Electronic signatures in property transactions – Part 2

Friend or Foe for Property Transactions?

Having considered the types and requirements of electronic signatures for HM Land Registry purposes, we now look at the ‘positives’ and the ‘negatives’ of this type of execution (particularly conveyancer-certified electronic signatures), over ‘wet-ink’ signatures?

Positives

Speed – the electronic signature process, especially if there are a number of parties, is often quicker (once the documentation has been set up by the Conveyancer on the platform – see below) then sending documentation out by post (and waiting for its return – particularly when there are postal strikes!) or arranging appointments with multiple parties. The process also allows for signatories to sign outside of ‘normal working hours’ and then return the documents to the conveyancer for completion the next day;
Convenience – the electronic signature platforms can be accessed from a computer or smart phone anywhere in the world so this means that they are much more convenient for signatories, particularly corporate organisations whose directors may be spread out across the globe;
Environmentally friendly – particularly for transactions which have large numbers of documents, using an electronic signature platform cuts down on the amount of printing to prepare documents. This can also be a cost saving exercise for clients and their conveyancers;
Electronic Trail – electronic signatures leave a digital audit “trail” which can be examined and produced for evidential purposes (in the absence of any fraud) in the Courts of England and Wales;
Security – when correctly implemented, electronic signatures are very secure. As mentioned in the first blog in this series, HM Land Registry require the use of a (at least) 6 number, one-time passcode to be sent by text to signatories and their witnesses, which creates an additional level of security.

Negatives

Confidentiality – while all the parties of the relevant document may have already seen a draft and be aware of the contents, when using a ‘wet-ink’ signature, witnesses do not usually get to see any pages or part of the relevant document expect for the signature page. Most platforms allow the witness to view the entire document (although they do not get a completed version the end of the process) when they witness the signature. This could lead to confidential information being viewed by witnesses who are not a party to the transaction;
Witnesses – even for documents executed electronic, there is a requirement under current law that a deed must be signed “in the presence of a witness” which requires the physical presence of that witness. This may mean while the convenience of being able to sign documents from “anywhere in the world” is a positive, the ability to have a witness who can be physically present when the signatory signs electronically, and then have the witness ‘log on’ to the platform themselves to sign and include their witness details, can be difficult;
HM Land Registry requirements – HM Land Registry’s requirements for registrations using electronic signatures are strict, and for documents which are registrable at HM Land Registry, the conveyancer has to give an onerous certificate to confirm that the required steps have been undertaken to the best of their knowledge. It may be difficult for conveyancers to give this certificate if they cannot adequately confirm that all of the relevant steps have been taken, and they may not wish to do so as the consequences of giving this incorrectly may outweigh the benefits of using an electronic signature platform. Furthermore, HM Land Registry does not permit the use of electronic signatures for all types of document, so conveyancers would need to keep this in mind and not use electronic signatures as “a matter of course”;
No room for error – once the domination has been uploaded to the platform, it cannot be amended without a new document being uploaded. This means but there is no room for minor mistakes or typographical errors, which would normally have been resolved by way of manuscript amendment;
Seal – companies that require a seal to execute documents would not be able to use electronic signatories as “e-seal” is not possible (but the company’s authorised signatories can “e-sign” for example with two directors or a director and a witness
Cross-border transactions – before using electronic signatures to sign documentation in a cross-border transaction (i.e. that are not governed by the laws of England and Wales), it is important to determine whether electronically executed document will be registrable and enforceable, in every jurisdiction relevant to the transaction. This is because some jurisdictions do not permit electronical signatures and Counsel’s opinion may be necessary on this point, which would increase costs;
Time – often it can take conveyancers more time to set up electronic signatories on an electronic signature platform than it would for them to print and prepare the documentation to be sent out in the post or arrange available for a meeting (particularly if there are only a small number of documents on a straightforward residential purchase);
Technology – some forms of electronic signature or platforms may require advanced technology and those using them may need additional training. The software is also still be developed and improved so it will be constantly changing, which can be difficult to keep up with;
Cost – originally setting up an electronic signature platform can be expensive for law firms and the additional features that HM Land Registry require (such as the one time passcode) can increase the cost.

Having considered the above, do you think that electronic signatures can be a friend or for to the property conveyancing market? Our final blog will consider the above points and look at what electronic signatures mean for Property Transactions.

If you would like to discuss electronic signatures in property matters further then please contact Keelys Real Estate team.

Emma Faunch is a Solicitor in Keelys Real Estate team.