Digital vs Wet Signatures: The Impact of Forgery On House Buying

Mortgage fraud is a serious crime. Once executed and signed, a mortgage deed is a legally binding contract. The responsibility of trying to prove that signatures have been forged relies on the individual(s) having to prove it. It involves time and cost and, in many circumstances, requires evidence based on expert opinion.

In mortgage cases, forged legal documents frequently involve one person impersonating another person's details, including signatures on a variety of documents, most frequently a property transfer, a mortgage application form (and/ or other documents and correspondence related to a mortgage application), and the mortgage deed itself.

Case Scenarios

Mr. & Mrs. Smith have separated, and Mr. Smith has now found and has applied to buy a separate property. A claim is made by Mrs. Smith where she disputes that she signed a legal document when Mr. Smith applied for a mortgage. She says that she was not aware of him applying for a joint mortgage and said that it was verbally agreed that the property was to be bought in his name only. She claims that her wet signatures on a mortgage document are forgeries and that she had no knowledge of the application. Mr. Smith says that his wife signed in the presence of his well-established connection, Dr. King, who first met his wife on the day of witnessing her signature.

To settle this dispute, both parties jointly instruct a forensic handwriting expert to examine Mrs. Smith’s signature.

What could possibly go wrong?

The Forensic Handwriting Expert

Scenario 1

The handwriting expert, who is regarded with great respect by many courts, has arrived at a conclusion that Mrs. Smith signed the legal documents and that all signatures are genuine. Therefore, Mrs. Smith is bound by the legal documents that she signed.

Mrs. Smith is both distraught and angry and is now threatening further legal action. She claims that the handwriting expert‘s view on the authenticity of the signature is mistaken.

The case continues, including the legal fees.

Scenario 2

The handwriting expert’s analysis is that the signatures are forged. Therefore, Mr. Smith should be held liable.

Mr. Smith agreed to accept liability and admitted that he was unable to obtain a mortgage as a sole owner due to limited income.

Mr. Smith’s mortgage application was terminated and all legal fees are to be paid by him. Furthermore, forging signatures is a criminal offense. It is considered to be ‘intent to defraud’ and, at times, can be punishable with imprisonment.

Scenario 3

The handwriting expert’s analysis is that the signatures are genuine. Mr. Smith is satisfied with the outcome, but Mrs. Smith is not and continues to claim that she has never signed any legal documents and does not know and has never met the witness, Dr. King. The case continues.

Dr. King is later brought to court. He is claiming that on the day of witnessing the signatures, he agreed that it was the first time he had ever met Mrs. Smith. The court asked that perhaps it was not Mrs. Smith in attendance on that day, hence her claim to the forged signature. Maybe an additional third party was also involved that fraudulently signed the documents. 

Dr. King disagrees. This wasn’t the case because, on the day of visiting, Mr. Smith had provided him with 2 passports - both his and his wife's. Dr. King stated that both applicants were present on that day.

The court rules in Mr. Smith’s favor, claiming that the handwriting experts' analysis is correct and that the signatures are genuine.

This could result in two outcomes - either Mrs. Smith continues with the application of the loan agreement, or both parties need to agree that the application is canceled.

Best Practices & Higher Security

Depending on the transaction, the eIDAS regulation (Electronic Identification and Trust Services for Electronic Transactions) may require a Simple, Advanced, or Qualified eSignature. 

In the case that an electronic signature is used, conveyancer-certified electronic signatures necessitate a witness's signature. It necessitates the use of an operating system or a platform that manages the electronic signing process, including the creation of the electronic signature. This also means that if more than one electronic signature is required, dual signing capabilities become a requirement. 

However, if and when a document is signed using a qualified electronic signature, the identity of the individual is verified by a ‘qualified trust service provider’, which will replace the assurance that is usually provided by the witness, resulting in a more streamlined process of proving digital identity for property transactions. When verifying the identity and creating the signature, the qualified trust service provider must meet a strict set of standards outlined in the eIDAS legislation.

Qualified signatures include built-in security for the verification and authentication of the signatory's identity as well as encrypted evidence of what, how, and when they are signed. In this instance, a witness to the buyer's or seller's signature is not required.

Conclusion

Compared to other electronic signatures, qualified electronic signatures are unique. Since an independent identity check is part of the procedure, they do not require a witness. The digital method simplifies the deed signing procedure and offers more security and assurance than a wet signature, as well as avoiding costly, lengthy court procedures and disputes, such as the case examples provided above, featuring Mr. & Mrs. Smith.

Cryptomathic Signer is a remote QES solution, incorporating Cryptomathic's certified Qualified Signature Creation Device (QSCD), which abstracts all the complexity and helps all industries to provide a smooth digital signing experience to their clients.