The Law Commission has recently begun consulting about a legal framework for electronic signatures. If this becomes law it will be the last stage in the complete digitisation of legal documents, which in the case of land and title in England and Wales, started on the 23rd November 1998.
The rather inauspicious catalyst was a burglary, when vandals broke into a storage warehouse used by the Bradford & Bingley Building Society, crashed a forklift truck and started a fire. The building society lost thousands of packets of deeds and during the process of reconstructing their titles, which required an application to the Land Registry for each missing title, the society persuaded the Land Registry not to issue them with the traditional Charge Certificates, but to “store” the newly created registered titles on the Land Registry computer.
This arrangement created the first virtual title record and, motivated by the huge savings in storage costs, other lenders quickly followed suit “dematerialising” their existing and subsequently acquired registered titles. This practice had no basis in law and was “an arrangement” between the lenders and the Land Registry but it signalled the birth of “dematerialised” titles, a process later enshrined in law by the Land Registration Act of 2002.
Although the legal profession has (with diminishing numbers of exceptions) embraced both electronic communication and the use of electronic documentation, the stumbling block to full digitisation, at least for those transactions which must by law be in writing or by deed, has for some time been the need to produce a final paper document for the parties to sign. For those property transactions for which registration at the Land Registry is also required, there is a further ironic twist. The Land Registry does not want the paper document. It only wants an electronic copy and its staff will scan, and just to make its point, destroy every paper document it receives. Inevitably, but one hopes only occasionally, human error will prevail and the scan/shred sequence is reversed with unfortunate and sometimes costly consequences.
Digital documents and communication increases dramatically the speed at which transactions can be concluded; there are, as well as the occasional destruction of historic deeds by the Land Registry, significant and increasingly costly negatives. For property lawyers and those not entirely in agreement with their neighbours, there is the loss of important evidence about boundaries, rights and covenants which do not appear on the registered titles and for all of us there is the issue of internet security and fraud, which was not a consideration when we all used paper.
To be continued.
Property and Commercial