There are few areas of life that have not been turned upside down by the current Covid-19 pandemic, and the signing of legal documents is no exception.
Since the beginning of lockdown, we have encouraged a rise in the use of DocuSign, a leading electronic signature platform, for executing suites of finance documents. This allows parties to execute documents electronically without the need to arrange for wet ink originals to be couriered back and forth.
At Osborne Clarke, we have been using DocuSign for some time and our fee earners are proficient in putting together an 'envelope' ready for signing. But it is still relatively new to some parties, so we thought we would share some of the pitfalls and challenges that we have overcome over the past few months as our use of DocuSign has escalated.
The mouse or the pen?
Not all lenders will be willing to accept documents signed by way of DocuSign. We have found that most of our lending clients have demonstrated a willingness to adapt quickly to the current situation but it is important for all parties to discuss early on whether DocuSign is a possibility, or whether arrangements will need to be made either to use an alternative electronic signing platform or to obtain wet ink signatures.
Can I choose what my electronic signature looks like?
DocuSign provides three ways in which a party can produce their signature:
- 'Draw A Signature': this method allows the signatory to draw their signature on screen.
- 'PDF Upload': this method allows a signatory to upload a pdf scan of their original wet ink signature, which is then pasted into each document.
- 'Auto-Generated Signature': this method uses the DocuSign-generated text signature, which essentially just sets out the individual's name in full.
While the DocuSign auto-generated signatures are legally binding, some banks' internal processes require the specimen signatures provided in a director's certificate (which are still often signed in wet ink with the other remaining corporate authorities) to match the signatures provided in each document. It is therefore important to discuss with lenders their requirements in this regard, and whether use of the DocuSign auto-generated signature is permitted or whether borrowers will need to upload or draw their electronic signature as closely as possible to the specimen signature provided in any director's certificate.
It may be that we see less of a reliance on the certification of specimen signatures in directors' certificates going forward, as we further develop processes around the use of two factor authentication (using a passcode). Greater reliance may also start to be placed on the evidential weight added by the verification certificate which contains meta data regarding the time and place of signature.
Can a document be witnessed through DocuSign?
As the document envelope will need to be circulated to each relevant witness for signature, it is helpful if the creator of the envelope has the details of each relevant witnesses ahead of time so they are able to add in their name, address and occupation ahead of circulating the document for signature. This also means that each witness will only need to upload their signature, and not fill in any additional details.
As is the case with witnessing wet-ink signatures, the witness must (a) be present in the room of the party whose signature they are witnessing as they upload their signature to the document, and (b) sign in their capacity as witness after the relevant signatory has uploaded their signature. The order in which parties sign each document is important as it will be set out in the DocuSign 'envelope summary', which serves as further authentication of the signing of the document.
Who signs first?
It is possible to set the order in which signatories are required to sign before the document envelope is circulated. This is useful if you would like to ensure that a particular party signs first.
If you do set the order in which the document is to be signed, then the envelope will only be sent to subsequent signatories once it has been signed by all prior signatories. This can lead to the documents getting 'stuck' if a party is not online and ready to sign. In our experience therefore, where you have a number of signatories it is easiest to not set an order, which enables signatories to access the document as and when it is convenient for them.
What is a 'signature black out?'
Occasionally, signatories have reported that after they have uploaded their signature to DocuSign, when they are directed to their signature block in each document where they need to click to sign, their signature doesn't appear and instead the document displays an 'X', similar to that which you see on a webpage when an image has not downloaded properly. Generally speaking, this is not an issue and the signature comes through intact on the original document that is e-mailed back. If this happens therefore, signatories should simply continue clicking to sign where required. In any event, if the signature has not uploaded properly, this will be picked up by the creator of the envelope on their final review, and can be dealt with at this stage.
Isn't there an issue with the Land Registry?
The Land Registry will not accept security documents signed with DocuSign as original "wet ink" documents. Any document that creates a charge over land and therefore requires registration at the Land Registry, for example a legal mortgage or debenture, must still be signed by the chargor in wet ink.
Communication is crucial
As many borrowers and lenders will be using DocuSign for the first time, communication between parties as regards requirements is crucial. The more clearly instructions in respect of signing can be set out, the smoother the DocuSign process will run.