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Electronic execution of all lease documentation

Going completely paperless means we must now consider the execution of documents by way of an electronic process.  Signing documents electronically raises questions about whether the electronically executed document is legally binding and the authenticity of the signature. This article intends to cover the concept of electronic signing of leases in Victoria – a practise that we at Carroll & O’Dea have recently adopted.

Is it legally binding?

Electronic signing has been recognised by Australian law since 1999 with the introduction of the Electronic Transactions Act 1999 (Cth) (ETA Cth) and its Victorian and New South Wales counterparts which set out the requirements of an electronic document in order to be held as valid.  The ETA Cth provides regulatory framework that, amongst other things, facilitates the use of electronic transactions and promotes business and community confidence in the use of electronic transactions.

Authenticity of the signature

The ETA Vic contains provisions to the effect that a legal requirement of a signature is met if requirements as to reliability, consent and identification are satisfied. It also contains provisions to the effect that a requirement to give information in writing is satisfied by an electronic communication if requirements as to the accessibility and consent are met.

Companies which sign documents under s127 of the Corporations Act 2001 (CA) can still sign electronically.  Section 127(1) of the CA allows a company to execute a “document” by relevant officers (two directors, a director and a secretary or a sole director and secretary) “signing” it.

In the past, deeds signed by individuals were also signed by a witness so as to prevent fraudulent transactions or preventing a person claiming that he did not sign the document. However this is not actually a formal requirement for most documents – only deeds.

At this stage, the need for witnesses presents a problem for electronic execution.  All Australian jurisdictions (except Victoria) have legislated that when an individual executes a deed, a witness is required. The legislation in Victoria (Property Law Act 1958 (Vic) s73 – 73B) has not included a requirement for a witness to an individual’s execution. Therefore, electronic execution of deeds in Victoria is easier than in other States.  Although neither the NSW Land Registry Services nor Land Registry Office in Victoria accept electronic leases, in Victoria there is no need to register the lease so there is no problem.  The Victorian Transfer of Land Act 1958 does not require leases to be registered if the lessee is in possession of the premises.

How can documents be created and signed electronically?

There are a number of ways electronic documentation can be created.  DocuSign is one of them.  You can use DocuSign to prepare and send documents to your clients to be filled out and signed by them and then receive, sign and complete the document enabling you to digitally manage everything involved in the transaction.

The process of executing a document by way of DocuSign is simply issuing the final form documents through DocuSign to the lessee (or the lessee’s solicitor), a code will be emailed to the lessee/solicitor and that code is required to access the document to be signed. The code is being used as an authentication method to prove the person who executed the document is who they state they are. The code is only for use by the person executing the document and must not be issued to any other person. The document is executed by the lessee and then the lessor/solicitor is notified and can check the document has been signed by the appropriate person and the lessor can then execute the document.  Once the document has been executed by the lessor, DocuSign will issue a Certificate of Completion to all the signatories. This certificate sets out a audit trail of the signing parties’ names, digital signatures, email addresses, public IP addresses, signing location (if provided), chain of custody (sent, viewed, signed etc) and timestamps.

Parties to the lease documentation are not required to have an account with DocuSign and the execution can take place by way of desktop computer, tablet or smartphone.

Gillian Kirwan, Lawyer

Paul Carroll, Partner

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