In our communal efforts to combat the spread of Covid-19, virtual meetings are more common, but social distancing policies have left many wondering what they should do when they need to get documents signed or notarized when in-person meetings are not possible or access to printers and scanners may be limited.
Using electronic signatures and remote notarization to overcome these obstacles is an option, but there are important considerations when engaging in complex transactions. There is federal law and state laws can vary, but a look at New York’s law is instructional and offers examples of best practices.
Electronic Signatures May be Acceptable
Pursuant to New York’s Electronic Signatures and Records Act (ESRA), properly executed electronic signatures have the same force and effect as handwritten signatures if they otherwise comply with evidentiary requirements. ESRA excludes certain types of documents, however, and eSignatures cannot be used, for example, for wills, trusts, powers of attorney, healthcare proxies, orders not to resuscitate and certain negotiable instruments.
The federal government has enacted similar legislation, the Electronic Signature in Global and National Commerce Act (ESIGN), which grants electronic signatures the same legal status as ink signatures when used in compliance with the act. In addition, many states have adopted the Uniform Electronic Transactions Act (UETA) or their own electronic signature legislation, which also provide avenues for electronically signing documents. All three acts set the same key parameters for what constitutes a permissible eSignature.
ESRA, like ESIGN and UETA, provides that a wide range of digital objects may serve as an eSignature. Objects can be as simple as typing one’s name or as sophisticated as an encrypted hash of a document’s contents. As with handwritten signatures, the signer must show intent to sign the document electronically, which can be demonstrated by typing one’s name or drawing a signature with a mouse.
Further, as with ESIGN and UETA, ESRA requires that an eSignature be attached to or “logically associated” with the document. The signature should be linked with the record during transmission and storage; for example, embedded on the face of a document like a handwritten signature or accessible through an embedded link.
A signature object can also be maintained separately, but it needs to be logically associated through a database, index or other means. Note, however, that typing a signature into the body of an email instead of the scanned attachment (the document to be signed) is likely insufficient if the signature could have been included in the attachment.
Best Practices When Considering Whether an Electronic Signature Is Appropriate
- Determine what law governs the contract and whether that type of agreement can be signed electronically under the law of that jurisdiction.
- Identify the location of parties signing the contract, the location where performance will occur, and any other jurisdictions where litigation relating to the contract could occur. Determine if the laws in those locations impact the use of eSignatures.
- Include language in the contract indicating that it will be signed electronically and the manner of signature, and that all parties agree that such methods shall have the same legal and evidentiary effect as a handwritten signature. It is prudent for the electronic signature to be embedded in the document.
- Circulate executed copies of electronically signed documents to the parties.
- Consider using an electronic signature platform, such as DocuSign or Adobe Sign, which can prevent the manipulation of the contract after execution.
- Consider whether it is possible to execute a contract in counterparts using handwritten signatures. Courts in many jurisdictions, including New York, will accept scanned copies of contracts as originals provided there are no authenticity issues. This method may be preferable if the contract might be litigated in a foreign jurisdiction that does not recognize electronic signatures (especially if originals may be exchanged at a later date).
- When in doubt, check with legal counsel to help ensure that using an eSignature will not impact the enforceability of the contract in your specific transaction.
Remote (Virtual) Notarization and eNotarization
Traditional notarization requires that the signer be physically present before a notary so the signature can be authenticated. However, remote or virtual notarization permits the signer and the notary to be in different locations while using audio-visual technology at the time of the notarization.
Note that remote notarization is different than electronic notarization, or eNotarization. Electronic notarization permits the notary’s signature and stamp to be added to a document through electronic means instead of ink. However, eNotarization still requires that the signer be physically present before the notary. If both have been authorized within a state, remote notarization may be combined with eNotarization.
In recent years, a number of states have enacted laws permitting remote notarization, such as Florida, Virginia, Texas, Ohio and Nevada. In light of Covid-19, many other states have issued emergency measures temporarily adopting remote notarization and relaxing notarization requirements in other ways.
In New York, Executive Order 202.7 (extended until June 6 by Executive Order 202.28) allows a notary to witness a document being signed using audio-visual technology as long as other requirements are met. Importantly:
- If not personally known to the notary, the signer must present valid photo ID during the video conference, not merely transmit it prior to or after the conference.
- The video conference must allow for direct interaction between the person and the notary (e.g., no pre-recorded videos of the person signing).
- The signer must affirmatively represent that she is physically situated in the state of New York.
- The signer must transmit by fax or electronic means a legible copy of the signed document directly to the notary on the same date it was signed.
Closely review any applicable legislation as specific requirements vary by state. For example, some states (like New York) still require that the signer be physically situated within that state (even though outside the presence of the notary), while others do not.
Likewise, some states that have temporarily adopted remote notarization have not adopted electronic notarization. In New York, for example, the signer may electronically sign a document (as permitted by ESRA), but the notary must still print and sign in ink.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Judith A. Archer is a partner in Norton Rose Fulbright’s New York office and handles a wide variety of cases in state and federal courts across the U.S. at the trial and appellate level, as well as arbitrations and regulatory proceedings.
Jeremy A. Hushon is a partner in Norton Rose Fulbright’s Washington, D.C., office and focuses primarily on the financing of energy and infrastructure projects in emerging markets.
Lisa Schapira is a counsel in Norton Rose Fulbright’s New York office and focuses her practice on litigation, with a particular emphasis on commercial litigation.
Lauren Lee is a senior associate for Norton Rose Fulbright in New York, and focuses her practice on complex commercial litigation, including environmental, products liability and contract matters.