08/04/2020
We have been advising many housing associations on their business continuity plans as part of the social distancing measures introduced by the Government to tackle the COVID-19 pandemic.
This has included implementing short-notice powers of attorney for the execution of deeds, and advising on when electronic signatures can be used.
We set out below some tips if this is something you are considering or in the process of implementing at your organisation.
When can electronic signatures be used?
Your Standing Orders will already authorise specific persons to sign simple contracts/agreements (i.e. those that aren’t deeds) on the association’s behalf.
When it is not practical to obtain ‘wet’ signatures by post from those authorised individuals, you could consider using electronic signatures. This could be a copied and pasted scan of an ordinary signature, or a signature using specific software such as DocuSign.
The position is slightly more complex when it comes to deeds, because most associations will execute deeds by using their seal which requires the physical presence of those witnessing.
In addition, the Land Registry will not accept electronic signatures on registrable deeds. The rules intended to ‘pave the way’ for e-conveyancing only allow the use of “certified” e-signatures; copied and pasted handwritten signatures do not pass this test.
How can we make the signing of deeds easier during this time?
Companies and community benefit societies do not necessarily have to execute deeds by affixing the seal.
Provided their constitutions do not specifically prohibit execution of deeds in another way, it is possible to execute a deed by two “authorised signatories” signing. For the purposes of the legislation, members of the association’s board and its secretary are authorised signatories.
If an association wishes to appoint others to this role (e.g. a member of the executive team that does not sit on the board), the board must do so using a power of attorney.
Companies also have an additional flexibility to sign deeds by one director/board member with a witness, and a power of attorney can also be used here.
It may be possible for electronic signatures to be used alongside this revised method of execution, but this should be agreed with the other party to the deed, and there will be formalities to comply with that you will need to check with your legal advisers.
How do we put a power of attorney in place?
A power of attorney must itself be executed as a deed, and will need to be approved by the board of the relevant entity (including subsidiary boards).
There are fairly standard forms available. Some key points to think about are:
- You should be clear as to the scope of the delegation – powers of attorney can be wide (allowing the attorney to take any action on an organisation’s behalf, or to agree changes to documents alongside signing it) or more specific (restricted to signing only, and in accordance with your internal processes for approval).
- Whether the power be exercised jointly or by individual attorneys.
- The duration of the power - charities should review their powers of attorney at least annually (and the Land Registry has additional requirements where powers are over 12 months old).
- Ensure that the board also agrees any changes/temporary variations required to your Standing Orders.
- The form of your execution clauses for documents will need to be updated to make reference to the power of attorney, so you will need to ensure anyone preparing documents on your behalf knows about the change.
- The Land Registry has specific requirements in relation to deeds signed under a power of attorney so ensure to liaise with your legal advisors about what they need.
Can we appoint our solicitors to sign documents on our behalf?
It is possible to appoint your solicitors as your attorney. This is most commonly for the purposes of signing documents which they have negotiated on your behalf (particularly helpful where you have on-going bulk transactions).
If you decide to do this, you should:
- Check with your solicitors whether they would be willing to do this and their preference as to whether the firm or individuals are appointed.
- Consider the scope of the power of attorney carefully.
- Engage with the firm in relation to the approvals process that you are proposing so that they can ensure it complies with their own internal procedures.
- Provide a copy of the board resolution approving the power of attorney as evidence – it is likely this will be requested by third parties alongside a copy of the power of attorney itself.
We can review your constitutions, advise you on the most suitable form for the power of attorney and provide a covering report for your board(s) for a fixed fee.
For further support and advice relating to the impact of COVID-19, please view our COVID-19 Advisory Service page.
