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Will e-signatures be the new normal?

Gateley Legal

Covid-19 is having a significant impact on our daily lives. With the majority of office workers at home and the implementation of social distancing, this has created many issues regarding the execution of contracts and deeds. This article focuses specifically on property contracts and deeds. 

On Monday 27 July 2020, the Land Registry confirmed that it will accept witnessed electronic signatures. Prior to this, the Land Registry did not accept any form of electronic signature and any document had to be signed in 'wet ink' in the physical presence of a witness, who also signed in 'wet ink'. Where any document needs to be registered, it will have to satisfy the requirements set out by the Land Registry. 

What is an electronic signature? 

There is no legal definition of an electronic signature. However, each of the following is a type of electronic signature: 

  1. Typing a name into a contract.
  2. Using a picture of a signature and pasting it into a document. 
  3. Signatures generated by e-signature platforms (such as DocuSign). 
  4. Signing a name on a touch screen. 

The English law position on electronic signatures

The English law position is that electronic signatures are valid. In September 2019, the Law Commission set out its findings in a report which found that provided that there is an intention to authenticate and any execution formalities are exercised, electronic signatures are valid. However, there are some public registers and bodies that have their own requirements and will not accept electronic signatures. The Land Registry used to be one of these bodies. 

Witnessed electronic signatures

The Land Registry has now published guidance on witnessed electronic signatures. The guidance states that in order to be signed and witnessed electronically, the document must be uploaded to a platform which can be accessed by the signor and a witness using a secure one-time password sent by text message. The signor then signs the document in the physical presence of a witness. The witness will also need to sign the document electronically. When the application for registration is lodged, a conveyancer must certify that the relevant e-signing requirements have been satisfied.

The Mercury signing process

Prior to the Land Registry accepting witnessed electronic signatures, the Land Registry began to accept the ‘Mercury approach’ to signing documents. This approach allows for the signature page of a document to be printed out and signed in wet ink in the physical presence of a witness. The signature page can then be scanned or photographed and sent to the relevant solicitor or conveyancer with a copy of the final form agreed document. This way of signing documents will remain in use. 

Qualified electronic signatures – the future? 

There is the potential for a replacement of witnessed electronic signatures. The Land Registry are exploring the use of a ‘Qualified Trust Service Provider’. This process would mean that the document would be uploaded to the Service Provider’s system and the signatory would be able to access the document after meeting several security checks. The signatory would then sign the document electronically through the Service Provider’s system. A qualified electronic signature is considered more secure because of the additional ID checks and encryption. This would eradicate the need for any witness. 

Considerations 

Electronic signatures are likely to become the norm over coming years, however, if they are to be used, some consideration should be given to the following: 

  1. Foreign companies – does the law in the relevant jurisdiction permit e-signing? 
  2. Does the document need to be lodged with any other public body or register and, if so, does it accept electronic signatures?
  3. Check in advance! Is e-signing likely to be problematic for any party? If so, arrange for documents to be sent out for signing in wet ink at an early stage of the transaction where possible, or use the Mercury signing method. 
  4. Where relevant, obtain confirmation from the witness that they were physically present at the time of the e-signing. 
     

Covid-19 has forced us to adapt more quickly than we otherwise might which means that we have had to find ways around the traditional ‘wet ink’ signing methods. However electronic signatures are a cost-effective, quick and environmentally friendly way to enter into deeds and documents.

More information

If you have any queries about your contracts, please contact our experts listed below and we will be happy to advise. 

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