Land Registry’s view on execution during COVID-19

The past two months have been testing for individuals and businesses alike.  For the humble property lawyer trying to complete transactions when everybody involved is working remotely, the most basic challenge has been – how do I get documents signed? Technology has offered many answers to the questions of virtual working but up until recently HM Land Registry (HMLR) have been sticklers for tradition.

In this case, the traditional ‘wet ink’ signature on documents submitted to them for registration. However, as in so many other aspects of life, HMLR has had to make rapid, and sometimes dramatic, changes in its working practices. One of the temporary modifications is HMLR’s acceptance of ‘Mercury Signing’.

So what is ‘Mercury Signing’?

This method derived from the decision in R (on the application of Mercury Tax Group and another) v HMRC [2008] EWHC 2721 (Mercury Case). It was held in this 2008 case that to be a valid deed the signature and the attestation must form part of the same physical document.

Essentially, your deed would be invalid if:

• The signature page is later added to the deed; or
• The signature page is used from a previous draft of the deed and then added to a final draft.

Mercury and Real Estate

Back in 2009, following the Mercury Case, the Law Society issued guidance on “execution of documents by virtual means” where some signatories are absent. The guidance covered a number of legal documents but only the version known as ‘option 1’ could be used for real estate contracts and deeds; this option allowed for returning by e-mail the entire document and the signed signature page. The guidance (produced with input from leading counsel) said that if the correct process was followed, then a deed could be effective ‘in law’. However, HMLR insisted that they would only accept a deed for registration if it comprised a single original document including the original signature pages; a scanned version of the signature page would not suffice.

Fast forward to 2020 – our problems are solved!

In a major breakthrough, because of COVID-19, HMLR are now accepting the Law Society’s option 1 formula, as a properly executed deed, until further notice. This means that for any real estate transactions that take place during the global pandemic, and where most signatories and their lawyers will be “absent”, there will be fewer execution complications.

How can we comply with option 1?

1. Lawyers (having agreed between the parties that they will use a Mercury Signing) must send, by e-mail, the final agreed transfer/deed to all absent parties in PDF or Word attachment.
2. Parties are to print ONLY the signature page.
3. Parties are to sign the signature page (using wet-ink) in the physical presence of a witness.  Regardless of other arguments about whether a signature can be witnessed remotely (such as by video link), HMLR insist that the witness must be physically present when the party applies their own signature.
4. Physical witness is to sign (again, using wet-ink) the signature page.
5. Parties are to send a single e-mail to their lawyers attaching BOTH the final agreed document and a PDF/JPEG of the signed signature page; and
6. The transaction can then be completed by the respective lawyers.

What about e-signing?

E-signatures are an entirely different way of signing documents (including potentially deeds).  While there are a number of different methods of creating an e-signature (from simply typing a name on the bottom of a document), most true e-signing takes place via some sort of third –party software.  So, instead of pen and ink, the document exists purely in digital form and is sent via email to the signatories.  Subject to passing any security checks needed to confirm it has been sent to the correct person, they ‘sign’ on screen and a unique code is generated alongside a digital rendering of a signature. In 2019, the Law Commission of England and Wales published a report concerning this technique. The report advised that e-signatures WILL be legally binding in England and Wales if “the signatory intends to authenticate the document and that any relevant formalities, such as the signature being witnessed, are satisfied”.

BUT…

It isn’t as simple as that. Unfortunately, despite the shake-up cause by COVID-19, HMLR are yet to accept the registration of documents using an e-signature. HMLR will only accept documents that have been signed using wet-ink (including via the Mercury method) and will likely dismiss any application that is signed otherwise.

Conclusion

• Mercury signing has been around for many years but HMLR rejected applications using that method of execution.
• The interruption caused by COVID-19 has meant that HMLR have begun accepting Mercury signed documents.
• E-signatures are becoming a popular alternative to wet-ink signatures and are especially common during these unprecedented times; but
• HMLR are still yet to accept e-signatures as a form of execution and will reject any applications using this technique.

If you have any questions on this article or the services we can offer please contact Talia Jacobs, Solicitor or Matthew White, Partner in our Commercial Property Team.