Conveyancing transaction times could be reduced to five days

Mon 21 Jul 2014 by Lorraine Imhoff

Written by Lorraine Imhoff

“... the development of a fully electronic conveyancing system will dramatically reduce the total transaction time for buying a house – to as little as five working days in some cases. The current paper-based process is creaking at the seams and cannot deal with the demands of the modern property market ...”

This looks exciting – but the quote comes from a recent press release from the Law Society of Ireland. So can we expect to see eConveyancing introduced in England and Wales anytime soon?

Fortunately the average transaction time for property sales on this side of the Irish Sea is much less than the 22 weeks they take in Ireland. But many homebuyers here will still agree that conveyancing still takes far too long.

Get a quote for conveyancing

Conveyancing should be quicker with an electronic system

Electronic conveyancing or eConveyancing should be able to speed up conveyancing considerably. The goal is to produce a system which will provide a paperless electronic end-to-end, pre-sale to post-completion, conveyancing process.

In the last fifteen years or so there has been much talk of an eConveyancing system being introduced in this country. But it has proved to be much harder than might have been thought to come up with a satisfactory system.

The main problem has been to build in the high degree of security which conveyancing transactions require.

Online property transactions could be targeted by cyber-criminals

Thousands of property transactions are completed each week and millions of pounds are being passed between solicitors, mortgage lenders and the banks. This is a tempting target for cyber-criminals and so any eConveyancing system must be made absolutely secure.

In fact a legal framework for eConveyancing in England & Wales has existed since the Land Registration Act 2002. Following that Act the Land Registry has computerized its records and done much to speed up conveyancing.

However it was unable to set up a fully-workable eConveyancing system and decided to abandon further development.

Law Society's Conveyancing Portal could be the solution

The baton has now been taken up by the Law Society of England and Wales, which is currently working to set up a Conveyancing Portal. This is intended to provide a secure  online deal-room which will be accessible by all parties and allow documents to be shared.

It intended that in due course all those involved in conveyancing transactions will be able to connect to this Portal, including the Land Registry and HMRC as well as the banks and building societies.

But it looks as if the Conveyancing Portal is taking longer to set up than was originally planned. At present it seems that an initial version should become available next year, which will enable solicitors to connect to it. However it could be some time before a final version can be rolled out which will meet the requirements of all users.

It is already quite possible at present to complete a conveyancing transaction in five days or even less. But this does assume that both seller and buyer want to complete that quickly and are otherwise able to do so – for instance the buyer must have the money readily available.

How the conveyancing process can be streamlined

Much of the delay in conveyancing transactions is not caused by solicitors but by the need to carry out searches with the local council. Buyers often do not see the need for these – after all if you are buying a well-established home in a residential area which the seller bought a few years before it is going to be extremely unlikely that anything untoward will show up in the searches, isn't it?

The problem here for solicitors is that while most searches do not show up anything for the seller to worry about, sometimes they do. And if they do, the consequences could be serious.

So it would be much better if an eConveyancing system could ensure that these searches could also be carried out electronically and cut out the delays with the present system.

Time to abolish 'caveat emptor' rule?

Another common source of delay is the need for buyers' solicitors to send lengthy  enquiries for the seller to reply to. These enquiries mostly do not relate to legal matters, so why do solicitors raise them?

The answer is because of the 'caveat emptor' rule – in other words the risk in buying the property lies with the buyer. If the buyer fails to make enquiries about the property and finds something wrong after completion he will not be able to sue the seller. But he might sue his solicitor for failing to carry out the enquiries!

The Law Society of Ireland has said that the caveat emptor rule is inappropriate for modern transactions and conveyancing would be quicker if the rule was abolished. Instead sellers would be required to make full disclosure (although buyers would still need to have their own surveys carried out.)

Under their proposals there would be a standard form of eContract which would incorporate comprehensive guarantees, covenants, warranties and certificates by the seller.

A single eContract could replace present documents

They also suggest for straightforward transfers the eContract would be the only document that the seller and buyer would sign (and signing would be done electronically.) The eContract will specify the completion date i.e. when the money is to be transferred.

Acknowledging receipt of the money would trigger an automatic electronic message from a central Hub to the Land Registry to discharge any prior mortgage, register the new owner and the new mortgage. This would do away with the need for a separate transfer deed.

Such a system could also cope with mortgages and include arrangements for payment of the stamp duty land tax on completion.

Re-engineer the entire conveyancing process

eConveyancing may well require a complete re-think of the way things are done at the moment. This could mean re-engineering the entire conveyancing process to suit the electronic and online environment, not the other way around.

While that might require solicitors and others to reconsider how they work they should remember that the purpose of conveyancing is to transfer property between clients. A system that provides a quick and safe method of doing this should be the ultimate goal.

Whether five-day conveyancing will ever prove a possibility for the average homebuyer remains to be seen. Buyers who require a mortgage will probably not find this possible as it usually takes several weeks for a mortgage offer to be issued. But there is no doubt that eConveyancing will come eventually.


Get an Instant Conveyancing Quote

Please quote me for:

Prefer to Talk?
0800 038 6699

9am-8pm Mon-Thur, 9am-6pm Fri, 10am-4pm Sat/Sun

Request a Callback » Request a Callback

Ask a Solicitor