Are electronic signatures legally valid?
There is case law recognising the fact that contracts can be signed electronically, but it is important to determine what we mean by an electronic signature. Sometimes it can be electronically handwritten with a stylus or a mouse, or by typing information into a pre-populated document. According to HM Land Registry, a signature is electronic if it is written on paper with wet ink and then scanned into a computer (this being the basis of the Mercury signature process).
But is this valid when it applies to property deeds, for mortgages or transfers? According to residential property expert Lorraine Richardson, the Land Registry is willing to accept the forms of electronic signing outlined in sections 12 and 13 of practice guide 8. However, there has been no judicial comment on whether a deed (as opposed to contract or an ordinary document) that is signed electronically is legally valid. In 2019, the Law Commission produced a paper in which they state that they believe deeds can be signed electronically. “I think it would be a fairly brave judge that would talk against that,” Lorraine said. “It’s a long-winded way of saying: contracts, yes; deeds, it’s not been judicially questioned but is highly likely to be yes. The Land Registry will accept them but … you often have to remember that it’s the lenders who sometimes take a different view.”
Using the Mercury signature process, which is described in section 12 of practice guide 8, all you need is a scanner/camera and an email. But both conveyancers must agree to use this system. It is a process which does not require a great deal of technology, especially when compared to the witnessed electronic signature process mentioned in section 13 of practice guide 8. The witnessed electronic signature process has some very specific requirements regarding the technology and the steps that need to be taken. HM Land Registry refers to platform providers, i.e. organisations which offer case management or other software with in-built processes to enable clients to receive and sign documents electronically.
“If you are someone who perhaps haven’t dipped your toe in that pool yet, there are, according the Land Registry when I last spoke to them, only actually about two or three platform providers that offer a process that currently complies with practice guide 8,” Lorraine said. “But there are about thirty prop-tech organisations out there who are interested in doing it. So if you are going to go down that route, then any law firm needs to asset what is in the market, what’s out there, and decide what’s best for them.”
The best approach for law firms is to have a look at the options in the market and decide what might be the best IT investment to make.