Is an online sale agreement for a house valid?

“I am in the process of purchasing a house. I recently bought my vehicle by merely signing some online documentation electronicially and it was so quick and easy to complete. I asked my estate agent if you can use the same technology to purchase a house, but he said that the contract won’t be valid if I sign it electronically. Is this true?”

Legally binding electronic transactions and the use of electronic signatures have been increasing in prevalence since the promulgation of the Electronic Communications and Transactions Act of 2002 (“ECT Act”) which regulates electronic transactions in our country. As the ECT Act allows for the use of electronic signatures in our daily business dealings, it is important to understand what an electronic signature is and when such can be validly used and be legally binding.

The ECT Act defines an electronic signature as data (ie. an electronic representation of information in any form) which is attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as his signature in an electronic environment where a physical signature is not possible.

Where our law requires that contracts must be in writing, the ECT Act recognises that a data message may meet the requirements for being “in writing” and that where the signature of a person is required by law and such law does not specify the type of signature, the requirement is met if an advanced electronic signature is used, which establishes a valid and binding agreement.

This does not mean that all electronic transactions will be legally binding. The following exclusions are expressly provided for in the ECT Act:

An agreement for the alienation of immovable property in terms of the Alienation of Land Act of 1981.
An agreement for the long-term lease of immovable property in excess of 20 years in terms of the Alienation of Land Act of 1981.
The execution, retention and presentation of a will or codicil as defined in the Wills Act of 1953.
The execution of a bill of exchange as defined in the Bills of Exchange Act of 1964.

In your case, the first exclusion relating to the alienation of immovable property (eg. a purchase contract for a house) is applicable as the Alienation of Land Act determines that no sale of land shall be of any force or effect unless it is contained in a sale agreement and signed by all the parties thereto or by their agents acting on their written authority and thus any contract for the sale or purchase of immovable property is specifically excluded from being valid if entered into electronically.

So, although your motor vehicle purchase may have been possible electronically, an electronic agreement for the purchase of a house which you propose to sign electronically is not currently valid in our law.

August 11, 2016
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