Electronic signatures: a reminder

In the current climate lawyers will be contemplating how they can get transactions completed when getting physical documents is becoming impractical.

It is becoming more common practice for property deals to be completed relying on scanned documents. This however, is on the basis that hard copy documents with then follow in accordance with suitable cross undertakings.

This manner of completion has also become more widely acceptable for commercial property transactions. It is safe to assume that the longer the current situation continues the wider will be the adoption of this way of working.

As part of this process how much can we incorporate electronic signatures into documents?

By way of a reminder the Law Commission reported on electronic signatures on 4 September 2019 and produced a statement of law which confirmed the following;

• an electronic signature is capable in law of being used to execute a document (including a deed) provided the person signing intends to authenticate the document and the execution formalities are satisfied;
• the necessary execution formalities that may be required under statute or in contract need to have been complied with such as witnessing;
• an electronic signature is admissible in evidence in legal proceedings;
• common law does not specify the form or type of electronic signature although legislation or contractual terms may do so
• the courts have held that a name typed at the bottom of an email; clicking an “I accept” tick box on a website; and the header of a SWIFT message amount to valid signatures and so there appears to be little reason to suppose that an electronic version of that form would not be recognised; and
• the Law Commission’s view is that a requirement that a deed be signed “in the presence of a witness” requires the physical presence of that witness. The witness must also be a non-family member and aged over 18.

In practical terms there are two main problems for property transactions.

1. As referred to above the Commission concluded that any signature that has to be witnessed requires physical presence of the witness. Many property documents require the signature of a witness for example for the signatory as a single corporate officer or an individual; and
2. With the exception of digital mortgages, the Land Registry will only accept scanned copies of hard copy documents with wet ink signatures. So if your transaction needs to be registered at the Land Registry a document with an electronic signature will not by itself be capable of registration. (There a few exceptions relating to dispositions but contact us for further details if required).

On this basis is there any relevance for electronic signatures in property transactions? The clear answer is yes as electronic signatures can be used for an Agreement for Sale or Lease. Also if the above criteria are met and the documents do not have to be signed as a Deed. There may also be other forms of documents such as rent review memoranda some wayleave agreements and other documents which can also be signed electronically.

For the time being the signature of certain documents which require a witness and where the signatory cannot sign in front of an independent witness remains problematic. This can be an issue where say the signatory is self-isolating.

If you have any questions about this topic, please contact Clayton Beerman or any member of the Property team.

 

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