The Rise of Electronic Signatures and Remote Notarizations Amid COVID-19 Pandemic
May 14, 2020
As we continue to conduct business virtually, non-traditional means of document execution are becoming increasingly popular. It is critical, however, to understand the laws and requirements associated with these non-traditional means so that a document that is electronically signed, or remotely notarized enjoys the same legal validity and effect as if signed, or attested to in person.
In New York, electronic signature laws have long been in place. The current realities of remote business, however, has required more frequent electronic execution of documents. Because electronic execution requirements vary among states and differ from their federal counterpart, it is important to consult the laws of the jurisdictions that may govern the document, especially when the parties sign the same document in different jurisdictions.
The operative law in New York is the Electronic Signatures and Records Act (“ESRA”), which permits electronic signatures on various legal documents, with limited exceptions. The federal counterpart to ESRA is the Electronic Signature in Global and National Commerce Act (ESIGN). Generally speaking, provided that the signer(s) demonstrate a proper intent and no other defect exists, the electronic signature gives the document the same legal validity and effect as if it were signed by hand.
Less common among states are laws allowing for the remote and electronic notarization of documents.* Prior to the COVID-19 pandemic, only a handful of states permitted remote notarization of documents. Many states, including New York, required the signer and notary to be physically present together when the document was signed, as well as the notary’s hand-written signature on the document. This changed when New York Governor Andrew Cuomo issued Executive Order Number 202.7 (“E.O. 202.7”). Recently extended through June 6, 2020, E.O. 202.7 temporarily permits the remote notarization of documents subject to various conditions set forth therein. For example, the virtual meeting must allow for direct interaction between the signer and the notary, the signer must be physically present within the State of New York, and the notary must notarize the original signed document within thirty days of its execution. Notably, E.O. 202.7 does not permit a notary to electronically sign a document (see Footnote *). Rather, after the signatory transmits an electronic copy of the executed document to the notary, the notary must sign that copy by hand and transmit a notarized copy back to the signatory. Like the laws governing electronic signatures, the temporary measures allowing for remote notarization also vary by state. And so, it is critical to understand the laws of your jurisdiction before remotely notarizing a document.
As we move forward into reopening and the new realities attendant thereto it will be important to remain aware of the laws associated with these remote /electronic methods including whether EO 202.7 is further extended.
Have questions? Please contact me at email@example.com.**
*Do not confuse remote notarization with electronic notarization. Remote notarization involves notarizing a document when the signatory and notary are not physically present in the same location. Electronic notarization is the use of a notary’s electronic, rather than hand-written, signature on the document.
**Thank you to Kyle Gruder, a commercial litigation associate in the Firm’s Water Mill office, for his research assistance related to today’s blog.