Electronic signatures in real estate: an introduction

Thomas Ferguson, Senior associate in the Russell-Cooke Solicitors, real estate, planning and construction team.
Thomas Ferguson
4 min Read

The use of electronic signatures is not a new idea, but the Covid-19 pandemic left lawyers no choice but to adopt the technology to accommodate the requirement of social distancing. This article sets out the current legal framework for electronic signatures in England and Wales and considers how future developments in the law and technology may result in electronic signatures increasing both efficiency and security in the legal real estate industry.

Background of the development of electronic signatures

In September 2019 the Law Commission published a report on the electronic execution of documents in which they concluded, among other things:

An electronic signature is capable in law of being used to execute a document (including a deed) provided that the person signing the document intends to authenticate the document and (ii) any formalities relating to execution of that document are satisfied”.

The report also recommended that a Working Group should be convened to consider the technological and practical issues relating to electronic signatures. The Lord Chancellor and Secretary of State for Justice agreed with the recommendation on 3 March 2020 - just 20 days before the first national lockdown.

The Working Group published their interim report on 1 February 2022. In it they:

(a) analysed the current legal framework for electronic signatures

(b) set out best practice guidance in relation to use of electronic signatures and

(c) made recommendations for reform to the current legal framework and suggested further analysis.

Legal framework for electronic signatures

Regulation (EU) No 910/2014 already set out a regime for electronic identification and trust services throughout the European Union. This regulation (UK eIDAS) was adopted by the UK during the Brexit process and together with The Electronic Identification and Trust Services for Electronic Transactions Regulations 2016 and the Electronic Communications Act 2000 they established a legal framework for electronic signatures.

The Working Group concluded that the three levels of signatures set out in the UK eIDAS should be adopted going forward. These are:

  1. Simple signatures- the most common form of electronic signature and can be as simple as a scanned copy of a ‘wet ink’ signature or typing a name or symbol.
  2. Advanced electronic signatures - requires a link between the electronic signature and signatory allowing a “degree of identity authorisation.”
  3. Qualified electronic signatures (QES) - fulfilling the requirements of an advanced electronic signature it must also be accompanied by a qualified certificate, provided by a qualified trust service provider, that can verify the identity of the signatory. In the UK this may typically involve a video ID check by a qualified trust provider in which the signatory is observed physically holding their passport. The electronic signature must then be created via a Qualified Signature Creation Device. A QES is considered to have the same effect as ‘wet ink’ signature.

Execution of real estate documents via electronic signatures: current position

Electronic signatures are capable of being used provided the signatory intends to authenticate the document and execution complies with any formalities. For real estate, the main formalities are:

  1. That any deed must be signed “in the presence of a witness.” 
  2. The requirements set out by HM Land registry in Practice Guide 8: Execution of Deeds for any deeds purporting to transfer an interest in land.

Requirement of a witness

The Working Group concluded there is a requirement for a witness to be physically present when signing a deed even if it is signed via a QES. The requirement of the “physical presence of a witness” is an obvious obstacle to further adoption of electronic signatures.

The Covid-19 pandemic showed that this obstacle, which is usually easily overcome, can become a major cause of friction in real estate transactions.

Witnesses signing via an electronic platform add further obstacles as it requires the signatory to know certain details before they can nominate a witness i.e., email address and phone number.

The HM Land Registry guidance and many electronic signature platforms do allow for the witness’s contact details to be added at a later stage of the signing process provided it is before the witness electronically signs the document. We should also not forget that many witnesses may not be confident and comfortable when using this new technology.

HM Land Registry in Practice Guide 8: Execution of Deeds

The HM Land Registry announced that they will now accept dispositionary deeds that have been signed with a witnessed electronic signature.

Practice Guide 8 sets out the extra requirements for registration of such deeds. Although this is ultimately a huge endorsement of electronic signatures in real estate, it does also add further barriers to wider adoption in certain situations.

The requirements include that all parties should agree to the use of electronic signatures and the specific platform to be used. It also requires that all parties are represented by a conveyancer (save for a specific few exceptions) and that a conveyancer is responsible for controlling the signing process.

Plus, the conveyancer lodging the application for registration will need to provide a certificate to the registry stating that these extra requirements have been satisfied. 

There are further general barriers to consider such as security and reliability. As with all new technological developments, there is an inherent fear that the technology is not secure or reliable.

Although current evidence would suggest electronic signatures are secure and legally reliable, these are understandable reservations given this is a fast-moving area and that most conveyancers are not experts in technology.

Although the above illustrates that there are still barriers to the wider adoption of electronic signatures many of these can be overcome by continued use and by future developments in both technology and the law.

To find out about the future of electronic signatures, read more here.

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