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One step closer to e-signing in real estate transactions?

Posted on 21 October 2019

In September 2019 we wrote an article about the Law Commission's recent report which confirmed that electronic signatures are valid under English law, for both contracts and deeds.

In spite of this, the real estate world remains understandably reluctant to rely on electronic signatures, as property sale agreements are subject to specific signing requirements. No one wants to be the test case on whether an e-signature is valid.

However, the recent case of Neocleous v Rees, was a boost for the future of e-signatures. Here it was held that a simple typed email was enough to be a binding agreement for the sale of land.

To briefly summarise the facts of the case: the parties were in litigation over a right of way and agreed to settle on the basis that the claimant would buy a piece of land from the defendant for £175,000.

The defendant's solicitor sent the other side an email summarising the terms of the deal. At the bottom of the email, he typed the words "Many thanks". Underneath that were set out his name and contact details, which had been automatically inserted as an email footer.

Before contracts were exchanged for the sale of the land, the defendant tried to get out of the deal, arguing that the email was insufficient to amount to a contract under s. 2 of the Law of Property (Miscellaneous Provisions) Act 1989. (S.2 provides that any contract for the sale of land must (a) be in writing, (b) incorporate all of the terms, and (c) be signed by all the parties.)

The judge disagreed and held the contract was valid. The email signature footer was enough to be a signature. It didn't matter that the sender's name had been inserted automatically – it was still a sufficient act of signing. Although the email correspondence didn't set out the terms of the agreement in full, these terms were implied.

This case is also a cautionary reminder to mark all email correspondence "Subject to contract". Here the solicitors hadn't done so as they wanted the emails to be binding in order to settle the litigation. But for property transactions, the parties aren't normally going to want to be committed until they've exchanged formal contracts.

As this is only a county court decision, it's not binding and isn't going to revolutionise how we do property deals just yet. And for transfers and leases, we still have the same issue with the Land Registry requiring wet ink originals for registration. But it's a small step in the right direction.

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