The Land Registry has this week confirmed that it will start accepting electronic signatures on its conveyancing documents, meaning the entire conveyancing process could in the future be conducted electronically.
This could be great news for speeding up the property sale and purchase process; however as a solicitor who specialises in advising unmarried individuals on cohabitation and separation, I am wary that there may be several wider potential consequences of this new announcement.
What does this announcement actually mean?
Currently, when two people purchase a property, they are required to sign various documents with ‘wet ink’. This includes the transfer ‘TR1’, which is the document lodged at the Land Registry to legally transfer the property from the name(s) of the seller to the name(s) of the buyer. The signatures on the TR1 are also required to be witnessed.
If the requirement for ‘wet ink’ signatures on the TR1 is dispensed with, a person can insert their signature electronically in the physical presence of a witness, who will also insert their signature electronically. This process would take place on a new online platform.
What are the consequences of electronic signatures?
Whilst the new process for electronic signatures includes a two stage authentication process, it is currently unclear exactly what steps are being taken to ensure documents cannot be fraudulently signed by a person who has access to the electronic signature of another.
Lack of proper advice
With the removal of a wet ink requirement, an individual may be even less likely to obtain independent legal advice before ‘signing’ a conveyancing document. The TR1 if completed in the absence of proper legal advice could lead one party essentially signing away a significant percentage of their financial contribution to a property, so it is absolutely vital legal advice is obtained.
Lack of understanding
In many cases a person does not think twice before clicking ‘accept’ for a company’s new terms of business when downloading an app or visiting a website, but will take the time to read through a contract or letter before signing it. There is a risk that removal of the ‘pen to paper’ act of a wet ink signature will mean individuals simply sign a TR1 or other conveyancing document without taking the time to read or understand it.
Other disputes that can arise from electronic signatures
In addition to those outlined above, there are various other potential doors to a dispute opened by the introduction of an electronic signature. Those could include claims challenging the validity of the transfer itself, and unfortunately one I see on a daily basis; disputes over the shares of the equity in a property between two or more people.
What should I do to avoid the negative consequences of electronic signatures?
The key step to take is seeking legal advice early and certainly before signing any documents (whether electronic or otherwise).
Equally, if you are asked to witness a signature electronically, ensure you pay proper attention to ensure the electronic signature you are witnessing is that of the ‘signee’, and does not indicate they are signing on behalf of another. As a witness to a signature, your evidence may later be required if the validity of the document is called into question.