3 April 2019 by and Real Estate Alert

One step closer to e-conveyancing

The digital age is deeming more and more legal processes in South Africa archaic and outdated, and the process of transferring property - or any registrations involving property for that matter - is no exception.

Our legislature introduced the Electronic Deeds Registration Systems Bill in 2017 (Bill), which it intends to be a replacement of the current preparation and lodgement procedures contained in the Deeds Registries Act, No 47 of 1937 and the Sectional Titles Act, No 95 of 1986. In terms of the Bill, the Chief Registrar of Deeds is obliged to “establish and maintain an electronic deeds registration system using information and communication technologies for the preparation, lodgement, registration and storing of deeds and documents”, and is empowered to issue directives to aid this process.

The Bill is largely subject to the provisions of the Electronic Communications and Transactions Act, No 25 of 2002 (ECTA), which is currently South Africa’s overarching legislation with regard to electronic information processes. The objects of ECTA include the promotion of (i) provision of universal access to electronic information services in disadvantaged communities, (ii) e-government services and (iii) the stability of electronic transactions.

The development of an electronic deeds registration system (e-DRS) has already commenced and it is anticipated that it will operate in tandem, and in addition to, the pre-existing online Deeds Registration System (which serves the purpose of maintaining the electronic land register).

It is envisioned that the e-DRS will promote (i) security of title, (ii) improved turn-around times, (iii) country-wide access to registration services, (iv) overall availability of information and (v) enhanced accuracy of information.

The imminent and direct problems that the legislature seeks to combat with the Bill and the e-DRS include the increase in volume that deeds offices are faced with due to land reform; the lack of uniformity in registration procedures at deeds offices across the country; the absence of a system which is flexible enough to accommodate new forms of land tenure and the need for decentralisation and mobility when it comes to property transfer and registration procedures.

Interestingly, the Bill provides a new definition for a “deed” and/or “document”, being: data that is electronically generated, submitted, received or stored, including scanned images. The Bill provides that such a deed or document will for all purposes be deemed to be the “only original and valid record”. This provision is also expressly linked to ECTA, which requires that for it to constitute an original the deed or document’s integrity must still be intact, ie that it must (to a reasonable extent) remain unaltered and complete. However, ECTA also provides that “[i]nformation is not without legal force and effect merely on the grounds that it is…” in an electronic form.

Ultimately the Bill will have the effect that deeds can be electronically executed or registered, and such deeds “shall be deemed to have been executed or registered in the presence of the Registrar by the owner or by a conveyancer authorised by power of attorney to act on behalf of the owner”. The Bill provides that notwithstanding the date of coming-into-force of the Bill, the preparation and lodgement procedures contained in the Deeds Registries Act and the Sectional Titles Act will continue to be in force and only be discontinued after the e-DRS and related provisions or regulations are fully in place.

The drafting of the Bill occurred following consultation with various interested boards and societies, and in 2018 the Bill was published for comment. At a meeting on 12 March 2019, the Department of Rural Development and Land Reform delegation (DRDLR) and the Deputy Minister of DRDLR presented responses to comments on the Bill (Meeting). Notably, the Law Society of South Africa and the Banking Association of South Africa (BASA) had submitted comments that largely related to considerations around the new definition of a “deed” or “document” and especially the deeming of such as the “only original and valid record”. One of the considerations put forward by BASA was that should the only way to obtain an “original” be to apply for one, this would result in additional costs for borrowers, to which DRDLR responded that upon a registration taking place, a certificate of registration or ownership (containing a summary of the transaction and details of rights and/or restrictions), which will be comparable to an original deed as we currently know it, will be issued and such certificate may be used for security or litigation purposes. It was also stated that financial institutions will have permanent access to original registered records through “bi-directional interfacing of systems”, and as such will no longer need to retain an original title deed as security. Although the Bill provides that it will not affect the validity of any registrations effected prior to its commencement, there is not much guidance in respect of pre-existing original title deeds held by banks as security. Will these deeds need to be replaced or will they be phased out gradually? It seems that directives from the Registrar will be required in order to address this.

Once the Bill is passed into law, there will also be a new requirement that before one can attend to any transactions relating to property registrations and the likes on the e-DRS, one will have to be a registered user. The broader public would also be entitled to register as users. At the Meeting there was concern around this particularly from a fraud perspective – how would fraud be avoided if it was possible for those other than conveyancers to attend to registrations, via the e-DRS, and given the fact that conveyancers would not be required to physically appear before a registrar? The DRDLR commented that it contemplates that there will be different categories of users – one of which will be “Public Users” who will be entitled to use the e-DRS only for the purposes of obtaining information, and that the usage of advanced electronic signatures (which can currently be issued by only two accredited service providers in the country) by conveyancers and registrars will be compulsory. However, in relation to advanced electronic signatures it must be borne in mind that according to ECTA, such signature is automatically regarded as valid and properly applied unless it is proven otherwise. It was also further commented that in fact the e-DRS will curtail fraud and corruption as there will be an audit trail of all registered property transactions.

The intention is to have the Bill passed into law by the current parliament, before the upcoming elections in May 2019. The practical effects of the Bill, once passed, will be gradual and we anticipate that it may take some time before the e-DRS is in full operation. Notwithstanding this, given the fact that one would still be furnished with a certificate of registration, the e-DRS should not be viewed as a total replacement of the current registration processes, but rather as an enhancement and technological upgrade.

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