Posted by Post Authored by Meredith Mays Espino
Despite 95% of the US population sheltering in place, and at least one-third of the planet’s population under some form of movement restriction business, be it commercial or personal, must continue and documents need to be signed. The traditional way is for a person to handwrite the signature on the document using a pen and ink, also known as a “wet” signature. Even before COVID-19, options to obtain wet signatures were ridiculously inconvenient. Now, they are nearly impossible.
eSignatures
Electronic signatures (i.e., an image of a signature, an /s/ before a name on a form, or an “I accept” in an email) and digital signatures (i.e., signatures made with a certificate-based digital ID, unique to the signatory, which is used to demonstrate proof of signing), both also known as eSignatures, are allowed in most instances by way of the Uniform Electronic Transactions Act (UETA) in most states and the federal Electronic Signatures in Global and National Commerce Act (ESIGN). New York and Illinois (Electronic Commerce Security Act) have their own versions of these statutes. These statutes give eSignatures the same legal effect as handwritten signatures and provide that the signature cannot be denied legal effect or enforceability because it is in an electronic form. The Federal Rules of Evidence and the Uniform Rules of Evidence allow for electronic records, with certain exceptions, to be admissible into evidence. Further, any printout of the document is considered to be an original document.
There are exceptions. For example, some estates documents, such as will, codicils, and testamentary trusts, are often not permitted to have an eSignature. Certain family law documents such as adoption or divorce agreements may not be signed electronically. Foreclosure and eviction notices must still have handwritten signatures. UCC documents must have a wet signature. Further, court orders must still have handwritten signatures.
The crisis has spurred some movement towards letting go of these wet signature requirements. The SEC issued a Staff Statement saying that it will advise that no enforcement action be taken against those who do not comply with Rule 302(b) of Regulation S-T, which requires that each signatory to documents electronically filed with the SEC provide a wet signature on the document.
Electronic Notarization
You may be asking, “But what about documents that must be notarized? Surely, those must be done in person.” No, they do not. Arizona, Arkansas, California, Colorado, Delaware, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin all allow for electronic notarizations or remote online notarizations (RON). Electronic notarizations are those where the notarial act is conducted electronically, without paper, but the parties are required to be physically present. RONs are where the notarial act is conducted electronically and online using a webcam.
Illinois, prior to the pandemic, did not allow for either. SB 3698 was filed in March that would allow for remote electronic notarizations. The E-Notary Task Force created by the Illinois General Assembly (of which I was a member) submitted a report to the General Assembly advising that RONs (named in the bill as “electronic notarizations”) be allowed and provided recommendations, which became SB 3698. Unfortunately, the bill languishes in the IL Senate Judiciary Committee.
Executive Order 14
In Executive Order 14, issued March 26th in response to COVID-19, Gov. Pritzker issued an emergency order allowing for RON, in compliance with guidance provided by the Illinois Secretary of state, which will remain in force so long as the Gubernatorial Disaster Proclamation is in force. “Any act of witnessing required by Illinois law may be completed remotely by via two-way audio-video communication technology,” provided that:
a.) Notary and signatory be physically present in Illinois at the time of the notary act;
b.) The notary act must be done by two-way, real time audio-video communication and the resolution must be of a quality that allows the notary to be able to examine the signatory’s identification documents;
c. The act must be recorded and kept by the notary for at least three years;
d. The signatory must show the notary all of the pages of the document to be signed and the signatory must initial each page to ensure that the notarized document is complete;
e. Acts conducted remotely may be replicated by the notary if required by other state law or by the signatory – the replicated signature must be dated the date of the remote notarial act; and
f. Notaries may use a commercial platform that meets the requirements of the Executive Order and industry standards.
The Executive Order also provides guidance for witness signatures. Witnesses may witness the signing of the document via two-way electronic communication. The signatory must then send the document by electronic means or fax to the witness(es), who must then sign the document and return it to the signatory, all within 24 hours. If the Notary Public is asked to certify to the appearance of the witnesses to the document, the Notary must be presented with document signed by the witnesses on the same date the document is signed by the signatory.
Further, the Executive Order allows for documents to be singed in counterparts by the witness(es) and signatory for all legal documents, including deeds, last wills and testaments, trusts, and durable powers of attorney for property and healthcare.
Going Forward
Once the dam is opened, the water cannot be put back in. Likewise, once the public, including lawyers, experiences the convenience and ease with which eSignatures and electronic and remote notarizations may occur, we may not have to go back to the traditional wet signatures and in-person notarizations again.
About the Author:
Meredith Mays Espino is Corporate Counsel for Accuity, Inc., a financial technology and data company, where she focuses on technology transaction and privacy issues. She is a graduate of The John Marshall Law School. The views expressed are her own and do not necessarily reflect those of Accuity, Inc. or its affiliates.