Digital Conveyancing – A Call for Action Not Words
by David Jabbari, Solicitor, CEO of Muve
Hardly a days goes by without another prediction that we are on the brink of a fully digital conveyancing process. This is usually linked to excitement about a fairly minor improvement to a part of the process, such as the current interest in digital or e-signatures, or extensions of this such as Blockchain. The mistake of the legal and prop tech community is to think that a new technology will be the ‘magic bullet’ that brings us the new world of e-conveyancing.
That there has been no significant progress on anything electronic about the conveyancing process is perhaps shown most dramatically by the fact that esignatures were made possible by the Land Registration Act 2002. 18 years has passed and yet the sector still sees e-signatures at the cutting edge today!
I run a firm that is determined to deliver a fully digital conveyancing process ahead of the competition, so I have an incentive to get to the bottom of this issue. What I have realised is that technology is only a part of the solution. The single biggest flaw in most commentary on e-conveyancing is to neglect the pivotal role that a single, regulated agency such as the Land Registry must play in achieving a digital conveyancing process. It is rather like predicting that there will be women priests in the Catholic Church in 5 years but leaving the Vatican out of the equation.
What is digital or e-conveyancing when you really look at it? I suggest the following definition: the fully automated transfer of Title to residential property without manual information retrieval, by the utilisation of structured data in digital form through a common transactional platform or protocols. Just pondering that definition should be depressing enough to anyone predicting the imminent arrival of e-conveyancing. Further reflection will reveal that it is the Land Registry, and not software providers, that will be key to this. The Land Registry’s ‘Digital Street’ initiative is a step in the right direction but to move the debate on, it is vital that practitioners and industry representatives lobby the Registry for a much clearer vision of this future.
The current conveyancing process is far from ‘automatable’. The data required to complete the process is all over the place, requiring time consuming retrieval of basic information. Secondly, every law firm works in their own way, and at their own pace, not because they are Dickensian but because there is no central ‘hub’ into which the transactions are plugged, unlike the litigation process, most obviously the MOJ mandated Claims Portal for small PI claims. People who study Henry Ford’s famous invention of the ‘production line’ always make the mistake of thinking that he achieved efficiency by breaking the manufacture of a car down into clear stages but in fact it was the setting of defined timings for each stage (i.e., the moving line) that caused the real efficiency. In conveyancing, there is quite a bit of standardisation of approach in the law firms: the problem is that each firm takes as long as it likes on each stage (most notably the handling of enquiries).
There is no tech ‘magic bullet’. In the highly regulated, and intermediated, world of conveyancing, technology is only one part of the solution. Until the Land Registry, and to a lesser extent the Lenders, get the key house mover data in a structured form, and mandate common protocols on the running of transactions, the talk of e-conveyancing will remain a myth. It would be rather like inventing software that dispensed with the need to try a criminal in court but not engaging with the criminal justice system and the police beforehand.
There are two central issues that determine the prospects of achieving digital or econveyancing:
(1) how much of the current data surrounding the conveyancing process can be turned into a layer of easily accessible structured data ideally provided in one place, most obviously by the Land Registry?
(2) how many of the elements of the conveyancing process could, and should, be centrally directed by the Land Registry, or by a third party property exchange company, such as Australia’s PEXA?
Both questions reduce to the balance that should be struck between an ‘official’ layer of data and transactional platform, and inter-operability with third party data providers, case management systems, and law firm processes.
In order to stimulate debate on this, I ask a series of questions about these points and provide some tentative conclusions.
1. The Data Layer in Conveyancing
There is currently great excitement about improving property information at the point of sale, so-called BASPI, or to the cynic HIPS Mark II. I must confess that I am not very excited about this: if anything it shows how limited the ambition is to be innovative in the conveyancing world. The current proposals are very far from being a “single source of property truth” as touted. We will not get close to a fully digital process until we can identify a comprehensive set of structured data about the property that can be accessed easily. It is striking that even before we get out of the starting blocks on e-conveyancing, this very fundamental problem is unsolved.
a. Structured and Official Data
The absolute key to digitising the conveyancing process is getting the key transactional data in a structured form. If we start with the strictly official layer, what additional essential data (beyond Title and ancillary documents strictly related to the Title) could the Land Registry undertake to provide that would be consistent with maintaining integrity and respect for the Register? This is a question about the threshold between curated and non-curated data and the role of the Land Registry in warranting the truth of that information: for example, could leasehold information (‘management packs’), compliance certificates etc feasibly be maintained in a form that would ensure their currency and reliability, and thereby not weaken the integrity of the Land Registry’s core data? While there are already good online sources for FENSA and building regulations – meaning that linkage to this would be possible – it is hard to see any near term solution to achieving the provision of leasehold information of a requisite standard in a structured or ‘official’ form.
There has been a lot of recent talk of some kind of ‘Property Log Book’ or ‘Property MOT’. People might be thinking of the recent online provision by gov.uk of vehicle MOT data which is an excellent move, taking a lot of the vagaries and manual information retrieval out of buying a used car. There is a difference of course in that the ‘MOT’ factor in property is much more complex: it is not an evaluation of safety we are after but the adequacy of the legal Title. No ‘Property Log Book’ would be complete without Title information so if this were to reside other than alongside the current Land Registry information there is a risk that the Land Registry’s role would be undermined, or made derivative (or that third parties would be warranting the accuracy of Land Registry data).
Despite these problems, there is no doubt that some form of Property MOT, combining Title data with other good quality structured data about the property would be a major step forward, It is clear that Local Land Charge data and the facility to make Con 29 enquiries could be part of this layer. If there was a will to digitise all local authority search data, this material could also be available at the touch of a button rather than via the mediation of a plethora of search providers. Things like FENSA, building regulations etc could also form part of this official layer.
b. Unstructured Data
A great deal of useful property information could be accumulated from semi-structured data such as previous search results or protocol information. As noted, the most important class of this, and the one that causes most delay, is leasehold information, despite moves to expedite its manual retrieval by government. Protocol forms, BASPI, former search results etc will lack sufficient integrity to be included in any official layer of Land Registry data and so would need to be provided by third parties. It could perhaps be another gov.uk responsibility (as with vehicle MOTs) but I suspect the Land Registry might be unhappy about another official agency treading on its toes. We should not forget that there could also be a role for completely non-curated unstructured data (eg reviews/commentaries on particular neighbourhoods, blogs, wikis etc). There is a high risk of inaccurate information from these latter sources and so they would always sit outside the ‘official’ conveyancing process.
Conclusions on Data
The Land Registry has an opportunity to add a number of structured data sources (some quasi-official) to its core information without any risk to the integrity and respect for the Register. This would be to the great benefit of lawyers and property owners, and it would provide part of the backbone of an e-conveyancing service. However, the Land Registry could not currently participate in a noncurated layer of data without significant risk to respect for the integrity of the Land Registry’s core information. This would extend to an arm’s length endorsement of an unofficial third party site. It is very difficult to see how any form of ‘Property Log Book’ or ‘Property MOT’ which sought to include a range of non-official information beyond the Land Registry data could be part of the official process of conveyancing. If such a ‘log book’ defaulted back to official information then it would simply duplicate the existing Land Registry core information or its natural extensions into LLC, building regs etc. Lastly, since the most useful upfront information – useful in that it and only it could initiate the legal process of conveyancing – is the Protocol/BASPI information, and this can only be collected at the time of sale with all the problems attached to that, it is doubtful that a log book would revolutionise process efficiency.
2. A Common Transactional Portal
i. Transaction Platforms
Whether run by the Land Registry or other gov.uk, or a private company, there is an obvious requirement for something like the MOJ Claims Portal which enables solicitors and clients to have a focal point for their co-operation with regard to official data and the Title registration process. This could be either an addition to the current Land Registry Gateway of core information or a separate environment.
Every transaction involving a modification of Title would be registered in the Portal. Client identification could be achieved via the HMRC Verify system which has unique access to passport data, since it is already being used for this purpose in the digital signature of mortgages.
There is a question whether this portal should have any ‘advanced transactional’ capability, e.g., could it be a place for the submission and resolution of enquiries between the law firms in agreed format, or provide a chain view functionality? Would it be possible to include case milestones, timing requirements? It is quite wrong to think that any such system would have a significantly negative impact on the lawyers’ role: in fact it would ensure the lawyers focused on their key role in the process which is to check and transfer Title as quickly as possible. Most firms would continue to have their own case management systems that would connect via an API to the Portal.
In due course a dynamic system of contract execution and registration (e.g. Blockchain which, by the way, is a registration technology and not something that needs to sit law firm side) would remove all paper based approaches, and perhaps a link to open banking platforms would allow cash settlement through the Portal (this latter aspect, when incorporated fully in the client’s Portal registration process, could also form part of the ID checking at the outset).
Looking even further ahead, there is an opportunity to use algorithms to make inferences from the mixture of structured and unstructured data available on the official platform and from wider sources. These inferences could extend to (a) complexity of the matter, (b) timescale of the matter, and less easily, (c) legal or other anomalies that might affect the Title. I see these as law firm technology innovations, much like the way investment banks have their own proprietary trading algorithms in their competition for the best returns. In this case the return is quality of legal advice.
Conclusion on Portal
A central Portal for the registration of all transactions which modify Title should be established and be run by the Land Registry or a third party private company or quango. The Portal would incorporate Land Registry and other government data for things like client identification and Title registration. There is little point in this Portal attempting to provide any form of case management beyond the requirement for connection through APIs to law firms or submission of data in an approved form. To do this would stifle efficiency improvement in the parts of the conveyancing process that are not tied directly to official data, e.g., (a) the identification and collation of wider transactional information and enquiries, and (b) the legal evaluation of official data and replies to enquiries etc. The one exception to this is perhaps a ‘chain view’, since such a view can only be obtained by the universal use of a single central system.
E-conveyancing will remain a myth or advertising ploy until the issues of easily accessible structured data and a common transactional Portal are addressed. Rest assured, it will not come like a thief in the night from a software company. In fact, the software companies are part of the problem because what we really need is a single public Portal at the heart of the conveyancing process. The true innovators in this field are the law firms, and I include mine in this, which are using the latest tech (including AI) to be able to bolt all their processes into the common platform when we get to that world. We still get a great competitive advantage from this activity, since we can ensure that the bits of the process we control are much faster than the norm, but clients and agents will not see a real revolution until the larger picture is addressed. The Land Registry is to be congratulated on the work it is doing to digitise its core data but this must be taken further more quickly. Lastly, a common transaction Portal, ideally run by the Land Registry, would be the single most important step to delivering e-conveyancing in anything like the near future.