In his winning entry from this year’s Property Bar Association essay competition, Jack Sheard outlines the need to update the Law of Property Act 1925 for the 21st century
The Law of Property Act 1925’s anachronistic approach to formalities is unfit for the modern computer era. The value of its formality rules has been debased by cultural and technological changes. Moreover, developments in AI will soon render them completely obsolete.
Formality rules
While the 1925 Act was designed to encourage the alienability of land, certain restrictions on that alienability remained necessary. The most important restrictions are the provisions of section 53, requiring written and signed documents for the valid creation or disposition of interests in land.
Such formality rules have three purposes. First, they caution the parties of the significance of their transaction. Second, they provide clear evidence of that transaction. These cautionary and evidentiary aspects, third, “channel” the transaction into a form clearly recognised as legally binding. However, section 53 no longer effectively serves these purposes.
Writing and cultural change
The primary way section 53 has become ineffective is a changed cultural approach to writing in the present computerised age. Writing is now overwhelmingly digital, and thus quick, easy and readily accessible. The rise of instant messaging has made it the default even for informal conversations. Moreover, its intangibility means it is easily forgotten. Writing’s hieratic effect has dissipated. In consequence, a requirement of writing neither cautions nor channels.
This can be seen on the quite ordinary facts of Hudson v Hathaway [2022] EWCA Civ 1648; [2022] EGLR 10. The claimant, through an e-mail appended with their first name, complied with section 53 and disposed of their interest in land. Neither party noticed; they continued to negotiate for another year. Although the parties were commercially astute, neither had been effectively cautioned by section 53’s requirements.
Consequently, the rules’ channelling effect was also lost. It is telling that the critical e-mail’s effect was overlooked by the parties’ lawyers. It was only following judicial prompting in the Court of Appeal, after over three years of litigation, that its legal significance was appreciated.
Hudson demonstrates the effect of the cultural shift around writing. The modern, casual approach to writing has shorn section 53 of its cautionary and channelling functions.
Signatures and technological change
Computerised technology has further undermined the signature requirement of section 53. The signature should serve both evidentiary and channelling functions, as proof of a party’s intent to be bound. This intent is increasingly obscured.
The common law’s search for intent in novel situations has necessitated a broader understanding of what constitutes a signature. A notable example is the Canadian case South West Terminal Ltd v Achter Land 2023 SKKB 116 where an emoji satisfied statutory requirements for a signature, akin to our “authenticating intent” test. Such informal signatures do not display the same certainty of intent as their conventional counterparts.
Yet in parallel, technology has stripped more conventional signatures of their reliability, as seen in Neocleous v Rees [2019] EWHC 2462 (Ch); [2019] EGLR 49. There, an automated footer, appending the solicitor’s name to all outgoing e-mails, sufficed as a signature. Two considerations arise from this.
First, “authenticating intent” was found in the original creation of the automated footer, requiring “conscious action at some stage”. However, that stage came long before contemplation of the relevant transaction. A document signed “by default” is of limited value as evidence of parties’ intentions.
Second, the court noted that the recipient “had no way of knowing” whether the signature was automatically created. Without such knowledge, they could not assess its authenticating intent. This complicated their recognition of the document’s legal enforceability – weakening section 53’s channelling effect.
Computerisation has thus expanded the definition of “signature”, while undermining its reliability. The evidentiary value of a signature has become more doubtful, and resulting transactions are no longer effectively channelled.
AI and the end of formality
The effectiveness of section 53 is therefore already limited. Future developments are likely to neuter it entirely.
Neocleous featured relatively low-level automation – the simple addition of a name. Computerised automation has since drastically advanced. AI assistants, such as Microsoft’s Copilot, are readily available. Copilot can generate extensive and detailed documents with minimal instruction. These, too, can be automatically signed.
The court’s concern in Neocleous with parties’ understanding of automatically signed e-mails can now extend to the whole document. Software can presently identify AI-generated text only 26% of the time – an ever-shrinking percentage. It will soon be impossible to tell if the signed, written document was human or computer in origin.
At that stage, the formality rules of section 53 will be purposeless. As compliant documents are synthesised with automated ease, any cautionary effect will disappear; concerns of authenticity and accuracy will diminish their evidentiary value; and the resulting uncertainty as to their legal worth will prevent channelling.
However, AI will not only leave the formality rules ineffective – soon, it will bypass them entirely. In October 2024, Microsoft released Copilot Voice – an AI technology capable of responding to oral instructions. This means section 53-compliant documents can be generated solely by spoken words. The formality rules can be met without human writing, or human signature – and it will be impossible to tell. Formality is becoming fully automated.
Conclusion
Currently, the 1925 Act’s formality rules fail to serve their functions. The ease of compliance precludes caution. Technological advances have diminished the evidentiary function. Resultingly, any emergent “channelling” effect is also lost. Moreover, the development of orally-instructed AI will soon render section 53 entirely vestigial.
The modern era requires modern formalities. The century-old Law of Property Act 1925 does not provide them, and common law incrementalism offers only patchwork solutions. The automated age requires new legislation, to be drafted with care – and with human hand.
The Property Bar Association essay competition
In this year’s competition, open to students registered on a postgraduate course leading to a Master of Laws degree and LLM, GDL and BPTC students, entrants were asked to respond to the question: “100 years on from the passing of the Law of Property Act 1925, is the Act’s approach to formalities fit for the modern era?”
Jack Sheard, of the Inns of Court College of Advocacy, was awarded first prize: £1,000 and publication in Estates Gazette. Judges praised Sheard’s essay for its “refreshing point of view” and its “good use of foreign as well as domestic authority and commentary”, adding that it was “beautifully written and advanced a coherent and interesting argument”.
Leoni Coyle, of the University of Leicester, took second prize (£500) and Chase Wood, of the University of Reading claimed third (£250).
Each winner also receives a copy of Megarry & Wade: The Law of Real Property and online chats with a KC, a barrister of 5-10 years call and a barrister of below five years call to discuss life at the property bar.
The prizes were awarded at the PBA Bar & Bench Party on 29 April.
