With Michaelmas just round the corner, landowners are busy completing farm sales and new tenancies and serving notices to quit and rent review notices. Since the Covid pandemic the use of electronic signatures for completion of all manner of legal documents and notices has become widespread.
For multiple-party transactions, the ability to procure the signing of a document by several parties located across the UK or further afield, in a matter of minutes, has transformed completions and saved days of delays. But it is not entirely straightforward, and mistakes are all too easy to make, which could leave the status of the arrangement ambiguous or transactions potentially void.
Since the Electronic Communications Act 2000 the law and practice relating to digital documents and electronic signatures has gradually developed as technology has advanced. More recently the Law Society has provided guidance on when and how electronic signatures can be used and this was followed up in 2023 with a Final Report by the Industry Working Group on Electronic Execution of Documents set up by the Ministry of Justice with their recommendations. Alongside these developments, H M Land Registry has issued very precise guidance relating to transactions which have to be registered.
Electronic signatures can encompass typed initials, affixing scanned manuscript signatures, clicking “I accept”, physical signing with a stylus or finger, as well as signing on the more sophisticated digital platforms, such as DocuSign and Adobe Sign. All of these methods can potentially be acceptable methods, but each carries with it differing risks regarding security and reliability. A typed name is easy to forge and a scanned signature can be affixed by anyone with access. Only the digital platforms offer proper traceability and enhanced ID verification security (using two step SMS codes which have become so familiar).
Many binding contracts do not have to be signed at all, if the essentially elements of a contract are present; offer, acceptance, consideration, clear terms and an intention to create legal relations. In these cases, obviously an electronic signature is entirely acceptable – consider a contract for services or sale of a product.
There are some contracts where the law steps in and imposes particular requirements – for instance the need to be in writing, to be signed or even to be drawn as a deed. For instance:
In general terms, recent caselaw has found that where there is a requirement for a document to be in writing then an electronic document will satisfy this requirement. Furthermore, electronic signatures will constitute a valid execution of a document provided that:
There are a few particular documents which the law will not allow to be signed electronically – most notably these include Wills.
Certain transactions and instruments are required by law to be registered with bodies such as H M Land Registry (HMLR) and Companies House. In general, Companies House accepts electronic signatures, although the company’s constitution should always be checked to ensure that it allows (or does not restrict) the use of electronic signatures. The signatories should be checked to ensure they have authority and capacity to sign for the company.
HMLR took some persuading on this issue during the covid pandemic and eventually accepted electronic signatures, but only if completion follows a very prescriptive process. This is laid out in detail in the relevant HMLR Practice Guide 82. Requirements include:
It is not essential that all parties actually have to use the platform for signing – there can be a mix of wet ink and electronic signing, but all parties must agree to the use of electronic signatures.
It is essential, however, for both electronic signatures and dating to be carried out electronically, so printing off an electronically signed document and then dating it in wet ink is not acceptable.
There was some discussion with the Law Society during the pandemic as to whether witnesses could witness signatures remotely through video conferencing. However, that was rejected, and the clear rule is that witnesses to electronic signatures must be present when the electronic signature is applied by the signatory and must then provide their own details as indicated in the document.
In some situations, legislation has imposed particular requirements on the service of notices and documents. For instance, under the Agricultural Tenancies Act 1995, notices and other documents served must comply with section 36. This prescribes postal or personal delivery unless the tenancy agreement extends these methods of service to other forms, such as email. We explained how this works under a variety of types of tenancy in our article Service of Property Notices by Email.
As to whether notices such as rent review notices can be signed electronically, neither s12 of the Agricultural Holdings Act 1986, nor s10 of the Agricultural Tenancies Act 1995 require a rent review notice to be signed, although best practice usually demands this by way of evidence. Some notices under various landlord & tenant statutory regimes, are prescribed and include spaces for signatures to be added. In those cases, those forms should be signed, but unless there is any agreement to the contrary between the parties, there would appear to be no reason why such a notice should not be signed electronically.
The same applies to a rent review memorandum agreed between the parties – although if it is considered necessary to draw this as a deed, in order to provide consideration, then the additional witnessing requirement will need to be followed.
If a deed needs to be registered at HMLR then the use of a digital platform must be supervised and certified by a conveyancer. So, surveyors cannot deal with this, notwithstanding the specific authority given in the Legal Services Act 2007 for members of the RICS and the CAAV to complete FBTs as deeds.
If, however, a deed does not have to be registered, for instance a 5-year FBT granted at a commercial rent with immediate possession, then a conveyancer does not have to certify the completion on the digital platform, so a surveyor can deal with this completion instead.
The outcome if electronic signing is used when it should not be used, or where it is used in the wrong way will depend on the type of agreement or document.
For agreements where there is no legal requirement to be in writing, the written terms, albeit not properly signed, will probably provide clear enough evidence of the contract between them anyway.
For agreements with specific requirements (eg to be in writing or to be signed) the failure may either make the transaction void (eg a contract for the sale of land) or may simply undermine the enforceability of the contract – it will depend on the type of contract and its terms.
For deeds which need to be registered at HMLR, a failure to follow the HMLR guidance will doubtless result in a rejection of the application to register the property or lease, which will then cause the legal estate in the property to be void for lack of registration. There may remain an equitable interest in the property, but this is far from ideal, and the position will still require to be remedied.
