On 2 April 2020, we released an alert with guidance on how to sign English law documents and deeds during lockdown. The Law Society and HM Land Registry recently published updated guidance on the use of virtual execution and e-signatures during the COVID-19 pandemic. This alert summarises the Law Society’s and HM Land Registry’s new guidance, and updates our previous alert. Please note that the underlying law in relation to signing simple contracts and deeds remains unchanged, but the issuance of guidance is intended to offer assistance to practitioners on how to best cope with practical obstacles when operating under the restrictions imposed by the COVID-19 pandemic.
HOW TO OPERATE IN PRACTICE
The Law Society gathered and collated feedback from its members to generate the tips set out below.
Agree a process
It is recommended that the parties’ lawyers in a transaction agree clearly on how that transaction will be managed. This should include agreeing on how signing will work.
Verify identity and authority
The Law Society suggests considering if any further steps, beyond those strictly required by law (including under anti-money laundering laws), should be taken to verify the identity and authority of each person signing in a transaction.
In all situations, parties must consider both common practice and regulatory requirements in the relevant area. For example, on certain transactions, solicitors may be involved in checking the identity of a signatory, the authenticity of a signature, and/or whether a document has been properly approved. Proceeding by way of electronic signatures does not, in any way, lessen the parties’ responsibilities in this regard. Parties are encouraged to use additional and objective sources of verification, for example, video/photographic evidence or a live recording that is shared between parties as soon as possible.
Collect evidence
It should be ensured that evidence of signing is kept on file and immediately available. This may include taking screen shots.
Notify parties
Electronic methods, such as emails, should be used to notify all parties that the transaction has been closed.
Understand the law
It is important to ensure that relevant laws, regulations, and cultural requirements are understood. For example, the law requires witnesses to be physically present when a deed is executed; this requirement remains unchanged by lockdown. The Law Society acknowledges that whilst it is possible to demonstrate physical presence and still maintain social distancing, there are practical challenges to this. Clear evidence of presence should be gathered (through, for example, a video recording) when these challenges push physical presence to the outer limits of what can reasonably be considered physical presence and to establish evidence that the witness, who may, for example be, witnessing through a window, had a clear line of sight and was therefore capable of witnessing the signatory signing the relevant document.
HM LAND REGISTRY
As noted in our previous alert, HM Land Registry ordinarily requires wet ink signatures (including for the witness) on documents submitted for registration. These signatures can, however, be scanned or photographed. Physical witnessing is currently still required; however, HM Land Registry has stated that it intends to begin accepting witnessed electronic signatures and has published draft practice guidance setting out the basis upon which it would accept electronic signatures for certain deeds (including those that relate to dispositions of land, discharges of legal charges and non-lasting powers of attorney).
All parties will need to agree to the use of electronic signatures, to the use of an electronic platform (the “Platform”) and follow the process below:
1. The conveyancer controlling the signing process uploads the deed to the Platform, gives the names, email addresses and mobile numbers of the signatories and witnesses, highlights the fields that need to be completed and sets the signing order so that the witness signs after the signatory;
2. The Platform emails the signatories to let them know the deed is ready to be signed;
3. The signatories access the deed using a one-time password (that must contain a minimum of six numbers) that is sent via text message to them;
4. The signatories enter the password and sign the deed in the physical presence of the witness and the date and time are automatically recorded within the Platform’s audit trail;
5. The witness uses his or her own one-time password to access the deed and enter his or her signature and details; and
6. Once the signing process has been concluded, a conveyancer effects completion of the deed by dating it within the Platform.
The conveyancer can then lodge an application with HM Land Registry electronically and will be required to include a certification that the requirements for the electronic signature of deeds have been complied with. The draft practice guidance further allows for mixed signing using counterparts e.g..one of the signing parties (whether signatory or witness) signs electronically, and the other signs in wet ink.
HM Land Registry has further stated that it will support the industry “as it develops a means of using cryptographic biometrics as another foundation of efficient, digital and secure means of conveying property”, in relation to the verification of identity.
FUTURE DEVELOPMENTS
The Law Commission has recommended a review of the law of deeds and has suggested laws on e-signatures should becodified. The Justice Secretary has welcomed such a review, but does not agree that there is a need to codify e-signature laws. The Law Commission has further recommended that an industry working group be established to consider video witnessing of electronic signatures – a move that has been endorsed by the Justice Secretary.
During lockdown, it is likely that we will see the emergence of further practical guidance to assist with navigating legislation whilst under external constraints, rather than the progression of new legislative developments referred to in the paragraph above. We therefore expect that the rules on signing English law documents and deeds discussed in this and our previous alert will remain in place for the foreseeable future.
Benjamin Beswick, London Trainee Solicitor, contributed to the drafting of this alert.
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