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A new era of paperless property deals is upon us following the Land Registry’s landmark decision in July 2020 to accept e-signed documents for registration.
In place of wet ink, our clients can now simply type signatures into documents, a process which is made even easier by our new e-signing platform system, making possible instant signature without delay, postage costs or travel.
Many of our clients have been asking, how can this work if we normally execute documents by a common seal?
The solution is often simpler than they think.
Where organisations execute with a seal, they usually have the option to do otherwise under their governing documents and/or statutory powers.
This will depend on what the governing documents say and what procedures they have in place for execution, which differs from client to client and depend partly on what kind of organisation you are.
Community benefit societies and registered societies
The method by which a society executes deeds is set out in a society’s rules and sections 50-56 of the Co-operative and Community Benefit Societies Act 2014 (CCBSA).
According to the CCBSA, a society can execute a document by:
- affixing its seal; or
- (without using the seal) the signatures of:
(a) any two members of the society's board; or
(b) one member of the board and the society's secretary.
Method one - sealing
Rules for societies may require the execution of deeds by the society affixing its seal with one board member signing and the secretary countersigning, “or in such other way as the board resolves” which means the board can, by resolution, appoint others (i.e. anyone other than a board member and the secretary) to sign when using the seal.
Method two - executing without sealing
Rules usually say (but it is specific to each individual rule set) that the board may alternatively authorise the execution of deeds in any other way permitted by law.
This means that the board could pass a resolution allowing execution by either two board members or one board member and the secretary executing deeds without using the seal. Many of our clients have already done this.
Method three - execution by non - board members (e.g. executive team or solicitors) without sealing
If the society wants to execute without using the seal and wants, for example, the executive team or its solicitors to sign, the board needs to resolve to give a power attorney to named attorneys to execute on its behalf (without the seal). Again, many clients we act for have done this. An attorney’s signature needs to be witnessed.
Methods two and three above facilitate signature by digital methods and we can make the transition to such methods a straightforward process for you.
At the time of writing in the midst of the Covid-19 pandemic, with many businesses having staff working from home, this may make things much simpler when it comes to executing deeds.
Section 44 of the Companies Act 2006 regulates the manner in which documents can be executed by companies (in practice it is usually only deeds that need to be 'executed' by companies). These are by:
- affixing the company seal; or
- two directors or a director and the company secretary signing the document; or
- a director signing in the presence of a witness who also signs to witness the director's signature.
The points made above regarding the methods of execution and resolutions for societies apply here too but rather than a society’s rules, it will be what’s in a company’s articles that will be relevant.
We can analyse these for you and work with you to make the electronic execution of documents possible for your company.
If the company is also a registered charity, there are specific charity law requirements for land disposals by charities. This is separate and in addition to the charitable company corporately as landowner executing the deed to dispose of its interest.
Trustees of charities, including directors of charitable companies must give certificates in the disposal documents (transfers, leases, mortgages etc) confirming that they have complied with these requirements. Their signatures must be witnessed but these certificates do not need to be executed as a deed.
These rules apply to charities that are not exempt charities (charitable community benefit societies and registered societies are 'exempt charities').
There is nothing in the legislation that requires any particular form of signature in addition to the general rules described above; other than that each council has to observe the rules which are set out in its constitution and standing orders.
So if a council’s constitution or standing orders require certain documents to be executed using a common seal, these rules will need to be changed in order for the council to benefit from the facility to execute documents electronically.
Such changes will have to be approved either by full council or by anyone to whom the ability to make minor changes has been delegated; usually, this will be the monitoring officer.
It is common for councils to delegate power to the monitoring officer to make changes due to a change in the law or to reflect decisions taken, with these then being reported to the full council later. We can help you check whether the appropriate delegation has been made.
If something urgent is needed before a change can be authorised, councils may be able to rely on urgency provisions.
Usually, there is a delegation to the head of paid service to take such decisions, but again it must be checked to make sure this officer has been granted sufficient authority.
How we can help
We can review your rules, articles of association, constitution and standing orders and advise you on how to move to electronic execution of documents either permanently or for the short term, for example, to respond to the need to work from home during the Covid-19 pandemic.
We are now able to offer our clients the ability to use e-signatures at a nominal fee of £4.80 per envelope, so if we have a transfer and contract that both need to be executed and if we are able to send them at the same time, the cost will be £4.80 for both. This fee is a disbursement charged by our e-signature provider for sending the documents to you safely and in compliance with Land Registry requirements.
Practicalities of the e-signature platform
For any clients that want to make use of the e-signature system, please be aware that we will require the full name, address, mobile number and email address of all signatories to the document and where those signatories need to have their signatures witnessed, we will also need the same information for each witness.
You will therefore need to consider who your signatories and witnesses will be in advance of us sending the documents to you for e-signature, and you will need to obtain this information from them where not already held.
Please be aware that there is currently an anomaly in the system in that whilst there is generally no need for a company executing by two authorised signatories to have those signatures witnessed, this was overlooked by Land Registry and our current provider, and the e-signature platform currently requires a witness to each signatory’s signature regardless of the fact that the execution requirements for companies are met without one.
For more information
If you would like further information on anything mentioned above, please contact:
- Catherine Simpson if you are a company or community benefit society.
- Olwen Brown or Alex Lawrence if you are a local authority.
- Sandy Munroe or Laura Moore if you would like more information about the e-signature process.
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