E-missives: what now?

The Land Registration etc (Scotland) Act 2012 is a major piece of legislation that will impact greatly on the Scots law of property and the practice of conveyancing. It is the final piece of the jigsaw that began with the abolition of feudal tenure in 2004. In what is a relatively short period of 10 years, we will, by 28 November 2014, have established a solid foundation on which Scots property law can develop further.

Credit for what has been a formidable piece of work must go to the Scottish Law Commission and to Professors George Gretton and Kenneth Reid in particular. The profession is indebted to these two individuals. They have played a pivotal role in reforming our law of property while, at the same time, retaining the underlying principles established over the last 400 years. We owe them a debt of gratitude. Credit must also go to the Registers of Scotland and to the Scottish Government for having the vision to progress the statutory timetable through a period of economic uncertainty.

The 2012 Act

The 2012 Act will not be fully in force until late autumn 2014. A period of consultation has recently closed with regard to a number of matters relative thereto.

Part 10 of the 2012 Act amends the Requirements of Writing (Scotland) Act 1995. In essence, it e-enables all the documents referred to in s 1(2)(a) of the 1995 Act. It also provides for electronic registration in the Keeper’s registers.

The amendments to be made to the 1995 Act include powers for Scottish Ministers to make regulations to prescribe requirements for (a) electronic documents; (b) electronic signatures; and (c) electronic registration. The Electronic Documents (Scotland) Regulations 2013, when in force, will e-enable all documents referred to in the 1995 Act as mentioned above. In addition, the regulations will allow for e-missives. They will not, however, provide requirements for electronic registration in the Keeper’s registers.

Wills will still require to be in hard copy with wet signatures on each page, and if confirmation is required, will need to be self-proving.

Electronic signatures

For an electronic document to gain the legal presumption of a signed and witnessed paper document, the signature used to sign the document must be an “advanced electronic signature” based on a qualified digital

certificate. The consultation on the 2013 Regulations proposed that the standards

adopted in Scotland should mirror existing European standards, and an advanced electronic signature is the equivalent of the highest legal standard as defined in the EU E-Signatures Directive 1999/93. The Electronic Signatures Regulations 2002 transposed the Directive into UK law, and the 2013 Regulations will import into Scots law definitions for the electronic signatures and the certification thereof.

In essence, the Directive established a legal framework for electronic signatures and their legal recognition. Using PKI (public key infrastructure) technology, electronic signatures based on a digital certificate are issued by a certification authority within defined, published policy parameters. The Law Society of Scotland is to introduce electronic practising certificates to all members of the profession by October 2014. This will be achieved by way of a phased rollout commencing in spring 2014, which will hopefully coincide with the coming into force of part 10 of the 2012 Act.

An advanced electronic signature is uniquely linked to the signatory and is capable of identifying the signatory. It is created using systems that the signatory can maintain under his/her sole control. It will, however, require a certification authority to have verified the identity of the individual using the advanced electronic signature. This, by necessity, means that the digital signature will only be processed by the certification authority after robust security and ID checks are carried out. A certification authority will be in place prior to the rollout commencing.

For more on the legal framework, see the opinion of Professors Brymer, Gretton, Paisley and Rennie published in 2005 JR 201 (a version of which can also be found at Journal, May 2004, 54; www.journalonline.co.uk/Magazine/49-5/1000329.aspx), and Conveyancing in the Electronic Age, paras 10-19 and 10-20.

What does this mean to practice?

Electronic signatures based on digital certification provided by a certification authority allow parties to rely on the validity of the signature. In simple terms, if you trust the certification authority then you can trust the electronic signature. The electronic signature will be legally valid and admissible as evidence of the authenticity and integrity of the electronic communication. It should also speed up the process of concluding missives, and remove problems encountered with regard to delivery of letters concluding the bargain etc. See Park, Petitioner 2009 SLT 871.

As with any change, it will take time for electronic signatures to become the norm. Put simply, we tend to trust that which we know. The writers are confident that practice will evolve quickly however – especially among the younger members of the profession. Why should we and our clients not benefit from a secure way in which to sign contracts and documents? Rollout of digital signatures is likely to commence in spring 2014, with the first to receive them being those who apply. “Early adopters” will therefore have an opportunity to develop their practices further by embracing this exciting, and entirely logical development.

As far as general practice is concerned, it might well be prudent to incorporate authority from clients in terms of business to the effect that the client authorises the solicitor to sign missives etc electronically on his/her behalf. No such authority is given under current practice, of course, but it is good practice at the moment to seek authority from one’s client before issuing an offer or formal missive.

The full effects of the change to electronic signatures will not be harnessed until a secure electronic document exchange facility is available. That has been talked about for some time. The reality, however, is that such document exchange facilities already exist. The stockbroking community, among others, is well versed at dealing in this way. This is a natural progression for conveyancing and the sale/purchase of heritable property generally. Now we need to adopt a single national missive and standard styles of common conveyancing documents. That will allow solicitors to focus on being a trusted adviser in the process which, in time, will hopefully see the Scottish system of conveyancing retain its uniqueness. There is, at present, a trend towards us having a system that is, to all intents and purposes, the same as that which operates in England & Wales, with exchange of contracts and chains of transactions becoming the norm. There is an opportunity now to reverse this trend. The ball is in our court.