Electronic signatures in property transactions – Part 3
What do they mean for Property Transactions?
At this time, electronic signatures are relatively new to property conveyancers (although the Covid Pandemic did mean that the use of them ‘gathered pace’) and, therefore, there may be some reluctance to use them (perhaps more so in residential transactions, than in commercial or corporate transactions, which are used to using electronic signing mechanisms).
This may be because fraud is a very worrying (and constantly evolving) part of property transactions and so often property conveyancers will want to be in attendance when their clients sign (thereby preferring the ‘wet ink’ signature). Even with the ‘positives’ of electronic signatures, property conveyancers may not be persuaded to change their processes, especially as ‘wet ink’ signing with a client also gives a conveyancer the opportunity to meet a client face to face, which may not happen at the out-set of the transaction, and which can assist with confirming identification.
There are also the added requirements of the Land Registry (mentioned previously), which are unlikely to be as onerous for other areas of the law using electronic signatures (for example, corporate documentation for the sale of business does not usually need to be registered) but which may dissuade property conveyancers from using electronic signatures.
The Land Registry are currently trialling the use of Qualified Electronic Signatures under a “pilot scheme” involving a small number of conveyancers and a limited number of kinds of registrable disposition. Qualified Electronic Signatures (which are a type of electronic signatures) are defined (by the eIDAS Regulation as amended by the UK eIDAS Regulations) as having the following key features: –
- uniquely linked to the signatory and capable of identifying them;
- linked to the signed data in such a way that any subsequent change in the data is detectable;
- supported by a ‘qualified certificate’ issued by a ‘qualified trust service provider’;
- created using a qualified signature creation device.
Section 91 of the Land Registration Act 2002 provides for a document in electronic form to be regarded for the purposes of legislation as a deed if certain conditions are met and one of these is that the document must be signed with Qualified Electronic Signatures. Trials such as this at the Land Registry may mean that, in time, the use of electronic signatures (or Qualified Electronic Signatures) are likely to become more widespread in conveyancing transactions.
The Law Commission has suggested that the government may wish to consider codifying the law on electronic signatures in order to improve the accessibility of the law. The Law Society have further advised that any legislative provision should have broad application, and further consultation would be required. The government would also consider whether the power to exclude certain types of documents from being signed electronically should be used to exclude anything for which electronic execution is not considered appropriate. This means that electronic signatory of specific deeds may be currently permitted but this could change if the matter is ever legislated on, which suggests that all professionals may not be happy with using electronic signatures for all legal transactions.
Furthermore, the Law Commission has suggested that as part of the review of the use of electronic signatures, there is a review of general law governing deeds and whether the current concept remains fit for purpose. If this review did take place, and changes were made to the “signed, sealed and delivered” requirements for the deeds, this would mean huge adjustments for conveyancers to how property transactions are carried out.
On review, it seems sensible to use electronic signatures when necessary for any deeds or documents which are required to be registered at the Land Registry but if possible, to continue using a “wet-ink” approach. Electronic signatures can, however, prove very useful for non-registerable documents and/or contracts, provided the ‘negatives’ of electronic signing are taking into account by all parties involved.
The use of electronic signatures in property transaction is going to continue to develop and become more mainstream so it is certainly something that all property conveyancers need to have “on their radar”!
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.