Utilising electronic signatures can help transform the execution process of documents. The Cowell Clarke Property Team explains how electronic signatures can be used.

As the world becomes more connected, working digitally is the norm and parties to legal transactions expect to be able to execute documents in any location, at any time, conveniently, quickly and in a streamlined and secure manner.

In this context, electronic signatures ("e-signatures") are a vital and widely accepted aspect of modern transacting.

What is an Electronic Signature?

E-signatures come in multiple forms, ranging from clicking ‘I accept’ to affixing one’s name or signature at the end of their email to ‘digital signatures’ created on digital signature platforms such as DocuSign.

Digital signature platforms have the benefit of underlying encryption technology that creates an audit trail to track each step of the signing process and provides certificates when documents have been executed electronically. Digital signature platforms also have security features which prevent tampering and provide for the authentication of the document.

Because of these features, using a digital signature platform to electronically sign a document is considered preferable over other methods.

Legislation Governing Electronic Signatures

In Australia, the use of e-signatures is governed by various Electronic Transactions Acts and Regulations (“ET Legislation”) which exist in the Commonwealth, State and Territory jurisdictions.

The ET Legislation, whilst not uniform across the Commonwealth, State and Territory jurisdictions, is very similar.

What Legislation Applies?

These days it is inevitable that a party in one State will seek to electronically sign a document with a subject matter located in a different State – for instance, an individual in Victoria may electronically sign a contract for the sale of land located in South Australia. In this circumstance, the question arises as to whether the Victorian or South Australian ET Legislation applies.

The relevant jurisdiction depends on who the parties to the transaction are.

Individuals

Electronic signing by an individual is governed by State/Territory law.

The applicable legislation depends on the location of the land subject to the transaction, the physical location of the individual signing the document is irrelevant.

For instance, if an individual is physically located in Victoria at the time that individual electronically signs a contract for the sale of land and the subject land is located in South Australia, the South Australian (and not the Victorian) ET Legislation applies. This is also the case if an individual signs overseas – that is the location of the subject land is the determinative factor as to what ET Legislation applies, not the physical location of the individual, including if the individual is physically overseas at the time of signing.

Corporations

Electronic signing by a corporation registered in Australia and its signatories is governed by Commonwealth law. As such, notwithstanding the location of the subject land, the relevant jurisdiction will be the Electronic Transactions Act 1999 (Cth).

What are the Legal Requirements for a Valid Electronic Signature?

Across the ET Legislation, there are three standard legal requirements for the validity of an e-signature being identification, reliability and consent.

  1. Identification - The person signing the document must use a method to identify themselves as the signatory (the method of identification need not be elaborate, no formal verification is required) and confirm that they intend to be bound by the information communicated.
  2. Reliability - The method of identification must be as reliable as appropriate considering the purpose and circumstances of the communication.
  3. Consent - The person to whom the signature is given must consent to the use of electronic communication to sign the document and to the method of identification.

These three requirements are generally satisfied when a reputable digital signature platform is used to obtain the digital signature. This is because such platforms have inbuilt processes to verify the identity and consent of the parties as well as security features which satisfy the reliability requirement.

Exclusions – documents that cannot be executed electronically

Even if the three abovementioned criteria are met, a transaction may not be able to be executed electronically if an exception applies. In each State and Territory, there are five main categories of different exceptions that apply to the use and validity of e-signatures, including:

  1. documents required by law to be witnessed;
  2. documents required to be personally served;
  3. Court documents;
  4. Powers of Attorney; and
  5. Wills.

Different exceptions apply in different jurisdictions. Accordingly, it is important to obtain legal advice before signing documents electronically.

Documents Relating to an Interest in Land

The ET Legislation expressly allows for documents that relate to the disposition of land, the creation or disposition of an interest in land, or to any other dealing or other action relating to an interest in land to be executed electronically.

As such, contracts for the sale of land, leases, and other documents that create an interest in land can be executed electronically even if in the form of a Deed.

However, ancillary documents that are in the form of a Deed and do not relate to an interest in land (such as an incentive deed) do not fall within this proviso. As such, an individual cannot execute these ancillary documents electronically (refer above).

Given the intricate nature of this carve-out and the differences between each State and Territory’s ET Legislation, it is critical to obtain legal advice before electronically executing a document.

The way of the future

With expertise using reputable digital signature platforms Cowell Clarke can assist clients to ensure electronic execution of documents is a hassle-free process.

Enabling the execution of documents (such as off the plan apartment sales) electronically has proven to be invaluable to our clients. Using electronic execution platforms documents can be executed in any location, using technology such as tablets, conveniently, quickly and in a streamlined and secure manner.

The time-consuming task of printing documents, and having them physically signed is circumvented. The often lengthy time taken to execute hard copy documents becomes a thing of the past.

The use of e-signatures is particularly relevant as e-conveyancing becomes mandated across Australia.

Our PEXA Certified Property and Conveyancing team has vast experience with the e-conveyancing regime having recently completed the largest PEXA Projects property settlement in South Australia to date.

By enabling our clients to electronically sign their documents, and completing certain conveyancing processes electronically using PEXA, we are able to provide a hassle-free end-to-end electronic transacting process for our property clients.