Since the COVID-19 pandemic hit and a national lockdown meant that a large proportion of the working population began to work from home, the number of contracts and documents being signed electronically has grown substantially. This shift to home working meant that signatories were less readily available, with limited access to printers, scanners and post, so solutions had to be found. Although many organisations are currently undergoing a shift back to office/hybrid working, this method of signing is becoming the "new normal".
Although a majority of Scots and English law documents can be signed electronically, for now, those that are to be registered in the Books of Council and Session or Land Register of Scotland must be signed in "wet ink". As the majority of property deeds will ultimately be registered in one or both of these registers, the application of electronic signatures in Scots property transactions has been limited.
There are clear advantages to electronic signing. Sending hard copy documents around various signatories for "wet ink" signing can be a time-consuming process, bringing with it risks such as documents getting lost, damaged, or even incorrectly signed. With the shift to home working during lockdown, more and more documents were being signed electronically using signing platforms such as DocuSign or Adobe Sign, solving many of these problems. Electronic signing can be much quicker, and the risk of the documents getting lost or damaged (or even incorrectly signed) is removed.
DocuSign and Adobe Sign collect meta data upon signing, providing an audit trail which can be very helpful in the event of a challenge to the authenticity of a document. This includes information such as the email address to which the "envelope" was sent, the date and time of signing and the IP address of the device that was used for signing. It is also possible to password protect these envelopes to provide an additional layer of security.
There are various types of electronic signature that are more or less appropriate depending on the type of document that is to be signed and the value and importance of the transaction. The level of security of an electronic signature varies depending on its type.
- Simple electronic signature is the standard type of signature within DocuSign and Adobe Sign and can be used for most contracts or agreements. This type of signature does not require ID verification; all that is required is the signatory's email address or that they enter a unique code prior to signing.
- An advanced electronic signature requires additional authentication; the signatory must produce a valid document (such as a driving licence) to confirm their identify in addition to entering a unique code.
- Qualified electronic signature (QES) is the most secure form of electronic signature, where the signatory's identity is validated by a qualified trust service provider and the QES is stored in a secure way (such as on a smartcard or cloud-based trust service).
If a document relates to Scottish property, a simple electronic signature is not sufficient. It must be at least an advanced electronic signature to be validly signed, and a qualified electronic signature is required if it is to be self-proving. As a result of the Requirements of Writing (Scotland) Act 1995, most Scots property documents require a QES. Market practice has developed so that, Scottish property documents that will need to be registered are often signed electronically by QES. For example, solicitors often sign missive letters by QES.
The benefits of electronic signing will soon be a reality for more documents involved in Scots property transactions. The Registers of Scotland (Digital Registration etc.) Regulations 2022 were laid before the Scottish Parliament in December last year which (among other things) will allow the registration in the Books of Council and Session of electronic documents that have been signed by QES. As a result, from 1 October 2022, shorter term leases and asset management documentation will become the first electronically signed documents to be accepted for registration. This is a significant step in the development towards a fully digital registration system in Scotland.
With the wealth of benefits electronic signing brings, together with the upcoming acceptance of QES-signed electronic documents in the Books of Council and Session, this method of signing is here to stay.
If you have any queries, please contact Breda using the details below, or speak to your usual Brodies contact.