Using electronic signatures for legal documents and electronic notarizations can help during Covid-19 social distancing, but there are important considerations, especially in complex transactions. Norton Rose Fulbright attorneys look at federal and New York state laws and offer best practices.
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.
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.
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:
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.
