Automated Registration of Title to Land

As readers of this magazine will be aware, a major contemporary policy theme,both of the UK Government and internationally, is the redefinition of therelationship between Government and the citizen in the emergent informationsociety. The tangible products of policy development are increasingly appearing.Outside of Government, in a relatively short period of time, EDI has ceased tobe a novelty and has become a commonplace means of doing business. At thebeginning of this decade, it was possible to emerge from university with a wellbalanced law degree which had included no study at all of either IT law or even,say, the impact of the Internet on intellectual property or choice of lawsproblems. This situation is changing rapidly.

One area of the law which has largely escaped the impact of the informationsociety has been the conveyancing of real property and the registration of titleto land. This may be about to change.

At the heart of conveyancing and registration practice is the written deed: aprinted document in a more or less stereotypical form which is signed by thevendor/grantor and presented for registration to either Her Majesty’s LandRegistry (in England and Wales) or the Registers of Scotland. Under the systemsof registration of title which operate in the UK ¹it is the act of registration which confers title. ²In process terms the entire system is predicated upon the processing of awritten document. In the present-day office environment this means that a deedis written on the conveyancer’s computer, printed, signed, then submitted to theregistrar who copies the relevant information from the deed into his owncomputer.

Automated Registration of Title to Land discusses the consequencesof digitising at least some aspects of the conveyancing process in the UK andthe possibility of making the registration of title an automatic and virtuallyinstantaneous process following completion (or `settlement’ in Scotland). Inessence the question which is addressed is that of how the law would require tochange if the written deed were to disappear and the information were to betransmitted directly from the conveyancer’s computer to the registrar’s computerwithout the physical intervention of civil servants to double check the workwhich the legal professional should already have done. The conclusion is reachedthat this is feasible and achievable. It will be readily apparent to readers ofthis magazine that the difficulties involved are not technical but legal.

The consequences are too complex to be detailed in full here, but it isworthwhile to consider the central change: the replacement of the writtenconveyance by a digital instrument.

The Deed

The deed has a long provenance in both England and Wales and in Scotland. Themodern form has its roots in the feudal Charter which began as a means ofevidencing a grant of land but over time became a necessary solemnity forachieving the transfer of land. The routes by which the deed came to thispre-eminence and the development of the differing systems of property law andconveyancing within the UK are not relevant here: suffice to say that bothsystems are predicated upon the exchange, examination and registration of piecesof paper which follow a particular, legally significant, form. However the deedis a product of positive, not natural law: it was created, not revealed, and itevolved to accomplish certain policy aims using the appropriate technologyavailable from the spread of literacy onwards. The technology defined the formof the deed, not vice versa. The essence of the form has not changed that muchin recent times, and the main impact of technology has been in the production ofthe piece of paper: laser printer and paper have replaced quill and vellum. Now,however, the availability of new technologies associated with EDI affords theopportunity to define further forms of the deed while maintaining the key policyfeatures which the written deed encapsulates.

The key points of the deed are that the document must tell you who theparties are, what they are doing, and what piece of land they are doing it to.The document must be in a form which the law recognises as significant and itmust be authenticated in a way to which the law prescribes some presumption ofauthenticity. These points remain a constant whether the document is in paperform or digital form, but, of course, they transcend the particular medium.

Existing Systems Elsewhere

A system of automated registration of title to land is currently being testedin Ontario by a public/private consortium called Teranet. Under the Ontariosystem the deed as a paper document disappears for certain transactions and whatis submitted to the registrar is an electronic document authenticated by thedigital signature of the presenting conveyancer. The conveyancer retains on filea document signed by the granters indicating their assent. On transmission tothe registrar, registration fees and land taxes are paid by electronic fundstransfer. The turnround time between submission to the registrar andregistration can be measured in seconds. Many of the checks which would normallyhave been done by the registrar’s staff are either pre-programmed into a rulestable on the system (against which draft conveyances can be tested prior tosubmission) or are made the subject of `compliance with law’ statements made bythe conveyancer as a result of their own standard searches and checks on behalfof their clients. In consultation with the Law Society of Upper Canada, `bestpractice’ has been built into the system design such that subscribers canautomatically obtain title insurance via the solicitor’s own professionalindemnity coverage when using the system.

Ontario is not alone in introducing automated registration, although it isthe furthest ahead. Aside from the merits of the particular system in itsparticular context, the broad importance of the Teranet system is that it can betaken as a `proof of concept’ writ large. The Kadaster in the Netherlands isdeveloping a system which will allow Public Notaries to transmit Notarialdocuments directly to the Kadaster for registration. The Registrar General ofLand in New Zealand and Land Information New Zealand are engaged in a wholesalemodernisation of their land records which will include the introduction of asystem similar to that introduced in Ontario. Various states in Australia aredeveloping or have in place the electronic lodgement of certain documents andthe Netherlands and some Australian states are also developing electroniclodgement of plans.

New Systems

These developments in other jurisdictions can be studied and learned from inthe UK, where the degree of automation already in place within the production ofthe registers, particularly in Scotland, is already very high.

Both Scotland and England are introducing systems of registration of title asopposed to registration of or reliance upon deeds. The difference betweenregistration of title and reliance upon deeds is important. Where reliance isplaced upon deeds then it is necessary to examine those deeds in some detail inorder to establish, say, the title of a vendor. In Scotland, moreover, since1617 deeds have had to be registered in order to establish a real right in land.By contrast, under registration of title there is a once and for all examinationof the bundle of title deeds by civil servants who create a Title Sheet on whichthe land is identified by reference to its location on the Ordnance Survey map.The Title Sheet is determinative of the title and once the title is registeredthe prior deeds become redundant for most purposes. In principle, once theinterest is registered, subsequent dealings with that interest can beaccomplished very simply. It is this relative simplicity of a dealing within asystem which is already highly automated in its production processes which makesthe introduction of automated registration a real possibility.

In a system of deeds it is important that those deeds are drafted to a highdegree of accuracy to avoid future problems with the progress of title. Inregistration of title, by contrast, when an event affecting the title occurs,the emphasis switches from drafting pedantically accurate deeds to producingsufficient evidence to persuade the Chief Land Registrar or the Keeper of theRegisters of Scotland to change the register. Of course generally what the ChiefLand Registrar and the Keeper have required to be produced to them is a deed,but that is because the present structure of the law ascribes virtues andevidential status to paper documents which are in a particular form and executedin prescribed ways. Requiring a deed gives the highest degree of protection tothe Chief Land Registrar or the Keeper in the event of challenges to hisactions. The key to automated registration is to devise a digital instrument ofsome kind to which requirements of form and evidential status can be ascribedand which therefore affords the same degree of protection and security.

The requirement is not to attempt to replicate a paper deed in electronicform but rather it is to create an electronic form which plays the same role asthe paper form.

Authentication

An immediate issue to be faced is how an `electronic deed’ would be signed,but in fact the background policy issue is not the signature itself: the role ofthe signature is to authenticate the document and additionally to provide asymbolic manifestation of the intent of the granter. Consequently the key issueis not signature but authentication and the true question tobe asked is therefore not how to replicate a signature electronically but ratherhow to authenticate an electronic document. The symbolic record of the grantor’sintent is a linked, but distinct, issue – it is convenient, but not necessary,to achieve both results in a single act.

In terms of available technology, authentication could be achieved at presentby the use of a digital signature. Since the digital signature would identifyboth the source and, via the # value, the content of the digital instrument, itwould in fact be more secure than an executed paper deed (at present under Scotslaw the test is simplistic and mechanical: does the document appear to have beensigned by the appropriate person and a witness? ³). In Ontario, New Zealand and the Netherlands, the digital signature will bethat of the conveyancer, not that of the granter of the conveyance. This is nota problem in the Netherlands where a notarial system is in operation: itrepresents a significant policy shift in Ontario and in New Zealand.

In the UK too a shift from the personal deed to a conveyancer’s instrumentwould be significant, but as I argue in the book this is more of a shift in theexisting balances in the process rather than a revolutionary change. While thelaw rests on mechanical tests within the requirements of form, in practice thesystem revolves around the trust placed in the legal professionals, theoperation of which trust I refer to for convenience as `Notarial Effect’.

Conclusion

In practice, it can be anticipated that, should automated registration bepursued as a policy option, the legislation supporting it would be technologyneutral, thus ensuring that (a) new techniques in the secure transmission ofdata would not require a redraft of primary legislation to be utilised and (b)if at some future date a national system of personal identification should beintroduced into the UK, personal electronic execution of digital instrumentswould not be excluded as a possibility.

Finally, registration of title is the end result of the conveyancing processand automation of the former achieves its full potential in the context of thedigitisation of the latter. The extent to which EDI becomes the norm for generalaspects of conveyancing business is a matter of broader application for theconveyancing profession and, for example, financial institutions. Already manyconveyancers will be familiar with commercially available packages containingelectronic templates of standard forms and letters used in the course oftransactions. It takes no great leap of the imagination to see that it would berelatively simple for such documents to be exchanged by e-mail rather thanprinted and posted or faxed.

More significantly, both HMLR and the Registers of Scotland are putting theirprincipal registers online for searching purposes and it is not difficult toimagine that commercial conveyancing document packages could become interactivevis-á-vis an information and registration system. An integrated network couldalso feature accesses to local authority planning information, Companies Housedata, and support the payment of the purchase price, stamp duty and registrationdues by electronic funds transfer. None of these suggestions is utopian and thetechnology to achieve them is readily available.

In Scotland it is hoped that preliminary consultation on the issues raised byAutomated Registration of Title to Land will begin shortly. In themeantime comments and views from SCL members are welcome.

Ian Burdon’s report, Automated Registration of Title to Land isavailable from the Customer Services Centre at the Registers of ScotlandExecutive Agency for £8.95.

Contact: e-mail KEEPER@ROS2.ros.btx400.co.uk;fax 0131 479 3666; phone 0131 659 6111. Ian Burdon can be contacted at email: ian.burdon@ros.gov.uk;fax: 0131 479 3675; phone: 0131 659 6111 x3804.

Endnotes

1. Property law and conveyancing practice differ as betweenScotland and England and Wales. For the purposes of this article I have tried toavoid areas of technical difference, but for those interested the differencesand the reasons for the differences are outlined in Chapters 1 and 2 of my fullreport. Registration of Title was introduced in Scotland by the LandRegistration (Scotland) Act 1979 (the 1979 Act) and the Land Registration(Scotland) Rules 1980, which are based upon the English Land Registration Act1925 (the 1925 Act) suitably reworded to take account of the Scottish Civil andFeudal law background.

2. 1925 Act, ss. 5, 9 and 19(1); 1979 Act, s. 3(1)(a).

3. Requirements of Writing (Scotland) Act 1995, s. 3. Variousdifferent rules apply to limited companies in terms of the Companies Acts and toother bodies.