The practical advantages of signing documents by “electronic signature” are clear. The process is quick and eliminates the need to physically deliver documents to signatories and therefore avoids problems of loss or delay.
In the private rented sector this could be especially beneficial for leases and Terms of Business where tenant, agent and landlord reside in different parts of the country. So, why does the use of electronic signatures remain relatively uncommon?
Law
The Requirements of Writing (Scotland) Act 1995 provides that, among other obligations, the “creation, transfer, variation or extinction of a real right in land” shall be in writing and signed by the contracting parties.
This rule applies to leases of one year duration or more. This means that writing requirements may not apply to Short Assured Tenancies if the tenancy is granted for less than one year.
The 1995 Act only recognised ‘writing’ to take the form of a traditional paper document, with signatures hand-written in ‘wet ink’. The Land Registration etc. (Scotland) Act 2012 has expanded this definition to incorporate both ‘traditional’ and ‘electronic’ documents, supplemented by the Electronic Documents Regulations 2014.
Together, these Acts require an electronic document to be ‘authenticated’ by the granter, which, with the 2014 Regulations must be an ‘advanced electronic signature’.
“Advanced electronic signature” is not defined in the Scottish legislation but its meaning can be taken from other UK and EU legislation. Generally, to be ‘advanced’, an electronic signature will require to be:
- uniquely linked to the signatory
- capable of identifying the signatory
- created using means that the signatory can maintain under their sole control
- linked to the data to which it relates in such a manner that any subsequent change in the data is detectable
In order to use electronic signatures, landlords and tenants should have their electronic signatures registered with a licensed provider, based on a qualified certificate and created using a secure signature creation device which meets the above tests.
Tenants are unlikely to have registered an electronic signature, and this may be considered burdensome when compared to the self-proving validity of a witnessed, handwritten signature.
What about other documents?
Can agents and landlords use advanced electronic signatures to validate electronic versions of AT5 notices, Terms of Business or short leases?
The answer to this question is not clear. These documents do not fall under the 1995 Act nor the 2014 Regulations, so it may still be competent to sign these by electronic signature, but the validity of these signatures is uncertain. The best indication may be the EU Directive on the use of electronic signatures, which provides that advanced electronic signatures will be admissible in court proceedings.
Advice
While legal provision exists for the use of electronic signatures in the private letting sector, this legislation remains to be considered and applied by the courts. As such, there is a risk to landlords and agents in using electronic signatures. You should err on the side of caution due to potential challenges.
If you would like advice on setting up an electronic signature, you can contact a member of our Housing and Private Letting team for more information.
