1. Buying a house at the click of a mouse
I’ve just moved house. The legal process was pretty painful. Why does it take so long? And why are we still doing it all on paper? You might be surprised at how much of it is routinely done electronically. Although you had to sign paper documents, your solicitor probably got a lot of the information about the property in digital format and you’ll have seen that email has made communication between the various parties much quicker. To streamline the process further, the Law Society of England and Wales has just announced plans for an electronic system, so everyone can see at a glance what is happening.
Will everything be done online? That’s the idea. The Law Society wants to create a secure online “deal room”, to make the whole process transparent. All the parties will be able to log in, see all the documents and update them. The Law Society also wants mortgage money, stamp duty and land registry fees to move electronically, so deals can be automatically registered straightaway. But the idea has only just been announced and is not yet at the pilot stage.
Are other countries doing better? Many countries are working towards online property transfers. It is on the agenda in Scotland, where the relevant law has been passed but is not yet in force. Finland’s national etransfer system went live at the beginning of November. Australia has just launched the first stage of a national electronic property transfer system, supported by legislation, designed to handle transfers of all land (not just residential) online. It will include contract exchange and completion, mortgages and payment clearing systems, all supported by the entire banking community.
So Australia is ahead of the UK? So far, yes. However, it is still early days. In Australia, the first stage just involves electronic processing of straightforward mortgages and mortgage releases on repayment, but not remortgages. Australia is starting with transactions that effectively involve only a bank and a bank customer and the payment clearing system is not yet being used. So far, only the banks are using the system – law firms do not yet have access to it. The system will ramp up over the next two years to full-scale property deals, with multi-sale chains, including lenders who are being repaid and new lenders who are coming in.
Haven’t we heard all this before in the UK? Yes. Over the past decade, the Land Registry put a lot of time and effort into its plans for an integrated system for electronic property transfers but ended up concentrating on making key parts of the process, like information gathering and registration, work electronically. The idea of an online deal room just didn’t get off the ground.
Why wouldn’t people jump at the chance to speed it all up? Perhaps the Land Registry’s plans came too early. Now so much of everyday life is online, there should be more appetite. Property and online financial fraud is a big problem and it isn’t going away, so people still need to be convinced that any electronic system is 100 per cent secure. Transparency doesn’t appeal to everyone – once the whole chain can see what stage everyone else is at, it will be harder for anyone to deliberately drag their feet for tactical reasons.
2. Protecting your home against fraudsters
My elderly father has just moved into a care home, leaving his house unoccupied. Does that make it a target for fraudsters? Perhaps. Property is at greater risk of fraud if the owner does not live there, according to the Land Registry for England and Wales.
What could happen? A fraudster could pretend to be the owner, forge signatures on documents, “sell” the property and vanish with the money. If the owner lives elsewhere, they are less likely to spot correspondence relating to the fraudulent “sale” that might go to the property. The Land Registry says it has blocked at least 136 attempted fraudulent sales since September 2009, worth a total of around £60m.
That’s scary. How can I protect my dad’s house? The first step is to check whether it is registered. If your father has owned it for many years, it may not be. If it isn’t, you can apply for voluntary first registration. Fees are based on the market value of the property: £200 for a home worth £200,000 to 500,000, with a maximum of £680 for properties worth over £1m.
If it’s already registered, what else can I do? Check that the Land Registry has up-to-date addresses to send any queries or information. You can register up to three addresses, which can include an email address. You might want to include your own address or the address of your father’s care home. The point is to make sure anything from the Land Registry gets to your father.
Anything else? One more thing. You can register a “restriction” against the property, which will stop a sale being registered unless a solicitor has checked that the person who signed the sale documents is actually the real owner. Properties are also more vulnerable if there is no mortgage on them, so people who live in their homes but have no mortgage can register a similar restriction.
Can I do all this myself or do I need a solicitor? There is nothing to stop you doing it yourself, although it may be easier to get a solicitor to deal with it, especially if you are applying for first registration. The Land Registry produces lots of useful guides aimed at the public. The page on protecting your property from fraud is a good starting point. See landregistry.gov.uk/public/property-fraud
Stuart Dixon-Smith is a partner at King & Wood Mallesons and Fiona Larcombe is a solicitor at King & Wood Mallesons SJ Berwin. SJ Berwin has combined with Asia Pacific firm King & Wood Mallesons. The combined firms use the name King & Wood Mallesons globally, and King & Wood Mallesons SJ Berwin in the UK, Continental Europe and the Middle East
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