Electronic Signatures & the Alienation of Land Act

Being in the 21st century, a frequently asked question is whether electronic signatures are acceptable during the sale of an immovable property.

 

The Electronic Communications and Transactions Act 25 of 2002 (ECTA) has for an extensive period enabled and facilitated electronic communications and online transactions, addressing technological barriers to promote agreements and transactions more efficiently.

 

The Alienation of Land Act 68 of 1981 (ALA) appears to place a hurdle in the way of 21st-century business practices especially parties to the sale of immovable property having to put pen to paper, rather than signing the agreement with an advanced electronic signature.

 

Section 13 of ECTA recognizes an electronic signature to have the same effect and be legally binding as wet ink, meaning pen to paper. Section 4(3) however excludes the use of an electronic signature for the following legal documents:

  • an agreement for alienation of immovable property;
  • contracts for long-term leases (10 years and longer);
  • the execution, retention, and presentation of a will or codicil;
  • the execution of a ‘bills of exchange’.

 

Where the signature of a person is required by law, but such law does not specify the type of signature, the relevant document may be executed by an electronic record only if an Advanced Electronic Signature is used.  This applies to the following types of documents:

  • Contracts of Suretyship;
  • Assignment of copyright and exclusive license;
  • Document to be notarized;
  • Certified documents existing in paper or other physical form;
  • Where a seal is required by law.

 

It was highlighted by the SCA in Spring Forest Trading CC v Willberry (Pty) Ltd t/a Ecowash and Another 2015 (2) SA 118 (SCA) that “the approach of the courts to signatures has, therefore, been pragmatic, not formalistic. They look to whether the method of the signature used fulfils the function of a signature – to authenticate the identity of the signatory – rather than insist on the form of the signature used”. However according to Section 2(1) of the ALA and Section 4(3) of the ECTA, when it comes to the alienation of immovable property, the said essentialia (certain requirements for a contract to be valid) must be signed with wet ink on paper, this seems to be against the Spring Forest judgment.

 

A case heard in the Eastern Cape Division of the High Court Borcherds and Another v Duxbury and Others 2021 (1) SA 410 (ECP) makes an interesting finding regarding electronic signatures in terms of the alienation of immovable property via the software application Docusign, which was found valid for the alienation of immovable property, however, the signature was originally written by hand with pen and paper and thereafter scanned into the application to be attached to electronic documents. It in effect bypassed Section 4(3) of ECTA in that it was originally a “wet ink” signature. The court indicated that there was no intention for the agreement to be an electronic transaction as the signature amounted to a wet ink signature in the first place.

 

Considering the above-mentioned facts, it remains that in terms of the alienation of immovable property, signatures ought to be done via wet ink signature and advanced electronic signatures should be refrained from being utilized in the alienation of immovable property.

 

Burden Swart & Botha Attorneys have the expertise to obtain clarity regarding for which documents electronic signatures are acceptable, or assistance in drafting of legal documents.