Digital signing of documents

Landlords are increasingly often under a time pressure. With the burgeoning regulatory requirements of the letting process has lead to more forms and paper work for both landlords and tenants. The standardised way of recognising an agreement between two parties is for them to sign and date an agreement.

When it comes to a tenancy agreement provided the term is less than three years, and the tenant is paying a market rent, the term starts immediately – there is no need for signatures to be witnessed. This is set out in section 54 of the Law of Property Act 1925.

Otherwise, for example if the landlord is granting a five year tenancy, the tenancy needs to be signed as a deed (which means the signature must be witnessed). Another situation where this should be done is where the tenancy agreement is being signed up in advance before a tenancy starts – this is often the case with many lettings to student tenants.

Legality of digital signing

The ability of a quick digital signing of a document is particularly useful where a landlord has already met their tenant and just wants to renew a tenancy.

In such cases there is no real need for another ‘face to face’ meeting and all matters can be confirmed remotely. The same can be true of guarantor agreements and the need for tenants to give confirmation of prescribed information or the Section 213 Notice relating to their tenancy deposit.

Digital signing in practice

A number of high profile letting agents such as Foxtons already use digital signing of their tenancy agreements and landlord documents.

SECTION 7(1) of the Communications Act 2000 legalised electronic signatures in the United Kingdom. There are already systems allowing digital signing to take place. One of those is a system called docusign. I’ve recently used it and it appears very straightforward to use. It produces a PDF signed document that can be saved or printed by both parties.

The Communication Act 2000 makes it clear that electronic signatures can be used as evidence of a signature. This means is if you can satisfy a Court that there is a valid electronic signature you will then have a valid tenancy. This will probably require producing an audit trail. Let’s not forget that it is still possible to create a tenancy agreement audibly without a written document being in place. So a digital agreement with an esignature must be preferable to this.

Are landlords’ luddites?

The law and innovation often run in separate orbits. UK law is based on precedent set by hundreds of years of case law defining the extent and meaning of legal practice. New technology looks to confuse and subvert this. Without any clear case law most landlords don’t want to take the risk of using a digital signature for fear of facing a long drawn out battle in the courts involving both time and money they don’t have.

Landlords to opt for ‘status quo’

It seems for now that without clear guidance from the courts and a simple and widely used solution most landlords will continue to opt for the traditional wet signature. I suspect once we get a clear steer from the Courts and a easy to use system then landlords and tenants will ask themselves why they were ever so hung up with paper.

Tell us about your experiences with esignatures. Do you use them and do they work?

Post a comment below or join the Digital Signature discussion on the Landlord Legal Forum.

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