Background
In a world where cars can virtually drive themselves and take-away pizzas are on the cusp of being delivered by drones, it can take four months to transfer the ownership of a standard 3-bed-semi from one person to another. Suffice to say, the Irish conveyancing system is in need of improvement. On that, there is unanimous agreement.
How Did it Come to This?
When analysing the Irish conveyancing process, one is reminded of the Kerryman, who when asked for directions, replied “well I wouldn’t have started from here anyway!” The system was not designed but rather organically evolved literally over hundreds of years with updates layered on top of updates over the decades. The finished product is now a disjointed, laborious, time-consuming process that takes literally months to complete.
For example, since the introduction of the LPT charge in 2013, purchasing solicitors have been tasked with verifying not only that the charge has been paid but furthermore that the vendor selected the correct valuation bands. The purchaser then pays the vendor for the portion of the year from when they take ownership through a process known as apportionment. So solicitors have taken on the role of the Revenue Commissioners in ensuring tax compliance. Likewise ensuring compliance with the now defunct NPPR charge (scrapped in 2013) and ensuring that properties have a valid BER certificate (introduced in 2007), all fall on solicitors. All these jobs conspire to delay the process and solicitors could rightly claim that these should not be their responsibility. The Revenue Commissioners should collect taxes and the SEAI should ensure that properties have valid BER certs. As various Governments introduce disparate property related laws over the years, conveyancing solicitors become the enforcers every time a property changes hands. As I say, the system we have was never designed but rather it evolved and it shows.
Why Has No One Fixed it?
In my view, the core of the issue is one of identity. The people who understand how conveyancing works in detail are conveyancing solicitors. They trawl through the process day in, day out, heroically dragging sales over the line after months of exhaustive toil on each file. Solicitors, quite rightly, see themselves as legal scholars and practitioners. They do not see themselves as process optimisers or IT experts. They view a conveyancing file, understandably, through a legal lens, as a legal challenge. They are experts at reading the title and understanding the law underpinning the process. They don’t view conveyancing as a process to be optimised and even if they did, it would be moot, as they don’t have the skills required to optimise it. Asking a solicitor to design and implement an efficient conveyancing management platform would be akin to asking a business analyst or software engineer to study a property’s title deeds; the analyst would be hopelessly ill-equipped.
What is needed is a multi-disciplinary approach including business, IT and legal experts working in concert to analyse the entire process with a view to building a bespoke IT system to streamline conveyancing. As this hasn’t happened, and the process seems to get slower over the years (as more layers get added), IPAV has promoted a new Bill, currently before the Dáil, with a view to moving things forward. In fairness, at least they are trying (no one else is) but will it improve things?
The Bill
The Seller’s Legal Pack for Property Buyers Bill can be read by clicking here. It is a straight-forward bill, the essence of which is to compel property vendors to have the legal documentation required to sell their property in order before putting the property on the market. Presently, vendors and their solicitors will often only start to gather this documentation once the property moves to sale-agreed. Gathering all of the documentation can take several weeks and the purpose of the Bill is to ensure vendors commence this process before even listing the property for sale. On the face of it, this would seem like a common sense proposal i.e. don’t list a property for sale until it’s ready to be sold. Below is an extract from the Bill which lists the documents that must be to hand before a property hits the market.
Documents Required to List a Property for Sale
Interestingly, one of the chief culprits for delaying conveyances is boundary issues. The Bill doesn’t require a vendor to ensure that the boundaries on the ground are as per the file plan so this issue would persist even if the Bill is enacted. A number of additional documents are listed as nice to have but as they are not required under the Bill, they don’t change the current position.
The Pros of the Bill
Ensure that Basic Documentation is to Hand on Sale Agreed
Every estate agent advises their client to engage a solicitor at the same time as their auctioneer. This is to ensure that the time the property is on the market is used productively gathering title documentation. However, some vendors and their solicitors will not properly focus on the conveyance until the property is sale-agreed. This means that they only commence the process on the receipt of a sales advice note. When this happens, a month will be spent gathering the various documents. The Bill would mean these documents are ready on the day the property goes sale agreed. This of course is welcome.
The Cons of the Bill
It Will Increase the Time Taken to Sell a Property for Many Vendors
Let’s suppose the day on which a vendor decides to sell a property is Day 0. Currently it is possible to contact an auctioneer and list the property for sale immediately. While the property is on the market, the vendor can liaise with his/her solicitor to gather the necessary title documentation and have contracts ready to issue the day the property goes sale agreed. Let’s suppose the property is on the market for two months. Assuming you get two professional solicitors handling the file, and because of the work done by the vendor while the property was on the market, it is not at all uncommon for the conveyance to conclude in two months. So under the current system, from day 0 to closing the sale can be four months.
Take the same situation if this Bill passes. The vendor will have to gather the documents before even listing the property for sale. Let’s suppose this takes a month. The property then comes to the market after one month and, as before, stays on the market for two months. After a two month conveyance, the whole process has taken five months. By precluding a vendor from gathering documentation and preparing contracts while a property is on the market, the overall process is lengthened, not expedited. For standard property sales with conscientious vendors and solicitors, this Bill, if passed, would have a deleterious impact on the time it takes to transact a property in Ireland. The insistence that document gathering and the sales process happen sequentially as opposed to simultaneously is the reason that we are, respectfully, against this Bill.
It Does Nothing to Improve the Process Itself
It would be absolutely fantastic for all stakeholders if a simple ten page piece of legislation could fix the Irish conveyancing system. Alas, it will take orders of magnitude more work than that to fix the problem. The Bill moves the conveyance from the end of the process to the start. It doesn’t attempt in any way whatsoever to make the process itself more efficient. To suggest that the Bill will expedite property sales is akin to someone saying that they will speed up the time taken to eat their dinner by having dessert first, then the main course and the starter at the end. Changing the order in which a set of tasks gets completed does nothing to speed up the overall time they take in aggregate.
A Better Solution
Tackle the Process Itself
As mentioned, the Bill proposes to change the order in which the constituent taks of selling a property get completed but in no way improves the speed or efficiency of completing these tasks. If conveyancing takes three months today, it will take three months the day after the Bill passes. It will just happen before the property goes on the market, not after. The overall process will take the same time.
Digitise Title Deeds
At present, the first thing that a vendor’s solicitor does, on receipt of a sales advice note, is to send an ATR request to the bank holding the title deeds. It can take several weeks for the physical deeds to be retrieved from the warehouse and sent to the vendor’s solicitor. The solicitor then drafts the contracts, scans all the title documents and either posts or emails them to the purchaser's solicitor. Many solicitors insist on receiving physical documents in the post, adding more delays versus email. It is not at all uncommon for the purchaser’s solicitor not to have received contracts a month post sale agreed as the ATR request, the posting of the deeds to the solicitor, the drafting of contracts, the scanning of deeds and posting / emailing to the purchaser’s solicitor all take time. The Seller’s Legal Pack moves this process to before the property goes on the market which, as explained above, lengthens the overall process, by insisting that tasks that can be done simultaneously are done sequentially.
If the deeds were digitised, on receipt of a sales advice note, both sides’ solicitors could log onto an online platform and download digital copies of the deeds, having firstly confirmed that they have the legal authority to do so. The vendor’s solicitor could draft the contracts and upload them to the same platform. The purchaser’s solicitor could draft pre-contract queries and receive replies all in the one centralised online hub. This could happen literally within hours of moving to sale-agreed thereby saving a month from the current process. This doesn’t just move the deeds gathering from the end to the start; it reduces the time taken to gather the deeds by a month.
This would be a gamechanger in Irish conveyancing and the cost would be negligible given the benefits that would accrue to the industry. During the course of a conveyance, new title documents are created e.g. NPPR certificates, LPT statements, certificates of compliance with building regulations for extensions installed after the last set of deeds were created etc. These documents would be uploaded to the database post closing to ensure the property is ready to sell next time around. Solicitors prepare certificates of title in any case at the end of a file. Uploading these to a centralised hub would ensure that the days of posting deeds around the country, which is an embarrassing anachronism, would be a thing of the past.
There are currently circa 700,000 mortgages in the country which equates to this amount of title deeds. If you assume that it would take on average 30 minutes for a set of deeds to be scanned into a database, that equates to 350,000 hours of work required to scan every set of deeds in the country. If we assume that the people doing the scanning are paid €20/hr, this means that the cost to digitize every set of title deeds in the country would be circa €7 million.
For context, there are circa 60,000 residential transactions per annum in Ireland. If the purchaser and vendor each contributed a conveyancing contribution of €100 on every transaction, this would generate revenues of €12m per annum. This revenue could be invested in conveyancing modernisation & digitisation in a self financing manner.
Digital Conveyancing Platform
If title deeds are going to be digitised, there would need to be a platform to host and maintain these. Ideally the platform would do more than just host deeds, but rather serve as a centralised hub for all stakeholders to the conveyance to interact online, in a modern, online, digital environment, as outlined above.
At Auctioneera, we have spent the past three years building this hub in conjunction with auctioneers and solicitors who are keen to work on improving the process of conveyancing to benefit of all industry participants. It is available at ConveyanceTracker.ie and is free to use for all solicitors. The first version opotimises the current system but we hope to work with all stakeholders to implement the above vision and ultimately get the average conveyance time from four months to below four weeks.