COVID-19, Electronic Signatures and Property Deeds - 27th March 2020 - Hewitsons Law Firm
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27th March 2020

COVID-19, Electronic Signatures and Property Deeds

For those property deals that have been agreed and are still progressing there are logistical challenge for clients and lawyers. As remote working increases enforced isolation means it is no longer straightforward to execute a deed. Statute requires leases (over 3 years), land transfers and some other property agreements to be made by ‘deed’ (as opposed to a mere contract). The problem is two-fold.
The first stems from the fact that deeds are required to be witnessed in person. In addition, in order for certain documents to be registered at the Land Registry a “wet ink” signature needs to be applied. With the recent government requirement for lockdown and social isolation both witnessing in person and filing a “wet ink” document is problematic.

The pandemic has meant that the current rules and practices of executing deeds are under renewed scrutiny.

Electronic signatures

The good news is that an electronic signature is already a valid means of executing a document in the same way as a “wet-ink” signature. Legislation in the early 2000s was intended to facilitate e-conveyancing by permitting the electronic execution of deeds.

Electronic signatures can include:

  • Typing the signatory’s name into an electronic document
  • A scanned manuscript signature.
  • A biodynamic version of a manual signature created, for example, by the signatory using a special pen to sign their usual signature on a screen or digital pad.
  • An electronic signature using cryptographic systems that include data with a message to confirm its integrity and authenticity such as docusign.

Each signatory simply has to confirm the validity of its electronic signature. An email to this effect from the signatory will suffice

Caselaw tells us if a party creates and sends an electronically created document including an electronic signature of the form explained above, they will be treated as having signed it to the same extent that they would in law be treated as having signed a paper copy of the same document using a “wet-ink” signature. The fact that the document is created electronically as opposed to in hard copy makes no difference.

Although historically, there has not been clarity as to whether the formalities for a valid deed are capable of being satisfied by electronic communications alone (i.e. without the manual execution of a paper copy of the deed or its signature page) and, as the law currently stands, there are no legislative provisions in effect which specifically deal with the electronic execution of deeds e.g. land transfers and leases. Given the courts’ willingness to interpret various requirements to include electronic communications in other contexts, it is difficult to see any reason in principle why a similar approach could not be adopted in relation to deeds.

The problem is in relation to registration of electronically signed deeds at the Land Registry. The land registry do accept digital documentation but only in relation to re-mortgages. Other transactional deeds require a “wet” ink signature. The Land Registry is now being heavily lobbied to accept deeds electronically executed. The reason they have not accepted electronic execution before now is because of the increased potential for fraud. It is likely though, that some concession maybe made to ensure logistical problems do not further hamper transactions.

Requirements for execution of ‘Deeds’ to be witnessed

The Law Society has concluded that it is possible for a deed to be validly executed, witnessed and delivered wholly electronically. However, there is a further problem during lockdown. The law requires ‘deeds’ to be executed correctly and in relation to individuals and companies executing by one officer this means signing in the presence of a witness. The self-isolation requirement for many in response to COVID-19 comes into direct conflict with this particular requirement for validly executing a deed, whether electronically or otherwise. Whether a wet-ink or an electronic signature is used, the witness must be in the same room so as to visually witness the signing.

In its 2019 Report Electronic execution of documents, the Law Commission was not convinced that a deed will be validly witnessed if done by video link. For more information, see https://www.hewitsons.com/latest/news/can-a-deed-be-virtually-witnessed.

That said, companies with two officers can validly execute a deed by their two electronic signatures alone with no need for any witness. They are well served in these difficult times.

As stated above it is with the signatures of those signing as individuals and those companies where there is only one officer where there will be more difficulty.

As yet there is no clear answer to this unique conundrum. The Law Commission’s concerns on execution and attestation were recently (but pre coronavirus) acknowledged by the Lord Chancellor. With the implementation of the COVID-19 lockdown, the legal sector hopes that some emergency measure will be introduced to relax the witnessing and “wet ink” requirements. With many lawyers swiftly adapting to working from home and Skype meetings becoming the norm it is likely that an indirect but positive consequence of the pandemic will be a swift modernisation of some long-established legal practices.

For more information please click here to contact Patricia Kempson. For further advice, please contact a member of our Real Estate team.
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