ARTL Practice Notes
Introduction
Although ARTL represents a fundamental change in the process of Land Registration, the Law Society of Scotland has managed to introduce only one single Rule as a consequence. There are some issues that require Guidance and at a more basic level Practice Notes.
Terms Of Business
Terms of Business should mention whether ARTL is to be used or not. In view of the differential registration dues, at the Firm’s discretion two alternative quotes may be given. This will be appropriate in transactions where you are unaware whether the purchaser’s solicitor will be ARTL enabled, but there may be other reasons why ARTL will not be available for a particular transaction.
The ARTL process should be explained to the client with particular reference to the Mandate position and the differential registration dues, but with the proviso that for reasons outwith the solicitor’s control, the system will not be available in certain circumstances.
Missives
Offers should state whether it is intended that ARTL is to be used in the transaction if it is available. Selling agents should at the earliest opportunity make clear whether or not ARTL it is intended to use the system. In the absence of a provision in the missives there will be no obligation on either party to use ARTL. The following style missive clauses should be considered:
Where the offering Solicitor/Firm does not intend to use ARTL:
"We are not registered for the operation of ARTL/ This transaction is not ARTL compatible/ Our client has instructed us that we are not to use ARTL and accordingly the transaction will not proceed under ARTL.”
Where the offering Solicitor/Firm does intend to use ARTL:
“Provided the transaction is ARTL compatible, it will proceed under ARTL. Neither the purchaser’s solicitor nor the seller’s solicitor will withdraw from using ARTL during the progress of the transaction without advising the other at the earliest practical opportunity”.
Where the selling Solicitor/Firm does not intend to use ARTL:
Where the offer is silent on ARTL the transaction may or may not proceed under ARTL as agreed .
Where there is an ARTL clause in the offer it should be deleted and it should be stated in the acceptance that this is the case and that the transaction will not proceed under ARTL
Conveyancing
Tell Me Don’t Show Me
Underlying the ARTL application is the principle of “Tell Me Don’t Show Me”. This is already in use to a limited extent in several questions in the existing Land Register Form 1 & 2 where the applicant’s agent effectively certifies certain statements to be true without providing vouchers to that effect. ARTL extends this principle and care should be taken when completing the application online that such statements can be properly certified. The application should be reviewed immediately prior to completion/submission to ensure such statements are still true at that time. Paragraphs 3 and 4 of the Society’s ARTL Guideline should be noted in terms of responsibility for this certification.
Discharges
Where a firm has authority from a lender to execute discharges on their behalf, whether under ARTL or not, individual Mandates may not be required if the Council of the Law Society have granted a waiver in terms of the Rules and the general mandate may be registered provided each execution of a discharge is vouched by an appropriate authority from a lender. To protect the integrity of the Register, it is imperative that discharges are promptly registered in such cases. Wherever possible discharges should be lodged electronically.
Delayed Discharges
ARTL envisages that discharges will be electronically executed and released for registration at settlement. Where this does not happen, discharges will have to be submitted by the seller’s solicitor either under ARTL or on paper. It would be expected that Discharges would be registered within 21 days of settlement. Parties should ensure that there are adequate obligations in this regard. On submission by the seller’s agent of the Discharge for registration, ARTL will acknowledge that to the seller’s agent and intimate the fact to the purchaser’s agent.
Letters of Obligation
Although registration in ARTL cases will be completed in most cases within 24 hours following submission of the application to the Keeper, a standard 21 day letter of obligation should be issued in normal form. This is likely to be reviewed once ARTL has been in operation for some time. To ensure that the letter of obligation is classic the same checks as at present outlined in Alistair Sim’s article in the Journal in April 2003 page 26 should be followed.
Mandates
Consideration should be given to the opinion of Professor Robert Rennie in Annex One of this Practice Note. Where Mandates are sent to clients for execution, a covering letter clearly explaining the meaning and import of the mandate and its effect should be sent. Where appropriate any other caveats relating to the execution of the document or its effect should be incorporated in that covering letter or intimated separately to the client prior to execution of the mandate. It is improper for an electronic signature to be applied without the appropriate authority. It may also be an offence. Care should be taken to ensure that:
· Mandates are in place
· They correctly identify the parties
· The parties have the capacity to grant such Mandates
· They have not been withdrawn
· They are sent to be archived by the Keeper within the 14 day time limit following registration
Unrepresented Borrowers
In addition to other guidance and practice notes, additional care should be taken to ensure that unrepresented borrowers are made aware that they are unrepresented and understand the meaning import and effect of that. The appropriate special mandate should be obtained for execution of documents in such cases.
Operational Issues
ARTL and PKI Administration
The Terms and Conditions of Use of ARTL and the PKI Policy Statement set out the responsibilities and obligations of firms in relation to the use of ARTL, but the following is a list of issues which should be particularly considered. It is illustrative only and is not definitive:
Firms should:
· Monitor the use of ARTL access by authorised users.
· Promptly remove access rights when users leave the firm.
· Ensure that the level of authority given to staff is commensurate with their knowledge and ability.
· Regularly review Risk Management issues.
· Where smartcards are lost or where the pin number or username and password may be compromised, withdraw access rights and replace them without delay.
ARTL Terms and Conditions
All staff with access to the system should be familiar with the Keeper's Terms And Conditions, The Society’s Rules Guidelines and Practice Notes and the conditions of use of the PKI.
SDLT and Registration Dues
For the avoidance of doubt, the obligation in respect of all payments of registration dues and SDLT rests with the Firm/Organisation. In completing an ARTL application the Firm accepts this responsibility and failure to meet this responsibility may have significant consequences including conduct issues.
Firms should ensure before completing Registration that they are in funds to meet these obligations.
Care should be taken in relation to the provision of cleared funds when settling a sale and purchase simultaneously and settlement is effected by means of cheque as SDLT and Registration Dues relating to the purchase will be deducted from the firm account by direct debit within…..days following submission of the application.
Compliance Issues
Firms should cooperate with the Keeper in any auditing or compliance procedures.
Firms should comply with the Keeper’s Terms and Conditions at all times.
Firms should be aware of money laundering and other issues.
Partners Senior staff, Organisations and Firms have a responsibility to preserve the integrity of the PKI signature and should make all users aware of their obligations to keep this secure. In particular they should remind staff of the duty to keep PIN numbers secret and prevent others having access to their Smartcards. If other users need access to the system they should be granted their own Smartcards and PINs. T
Firms should be aware of the data protection issues arising from the use of the ARTL system and in particular the addition of ARTL to their declaration of data use at next renewal should they hold Data Protection Act Registration.
Definitions
“ARTL” - means the computer system provided by the Keeper of the Registers of Scotland (“the Keeper”) to enable creation of electronic documents and the electronic generation and communication of an application for registration of an interest in land in the Land Register of Scotland and the automated registration of that interest.
“ARTL compatible” - means, in respect of a transaction, one which is capable of being processed under ARTL as being of a kind, and falling within a geographical area, approved by the Keeper for such processing.
"Firm/firms" - shall include Organisations and in that context references to Principals shall include senior line management working in-house in Organisations who are themselves solicitors.
