Validity of Electronic Signatures in Real Estate Transactions
12 November 2020
With the English and Welsh Land Registry announcing its decision in July to allow e-signatures we look at whether the Property Registration Authority (PRA) should follow suit.
When we first locked down in March there was a fear that most, if not all, real estate transactions would come to a halt with necessary government offices closed and key signatories of businesses spread out across the globe and separated from counter-signatories required.
It became clear that changes were required. Such as the use of existing but underused technologies and legal provisions. Unfortunately we are yet to see a change in legislation and the PRA procedure that would allow us to complete the final step in a real estate transaction; registration.
The immediate reaction to the lockdown was to use what was already available to allow transactions to reach completion, always being done with the endgame of registration in mind. For the execution of real estate documents, this meant the use of powers of attorney so that one individual could execute without the company seal on behalf of a company or counter-signatory. Of course this was not always practical and when clients encountered hardware or logistical issues, a recurring query was whether an e-signature would be sufficient to conclude a transaction.
The use of e-signatures across all types of transactions has had legal effect in Ireland for approximately twenty years and more broadly across the EU for approximately six. The adoption and acceptance of e-signatures has boomed in 2020.
Unfortunately, while the use of e-signatures has increased and clients became more adept with their use, in the world of PRA registrations there is still a requirement for original wet ink signatures.
The PRA’s main concern for using e-signatures is fraud but as discussed in Edel Hartog’s webinar, the forms of e-signature currently in use have grown more secure and resilient to such issues.
The PRA registration issue is twofold. Firstly, section 10 of the Electronic Commerce Act 2000, which recognises the use of e-signatures, excludes certain documents from the use of e-signatures. This includes any document in which an interest in real property, including a leasehold interest in such property, may be created, acquired, disposed of or registered, other than contracts.
Secondly, the PRA currently requires wet ink signatures to deem a document correctly executed.
We have seen legislative changes brought in to deal with issues. This includes changes to the Companies Act 2014 allow documents required to be countersigned to comprise separate counterpart documents, but just for a temporary period. With the Land Registry in England and Wales confirming in July 2020 that they will begin to accept e-signatures, it will be interesting to see if the Irish Government and PRA will come under pressure to make similar changes to allow real estate transactions progress in a practical way given the continuing uncertainty and challenges.
With the world adapting to life under Covid-19 and the move to working from home, those involved in real estate transactions will be aware of the practical issues caused by the requirement for wet ink signatures for the vast majority of real estate documents.
It is yet to be seen if the Irish Government and PRA will introduce changes to bring us in line with our neighbours in England and Wales. Changes would be welcome.
For more information and expert guidance in all related matters, contact a member of our Real Estate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.