Deeds and electronic signatures in a COVID-19 environment

Deeds and electronic signatures in a COVID-19 environment

Technology has been moving at a rapid rate within the conveyancing industry as we try to find innovative ways to deliver legal services to all stakeholders. Just as we start to get comfortable with the digital transformation of conveyancing, COVID-19 has forced the industry to again look for ways to provide digital solutions to legal problems. One of the problems that COVID-19 has highlighted is the need to address the way documents such as deeds and land titles forms are signed and witnessed.

Electronic signing of agreements

The Electronic Transactions Act (Queensland) 2001 permits a party to electronically sign an agreement if certain requirements are met. Under section 14 of the Act, an electronic signature to an agreement will be valid if:

  1. a method is used to identify the signer and to indicate the signer’s intention to be bound to the information communicated in the document;
  2. the method used must be reliable as appropriate having regard to all of the circumstances; and
  3. the signer must consent to the electronic signing method.

DocuSign and most other electronic signature applications engage methods that satisfy these requirements. Real estate agents and users of DocuSign will be familiar with a Certificate of Completion which provides a permanent audit trail of each signer. Also, all current REIQ contract contains an electronic consent clause within the standard terms.

The advantages of electronic signing are:

  • the ability to sign from different locations;
  • benefit to the environment;
  • if permitted by the agreement, no witnessing required;
  • documents can be signed and exchanged in an instant.

Prior to May 2020, certain agreements were not permitted to be signed electronically. These agreements were labelled under the Electronic Transactions Act (Queensland) 2001 as Excluded Transactions. An Excluded Transaction includes any documents where a document is “required to be attested, authenticated, verified or witnessed by a person other than the author of the document”.

Deeds fall into this category.

Deeds

A deed is a special type of agreement where certain formalities must be met for it to be valid and enforceable. It is the special characteristics of a deed that has highlighted the impracticality of these formalities in a COVID-19 world filled with lockdown, quarantines, and separation.

A deed differs from an agreement in two major ways. Firstly, there is no requirement to satisfy the consideration element meaning a party does not need to provide consideration for the deed to be binding. The reasoning behind this is due to a deed’s special characteristic in that the signing party is providing an indication to the community at large that they will fulfil their promise.

Secondly, the execution of a deed is significantly different in both form and substance. A party will be bound immediately once the party executes a deed as opposed to an agreement. Further, for a deed to be binding it must be in writing, signed, and witnessed. Common phrases in a deed are “executed as a deed”, and “signed sealed and delivered”. Where there are inconsistencies in the use of language in the document such as referring to the document as both an agreement and a deed,  difficulties arise in whether the document is intended to be a deed or agreement. The case of 400 George Street (Qld) Pty Ltd v BG International Ltd highlights the problems when getting this wrong.

Electronic signing of Deeds

Temporary measures have been introduced by Federal and State Governments for the electronic signing of documents.

On 9 September 2021, the Queensland Government passed the Public Health and Other Legislation (Further Extension of Expiring Provisions) Amendment Act 2021 (Qld) which extended the application of the Justice (COVID-19 Emergency Response – Documents and Oaths) Regulation 2020 to 30 April 2022. The Regulation allows deeds to be:

  • made in the form of an electronic document;
  • electronically signed;
  • signed in counterparts; and
  • signed by an individual without a witness.

Signing as an individual

Individuals may sign an electronic deed without a witness. However, a method will need to be used to identify the individual and to indicate the individual’s intention to be bound to the deed. Some electronic platforms include such methods to identify the individual and indicate their intention.

Signing under a company

The Federal Government enacted the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 to extend the temporary measures concerning the electronic signing of documents including deeds.

Section 127(3) provides that a company may execute a document as a deed if it is expressed to be executed as a deed and the deed is signed in the manner set out in section 127(1) or section 127(2).

These measures are in place until 31 March 2022.

Signing of Land Titles documents

Unfortunately, most land titles forms still require wet signatures. We recommend that where possible, the use of Electronic Lodgement Network such as PEXA and Symplii occur to transact or lodge documents electronically.

Next steps

Are Directors of your company in quarantine? Unsure of what these measures mean for you? Reach out to us today; our team is here to help.

 

Originally published at Murdoch Lawyers on November 2, 2021.

This publication has been carefully prepared, but it has been written in brief and general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.