Hi Reader 👋

This week's edition of Law in a Coffeeshop is Sponsored by BKD AUDITORS. (More on them at the end.)

🚫 Did you know?

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

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🔄 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.

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

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🚫💧 Massive, massive issue. 🤷‍♂️

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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.

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

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In 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 state 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.

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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 of 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.”
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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”. 💧

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

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

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

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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. ⚖️

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

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Thanks for reading!

Have a great week!

~Francois ☕

Sponsored by BKD AUDITORS

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