A sale agreement for property MAY NOT be signed with an electronic signature!

Did you know that?

There’s an old saying that I just love, “The more things change, the more they stay the same”.

Recently an estate agent asked me to assist her with a dispute regarding a clause in a sale agreement for a property. When I received the contract, I noticed that the “initials” and signatures on the agreement were made electronically.

It was not made by pen. It was not “wet ink”.

Massive, massive issue. The agent didn’t even notice it. Or rather, the agent didn’t realise what it really meant.

(When I refer to a sale agreement for immovable property it includes a deed of sale, offer to purchase, sale contract, etc. They are all the same thing.)

In a time when everything is moving online, some things are not. That is the reality. There are multiple reasons for that, but that is beyond the scope of this article.

So, let’s dig into the implications of this.

I’m firstly going to discuss this in simple terms and thereafter in a little bit more detail for my fellow attorneys, estate agents, financial advisors, etc., that would like to learn more about the subject.

Simple Terms

  • The whole process of the sale of immovable property, like erven, houses, flats, etc. is controlled by a specific Act.
  • This Act states that a sale agreement for immovable property must be contained in a written agreement, deed of sale.
  • It must be signed by the Seller and the Purchaser.
  • (If you read between the lines, you would notice that you can’t sell a property by way of a verbal agreement.)
  • Then, there is another interesting Act. This Act determines which documents may be signed by electronic signatures. There are 4 exceptions in this Act that explicitly states that these 4 types of documents MAY NOT be signed by electronic signatures. I’ll give you one guess which type of document is one of them:
    • The sale of immovable property.

In conclusion, a contract for the sale of immovable property must be printed out and must be signed with “wet ink”.

If not, it is not valid.

Deep Dive

  • The sale of immovable property is governed by the Alienation of Land Act, 68 of 1981.
    • Section 2(1) states that:
      • “No alienation of land … shall … be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority.”
  • That begs the question whether it can be an electronic signature. This is clearly answered in the Electronic Communications and Transactions Act, 25 of 2002.
    • In Section 4 of the Act, it states that the documents contained in Schedule 2 of the Act are exceptions and electronic signatures are not allowed.
    • Schedule 2 (1) is:
      • ”An agreement for alienation of immovable property as provided for in the Alienation of Land Act.”
  • It is clear that an agreement for the sale of immovable property must be a written agreement and it must be signed by the Seller and the Purchaser using a real pen, “wet ink”.

The obvious next question – “What if the sale agreement is signed using an electronic signature?”

  • My first thought would be that the agreement is ab initio void. Technically it never existed.

Does that mean that all sale agreements signed electronically doesn’t exist and that those transfers are at risk?

No, I don’t think so. I believe that the surrounding circumstances and actions of the parties play a role. Each of these scenarios must be determined on its own merits.

In future, make sure your sale agreements for immovable property are signed correctly.

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