Matt Cowen, Senior Associate at Winckworth Sherwood, discusses the electronic signing of documents and the factors housing associations need to consider when adopting this approach.
Many housing associations now prefer to sign documents electronically, saving the time and resource needed to facilitate ‘wet-ink’ signatures and/or the affixation of a common seal on hard copy documents. This is leading some to consider the merits of completely dispensing with their traditional execution methods and fully embracing electronic execution for all documents, including deeds registrable at the Land Registry.
For housing associations considering this approach, the first step is whether electronic signing is permitted under the housing association’s rules/articles. The NHF Model Rules, upon which most housing associations base their own, provide that in the absence of affixing a common seal, the board can “authorise the execution of deeds in any other way permitted by law”. The question, therefore, is what does the law permit.
Housing associations constituted as Community Benefit Societies (CBS), which is the norm, are governed by the Co-operative and Community Benefit Societies Act 2014 which makes clear that, as an alternative to executing under seal, a society can execute a document by the signatures of (a) any two members of the society’s committee or (b) a member of the committee and the society’s secretary. The meaning of ‘signature’ is not further defined in the legislation but, in the absence of any specific restriction, it has become normal industry practice to accept electronic signatures as a valid form of ‘signature’ for the purposes of this legislation.
Electronic signatures
If, having checked its rules/articles and the relevant legislative provisions, a housing association decides to rely exclusively on electronic execution going forward, it must ensure that its internal delegations and approvals line up accordingly and a properly qualified/industry accepted electronic signature platform is used.
There will no doubt be counterparties who take a more traditional approach so, even though there may be no legal prohibition on signing electronically, housing associations should nevertheless be prepared to face questions on this in some transactions. We expect this will become increasingly rare but, practically speaking, it is worth considering a backup plan for where resistance is met.
It is also important to ensure that any electronic signing protocol is fully compliant with Land Registry guidelines where the signed document will need to be registered with them. There should be no obstacles to registering such documents at the Land Registry so long as the formalities set out in the Land Registry’s practice notes are complied with.
It is understandable that many housing associations want to move to a more efficient protocol of electronically signing all documents. In doing so, it is important that proper consideration is given to the relevant governance issues.
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