Business practices

The Law of Property (Electronic Communications) Order 2001 incorporated into Section 8 of the Electronic Communications Act 2000, and enactment of the Land Registration Act 2002 will have a number of implications to Quill's business of creating hand written conveyances and selling individual house to Americans. Firstly, it will be voluntary for conveyancing to be carried out electronically which will make it simpler and more efficient.

A new section 2A will be added to the Law of Property (Miscellaneous Provisions) Act 1989 to make contracts of sale available electronically, and a new section 144A in the Land Registration Act 1925 will provide a deed to be created electronically. Both electronically created contracts and deeds will take effect as a paper contract or deed. In order for Quill to adapt to these changes, some formalities need to be understood.

At present, all conveyances of land are required to be made in writing under a deed in section 52 of the Law of Property Act 1925, with the exceptions of assents, creation of short leases, and conveyances by operation of law. Under the draft Order for e-conveyancing, a deed can be created electronically via a secure Intranet. Quill will firstly be required to update his business by purchasing a computer in order to be able to carry out transactions in the future.

If he has not done so already, Quill will have to be registered as a licensed conveyancer by application to the Council of Licensed Conveyancers1. For Quill to be able to access this "secure Intranet" he will require a "Network Access Agreement" by authorisation of the HM Land Registry2. However, in order to have the right to enter a network access agreement, Quill is expected to provide evidence of having "a proven record of competence conveyancing"3. The first requirement underlined in the Land Registration Act 2002 is that the document, to take form electronically, "purports to effect a disposition".

By a "disposition", we refer to either a disposition of a registered estate or charge, an interest that is subject to notice in the register, or a disposition that requires registration4. So before Quill is able to make dispositions of his properties electronically, the land involved must be registered, and if it is unregistered then this will trigger the requirement for compulsory registration5. With concern to the land being sold in "postage stamp sized lots", Quill may be subject to the souvenir land scheme whereby registration is now required despite the implication of Section 5(1) of the Land Registration (Souvenir Land) Rules 19726.

Quill should enquire by letter to the Chief Land Registrar whether a declaration will need to be made. The District Land Registrar must be satisfied that the land has wholly or mainly been disposed of as souvenir plots in order to make a valid declaration. This declaration will be entered on the property register of the registered title. Under Section 4 of the Land Registration and Land Charges Act 1971 and the Land Registration (Souvenir Land) Rules 1972, Quill should register this land by a "Souvenir Land Declaration" to the District Land Registry7.

The land itself must be registered before any declaration can be made. This would aid the application of electronic conveyancing and cause fewer problems for Quill and his American clients in the near future. All other titles that Quill has been selling will also have to be registered. Under the new section 144A of the Land Registration Act 1925, Quill can change his business by creating the deeds electronically using a Gothic font to upgrade his business of elegant hand-written titles.

If the document in electronic form is to be authenticated by the licensed conveyancer rather than the individual (i. e. the buyer), he will need to "obtain written authority of his principal"8. Quill will then be required to obtain an electronic signature from the Land Certification authority, which is otherwise known as a "private key" or PKI9. This private key will be issued to Quill once the authority is satisfied as to his identity10. He will need to inform his American buyers or mortgagees that this key can be decoded via a "Public key" which will be supplied by the authority.

The document would therefore be valid providing it is in writing, and signed by each individual by use of electronic signature11. Once these requirements have been fulfilled, the electronic document will be as effective as an equivalent paper document. The new section 2A of the Law of Property (Miscellaneous Provisions) Act 1989 will change Quill's business of conveying his manor houses to aristocrats or any other disposition of an interest in land is to be made. Again, as with section 144A12, the land will need to be registered before any disposition of an interest can be made.

If the land is unregistered, then compulsory registration will be triggered under section 123 of the Land Registration Act 1925. However, if the manor houses are incorporeal hereditaments as described under the Land Registration Rules 1925, compulsory registration under section 123 would not apply. In this situation, because the estates are being conveyed, there will be a break in the descendancy that will make it compulsory for first registration once the sale is completed.

With regard to his business of conveying tenanted houses to Americans, Quill would still require this land to be registered even if he grants a lease for more than just 3 years13. Quill can transfer these interests over land by e-contracting. It is quite surprising that Quill has not heard of the Land Registry because if his land was not register two months after it was conveyed to the Americans, the sale would be void and his clients would not have any title or interest over the property.

By the process of e-conveyancing, because the sale and registration are almost simultaneous, Quill can ensure that a genuine transfer of property has been made. For a contract to be valid electronically, there are four requirements14. Firstly, between Quill and the buyer (or his respective agent), an incorporation of all the agreed terms will need to be expressed in the document, as has been practiced under section 2(1) and (2) of the Law of Property (Miscellaneous Provisions) Act 1989.

Secondly, the time and date of when the contract is to take effect must be implied within the document. Thirdly, Quill's clients will need to obtain an electronic signature to authenticate the document. Finally, this signature should be certified with the Certification Authority. The implications of these two new sections created by the draft Order will in effect, force Quill to acquire competent computing skills in order to satisfy the new system of electronic conveyancing and add efficiency to his business.

As to when Quill should make these changes, it is advised that he acquires computer skills as soon as possible to prevent being undermined by larger firms of conveyancers who will have the upper hand with expensive advanced computer technology. The Land Registration Act 2002 was given the Royal Assent on 26 February 2002, however, it must be remembered that this will only render e-conveyancing methods as voluntary. It has been estimated that in 4-6 years time, e-conveyancing will become compulsory, but the date is yet to be confirmed.