyancing documents such as mortgages and transfers.
Commenting on these changes, Chief Executive and Chief Land Registrar Graham Farrant said “Our customers are central to everything we do and we want to make dealing with us quicker and simpler by providing more services through digital technology. These changes are an important enabler for our digital transformation.”
How will digital conveyancing work? It is the same process as now but rather than a physically signed document, often known as a wet signature, documents will be signed by users confirming their identity through the Gov.UK Verify service. This is the same on-line service used by those needing to confirm their identity to file their tax return, claim benefits or check their state pension. Users are asked to submit details such as passport or driving licence information and are then sent a security code to their mobile phone which is entered to confirm their identity. It takes people, on average, between 5 and 15 minutes to verify their identity the first time it is used.
Business minister Greg Clark admitted that the introduction of digital conveyancing involves some risk. He said “The risk of the new liability occurring is considered low. The new process, where the borrower’s identity has to be verified through Verify combined with HMLR’s independent security processes, should in fact reduce the overall risk of fraud.”
Benefits of digital conveyancing: The benefits cited by the government for introducing digital conveyancing include:
- Streamlining the conveyancing process, leading to quicker processing by conveyancers
- Introducing fully digital conveyancing documents including mortgages and transfers
- Increased accuracy e.g. by eliminating clerical error when the digital register is updated by a clerk from a paper deed
- Reducing costs e.g. reduced paper, printing and postal costs
- Minimising delays e.g. conveyancers will need to raise fewer requisitions due to missing information
- Increasing flexibility around when businesses and individuals can enact business
Risks of digital conveyancing: In regard to the cited benefits above, then questions have been raised as to the actual benefits that would be realised by Digital Conveyancing, specifically:
- Quicker conveyancing is not always assured as delays usually occur for other reasons such as buyers having trouble getting a mortgage, sellers waiting until they have a buyer before looking for their new home, surveys revealing hidden problems, and the common problem of buyers or sellers changing their mind and pulling out.
- Cost savings are minimal, as the cost of printing and posting documents is insignificant when compared to the other costs involved.
- Conveyancers and individuals are unlikely to require out of hours’ access to the register.
- There are concerns over the security of electronic signatures and the ability of criminals to fake an owner’s signature electronically on a property transfer or mortgage. This could result in the owner losing their property or finding themselves landed with a massive mortgage that they knew nothing about.
- It is also increasingly common for fraudsters to intercept legitimate emails between buyers and conveyancing solicitors. They then send the buyer a fake e-mail which looks like it has come from their solicitor requesting a payment into the swindler’s bank account. Research by Barclays shows that 13% of homebuyers in London are targeted by this simple con. It is also prevalent in other areas including Liverpool (10%) and Birmingham (9%).
The Land Registry has said it will underwrite a level of risk of fraud when it starts accepting digital signatures as part of changes that will allow mortgage and conveyancing services to be completed digitally. However, it is not said how much it will underwrite or under what circumstances.
If you would like further advice, please contact our Commercial Property team by calling 01283 526 200.