E-signatures and real estate

In the current fast-moving world, with the increasing technological capabilities and innovations, digital signatures are becoming increasingly popular. Electronic signing platforms are slowly taking over the usual paper and “wet ink” as a result of the availability of deed authentication processes which arguably beat the testimony of a human witness.

The Covid-19 pandemic perhaps encouraged the gradual evolution of technology in this respect, despite the fact that the world seemed to have been put on pause, the ongoing business needs and demands required us to adopt to new ways of living.

Regardless of whether you are signing electronically or not, it is always important to ensure that a deed is executed accurately. In order to avoid potential issues, all of the relevant steps must be followed to avoid the possibility of defective execution, particularly when dealing with real estate.

When considering a potential departure from traditional execution, it may be appropriate to familiarise yourself with the available options. In essence, there are three types of electronic signatures: standard, advanced and qualified. Qualified being the most secure type of electronic signature. It is legally valid and admissible as evidence and cannot be denied legal effect purely on the basis that it is of electronic nature. If you are intending to sign a document electronically (regardless of the value of the transaction or its importance), we would advise that a qualified electronic method is used as it principally has the same legal effect as a handwritten “wet ink” signature. Arguably, this electronic signature is more secure than the conventional method since it is certainly harder to gain unauthorised access to a private document than forging a handwritten signature.

A qualified electronic signature platform will also produce an audit trail which would show when the document has been signed and witnessed. An important point to note is that according to the Law Society’s guidance, even if execution is performed electronically, the witness must be physically present when a deed is executed. Fortunately, there will be clear evidence of this on the audit trail as the signatory party and the witness will have the same IP address if signing at the same location, if not, the document has been signed incorrectly and a conveyancer should be able to pick up on this before completion takes place to avoid potential complications. Undoubtedly, this element alone makes the electronic signing process through a recognised platform more secure and reliable.

To complicate matters further, HM Land Registry has its own specific requirements on how a deed should be executed in order to be considered valid, these are set out in Practice Guide 82. These requirements should always be taken into account when dealing with electronic signatures in real estate transactions as HM Land Registry may refuse to complete the registration of your application if the electronic signing process did not comply with the relevant requirements. It must be noted that according to HM Land Registry, deeds should not be signed electronically by a party who does not have a conveyancer acting for them, hence you must ensure that you are legally represented if you are intending to sign a deed electronically.

When considering whether electronic execution is appropriate for you and your transaction, it is important to consider whether there are any elements which may affect your ability to sign electronically. According to the Industry Working Group Report on Electronic Execution of Documents, you may wish to consider the following:

1. Are you restricted from signing electronically by your company’s Articles of Association?

2. Are you restricted from signing electronically due to your restrictive internal information security policies in connection with the use of cloud-based platforms?

3. Is you document required to be registered at HM Land Registry and will you be in a position to comply with their specific requirements (ensure you are legally represented by a conveyancer in the first instance);

4. Does the document require a signing formality, such as affixing a common seal? If so, you cannot sign electronically.

Inna Ratsebarska
Paralegal, Commerical Property