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Can tenancy contracts be signed electronically?

Document Review - Sign

Since Covid many common business practices have changed as the digital revolution has enabled many of these practices to be streamlines, none more so that the use of electronic signatures and electronic transfer of documents. As more people have, through necessity, become familiar with the technology, not only has this opening up of the common use of digital technology proved to be convenient, it has also speeded the processes of exchange.

In has therefore become very convenient and timely to accept documents relating to tenancies and other business contracts signed electronically and transmitted electronically, rather than using the usual face-to-face (wet) signing and exchange using pen and ink, but are these exchanges legally valid?

The rules

Can we have confidence that signing and transmitting electronically is legally valid?

Importantly, how would electronic signatures stand-up in court?

Would you be prepared to accept a tenancy agreement attached to an email with an electronic (typed) signature on it?

This article applies primarily to English law and is not a definitive statement of the law. Although tenancy laws are similar in other jurisdictions, there may be significant differences. Always seek professional advice before making or not making important decisions.

Yes, says the law, electronic signatures are legal because today we have something called the Electronic Communications Act 2000 (and eIDAS in the European Union, NIST-DSS in the USA or ZertES in Switzerland)., all of which clarify the situation somewhat.

From this is follows that electronic signatures are legally recognized in the United Kingdom and are provided for in the Electronic Identification and Trust Services for Electronic Transactions Regulations (Regulations) in 2016,  

Electronic Communications Act of 2000 (ECA), and as the UK still follows the retained UK version of Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market (eIDAS) as amended by the Electronic Identification and Trust Services for Electronic Transactions (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/89) (the “UK eIDAS Regulation”).

The UK Act provides a power to modify legislation to remove restrictions arising from other legislation which prevent the use of electronic communications or storage in place of paper. The Act increases confidence in electronic transactions by providing legal admissibility for digital signatures.

Even so, many people would still be quite apprehensive about accepting documents signed electronically, especially if they suspect the sender is unfamiliar with the technology involved, regardless of the benefits of instant communications via email and text.

Section 8. (3) qualifies the order when it states:

"The appropriate Minister shall not make an order under this section authorising the use of electronic communications or electronic storage for any purpose, unless he considers that the authorisation is such that the extent (if any) to which records of things done for that purpose will be available will be no less satisfactory in cases where use is made of electronic communications or electronic storage than in other cases."

It is also the case that some documents need a signature and witness, so physical signing and witnessing is necessary, for example for documents signed as a deed involving leases of longer than 3 years, guarantor agreements and and property titles etc.

To quote directly from the EU Act: Electronic signatures and related certificates.

(1) In any legal proceedings

(a) an electronic signature incorporated into or logically associated with a particular electronic communication or particular electronic data, and

(b) the certification by any person of such a signature, shall each be admissible in evidence in relation to any question as to the authenticity of the communication or data or as to the integrity of the communication or data.

(2) For the purposes of this section an electronic signature is so much of anything in electronic form as

(a) is incorporated into or otherwise logically associated with any electronic communication or electronic data; and

(b) purports to be used by the individual creating it to sign.

(3) For the purposes of this section an electronic signature incorporated into or associated with a particular electronic communication or particular electronic data is certified by any person if that person (whether before or after the making of the communication) has made a statement confirming that.

(a) the signature.

(b) a means of producing, communicating or verifying the signature, or

(c) a procedure applied to the signature, is (either alone or in combination with other factors) a valid means of signing.

Permitted Electronic Signatures

The UK eIDAS Regulation defines an electronic signatures as "data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign."

This recognises three levels of electronic signatures:

1 - A Simple electronic signature that does not meet the definition requirements for higher levels of electronic signature, i.e., Advanced or Qualified. Thus, typing one´s name at the bottom of an email might constitute a simple electronic signature.

2 - An Advanced electronic signature that is: (a) it is uniquely linked to the signatory; (b) it is capable of identifying the signatory; (c) it is created using electronic signature creation data that the signatory can, with a high level of confidence, use under the signatory’s sole control; and (d) it is linked to the data signed in such a way that any subsequent change in the data is detectable.

3 - A Qualified advanced electronic signature created by a qualified electronic signature creation device and which is based on a qualified certificate for electronic signatures.

The UK eIDAS Regulation sets out minimum, not maximum, standards for electronic signatures therefore it has limited effect on pre-existing English law, given the already broad definition of electronic signatures that had been adopted in the ECA.

In cases involving electronically signed documents which are subject to authenticity challenges, English courts will consider these documents as initial evidence of their authenticity. The burden of proving otherwise lies with the party contesting their legitimacy. The Electronic Communications Act (ECA) does not prescribe specific evidentiary standards for electronic signatures but rather treats it as a matter of fact.

As a recommended practice, maintaining a transparent record of the electronic signing process using a suitable platform, not necessarily a complicated one,  can effectively address any potential evidential concerns that may arise.

A verifiable audit trail

Quite clearly the electronic signature has legal standing providing certain other requirements are met, in particular that a confirmation statement is made, the parties are identified and the document is date-stamped, which it would be in any case if accompanied by an e-mail audit trail as evidence of receipt.

Ironically, the accommodating audit trail could give more certainty to the signature and the intentions of the parties than would a traditional pen and ink (wet) signature.

That's because tenants can, and sometimes have done in court, deny they have signed a document. Faced with this situation, unless other supporting evidence is available, such as a witness or witness statement, any judge would probably err on the side of caution and take the tenant's word.

Although there are third party signature services available, such as those offered by Adobe, which act as a sort of independent escrow service, not likely to be available to the average landlord, this is not necessary for one offs. It would also be usual for landlords to send documents attached to an email on which the tenant/s can either upload a facsimile signature, or simply type one.

The key to all this is that common sense is required. Landlords and agents first of all need to ensure that there is a clause in their agreements stating that the parties agree to accept communications by electronic means.

Electronic signing and delivery is such that the process used generates a clear audit trail showing the intentions of the parties. This would normally follow on from the electronic communications between the parties, all leading up to the agreement signing, with an added confirmation statement and dates are clearly stated.

It's advisable to type out a date in full so that, even thought the email is electronically dated, the date on the documents cannot be doctored. For example, instead of 19/06/23 type in full: "The 19th of June, 2023".

The exception to all of this as stated above, is where a document needs a witness. For example, tenancies of more than three years and guarantor agreements must be prepared and signed as a deed with witness details and signature. Witnessed documents therefore cannot be signed electronically.


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