When I Stopped Vomiting, I Learned to Hate Teraview

Technology, particularly legal technology is supposed to make the delivery of legal services more convenient. However, sometimes lawyers get in the way and muck things up. Teraview is a perfect example.

Back in the day, anyone could walk into the local registry office and register any document they wanted. Since the mid-1980s registration documents were not witnessed, nor were signatures checked. The system was one of openness and accessibility.

Then along came Teraview – which allowed registration from anywhere in Canada via the internet. A seemingly great idea that would make real estate transactions faster and smoother. However, everyone forgot about the fact that money still needs to be transferred by bank draft. Teranet Inc. (which runs Teraview and is owned by OMERS) has been well-positioned for years to create a fund transfer system to go along with registration – but has failed to do so. In fact, Teranet Inc. has been well-positioned to be a leader in fast and efficient real estate closing processes for the same period – but has failed to do so. Mostly because Teranet Inc. does not see itself as a legal tech company. It sees itself as a sleepy registration company that happens to use some technology. A big miss in my view.

But I digress.

Many lawyers liked the idea of remote registrations, but many others were concerned that our practical monopoly over registering deeds of land might end – even back in the day clients asked lawyers to prepare and register deeds. So, positioned as “fraud prevention” the government of the day was convinced to permit only lawyers to register deeds – notwithstanding over 100 years of permitting members of the public to register them. Note: Teraview allows mortgages and other documents to be registered by regular Canadians.

All these thoughts were turning in my mind as I spent much of Monday afternoon vomiting in my office. I was unable to go home to bed – where I belonged – because I had a real estate deal to close.

As a solo, there is no other lawyer who could register it for me. I was stuck. The same would apply if I went for a vacation outside of Canada. If I vacationed in Canada, I would need to have access to the internet to close my deals. In the old days, I would have sent the documents to a conveyancer who would close the deal for me and I could go to bed – or even on vacation.

It’s no wonder that the really good, useful legal tech is created and run by regular people – not lawyers.

Note to Teranet Inc. – you can access more capital than any legal tech start-up in history and yet you’ve decided to sit on the sidelines during the most disruptive period of time in the history of the legal profession. What’s up with that?

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Comments

  1. Mitch Kowalski commented that Ontario’s electronic land registration system had failed to be a leader in fast and efficient real estate closings.

    One reason may be that, in 2010, the Ontario government sold, to an arm of the Ontario municipal pension plan (OMERS), a 50-year exclusive right to operate the system. The price was $1 billion and the Ontario government used the price to pay down public debt and reduce interest. The pension plan must expect to recoup, for the municipal pensioners, the $1 billion, plus a good return. This must come from Teranet’s share of future fees paid by users. Using the fees in this way must remove, from the land registration system, money that could have been used to lower costs or pay for improvements. The terms of sale may provide incentives for improvements, but the $1 billion remains a central feature of the sale. Perhaps lawyers and the system failed credibly to guard against the sale.

    Mitch rightly suggests that people should have better access to the land registration system, and that “fraud prevention” had something to do with this. The government seems indeed to have given lawyers the two-lawyer rule for transfers, in return for their agreeing to pay for extra insurance against fraud. If so, the government can’t be proud of this deal.

    Mitch suggests that not having fast and efficient real estate closings is a case where “lawyers get in the way and muck things up.” It may be a case where real estate lawyers aren’t doing what they should do best, that is, push to modernize the law and legal practice, and so guide the technology.

    Lawyers need to review many parts of the electronic land registration system. A few examples are the parts relating to funds transfer (as Mitch says), fraud, signing, statements, access, or becoming a user (including lowering the high cost of buying the Teraview program). There are also many examples of general laws and legal practices that can stand in the way of fast and efficient real estate closings. A few examples are laws and practices relating to subdivision control, land titles, off-title searches, positive obligations, condominium documents, residential sale agreements, commercial leases, estates, limitation, and seals. In general, Ontario needs a better understanding of its land registration systems and wiser policies.

    With the recent revelations about the security of electronic systems, Ontario must wonder how secure the electronic land registration system is. Teranet should be highly motivated to avoid any security breach.

    Ontario’s move to electronic land registration has been a remarkable achievement. Ontario has made a long and large investment in public land registration. This should make title insurance relatively unimportant in Ontario. In light of the above, Ontario must now wonder whether it will enjoy the full benefit of these past commitments. Or whether Ontario will foreseeably have fast and efficient real estate closings.

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