Beyond COVID-19: Crisis response or road to recovery?
Crisis response or road to recovery?
In our communal efforts to tamp down the spread of COVID-19, virtual meetings are replacing in-person ones. Our efforts to implement social distancing have left many wondering what they should do when they need to get documents signed – whether it is executing a contract or notarizing a signature – when in-person meetings are not possible or desirable and people are working remotely and may not have access to printers and scanners. This article explores using electronic signatures and notarization under New York law, and identifies important areas for consideration when engaging in complex transactions.
Pursuant to New York's Electronic Signatures and Records Act (ESRA), electronic signatures have the same force and effect as handwritten signatures for many documents. Under New York law, properly executed electronic signatures will have the same force as a handwritten signature if they otherwise comply with evidentiary requirements. Note, however, that electronic signatures are not approved for all documents types. For example, this method cannot be used for wills, trusts, powers of attorney, healthcare proxies, orders not to resuscitate and certain negotiable instruments.1
The ESRA provides that a wide range of digital objects may serve as an eSignature. These 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. This intention can be shown by typing one's name or drawing a signature with a mouse, among other actions indicating that the signer understands that using the digital object has the same import as applying a handwritten signature.
An electronic signature needs to be appropriately associated with the document and should be linked with the record during transmission and storage. For example, an electronic signature is appropriately associated when it is embedded on the face of a document like a handwritten signature or associated with the document 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, New York courts have found typed signatures insufficient where the document being signed was a scanned attachment to an email and the signature was typed in the body of an email when the signature could have been included in the attachment that had been scanned.
Usually, notarizing documents in New York requires the signer to be physically present before a notary so the signature can be authenticated. In light of COVID-19, however, New York is temporarily suspending the requirement that the signer be physically present before the notary. On March 19, 2020, Governor Cuomo relaxed the requirements around notarization by issuing Executive Order 202.7, which in part temporarily allows notarization using audio and video technology. Unfortunately, the signer must have access to technology to electronically transmit a physically signed document to the notary.
This new process is only valid until April 18, 2020, but the timing could be extended by future executive order.
We are all adjusting and adapting our business processes in light of COVID-19, including re-thinking how we sign documents. Tools like using electronic signatures or video notarization may be important to helping companies figure out how to proceed as businesses try – or are required – to limit in-person contact. It is important to make sure that documents are properly executed in this new environment so their enforcement cannot be challenged later based on how they were executed. Norton Rose Fulbright would be happy to assist your company navigate signature authentication issues with respect to particular transactions or other needs stemming from the impact of the coronavirus.
The COVID-19 pandemic has seen governments across the world restricting civil liberties and movement to new levels.