The Government has just tabled a Bill to amend the Stamp Duties Act (Cap. 312) with the main objective of applying the Act to an electronic record that wholly or partly effects a property or share transaction, or evidences such a transaction.
In this regard, a new Part VIIIA titled "Application of Act to Electronic Instruments" has been added to the Act, comprising definition section 59 and sections 60 and 60A-H.
What is an Electronic Instrument?
An Electronic Instrument is an electronic record, or a combination of electronic record and a physical document. An electronic record has the meaning given by section 2(1) of the Electronic Transaction Act (Cap. 88) which legitimises electronic transactions. For example, anything sent by email, SMS or any internet-based messaging service is an electronic record.
Stamp duty is chargeable under the Stamp Duties Act on certain instruments that effect a transaction as provided in the relevant Schedules of the said Act. Proposed new section 60A states essentially that a reference to an instrument that effects a transaction includes -
- an electronic record that effects, or an electronic record and a physical document that together effect, the same transaction, and
- an electronic record that concludes the same transaction which is effected by a verbal communication and electronic record.
The proposed new section 60C(1) elucidates that an electronic instrument which is an electronic record is treated as signed when an electronic signature is applied to it. An "electronic signature" means any electronic method used to identify a person and to indicate that person's intention in respect of the information contained in an electronic record.
An electronic instrument comprising of an electronic record and a physical instrument is treated as signed -
- if the transaction is concluded by the electronic record, when an electronic signature is applied to the electronic record, or
- if the transaction is concluded by the physical instrument, when the physical document is signed.
Section 60C(3) elaborates that the time and place of the signing of the electronic document shall be the time when and the place where the signing party does an act that results in the application of the electronic signature to the electronic record. For instance, A sends an email from outside of Singapore offering to sell a property in Singapore to B. The latter then sends an email from Singapore accepting the offer of A. If there is a contract concluded, the electronic instrument comprising of the 2 emails is treated as executed in Singapore and at the time B sends the second email accepting the offer.
It is also made clear in section 60(5) that reference to the signing party includes a person authorised by the signing party to apply the electronic signature on the signing party's behalf. However, it excludes online intermediary which provides the facility for the application of such electronic signature.
Impact of these new provisions
These new provisions of the Stamp Duties Act are not expected to have any immediate impact in the real estate industry. For avoidance of doubt, there is no change in stamp duty rates or the principles thereof.
The changes do set the stage for electronic contracts for real estate transactions which is widely viewed as a necessary stage in the move towards the total digitisation of the real estate industry. In this regard, we can expect further changes in the law, including the Electronic Transaction Act which appears to exclude real estate transaction in its application.
It is foreseeable in the near future that real estate lease or tenancy contracts might be concluded via electronic contracts. This will help improve the efficiency in the process of the leasing of apartments which generally do not involve large sums of money passing between parties.
In the meantime, the large monetary value of real estate may stand in the way of people's willingness to use electric records to conclude a real estate transaction for sale and purchase cases. In this regard, real estate transactions of larger quantum in value (like collective sales) will continue to be managed by professionals who can ensure the authenticity and accuracy in such transactions amid advising on many legalities of important aspects of the deal.
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