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Can agreements for the sale of immovable property be signed electronically? By Johanei Borstlap

JOHANEI BORSTLAP

Agreements for the alienation of immovable property must be in writing and must be signed by the parties. Can this be done electronically?

Section 2(1) of the Alienation of Land Act, 68 of 1981 (“the Act”) provides as follows:

No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force and effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority.

The Electronic Communications and Transactions Act, 25 Of 2002 (“ECTA”) regulates the use of electronic documents, commercial and general electronic contracts and electronic signatures.

ECTA defines an electronic signature as “data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature” and data is defined as “electronic representations of information in any form.”

Subsection 4(4) of ECTA provides that ECTA must not be construed as giving validity to any transaction mentioned in Schedule 2. Schedule 2 of ECTA lists the agreements that cannot validly be concluded in terms of ECTA and includes an agreement for alienation of immovable property as provided for in the Alienation of Land Act.

These two statutes clearly indicate that an agreement for the sale of immovable property must be physically signed by parties in “wet ink” and cannot be concluded by using electronic signatures and/or e-signatures.

However, the recent Eastern Cape High Court decision of Borcherds and Another v Duxbury and Others (1522/2020) [2020] ZAECPEHC 37) has however introduced uncertainty in this regard.

Borcherds (the applicant and “the First Purchaser”) signed and emailed an offer to purchase immovable property to Duxbury (the first and second respondents and “the Seller”) who received the offer on his cellphone. The Seller then imported the offer to purchase into software known as DocuSign which is an application used to apply electronic signatures. The Seller used DocuSign to sign and initial the offer to purchase, using his signature and initials saved on the DocuSign app.

After accepting the offer to purchase, the Seller received a competing offer to purchase for a higher purchase price. The Seller attempted to abandon the first offer to purchase so that he could sell the immovable property to the second purchaser.

The First Purchaser launched an urgent application to the High Court and interdicted the Seller from transferring the property to the second purchaser. The Seller alleged in reply that the offer to purchase was invalid as it had been signed by using an electronic signature (through the DocuSign app). He alleged that his signature did not comply with the Act or ECTA and therefore the agreement of sale was of no force and effect.

The court held that by affixing their signatures and initials to the offer to purchase, utilising DocuSign, the Seller signed the offer to purchase as envisaged in section 2(1) of the Act with the intention of being bound to the agreement.

The Seller was ordered to give effect to the offer to purchase concluded with the First Purchaser.

The court mentioned in passing that: “Had the agent … taken the trouble to present the offer to the first respondent personally and obtain his signature … this litigation could have been avoided or substantially reduced in its scope.” (own emphasis)

This judgment is open to criticism on the basis that the court did not refer to Schedule 2 of ECTA, which specifically excludes the application of ECTA to an agreement for the sale of immovable property. The judgment does not deal with these specific provisions of the Act and ECTA.

Therefore, despite the decision in the Borcherds case, it would be safe to conclude that the Act and ECTA require signatures to be made in “wet ink” by a physical hand or bodily movement when concluding agreements for the sale of immovable property. Agreements for the sale of immovable property should be physically signed by the parties.

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