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Human beings, no matter what country we live in, like paper. Nowhere is this truer than with the legal documents that give us title to our own homes. But paper documents need to be phyically transported, and transportation is slow - too slow for the modern world.
The U.S. is on its way to paperless closings. However, England and New Zealand may be one step ahead. Why? The reasons for this are varied, but most relate to size both in terms of populations and geographic area (see "Some Facts and Figures"), and systems of government. Both England and New Zealand have strong centralized governments, which enable national directives to be enacted. Even though this gives an edge to England and New Zealand, there is much that the U.S. can learn from the process it took to move records online.
As many of you are no doubt aware, the move from paper to electronic format is not an overnight transformation. It takes time, but time that is well spent in the long run.
Here's a look at the systems being used in England and New Zealand.
Land Register Direct - The UK Experience
The UK's Land Registry (a government agency) deals with land registrations and title deeds for property in England and Wales. Similar to the U.S., the UK is undergoing a move to e-government at all levels. Although the UK's e-government initiative requires all government agencies to operate e-government services by 2005, a number of other factors contributed to the UK Land Registry being able to offer online services today.
The first key move came during the 1986-1992 time frame when all Land
Registry district offices in England and Wales were computerized. In
1990 the Lord Chancellor (a British officer of state who presides over the
House of Lords) made it mandatory for any land transaction throughout
England and Wales to be recorded electronically. In the same year he
also made the electronic records open to public inspection—they had
previously been private. At about the same time, the Law Society (much
like the ABA in the U.S.) asked for e-access. Opening the Land Registry to
everyone facilitated the move to e-access.
The Land Registry started a
prototype to view land records online. Named “Direct Access Service”, it was
tested with three clients—a bank, a building society (savings & loan), and
a solicitor (attorney). Proving popular, it was expanded, so that by 1995 there
were between 300 to 400 organizations using the system.
The initial growth in use of the Direct Access Service occurred very
quickly.To deal effectively with potential demand, the Land Registry
decided to outsource the management of the service and its network. They
bid out the project and awarded a contract in 1997 to Racal Telecomm
(subsequently bought out by Global Crossing in November 1999). The
Direct Access Service was provided on an account basis and used dial-up
access, via a secure extranet.
In July 2000 Land Registry Direct,
a service using the Internet, was launched after a year of working on a
browser version of the Direct Access Service. (Go to: www.landregistrydirect.gov.uk for a demonstration download.) Land Registry Direct
gave more opportunities to view registers, documents, and plans online,
but for full online service, a number of different things needed to be
accomplished.
First, the documents needed to be converted to electronic format. For
the Land Registry this has been a mammoth, ongoing undertaking—
some 19 million registers and title plans and 10 million filed deeds and
documents (with more than 100 million pages). A project was
undertaken toward the end of 1999 to bulk-scan the filed documents. It
should be completed in November 2004. It is planned to scan a further
10% of total images, or about one million scans, annually. The title
plans were also bulk-scanned, which was completed in 2001. Most B&W
images are stored as 1-bit TIFFS. Color and some poorer quality B&W
images as 24-bit JPEGs. Image sizes vary considerably from 32KBytes to
over 10MBytes when stored, and from less than 1MBytes to over
300MBytes when displayed. For comparison purposes, an average text
page is 50KBytes. The images are stored in a DB2 database in a
hierarchical structure of Document/Page/Image data — the
image data is split into 32K chunks and reassembled when required for
viewing. UK Land Registry has been registering land since 1862 when
towns literally started with plan #1, plan #2, etc. As it became apparent
that plan #1’s were proliferating, the counties started prefixing with a code
for the town. For example CB#1 refers to Cambridge #1. Nowadays
up to a nine character index is used, with two to three alpha characters,
and the remainder numerical.
 The second thing that needed to be done was to enable the end user to
view the documents. Text documents did not pose a problem, but the maps
did. The UK Land Registry’s title plans are based on the latest available
editions of the Ordinance Survey Map, which are extremely detailed,
accurately scaled maps for all areas of England and Wales. A comparison is
made with the title deed, and red lines show the extent of the registered land.
The difficulty with maps is finding a mechanism that provides both
necessary functionality and speed of download. This is important because
of the size of some of the images, and the viewing tool originally used by
Land Registry could not handle the large file sizes. The Land Registry
found a product that could handle these files via an Internet search—
Onstream Systems’ Trapeze software (www.onstreamsystems.com). Trapeze
allows for speedy (up to ten times faster than other technologies) downloading of maps by creating a
multilayered file from the colored image maps, which is a fraction of the
size of images in the usual format. The files are small, clean to view, and
very quick to transmit online. The viewer has a free download of the
latest version of Trapeze to view the title plan, which expands the basic
viewing functionality to enable rotation and zooming in/out, gives a
scaling tool, and permits online measuring, in many cases to scale, as
well as potentially allowing printouts to scale. Most Land Registry maps
are 1:1250 or 1:2500 scale, so that the ability to cope with scale while
viewing online is an important consideration.
 The final strand in ensuring the success of Land Registry Direct was
to get people to use it. Land Registry’s services are used by many
different organizations: solicitors, banks, building societies, insurance
companies, government departments, railway companies, corporations, etc.
Few of these are known for their warm embrace of anything new; in
fact most have a reputation for sticking with the tried and true—
some 19% of UK Land Registry inquiries are still made via the postal
service. The postal service route takes time, approximately 7 to 10 days for
the request to arrive, be processed, and the required documents to be
delivered to the requestor. Land Registry Direct also competes with
Land Registry’s own popular phone service, which allows phone requests
for the same information. Forty-six percent of the overall preliminary
searches are conducted after a phone request. However, the search results
from telephone transactions still have to be mailed out in hard copy format
Land Registry’s contract with Global Crossing runs at least until
September 2005. The Global Crossing extranet service requires an initial charge per user ID (UK£100, US$180) plus the fee for any required
documents. The initial fee charged by Global Crossing has historically
proved something of a barrier to use of the service, so since March 2004,
Land Registry has been providing a new version of Land Registry Direct
that runs securely over the Internet (still using Global Crossing) but
makes no initial charge to the end user (although fees still apply). This
latest version of the service is proving immensely popular.
Benefits
In addition to reduced fees, Land Registry Direct offers far faster access
and retrieval of documents and title plans than Global Crossing’s extranet
service or requests made by phone. Using a fairly common 56K modem,
it takes about 37 seconds to download a 250K file; using faster Internet
access the same task can be done in just a few seconds.
Land Registry Direct has brought several cost savings to the UK Land
Registry, most notably in the area of clerical costs and postal and printing
charges. The UK has recently undergone a housing boom with a
large increase in borrowers; much like the U.S. has with the refinance boom
in 2004. Land Registry Direct has experienced a 45% to 50% year-on-year
growth in demand for its services since 2000, but without a
corresponding increase in costs.
An End User's Perspective
Hugh James is one of the UK’s leading law firms, with headquarters
in Cardiff,Wales. Land Registry Direct has made a major difference to
the law firm in the processing of mortgage and re-mortgage
applications for some of the UK’s largest building societies, including
Halifax and Abbey National.
According to Joanne Morris, senior associate at Hugh James, their office
used to call the Land Registry or issue postal requests to order the required
title deeds and registration papers and then had to wait two to three days for
their postal delivery. Now they log in more than 2,000 times a month to
download the required documents instantly. This has made the staff
much happier since there is no longer a need to flag the various files—the
documents can be immediately retrieved and processed. It has
reduced costs and processing times as well, which has made the lenders and
their clients happier. More important, it has also enabled Hugh James to
handle the huge property boom of the past year in a timely manner with no
increase in staff. As Morris commented, “Land Registry Direct
has allowed Hugh James to reduce cost and increase the speed and
efficiency of collecting property information—as soon as we receive
instructions, we can process the work.”
LINZ - The New Zealand Experience
LINZ (Land Information New Zealand - www.linz.govt.nz) is New
Zealand’s central Land Registry (also a government agency). LINZ holds
the information about land surveys and ownership, topographic maps,
and nautical charts. The agency also ensures that the rating (property tax)
valuation is fair and consistent and oversees the buying and disposal of
Crown land. Land titles and survey processing services are provided by the
customer service staff in the LINZ regional offices throughout New
Zealand. The national headquarters office provides system, service, and
support delivery management.
Landonline is LINZ’s secure access service to provide New Zealand’s only
authoritative titles register and digital cadastre (the official register of the
quantity, value, and ownership of real estate used for taxation and other
purposes). Only registered users may access the system, which provides
secure electronic title and survey transactions in real time, automating
and speeding up traditional (and sometimes prolonged and complex)
manual processes. Landonline provides three different tiers/types
services:
e-search — This is the most frequently used service, particularly by search agents, lawyers, and conveyancers. It provides access to the titles register and survey data in image format and supporting documents, but it does not include any access to spatial data. Access to spatial data can be obtained
with an enhanced service e-search plus.
e-dealing - This service, which includes all of the features of e-search,
allows for electronic conveyancing. Title instruments and changes to titles
can be registered electronically, including transfers of ownership and
registration and discharge of mortgages. Again, if the spatial data
is required, the service has to be upgraded to e-dealing plus.
e-survey - This service is for surveyors and includes all of the
features of e-search plus, allowing the electronic submission of cadastral
survey datasets.
The services of Landonline also allow local authorities to certify the
cadastral survey datasets online via TA e-certification. This certification
online can be done regardless of whether surveyors submitted their
work in paper format or online via e-survey, as LINZ captures the images
of the paper plans and makes them available online.
As with the UK’s experience, the full process of being able to offer the
above services took considerable time—some five years to convert over
seven million physical records of titles, title instruments, plans, parcels,
and geodetic survey marks dating back over 150 years, into the digital
records that are held in Landonline. New Zealand also chose Onstream Systems’
Trapeze suite of products as this was the only company they could
find to provide an imaging system to lay over their document management
system and that would customize the system to suit their requirements. It
involved close collaboration with all parties involved, including surveyors,
lawyers, conveyancers, and local authorities.
Benefits
Today all items are processed straight into Landonline. The only documents that are unavailable via Landonline are those that are either too fragile to convert to digital records, too large, or
too infrequently accessed. This means that whenever users log on, they
receive the most up-to-date information available. The distinction
between historical and current documents is clearly identified, and
converted records are easy to read, reducing the time and hassle of
deciphering old handwriting or faded documents.
Comments on Landonline
Here’s what one Landonline user, Guy Mortlock, of Hensley Mortlock Lawyers, Christchurch, NZ, had to say: “I think e-dealing is the way of
the future—it’s definitely the way conveyancing should be done. We
were one of the Landonline pilot firms so we’ve been involved from the
beginning. Now we use it for a number of transactions every week,
without any problems at all. It's become part of our everyday practice.
“It’s faster, cheaper, and more
efficient. I’d like to see others using e-dealing
far more, sooner rather than later, so we can process more two-party
transactions. That way we—and others—would really get the full benefit.”
Lessons to Take Away
The United States, with its over 3,000
counties, faces problems of a different
magnitude, especially since there is no government entity taking on this
project. However, there are some lessons that title companies in the
U.S. can benefit from in their quest to move records online:
- Allow time—it takes time to convert paper documents to images, to build the database, to introduce the service, to educate the users.
- Involve all parties from the beginning and keep them involved
throughout the process. Take extra time in the initial
planning and selection process to make the correct software and
integration choices to work with what you already have, and to cope
with what you will have upon completion.
- Educate, even entice, users. Both the UK and New Zealand have had
to overcome resistance to the online service. Many users, particularly
lawyers, are more comfortable with paper. They have to be convinced
of the value of the time savings, efficiency, and accuracy of the
online availability of the documents. Reducing the fees can
help make them willing to try. Both the UK and New Zealand
have a reduced fee structure for their online services.
- Different services may have to be offered to account holders and the
general public. UK Land Registry offers Land Register Online to the
general public. It enables a search for documents for properties in
England and Wales that can be identified by an address. Copies of
the documents can be downloaded, for a fee of £2 each, payable by
credit/debit card. Landonline allows public access to their e-search
functions at public counters in the LINZ offices.
- Online access can dramatically change the parameters of doing
title business as it basically eliminates the geographic factor.
Reprinted from Title News, the bimonthly magazine of the
American Land Title Association.
View the original article in PDF format
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