One of the most important steps in the process of handling a property transaction is the executing – or signing – of the deeds. The deeds are important as they represent the formal statement of agreement between parties relating to the property or land that is changing hands.
Of course, it can take a fair while to get to the point of actually signing. Because of this, when everyone is finally ready to sign on the dotted line, it can be tempting to get it done as quickly as possible. However, trust us when we say that it really is important to take the time to ensure the signing process is properly managed. This is because the way a deed is signed and witnessed is absolutely crucial to its validity. Taking the time to ensure deeds are executed properly means that all parties involved can be confident they are legally sound.
Who should execute the deed?
The question of who should sign the deed will depend on the kind of transaction that is taking place. If the people involved in the transaction are private individuals or a couple, then all parties will need to sign the deeds themselves. If the transaction is being done on behalf of a business, partnership or organisation, this question will be slightly more complicated.
Who will sign in these cases will depend on the legal status of the business or organisation in question, and any policies or agreements they have in place.
There are several ways this might be handled. In some situations, a deed may be ‘signed’ by affixing the company’s seal to the deed. Alternatively, two authorised signatories may sign on the company’s behalf. This is often done by two directors of the company, or one director and the company secretary.
If the transaction involves a partnership, who will be required to sign will depend on the nature of the partnership. The partnership agreement may require all partners to sign, or there may be a named partner (or partners) who have the authority to sign on all the other partners’ behalf.
Witnessing signatures
Whether the deeds are being signed by private individuals or on behalf of a company, partnership or organisation, the signatures will need to be witnessed.
The role of the witness is to confirm that the correct person has signed the deed, that their signature is authentic, and that they appear to be signing willingly. They are required to understand the nature or significance of the document, though they are not entitled to know its contents.
Witnesses must be over 18 and must have the mental capacity to understand what is occurring. They must not be directly involved with the document themselves, and they must not stand to benefit from it. This is because the impartiality of the witness helps to maintain the document’s credibility, especially in cases where the legality of the document might be questioned at a later date. With this in mind, spouses, partners and other family members should not act as witnesses for deeds, even if they are not directly involved in the transaction themselves.
In certain situations, it may be important to give some extra thought to the choice of witness. Selecting someone with no history of legal issues can be important if it is likely that the validity of the deed may be scrutinised at a later date. Professional witnesses – such as solicitors or notaries – can be beneficial here. Their involvement as a witness can add a layer of formality and trust to documents that have significant legal implications.
The witness must observe the signing of the document in the same physical space as the person who is signing it. They cannot observe this process over a video call. Once they have observed this process, they will then be required to sign the document, noting their own name and address.
What about when documents are signed electronically?
Generally speaking, there are three types of signatures that can be used for documents: wet ink, Mercury and electronic.
A wet ink signature is when all parties (including witnesses) sign the same hard copy of the document. A Mercury signature is when each party and their witness signs their own hard copy of the document, then scans or photographs it to share with the other parties. An electronic signature is when each party signs a digital copy of the document, usually with the assistance of software.
Electronic signatures are essentially a digital version of a traditional wet ink signature. They can be done as simply as typing your name into a document, by using a mouse or touch screen to draw your signature, or by clicking a button to insert a pre-made digital signature.
Advancements in technology mean that Mercury and electronic signatures are increasingly accepted for executing deeds. However, they usually need to adhere to specific legal standards in order to be valid. Just as with traditional wet ink signatures, when a witness is required they will need to be in the same physical space as the person who is signing. This is true whether the document is being signed using the Mercury method or whether it’s being signed electronically.
There is an additional method of signing known as a digital signature. This is different to an electronic signature, as digital signatures are managed with the help of software that confirms the identity of the signing party as part of the process of them signing. This negates the need for witnesses at all. This method has not yet been accepted widely, but it’s likely to become the norm in the future.
Finalising the process
What will happen to the deed once it has been properly executed will depend on the method used.
For traditional wet ink signatures, the signed document will usually need to be sent in the post to be signed by any other parties and/or held by the solicitor.
In the case of Mercury signatures, the signed copy will need to be scanned or photographed and sent to all relevant parties by email.
When an electronic signature has been used, the signed document can be emailed straight back to the other parties. In many cases, this whole process will be completed within a dedicated electronic signing platform, which will manage and record these steps for legal compliance.
Why proper execution matters
It is crucial that deeds are executed correctly. This ensures that the documents are legally binding and enforceable. If deeds are executed incorrectly, it can lead to disputes and legal challenges and, in some cases, can even invalidate the agreement completely.
This is why understanding the proper execution of deeds is a critical part of property transactions. While the process is largely straightforward, it’s important to ensure nothing has been overlooked.
For further technical information in respect of the execution of documents please see Practice Guide 8 and Practice Guide 82.
If you have any questions about the process or security of executing a deed, please do get in touch.