Electronic Land Registration - 1: Options from a legal perspective

INTRODUCTION:
The present paper system is successful to the extent that it provides security of title and is accurate. It does afford protection for registered rights, gives notice to the public of such protection and provides an easily accessible record should disputes arise. The success of the present system can be ascribed to sound legislation such as the Land Survey Act, No 8/1997 the Deeds Registries Act No. 47/1937 and the Sectional Titles Act No. 95/1986. It is one thing to be blessed with sound legislation but another matter to apply it properly. The healthy interaction between the private sector (the conveyancers) and public sector (the Deeds Office examiners) ensures the proper application of the complex legislation relating to land registration and land related matters. The challenge now lies in effecting speedier and more cost-effective land delivery through technology without detracting from the accuracy and security of title enjoyed by the South African public at present.

GENERAL REMARKS:
1. A computerised registration system should make land registration accessible to the public
It should be possible for a conveyancer or accredited government official to access the Deeds Office from any place in the Republic with a PC, modem and telephone line. The existing cumbersome procedure in terms whereof a rural conveyancer or government official has to instruct a colleague practising at the seat of registry to lodge the necessary documents on his or her behalf, should no longer be necessary. A conveyancer or government official practising or operating in the area where the need arises to register land, should be able to serve his or her community far more effectively in this manner. This will ensure that land registration is brought to the people in need of this service.

2. Legislation will have to be adapted to provide for the introduction of electronic land registration
Certain amendments to the Deeds Registries Act, 1937 (Act 47/1937) will be required. It will not be necessary to redraft the entire Act.

3. Legislation will also have to be adapted to create a uniform land registration system
At present our land registration system is still saddled with certain legacies of the apartheid era. This relates to legislation in regard to leasehold rights in former trust territories, self-governing territories and the so called former TBVC countries. The procedure is cumbersome and time consuming and certainly prejudices the holders of these statutory rights. The process should be streamlined to be absolutely similar to the procedure presently applicable to registrations effected in terms of provisions of Deeds Registries Act 1937, in regard to full ownership rights.

4. Legislation should also be introduced to facilitate electronic land registration
The Electronic Communications and Transactions Act, 2002 (Act 25/2002) has gone a long way towards creating a suitable environment for electronic land registration.

In the South African context, it is important to bear in mind that property ownership is no longer a right that can be acquired by only the privileged. Government has embarked on a massive housing and land tenure program in both the urban and rural environments and the purpose is not only to provide housing and land but also valid title to these rights.

Affordability inhibits the process and as conveyancers in private practice can only charge a viable fee, such a fee may well be beyond the reach of the bulk of the poor. We therefore support the concept that accredited government officials be authorised to attend to these registrations. Accredited officers in the employ of Government can best serve the interests of the poor in order to ensure that the Government's housing and land tenure initiative, from a registration viewpoint, is properly and adequately implemented.

5. Implementation process
From a legal perspective it would appear that the implementation of electronic land registration would necessitate, for at least an initial period, a parallel registration system. The present paper based system will have to run concurrently with an electronic system as it would be impossible to convert to an electronic system in one fell swoop.

6. Deeds rather than certificates or questionnaires should be lodged electronically
It should remain the prerogative of the legal profession in conjunction with examiners to determine the format and especially the framing of conditions and the wording of servitudes. It is in the public interest that this procedure should not be tampered with as the best effect to the instructions of a client, whether the transferor, transferee, mortgagor, mortgagee or grantor or holder of a servitude can be realised in this manner. Such a system would also simplify the capture of information on the system whether by means of the initial scanning in of the paper document or subsequently electronic registration. The computer need not be programmed to convert information contained in questionnaires or certificates into deeds. The options and possibilities are endless especially insofar as these relate to conditions and servitudes and should therefore remain the prerogative of the conveyancers in conjunction with the Deeds Office examiners.

OPTIONS:
From a legal perspective we recommend that the responsibility for the legal validity of titles should be the basis for an options analysis. The present system provides for a division of these responsibilities between the Deeds Office and the conveyancing profession. In recent years and especially since the introduction of Section 15A of the Deeds Registries Act, 1937 and the Sectional Titles Act, 1986 the responsibilities of the conveyancer have steadily increased. The examination function of the Deeds Office although substantial and important, is no longer as comprehensive as in the past.

In regard to the future and electronic land registration, we submit that the following options warrant consideration:

1. The Deeds Office assumes full responsibility for the legal validity of Deeds; or

2. The legal profession (e.g. the conveyancers) assumes full responsibility for the legal validity of Deeds; or

3. The Deeds Office merely records and registers as the examination function is delegated to the Private Sector;

4. The status quo remains unaltered save for certain consequential adaptations necessitated by an electronic- as opposed to a paper process; or

5. The status quo remains unaltered in essence but with a number of cardinal adjustments to facilitate the process, alleviate the burden of the Deeds Office and render a better service to the public.

A number of permutations between these options could also be considered in the sense that an element or elements of one option could conceivably be built into another option.

1. The Deeds Office assumes full responsibility for the legal validity of deeds
This would inevitably result in a substantial expansion of the examination function of the Deeds Office to ensure the legal validity of each and every registration. It would lead to a massive increase in supporting documents to be checked by the Deeds Office in order to establish the legal validity of a particular transaction.

This could lead to an untenable position as the list of problems resulting from this option would be substantial. The following scenarios will result:

1.1 To undertake such a comprehensive examination function, the Deeds Office will have to insist that extracts of company, close corporation and trust documents as well as extracts from the constitutions of voluntary associations such as churches, social and sports clubs be filed, albeit in electronic format, in order to enable the Deeds Office to check the powers of these juristic persons.

Natural persons would also pose problems as the existing records of Deeds Office cannot be relied upon in so far as it relates to a person's marital status. Affidavits confirming a person's marital status will therefore have to be checked and verified by the Deeds Office.

1.2 The problem could be further compounded if persons other than qualified conveyancers insist on lodging and registering deeds electronically. The argument could be raised that anybody who can read or write and consequently operate a computer should be allowed to register deeds owing to the fact that the Deeds Office in the last analysis assumes full responsibility for the validity of the registration. This could result in a prolonged inter-action between the Deeds Office and laymen and would probably, more often than not, result in the layman being unable to understand the issue or interpret the law, the contract or the empowering- or the authorising document.

A questionnaire, however comprehensive, cannot resolve the issue as the layman may not realize that the supporting document on which he relies when completing or responding to the questionnaire, is either irrelevant, incorrect or even illegal. This cannot be checked or verified unless the document itself is transmitted to the Deeds Office for scrutiny. It is simply unrealistic to expect a layman to interpret a will, a trust deed, conditions imposed by a local authority in the case of a sub-division or consolidation or the memorandum and articles of association of a company.

Such extensive examination will burden the Deeds Office with too much additional work and will consequently frustrate the objective of handling greater volumes with its existing staff complement. Furthermore, the objective of effecting registrations electronically, will be frustrated as supporting documents will have to be submitted in paper format.

This option may also result in too many persons gaining access to the electronic land registration system for registration purposes. The records are not accessed for information purposes but in fact to record new registrations. Hackers could create havoc and jeopardize the integrity of the system. If access is limited (in order to safeguard the integrity of the system) only to qualified conveyancers and government officials with accreditation to access the system, the question again arises as to why the Deeds Office should carry the sole responsibility for the legal validity of deeds in the first place. In the South African land registration context, this option is clearly not a viable one.

2. The legal profession assumes full responsibilty for the legal validity of deeds
This would result in the abdication of its examination function by the Deeds Office. All the other important functions of the Deeds Office will remain intact, i.e. the duty to register and record, to maintain registers, to provide information and to preserve records. This would also mean that it would become the sole responsibility of the Conveyancer to ensure that transactions intended for registration are in proper form and that their nature is such that they are capable of registration.

It would appear that the Deeds Office will still have to perform a "checking" as opposed to an "examination" function. As Court Orders and Notices affecting persons (insolvency and divorce orders) and land (attachments and expropriations) are filed with the various Deeds Offices, it follows that the Deeds Office will have to check as to whether or not any of these orders or notices affect a person or property involved with a transaction which the Registrar may be called upon to register.

Should the Deeds Office dispense with the examination function, virtually the full responsibility for the validity of Deeds will rest with conveyancers. This could lead to problems that may well be insurmountable.

2.1 Although the state does not explicitly guarantee security of title, the system and its application virtually has this effect. It is our view that the judicial function of the Deeds Office (i.e. the final decision either to pass or reject a deed tendered for registration or execution) is an inherent function of the State. It is in the public interest that this function should not be outsourced. In the absence of the judicial function of the Deeds Office, conveyancers would simply be unable to ensure security of title as comprehensively as is presently the case.

2.2 It will also be difficult to maintain a uniform standard of conveyancing as the Deeds Office will no longer be the sole arbiter in this regard. The expertise, experience and integrity of a particular conveyancer will, to a larger extent than previously, determine the integrity of a registration.

Errors will be more likely to occur as the inter-action between the Deeds Office and conveyancers will, in the absence of the examination function, no longer be as comprehensive as at present, resulting in double checking, to the extent that it still exists, disappearing altogether.

As the property law environment becomes ever more complex, it would be imperative to maintain the standard of conveyancing. If the examination function were to fall away, "examiners" as a group of well-trained and experienced persons, well versed in property law, will disappear leaving the conveyancing environment without competent officers capable of performing a judicial function (i.e. giving rulings on questions of law when a conveyancer intends to proceed with a registration fraught with legal difficulties). Deeds Office personnel cannot be expected to acquire the necessary skills required for the performance of a judicial function in the absence of the on-going training that the examination of deeds affords. This may eventually compel conveyancers to approach the Courts for ruling on matters of doubt - a function admirably performed by the Registrars of Deeds over many decades till the present day. Our courts are already over-extended and simply cannot be expected to resolve issues relating to land registration.

2.5 Errors in registration may occur for the reasons given above. The marketplace may then dictate that title insurance be introduced (especially in the case of big mortgages). This could lead to an escalation in costs for the consumer public. To protect them from possible liability due to errors, conveyancers may likewise be compelled to take out sufficient professional liability insurance, a development that will also inevitably lead to an increase in costs.

2.6 It would clearly not be in the public interest if the Deeds Office were to abrogate its responsibilities to ensure that land registration is effected in accordance with the laws of the land. It is in the public interest that the Deeds Office performs this vital function in conjunction with the conveyancing profession. The system of checks and balances afforded by the interaction between the Deeds Office examiners and conveyancers, is the cornerstone of our land registration system, whether applied in paper or electronic format.

Part 2...