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18th December 2019

Contract or Deed - Execution Formalities

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Increasingly contracts are being signed electronically. A recent case held that even an automatically generated email signature constituted a “signature” and therefore meant the email exchange was contractually binding. However, those of us in real estate still require many of transactions we deal with to be signed not just as a contract but to be executed as a deed to comply with statutory. land registry and common law requirements.

The main difference between a deed and other forms of contract is that there are additional execution formalities for the instrument to be enforceable. Statute demands the use of a deed for transactions (amongst others). involving transfers of land, registerable leases and mortgages Whilst common law requires a deed for any agreement that is made without consideration or an agreement including an express release or variation of certain rights. If a deed is required and the execution formalities necessary, are not complied with then the legal validity of the relevant agreement or transaction may be challenged.

In the past deeds were commonly executed by being signed and the application of a wax seal hence agreements being signed, sealed and delivered. Now it is more usual practice for deeds to be executed by the signatory signing in the presence of a witness who must then sign and enter their address. In a recent case it was claimed that a mortgage was not valid, as not only was it necessary for the borrower to sign in the presence of the witness but that the witness too had to sign and enter their details in the presence of the borrower. The High Court held that this was not the case and in order to be an enforceable deed there was no requirement for the witness to sign in the presence of the executing party.

It is widely anticipated that at some point in the future the formalities required to execute documents will be reformed but until they are those of us in real estate will still need to ensure that any necessary execution formalities are complied with.

For advice on commercial property related matters contact David Wells on 01908 247030 or click here to email David.
David Wells
David Wells

Partner and Joint Head of Milton Keynes Office

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