Qualified electronic signatures: the future for property transactions

Although UK housing prices fell sharply at the onset of the covid-19 pandemic, they were quick to recover. Recent figures from HM Revenue & Customs (HMRC) showed UK property transactions soared in September 2021, rising 67 per cent compared to August and almost 70 per cent higher than September 2020. Yet, recent estimates showed residential transactions in October 2021 were 52 per cent lower than in September 2021.

The pandemic certainly accelerated the need for digital transformation across several sectors, but the property industry was in need of a new digital solution to move from face-to-face transactions while maintaining security. That’s why at DocuSign, we worked with HM Land Registry (HMLR) and Hugh James to develop a new approach in July 2020.

When HMLR announced it was accepting electronic signatures for property transactions, Hugh James, a top 100 UK law firm, took its first major step. The firm participated in the HMLR pilot scheme, completing the first ever UK property deal by means of the DocuSign Qualified Electronic Signature (QES).

In the UK, a properly executed QES is considered the legal equivalent of a wet signature. The digital signature securely associates a signer with a document in a recorded transaction, using a standard accepted format called Public Key Infrastructure (PKI) to provide the highest levels of security and universal acceptance.

Hugh James regards these technical developments as essential for the evolution of the property sector and is passionate about innovation, removing blockers in transaction processes and – importantly – offering client choice to improve the client experience. This will have a profound impact on how Hugh James is able to serve its clients. Ultimately, in an increasingly digitised world, there are four key reasons why the introduction of QES is significant for the property sector.

Security

Signatures are still an important aspect of the contractual and transactional processes as most agreements need a signature to be legally binding. The property sector is currently burdened by time-consuming and paper-based systems and one crucial security measure that dates back thousands of years continues to be a driver behind this: the hand-written signature.

Ensuring adequate security standards is important when buying a home and undertaking financial transactions and security is a fundamental aspect of electronic signatures. Under English law, a properly executed QES is the legal equivalent of a witnessed wet signature and the same is true under the EU’s electronic identification and trust services (elDAS), which gives both a QES and wet signature the same evidentiary weight.

 However, a QES differs from other firms of electronic signatures, including a Simple Electronic Signature (SES), Advanced Electronic Signature (AES) and a Witnessed Electronic Signature (WES). A QES offers the highest level of trust through a face-to-face ID verification process by a QES provider, which may be from either the UK or EU, with the resulting digital certificate created with an electronic signature device.

Estate agents and property legal professionals have an opportunity to pilot the scheme and replace wet signatures with a legally recognised QES thereby bringing speed and efficiency to the property purchase process. Ultimately, a QES will remove the final hurdle when it comes to privacy for home buyers and property professionals alike.

Autonomy

When it comes to buying or selling a property, the prolonged process can often make clients feel they are not in control and many clients find it stressful. Drawn-out processes often leave the parties desperate for an update, which leads to them sending numerous emails for updates.

The DocuSign pilot provides parties with quick and easy access to their documents, ready to access and sign through a link when they are ready without the need for a witness. For property professionals, this solution provides them with faster access to signed documentation. You’re not reliant on postal services and the execution is still validated by HMLR. Digital signatures are more secure because there is a process preceding them that positively identifies the signatory and the resultant document is encrypted as such that any tampering with the document will be evident.

Furthermore, the good news for property professionals is the improvement of the client experience. The availability of a QES demonstrates their commitment to the best possible experience for clients and, while delivering a faster process for professionals, it puts buyers firmly in charge of the process.

Speed

The underlying benefit of a QES is the speed at which it takes to sign and finalise documents. Waiting for the ink to dry is set to become a thing of the past with the introduction of this pilot scheme, delivering a new user experience for clients. Property contracts typically take between 6 - 8 weeks to complete, but signing with DocuSign QES means documents can be completed within 24 hours.

Hugh James’ clients range from businesses, individuals, banks and public sector organisations to property companies, education establishments and utility providers and they’re all set to benefit. Over the past 12 months, the firm has focused on expanding its geographical reach and the services offered. It’s transforming its digital capabilities and capacity and becoming an agile business that supports communities and causes close to its heart.

Clients and property professionals are no longer hindered by travelling to oversee documentation signing and the parties don’t need to be in the same place. Knowing the transaction can be recognised by HMLR has enabled Hugh James to update processes to remove potentially time-consuming and expensive delays.

Of course, as with any innovative technology, there are learning curves. Yet for Hugh James, the pilot project was a significant step forward. According to the firm, the use of a QES should become commonplace and a feature everyone can access as the UK moves towards the self-verification of deeds. Transactions often move only as fast as the signing process and a reduced timeframe could reduce stress levels caused by uncertainty and delays.

Sustainability

Sustainability is on everyone’s agenda, from professional services to charitable organisations and hospitality. The move towards becoming paperless was already on the rise before the pandemic, with HMLR moving towards digital deeds in 2018, which has been accelerated following COP26, the 26th UN climate change conference this year. So, many paper-based tasks could become a thing of the past.      

Hugh James has moved with the times, putting technological development at the forefront of its agenda. The pilot provided the perfect opportunity to innovate for the future. Paper use wastes time and resources while also adding unnecessary costs and avoidable delays, so the days of posting paperwork and waiting on their return are numbered.

The UK property sector will need to be fit-for-purpose when it comes to buying and selling property. The introduction of QES for transactions not only puts the industry under the spotlight, it could put it on track to lead in areas of digital transformation and paperless technology.      

What now for the property sector?

For Hugh James, QES are an unqualified success. The firm will continue to use them and support their adoption in the hope they will be an option for all conveyancing processes in future. It could become a commonplace feature of all property documents, from deeds and tenancy agreements to mortgage documentation, leading to a profound and revolutionary impact on how the sector operates.

The property sector is moving away from traditional, paper-based processes and industry leaders have an opportunity to push the sector in a direction that leads to digital transformation. Witnessed wet ink signatures have become a bottleneck for a booming property sector with record transactions and the use of a QES is the first major step towards an enormous shift across the UK.

DocuSign is a company headquartered in San Francisco, California, that allows organisations to manage electronic agreements docusign.com