Deregulation of conveyancing
Respondents felt this would not happen because banks' and owners' security of title could be adversely affected if the conveyancing market was deregulated. Our system of land registration is one of the best in the world and such a move could result in the introduction of title insurance, adding further costs to the land transfer process. Interestingly some contributors believe that deregulation will occur, but only after about five years. If this happens, many conveyancers will be employed by the banks, the big estate agencies and mortgage originators as their in-house conveyancers, because they will not want to train their own staff.
Some respondents feel that banks do not want to do their own conveyancing because virtually all the work involving a bank loan is now outsourced to the conveyancers. The large banks have minimal contact with borrowers and most of the "conveyancing" work undertaken by conveyancers in fact relates to the preparation of documents which are ancillary to the registration of the mortgage bond. The bond registration represents only a small part of the overall lending transaction.
Conveyancing does not represent an attractive business proposition to banks because it does not form part of their core activities, to such a degree that over the last five years attorneys have been given more responsibility in order to streamline and reduce banks' costs. To undo that would be counter-productive. One respondent noted the irony in England where deregulation is starting to turn full circle and banks have more or less divested themselves completely from the estate agencies and conveyancing firms which they bought. Australia also deregulated, now it looks as if they are also going to change.
Concerning mortgage originators doing their own originating and registering, here a potential conflict of interests could arise and it is felt that conveyancers have the high level of independence necessary to protect the interests of both banks and clients.
Deeds Office and other matters
Volumes of transactions in the Deeds Office will continue to increase. Electronic Deeds Registration (EDRS) will continue to be a goal but currently it seems the Deeds Office will be the last entity to join a growing internet platform where service providers in the property industry and particularly the banks will communicate and interact. However, that said, the need for certainty of title will mean that the system will initially be administered by the Deeds Office only. Banks, attorneys, agents and mortgage originators will have access to but will not be allowed to control the system.
Despite the goal of EDRS the practical aspects of transferring property cannot be wished away. These include investigative and reporting functions required of attorneys and banks under the Financial Intelligence Centre Act (FICA). Commercial transactions are becoming more complex. A property lawyer, as opposed to a conveyancer, will need to have a good working knowledge of how income tax, VAT, Capital Gains Tax and STC impact on property transactions.
Some respondents who think that standards and performance in the Deeds Office have declined are confident that positive dealings with the Deputy Minister of Lands and with the Chief Registrar of Deeds will soon result in remedial steps being taken to retain the integrity of the registration system. Others considered the Deeds Office service very good if one considers the volumes involved.
Almost universal opprobrium is reserved for the local authorities. This ire includes the lack of trained and willing personnel and the creation of rules which appear to have no effect other than to delay transactions. For example, if one now applies for extended figures, the Johannesburg City Council insists on taking a new reading on the water and electricity meters which results in long delays.
Technology and the legal profession
The views of one respondent are interesting and worth reproducing here. He sees Internet connectivity changing quite a bit over the next twelve months, with issues of connectivity costs and pathetic bandwidth receding as content and service provision become more important. As a consequence, the profession will start migrating towards web service sites in conjunction with service providers/vendors.
The property market
The opinions we received generally reflect the conventional wisdom about the nature of the property market, to wit:
A growing black middle class should see a strong demand for properties for at least the next five years. To this end the banks will have to steel themselves to lend money more broadly and to take higher risks if they hope to retain new business. It will initially be difficult and costly to provide the before and after sales service, but failure to do so will result in losing out in the long term.
The 2010 Soccer World Cup should also have a positive influence. The economy is growing at a relatively rapid pace, so therefore this should be reflected in the property market, despite the short term slow-down, and despite a short term rise in interest rates. Unless some outside shocks occur, such as a political disaster, oil price increases, interest rates increasing hugely, the market will continue growing in a cyclical way but with few busts.
There will also be large volumes of previously unregistered rights being registered as the state gets land reform and its redistribution programme going. Here we are talking about so-called PTOs, communal land rights, the selling off of state land cheaply or even giving away state-owned dwelling units and suchlike. Conveyancers will have to participate with the state to provide visible delivery of title because the state will not have enough resources to do the job properly.
Conveyancing and attorneys
Conveyancing overheads are quite expensive; this could lead to the big practices with the necessary infrastructure leaving behind the smaller conveyancing firms. Attorneys will need to deal with a consumer who is information-empowered and who will expect continually better service at lower cost. Since all service costs and service effectiveness (think matter tracking on the Internet) will be more transparent, the mystique will be removed and demands for greater efficiency will be higher. The profession will have to allow its members to become more businesslike and openly competitive, as witnessed in the strong competition for conveyancing business.
One contributor noted that existing professional rules tend to restrict attorneys and that these will have to be relaxed. The English model and practices should be looked at, while a reading of the Clementi report on the structure of the UK legal profession should prove useful because we end up following some of the changes there, or at least being influenced by them. The profession should also become more coherent and united in its response to pressures from other parts of the property industry, and to quickly adapt to changes.
Banks, estate agents and conveyancers
White firms may find it increasingly difficult to be on panels of banks and black firms who want to be on the panels may need to amalgamate in order to have greater depth and infrastructure. Black firms who excel and satisfy performance criteria of banks should have a huge opportunity before them. Bank panels will probably shrink as the banks and indeed developers, estate agents and other clients insist on better turnarounds and better customer service. This could result in attorneys' practices being forced to specialize in conveyancing.
Deregulation of conveyancing