It doesn’t matter whether it’s a rental car or a purchase from an online store: Nowadays, most business is conducted completely digitally via the Internet – an advantage for everybody involved.
However, the situation is different when it comes to renting real estate. Most rental agreements are still signed with pen and paper, which results in higher costs and longer waiting times, especially for landlords.
The solution: sign the lease digitally. But is this legally possible? We give you the most important information at a glance.
Digital signatures for rental agreements have many advantages
Signing a rental contract “wet”, i.e. with pen on paper, comes with a lot of disadvantages:
- The lease must be available in paper form to all signers, which requires either sending it by mail or traveling to a signing location
- The rental agreement must then be “re-digitized” in the landlord’s IT environment
- The original lease document must be archived in paper form
- Waiting times extend the vacancy period, during which no revenue is generated from a property
- Tenants cannot be identified beyond doubt
All of these points generate fixed costs for landlords, which are incurred for each rental transaction per property. If a large number of properties are leased per time unit, the cost required to manage the documents alone can generate significant personnel costs.
In the case of missing identification, risks arise at the same time, because if a tenant disguises their identity or pretends to be someone else, this usually generates a very high administrative expense for landlords while at the same time generating opportunity costs because of a lack of rental payments.
Digital signatures for rental agreements, on the other hand, have several tangible advantages for both tenants and landlords:
- They reduce waiting and vacancy times by enabling an immediate conclusion of the contract online
- They avoid a media disruption that significantly improves the user experience for tenants, attracting new potential tenants to your platform
- They reduce costs on the landlord side, for example in processing documents, but also indirectly, as vacancies are reduced. Up to 47 euros can be saved per contract.
- They enable tenants to be identified beyond doubt
All in all, digital signatures for rental agreements therefore have nothing but advantages for all sides – provided that legal requirements and data protection are complied with.
We report in more detail on the advantages of digital signatures in the real estate industry in the linked blog post.
Legal validity of electronic signatures in rental agreements
After the adoption of the Regulation on Electronic Identification, Authentication and Trust Services (eIDAS) in the EU and the Federal Electronic Signature Act (ZertES) in Switzerland, electronic signatures are recognized and legally valid for most areas of application in Europe.
“Simple” and “qualified” electronic signatures
However, not all electronic signatures are the same, because there are different standards with different technical requirements and areas of application.
If there is no legal formal requirement for a particular document or contract, the so-called “Simple Electronic Signature”, or SES for short, is sufficient in most cases. In this case, the signatory is usually identified only via the e-mail address.
In contrast, the “Qualified Electronic Signature”, or QES for short, is subject to strict form and security criteria and is legally mandatory in some applications for electronic signing as an alternative to a classic, “wet” signature.
QES always require secure identification of the signers, which is done, for example, via video identification services that check the personal details of users.
Whether use cases are informal or require mandatory QES is regulated differently in Germany and Switzerland, for example. We have therefore summarized the various standards for the legal validity of digital signatures for rental agreements.
Note: The following lists serve only as an overview and do not contain all possible use cases. We make every effort to ensure that the information is up to date, but cannot always guarantee this due to rapidly changing legal conditions. For more information on the legal validity of eSignatures in general, see the linked page.
Legal validity of digital signatures in Germany
Cases in which a Simple Electronic Signature (SES) is sufficient include:
- Unlimited rental agreements with constant rent
- Handover records (incl. meter readings and damage documentation, etc.)
- Service charge statements
- Notices of termination (if not pertaining to housing)
- Rent adjustment letters
- Master data sheets and changes
- Tenant self-disclosure and self-disclosures from prospective tenants
Cases in which a Qualified Electronic Signature (QES) is required when signing electronically, including:
- Fixed-term rental agreements
- Residential leases with index-linked or graduated rents
- Terminations of residential leases
- Significant changes to fixed-term rental agreements
- Exercise of a statutory tenant’s right of first refusal
- SEPA mandates
Only the signing of a rental guarantee by a third party is one of the non-permitted use-cases for electronic signatures in Germany.
In all other cases mentioned above, the digital signature is legally valid and recognized by law in Germany – provided that any existing formal requirements are fulfilled and the electronic signature meets the requirements of the eIDAS Directive.
Legal validity of digital signatures in Switzerland
Cases in which a Simple Electronic Signature (SES) is sufficient include:
- Any rental agreements (including fixed-term or with index or graduated rent)
- Handover protocols (incl. meter readings and damage documentation, etc.)
- Service charge statements
- Tenant self-disclosure and self-disclosure of prospective tenants
Cases in which a Qualified Electronic Signature (QES) is required for electronic signing, including:
- Notices of termination of rental agreements (for both residential and commercial premises)
- Warnings, for example due to late payment or breach of duty.
Here, too, the following applies: In all of the above-mentioned cases, the digital signature is legally valid and recognized by law in Switzerland – provided that any existing formal requirements are met and the electronic signature fulfills the requirements of the ZertES directive.
The secret weapon for digital lease signatures: Our PES!
In most cases, digital signatures for rental agreements are legally valid and recognized by law. However, landlords are still faced with a problem:
Although the legislator allows the use of the Simple Electronic Signature (SES) in many cases, this cannot be used to identify a tenant properly. Thus, an SES cannot reliably protect landlords from fraudsters.
On the other hand, a Qualified Electronic Signature (QES) can guarantee very secure identification of tenants, but compared to an SES, it is often significantly more expensive, which would lead to increased costs overall.
The solution: the Professional eSignature (PES) by Certifaction! Our PES combines the secure identification of signers with the easy handling and the favorable prices of an SES. Thus, you are secure and enjoy the full benefits of both worlds.
In addition, Certifaction naturally offers the Qualified eSignature (QES) according to eIDAS, UETA, ESIGN and ZertES standards, so that you can use Certifaction for all use cases in which an electronic signature is permitted.
All this is available in an easy-to-integrate app that meets the highest data protection requirements and offers the “digital twin” as a solution in cases in which you need to authenticate printed documents without doubt.