LOCKDOWN AND THE SALE OF PROPERTY... MUCH ADO ABOUT NOTHING
Can I sign my mandate or my offer to purchase electronically? My client can digitally sign my offer to purchase, is it legal?
The short answer is no. When it comes to offers to purchase for immovable property, the Alienation of Lands Act, Act 68 of 1981, expressly forbids this by stating that the document must be in writing and signed by pen. The Alienation of Lands Act as yet, and possibly not in the foreseeable future, does not make any provision for a digital signature. The current lockdown and pandemic have made compliance with this Act virtually impossible, so how do we or how do estate agents then ensure compliance with the Act and at the same time ensure that they close deals?
A work around can be expressed as follows. An agent Joe signs an offer with Ben, Ben receives the offer from Joe via email, Ben prints, signs the document with a pen and then scans it back to Joe. Joe then does the same for Mary the Seller. If she accepts the offer, she will print the document, sign it and scan it back to Joe, who will then forward it on to the appointed conveyancer. This example illustrates how to execute a valid and binding agreement of the sale of land and ensure compliance with the Alienation of Lands Act.
Many estate agents may then ask about the Electronic Communications and Transactions Act, Act 25 of 2002 (the ECTA), which allows people to sign certain documents and that certain electronic transactions are valid. An example of a valid electronic contract is an agreement to sell your furniture, bedding and contents of a house, if:
- The email correspondence is clear about the terms of the agreement;
- There is an actual intent to conclude a binding agreement and that this intent is visible from the wording; and,
- The veracity of the email from the Seller and Buyer cannot be challenged.
To add to this, some banks permit "electronic signatures" on certain bond documents. The ECTA only permits an advanced electronic signature (AES) if the signature has been accredited, then and only then can an electronic signature be valid. This signature is virtually a scanned image of the signature of the person. However, some agreements are expressly excluded, such as sale agreements, as they fall under the Alienation of Land Act where it mentions that it must be in writing and signed by a pen.
Then what of a mandate? A mandate is an authorisation from a Seller to an Agent to sell his or her property and attempt to obtain a certain price. In terms of the Estate Agency Affairs Board Code of Conduct at clause 3.3.1, "all the terms of such mandate (or extension, as the case may be) are in writing and signed by the client." So once again this code expressly prohibits an agent from procuring and using a digitally signed mandate. As with an offer, an agent can email the mandate to a Seller, explain either via a video call or by normal voice call the ramifications of the mandate, the time, the property and the duty of the agent and then have the Seller sign the mandate and email it back to him. The agent can direct an email to the Seller stating the he, the agent, has explained all the pertinent points of the mandate and the Seller accepts this - especially if the Seller sends a signed mandate in return - then the agent would have then complied with Clause 3.10 of the Code of Conduct and thus ensured that the mandate is valid and enforceable.
The moral of the story is that it is necessary for an agent to have everything in writing or on email, no matter how trivial. So, ensure that your correspondence is always available.
Contact Robert, at robert@esilaw.co.za for any further questions.