It is often a source of frustration when trying to complete a deal that wet ink signatures will often be required. In an age where we are used to emails and facetime it sometimes feels very archaic and slow to have to wait for an original signed document to arrive.
The Law Commission is now addressing this point in a consultation paper. Their provisional conclusion is that it is already acceptable to have an electronic signature provided ‘an authenticating intention can be demonstrated’.
While this doesn’t place the authenticity of an electronic signature beyond all doubt it seems unlikely that this issue is going to be clarified further by legislation any time soon.
In addition, although we have long accepted a PDF of a scanned signed contract the Law Commission also goes onto say that its conclusion applies equally to deeds. However, deeds (whether signed electronically or by a wet ink signature) require witnesses to be present at the time of signing and the Law Commission expressed doubt that ‘present’ included being on a video conference or shared online platform. Establishing if a witness was physically present therefore to witness an electronic signature may prove problematic if the deed’s validity is later questioned. So one ought to proceed cautiously when signing a deed electronically.
There is an additional complication for transactions registerable at the Land Registry as they have not changed their requirement for wet ink deeds. Although originals are no longer sent, any application is made on the basis that the applicant holds the original completed document and it is not clear that the Land Registry would recognise a scanned pdf or other electronic signature as such.
Following the Dreamvar case the real estate legal world is on high alert for instances of fraud and it will be interesting to see if this is highlighted in the responses to the consultation. While not wishing to be stuck in the past it does seem that there is high potential for fraud where pdf scanned deeds are used, or electronic signatures relied upon. This may change when there are more sophisticated and reliable methods of obtaining electronic signatures – potentially achievable using blockchain - but such a significant change to a usually slow moving industry (and the Land Registry itself) is likely to take time.
Jennifer Lewis, Principal Associate, Mills & Reeve