Are Electronic signatures the way of the future in property transactions?

Are Electronic signatures the way of the future in property transactions?

any people working from home, has left many businesses questioning how to obtain handwritten signatures in order to conclude everyday business transactions

Author: Shelley Orgill

The Coronavirus pandemic, which has limited in person contact and many people working from home, has left many businesses questioning how to obtain handwritten signatures in order to conclude everyday business transactions. However, there is a silver lining otherwise known as the Electronic Communications and Transactions Act 25 of 2002 (hereafter referred to as “ECTA”) which permits parties to electronically conclude transactions. It is however, pertinent to establish whether these electronic signatures are legally enforceable in property transactions.

What is an electronic signature?

An electronic signature is used to authenticate a parties’ identity and to serve as proof of agreement to the contents contained in the document. The signature serves to indicate a parties’ intention to accept the data contained in the document. Section 13(2) of the ECTA provides that an electronic signature does not lack legal validity simply because it is in electronic form.

The forms of signatures covered by the ECTA

There are two categories of signatures provided by the ECTA, namely; electronic signatures and advanced electronic signatures.

Standard electronic signatures are generally utilized in most transactions and in instances where the law does not mandate the use of advanced electronic signatures. Additionally, standard electronic signatures are not utilized where the law forbids the use of electronic signatures in a specific transaction.

Where the law mandates a signature, only an advanced electronic signature would be adequate to satisfy this condition. Advanced electronic signatures refer to a specific type of electronic signature that has been accredited. The advanced electronic signature is therefore required to be supported by The South African Accreditation Authority (SAAA).

Can an electronic signature be used to sign a sale agreement for immovable property?

Section 4 (4) of the ECTA provides that any sale agreements for immovable property or a long lease are not legally enforceable when electronically signed. Therefore, parties are to ensure that these specific documents are signed by hand, to ensure compliance with ECTA and the Alienation of Land Act 68 of 1981.Additionally, Wills or codicils and the execution of a Bill of Exchange cannot be signed electronically.

Can your home loan documents be signed using an electronic signature?

Electronic signatures are not a newly introduced concept.  ProSign, a pilot program, empowers clients and attorneys, on the ABSA Bank Home Loans Panel such as Velile Tinto Cape Inc, to electronically sign several mandatory home loan documents. The parties are authenticated by way of their FICA documents as well as by a distinct online certificate utilized by the attorney.

To serve as proof that the signature occurred at a specific time and date, an independent date and time stamp, in line with the world clock, is added. This recently launched pilot program allows both conveyancer and client to sign certain Home Loanbond documents electronically by means of a tablet or signing pad.

On the one hand it is trite law that sale agreements for immovable property are required to be signed by hand. However, on the other hand, the use of technology has become increasingly ubiquitous across the world, especially so, since the outbreak of the Covid- 19 pandemic. Interestingly, the recent judgment in the Borcherds v Duxbury case, the court found that an offer to purchase signed electronically by the seller, to be legally valid and enforceable. This judgment conflicts with the ECTA. Despite this recent case, it appears that the current practice of hand signed documents is mandatory in property transactions such as the signature of deeds of sale and transfer documents. It is questionable whether electronic signatures will be integrated in its entirety into law involving property documents. We anticipate that this area of law will experience reform in the near future.

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