Author: Edmund Willis
Edmund Willis, Associate, Fladgate LLP (firstname.lastname@example.org)
Many real estate clients have asked whether they can sign documents electronically in order to save time and cost. Often it takes several days for documents to be signed due to the unavailability of the relevant signatories, and often documents need to be circulated and returned by post or courier, which takes time. Such delays are frustrating when trying to complete transactions.
HM Land Registry have acknowledged this issue and in an attempt to modernise the conveyancing process it has taken steps to incorporate new digital services to allow for transactions and registration to be carried out online. This is welcome news not only for legal practitioners but also for real estate clients.
From 6 April 2018, it will be possible for a “disposition of a registered estate or charge” to be carried out electronically with a certified digital signature, which is the first step taken by HM Land Registry to accommodate digital signatures. They will not be made available for every disposition at the outset but will be incorporated gradually. Using digital signatures will not be compulsory; clients and practitioners may still rely on “wet-ink” signatures and it is likely that until digital signatures are tried and tested and have won the trust of both practitioners and clients, they will be used cautiously.
HM Land Registry has suggested that initially digital signatures will be used for mortgages (and primarily re-mortgages) and will only be available to conveyancers who are registered with Business Gateway e-services via HM Land Registry’s portal. This is a system which many legal practitioners use including Fladgate LLP.
To prevent fraud, HM Land Registry will need to generate and certify an advanced electronic signature for clients wishing to use the digital signing process so that it has a record of whom the digital signature belongs to and the identity of the individual for money laundering purposes. The Government has an existing identity service called “GOV.UK Verify” which verifies an individual’s identity by checking their personal details against records held by other agencies such as HM Passport Office. As soon as an individual has verified its identity with GOV.UK Verify successfully, HM Land Registry will send security credentials to the individual’s mobile phone. HM Land Registry has suggested that as this system develops, security credentials could be sent by email in the future. The security credentials will allow the individual to access the document which it needs to sign and once it has done so, HM Land Registry will issue a digital certificate that confirms the authenticity and integrity of the deed.
It is important to clarify that a “digital signature” is more technologically sophisticated than just an electronic signature. It is created using public key cryptography and the signature is supported by a digital certificate as proof of the signatory’s identity.
Currently, the Verify service has only been set up to allow for individuals with a UK address to use it. This does not, however, mean that the individual needs to be a UK citizen. The service currently has limitations as corporate bodies, charities or other legal entities are not in a position to use it, but if the service generates credibility within the real estate industry, then it will not be unrealistic to assume that the service will be made available to other legal entities in time.
This service is very much a work in progress. It must win the trust of practitioners and clients and ensure that it is robust and secure to prevent fraud. It needs to be quick and easy to use, otherwise clients and practitioners will still use “wet-ink” signatures. It is however a progressive move from HM Land Registry and shows the right intentions to modernise real estate transactions. It will take time to incorporate the service across the industry but with feedback and refinements, it could be very widely used. Watch this space.