Date: 16/03/2023 | COVID-19, Business & Professional Services, Commercial Property, Construction, Corporate, Planning, Residential Development
Let’s take a simple residential conveyance as an example. The final stage in this process involves the purchaser’s solicitor submitting the signed disposition for registration in the Land Register of Scotland. The Land Register records ownership of land and property in Scotland, and provides property owners with a state-backed guarantee of good title. Currently, the Land Register does not accept electronically signed documents. Therefore, the solicitor must arrange for their client to sign the disposition in wet-ink for registration to occur.
During the height of the pandemic in April 2020, the Land Register introduced a digital submission service. This does not permit the submission of electronically signed documents. Rather, solicitors submit scanned versions of documents which have been signed in wet-ink. It is important to remember that if you print out a document, sign it in wet-ink, and then scan it; this does not create an electronic document. This is simply a signed traditional document of which an electronic copy has been made. An electronic document is one which only ever exists in a digital format.
It is clear however that the digital submission service will continue to grow, and electronic signatures are central to this process. The Keeper of the Registers of Scotland, Jennifer Henderson, is responsible for leading the organisation and sets its strategic direction. In September 2021, she advised that ‘the digital registration service will ultimately grow to become the default method of registration in the coming years’. She also advised that only Qualified Electronic Signatures (QES) will be accepted.
A QES is the most sophisticated type of electronic signature available through providers such as DocuSign. It is (a) unique to the signatory; (b) only capable of use by the signatory; (c) capable of identifying the signatory; and (d) created by specified means (face-to face identity verification). A QES has self-proving (probative) status, which means that it does not require to be witnessed. For a wet-ink document to obtain probative status, it must also be signed by an independent witness. There are other types of electronic signature but these cannot be used in property transactions.
Since 1 October 2022 the Register of Deeds accepts electronic documents signed by a QES through digital submission. The Register of Deeds (commonly known as the Books of Council and Session (BCS)) is separate from the Land Register and is used to preserve written legal agreements. It is rare for title deeds (i.e. dispositions) to be registered in the BCS. Instead, it is commonly used for wills, leases (of under 20 years), minutes of agreement, and other contractual documents. Landlords will often seek to register leases in the BCS, so they can enforce the terms of the lease without going to court, using the legal mechanism of “summary diligence”. Asset management documents such as deposit agreements, assignations and guarantees are also commonly submitted to the BCS. Allowing these documents to be signed electronically is a significant step forward towards a fully digital registration system in Scotland.
When then can we expect the Land Register to follow suit? A scheme is currently being piloted, and the first QES-signed disposition was submitted to the Land Register in June 2022. His Majesty’s Land Registry in England is also engaged in a ‘trial run’ with select conveyancers and is working on being able to accept electronic signatures more widely.
Debate rages on about the use of electronic signatures in property transactions. Many solicitors will view the latest changes as an important step towards more efficient and less time-consuming property deals. Others argue that wet-ink signing provides a greater sense of clarity and finality for clients, particularly when property is being bought, sold, or leased. However, it seems inevitable that electronic signatures will become the norm; it is simply a question of when the law bows to that inevitability and permits their use in the Land Register.
If you have any concerns about the process of signing a legally binding document, whether electronically or by wet-ink, contact a member of our Commerical Property team.
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