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Electronic signatures are now valid – but property deals will remain an exception

After new legislation around electronic signatures was announced in late summer, partner and head of commercial property at Liverpool-based law firm MSB, Neil Kelly, reflects on how new processes are likely to take affect.

He says traditional ‘wet signatures’ will still be required, particularly where it comes to transferring deeds for property deals.

‘Just sign here’ is a concept embedded into all our lives but official approval for use of electronic signatures in the UK represents a major change in our daily business dealings.

The Government’s Law Commission has said that formal documents, such as commercial contracts, employment contracts, consent forms or credit agreements, do not need a written signature to be regarded as valid and has confirmed that electronic signatures are valid and binding.

Allowing legal documents to be signed electronically does allow many legal and contractual processes to be speeded up, saving both time and money. Individuals would not always have to be present to sign a document.

Property deals

Leading Liverpool property lawyer Neil Kelly, a partner at MSB Solicitors, has welcomed the clarification from the Commission but added that transfer deeds in property deals, and wills, still require a ‘wet signature’ and that will be the case until the law is changed.

He said: “Property lawyers should not get too excited. As people who have been involved in property sales will know, the usual procedure is that contracts are exchanged and completion usually takes place 28 days later.

“The contract to exchange contracts can be signed electronically provided the signatory has an intention to authenticate the document. However, the transfer deed will still need a wet signature and a solicitor will  need to hold a hard copy signed and witnessed transfer deed before he or she can complete the transaction.

“The rules for deeds when it comes to property documents are  not changing so you will still need to either attend in person at your solicitors office to sign a deed or rely on the snail mail.”

Law change

The Law Commission has said that it is looking into the deeds issue and, if it recommends the extension of electronic signatures into this area, then new legislation will be required. But the challenge will be to balance advances in modern technology with security and potential fraud risks.

Neil added: “Property lawyers have recently been in the firing line from a risk perspective when it comes to responsibility for fraudulent property transactions and many solicitors may feel having a hard copy signed and witnessed document is still the safest way to proceed. The Commission also confirmed that the rules relating to wills have not changed and electronic signatures will not be valid for a will.”

Video link

The Commission has also suggested that where electronic signatures need to be witnessed, this could be done by either using a video link or allowing those involved to log in to an online portal.

“We do need to keep pace with how modern transactions are now conducted and we live in a digital age and it is right we do accept the validity of electronic signatures,” Neil explained. “The Law Commission guidance is valuable in clarifying the position on electronic signatures and further changes may well be on the way.

“I would not be surprised if, in the not too distant future, there may not be any need for any physical signatures.”

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