If you asked a year ago whether you could sign a sale of immovable property agreement electronically, the short answer would have been that an electronically signed agreement of sale is not valid or binding on the parties.

With the swift advances in technology, and more people than ever working remotely, there has been a significant increase in documents being signed electronically. However, it is important to remain cautious before opting to use the various applications available for the electronic signature of documents.

The Alienation of Land Act 68 of 1981 (“ALA”) provides that no sale of land will be of any force and effect unless it is contained in a written deed of alienation signed by all the parties. In addition, the case law that has evolved under the ALA has always interpreted “signatures” to mean “wet ink on paper signatures”.

This has been confirmed by the Johannesburg High Court in the matter of Aarifah Security Services CC v Jakoita Properties (Pty) Ltd[1] where the court found that:

“A “normal” signature, such as one finds at the foot of an email, whilst it might suffice for a formality requiring a signature laid down in contract, cannot suffice if the signature is required by statute. More fundamentally, however, sections 4(3) and 4(4) read with Schedules 1 and 2 of ECTA make it clear that its provisions can in any event not be employed to validate Deeds of Sale under the Alienation of Land Act.”

It is evident that an offer to purchase must be written and signed by all the sellers and purchasers and that the signatures of such agreement of sale may not be signed electronically. Should any of the above requirements, and other formalities, not be complied with it will cause the agreement of sale to be invalid and therefore not binding on the parties.

In South-Africa electronic signatures are governed by the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”). ECTA defines an electronic signature as data attached to, incorporated in, or logically associated with other data and which is intended by to serve as a signature.

ECTA lists the documents where an electronic signature is not sufficient as follows:

  1. An agreement for alienation of immovable property as provided for in the ALA.
  2. An agreement for the long-term lease of immovable property in excess of 20 years as provided for in ALA.
  3. The execution, retention and presentation of a will or codicil as defined in the Wills Act No 7 of 1953.
  4. The execution of a bill of exchange as defined in the Bills of Exchange Act No 34 of 1964).

When you sit down and create an electronic version of your signature on Adobe or similar applications – this would be considered a “mark” you make using data, which is “intended” to serve as a signature, i.e. an electronic signature under ECTA. ECTA clearly states that an agreement for the alienation of immovable property cannot be signed with an electronic signature and our courts have consistently held that a signature for the sale of immovable property must be a “wet ink” signature – meaning that your hand has to actually hold a pen or pencil to make a signature on a piece of paper.

In the most recent case on this topic – Borcherds and Another v Duxbury and Others[2] – the court held that it was acceptable for a signatory to use a mobile phone app, to apply a photo of his actual signature, onto a sale agreement for land.

In this case one of the parties concluded a sale agreement of land on 20 June 2020 in the Eastern Cape. The purchasers signed the offer to purchase, in pen and ink, and the document was scanned to the seller who received it on his cellular phone. The seller then, utilising the DocuSign application, imported images of his actual “wet ink” signature and initials into DocuSign on his phone and then applied these signatures to a digital copy of the sale contract, using the same application. Both parties were aware of this fact and didn’t dispute it.

The applicants in the matter, being the purchasers of the immovable property, sought to set aside the sale of immovable property agreement on various grounds, one of them being that the agreement was signed by the seller using an application used for electronic signatures of documents.  It was submitted by the attorney for the purchasers that by utilising DocuSign to sign the contract, the seller had applied an electronic signature to the contract within the meaning of ECTA, and as a result, the contract was of no force and effect as it did not satisfy the signature requirement of the ALA, read with all the case law over the years requiring “wet ink” signatures.

The court considered the following facts in making its decision:

  • the words “sign” and “signed” are not defined in the ALA;
  • the approach of the courts to signatures has always been pragmatic, not formalistic;
  • whether the method of the signature used, fulfils the function of a signature (to authenticate the identity of the signatory) rather than to insist on the form of the signature used;
  • before electronic communication, the courts were willing to accept any mark made by a person for the purpose of attesting a document, or identifying it as his act, to be a valid signature;
  • a “signature” is a person’s “distinguishing mark” made with the intention to be identified as his/her mark;
  • in another decision the court had held that a signature could even be effected by means of a rubber stamp;
  • the importance of the long string of cases that deal with signatures, lies in the recognition that the word “sign” means to “sign by name or by mark”.

The court also considered other authority[3] where the main concern with electronic signatures was the possibility of abuse, but in this case, there was no denying that the digital image of a signature was that of the actual signatory. It was common cause that the signatures and initials of the party who used DocuSign were merely digitised versions of original handwritten signatures and initials.

The court held that, taking into consideration that there was no evidence that the parties intended the sale of property to be an electronic transaction, in terms of ECTA and that the words “sign” and “signed” are not defined in the ALA, a pragmatic approach was appropriate.

On the facts the court held that “by affixing their signatures and initials to the contract utilising the DocuSign application the [signatory] signed the contract as envisaged in s 2(1) of the [ALA] Act with the intention of being bound to the contract as seller”.

The court accordingly held that with regard to the issue of signature, the agreement was valid in terms of the ALA and binding on the parties and that if that is how the seller chose to apply his actual signature, he was free to do so, given that it was still his actual signature – and not a computer-generated image “intended to be” his signature.

It seems that this case has certainly pushed the door slightly ajar when it comes to electronic signatures for sale of immovable property agreements. However, it was only a single judge judgment in the Eastern Cape High Court (which has not since been appealed to our knowledge) and is not entirely authoritative or binding on any other province or High Court. This case law is certain to be referred to; relied on and criticised in the years that lie ahead, and we look forward to the outcome when the case law is tested. As already mentioned, ECTA explicitly states that electronic signatures cannot be used for an agreement for the alienation of immovable property. In our view, there is little to no room for doubt or statutory interpretation on the matter.

Of course each case has to be tried on its own facts and merits based on the particular circumstances, but until there is absolute certainty on the matter in the form of an amendment to the relevant legislation to specifically cater for signatures of land sale agreements in this manner, or a Supreme Court of Appeal ruling confirming this stance, we strongly advise against signing any agreement for the alienation of land other than by way of the traditional wet ink on paper.

[1] Aarifah Security Services CC v Jakoita Properties (Pty) Ltd and others 2020 JOL 48794 (GL) at paragraph 63

[2] Borcherds and Another v Duxbury and Others (1522/2020) [2020] ZAECPEHC 37; 2021 (1) SA 410 (ECP) (22 September 2020)

[3] Global and Local Investments Advisors (Pty) Ltd v Fouche 2021 (1) SA 371 (SCA)