The Property Law Committee recognises that ARTL has not progressed as expected. It has some concerns in respect of the efficacy of the following guidance and will have this updated when ARTL2 is brought into force.
1. The Local Registration Authority (LRA - the person(s) responsible for Administering ARTL in the practice unit) should be solicitors.
2. Principal responsibility for compliance with the Keeper's Terms and Conditions shall rest on the Practice Administrator (PA). All managers in the practice unit or solicitors in the organisation registered to use ARTL should understand their joint general responsibility. In smaller practice units it is anticipated that the Local Registration Authority and Practice Administrator may be one and the same person
3. The PA should understand his/her responsibility for the actions of parties who are given access to the system.
4. The PA and LRA should jointly (where these are separate persons) ensure compliance with procedures and that the integrity of the system and in particular usernames , passwords, smartcards and pin numbers in connection with the digital execution of documents are preserved.
5. Practice units should have contingency plans in place. They should incorporate specific provisions in connection with:
· Sickness or absence of the PA or LRA.
· Loss of access to the system.
· General contingency planning issues.
6. All staff with access to the system should be made aware of the Keeper's Terms and Conditions, the Society's Guidance and Practice Notes and their obligations in respect of security of the ARTL system.
7. A policy should be adopted in regard to possession of mandates to execute documents electronically.
8. Direct debit payments should not be made on the principal client bank account. A separate subsidiary of Client bank account holding only sums required to meet direct debit payments (and perhaps a small surplus where appropriate) should be operated for such purposes.
9. For the avoidance of doubt it should be noted that the following may give rise to conduct as well as service complaint issues:
· Deliberately giving any other party access to your username, password, smartcard and/or pin number.
· Execution of any document electronically without the appropriate authority.
· Use of any other person's username password, smartcard and/or pin number.
· False declarations in the ARTL process.
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
Whenever possible Terms of Business should specify whether ARTL is to be used or not. In the event that it is not possible to confirm the position when the Terms of Business are first issued, that fact should be made clear and the position clarified in an amendment to the Terms of Business as soon as possible. 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 may not be available in certain circumstances. It should be remembered that use of ARTL is dependent on the client being willing to sign the appropriate ARTL mandate.
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 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 and the transaction may proceed under ARTL, or not, as may be agreed.
The standard missives contain examples of clauses which may be of assistance.
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 Forms 1 & 2 where the applicant's agent effectively certifies certain statements to be true without providing vouching 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 should be noted in terms of responsibility for this certification.
The buyer's agent may require sight of a copy of an ARTL Mandate obtained by the seller's agent in order to ensure that statements on the online application can properly be certified as true. The agents should ensure that there are adequate obligations in this regard.
Where a practice unit 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.
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 14 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.
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
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.
ARTL and PKI Administration
The Terms and Conditions of Use of ARTL and the PKI Policy Statement set out the responsibilities and obligations of practice units 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:
Practice units 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, rule B8.2, the Guidance 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 practice unit. In completing an ARTL application the practice unit accepts this responsibility and failure to meet this responsibility may have significant consequences including conduct issues.
Practice units 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 practice unit account by direct debit within three days following submission of the application.
Practice units should cooperate with the Keeper in any auditing or compliance procedures.
Practice units should comply with the Keeper's Terms and Conditions at all times.
Practice units should be aware of money laundering and other issues.
Managers, Senior staff, Organisations and practice units 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.
Practice units 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.
"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.
" practice units " - shall include Organisations and in that context references to Managers shall include senior line management working in-house in Organisations who are themselves solicitors.