Beyond Covid-19: Unexpected Policy Shift as Land Registry announces acceptance of Electronic Signatures
09 July 2020
The Land Registry has today announced that it will “soon” start to accept electronic signatures. This is a major policy shift for the Land Registry and will be welcomed by the property industry both as a positive step towards modernisation and as a practical life line in a post Covid-19 world. The change will impact upon all documents which need to be registered at the Land Registry including transfers of land, registrable leases and legal charges.
No timetable for the change in approach has currently been presented and further details are awaited. However, the Land Registry has issued a draft practice guide setting out its requirements for electronic signatures and asked for industry feedback by 18 July 2020. Based on the draft guidance it appears that the Land Registry requirements will include:
- every party to a transaction being represented by a conveyancer;
- two factor authentication being applied; and
- certification being provided by the conveyancer lodging the application with the Land Registry that to the best of the conveyancer’s knowledge and belief the Land Registry’s requirements for the execution of deeds using electronic signatures (as set out in Practice Guide 8) have been satisfied.
It is worth noting that the Land Registry announcement makes reference to two types of signature – witnessed electronic signatures (using platforms such as Docusign or Adobe) (electronic signatures) and digital qualified electronic signatures in the form originally envisaged by the Land Registration Act 2002 (digital signatures). It would appear that the intention is that electronic signatures are to be accepted initially and steps will then be taken to introduce digital signatures. The Land Registry considers digital signatures to be more secure as they employ a specific process to identify the signatory and the document is encrypted so that it cannot be altered. As a result, the use of digital signatures does away with the need for a witness. Digital signatures have been legally possible since the Land Registration Act 2002 (LRA) but only in relation to dispositions of a kind specified in secondary legislation rules. Currently, the only rules which have been issued relate to the use of digital mortgages. Electronic signatures by contrast are currently widely used in commercial transactions with specific limitations, most notably up until now where a document needs to be registered at the Land Registry. However, the Land Registry’s intention is that digital signatures become the preferred means of e-signing and they specifically note in their announcement that if they are successful, the Land Registry will review and may withdraw the use of electronic signatures in the future, leaving digital signatures as the only option.
It is clear that the acceptance of electronic signatures by the Land Registry will ease the immediate practical difficulties associated with paper and Mercury signings in a Covid-19 environment. However, from the Land Registry point of view this is also a step towards its long term goal of digitalised conveyancing. Whether digital signatures or electronic signatures are the future in this regard remains to be seen. Regardless, this announcement is a positive step forward for the property industry.