The Mercury signing protocol for virtual executions (where signatories are not all present in the same place) emerged following R (on the application of Mercury Tax Group Ltd and another) v Commissioners for HMRC and others [2008] EWHC 2721 (Admin); [2008] PLSCS 254 and has become well established outside real estate. The Law Society has endorsed its use for the execution of deeds in its practice note Execution of documents by virtual means and this is commonly referred to as a “Mercury Option 1” signing.
The Covid-19 pandemic has thrown up a number of challenges for real estate transactions (see: “How can you get deals done in lockdown?” EG, 27 May 2020). Therefore, we welcome the Land Registry’s change to their requirement for “wet ink” signed deeds, meaning that from 4 May 2020 until further notice they will accept deeds signed in accordance with Mercury Option 1.
How does a Mercury signing work?
The following are the basic steps:
- A PDF or Word version of the final form document is sent by e-mail, with separate copies of the relevant signature pages to the signatory.
- The signatory prints off the relevant signature pages and (subject to the comments below) any plans that need to be signed – there is no need for the signatory to print off the whole document. Once printed, the signatory signs the signature pages and any plans in wet ink in the usual way (so if a witness is required, the witness will need to be physically present to attest the signature).
- The signatory then scans the signed pages using a scanner or a scanning app on their phone. Alternatively, they can take a photo. Care must be taken not to distort the colour or scale of any plans.
- The signatory then returns the signed pages with a full copy of the final form document to their lawyer (and not just the signed pages).
- The e-mail with the final form document and signed pages is the original. For completion, the lawyer can date the document as a PDF or print it off and date it in wet ink.
- The completed document is an original.
How does a Mercury signing differ from an electronic signature?
The concept of electronic signatures is very wide ranging, from a typed signature to one generated through a signing platform. A Mercury signature is distinguishable because it is ultimately based on a wet ink signature, albeit one that is subsequently scanned and applied to a document with authenticating intent.
What Mercury signed documents will HM Land Registry accept?
The Land Registry’s guidance in Practice Guide 8 makes it clear that a Mercury signing can be used for:
- a deed that effects one of the dispositions referred to in section 27(2) and (3) of the Land Registration Act 2002;
- an assent;
- a discharge or release in form DS1 or form DS3;
- equivalent deeds in respect of unregistered land; and
- a power of attorney other than a lasting power of attorney.
There is no doubt this temporary relaxation by the Land Registry is a major step forward and will ease some of the difficulties in completing transactions. However, the Land Registry has been working with a number of stakeholders to see if it would be possible to accept electronic signatures more widely and, on 9 July, it announced it will begin accepting witnessed electronic signatures for registrable deeds in the very near future. Subject to various Land Registry requirements, this would allow the use of simple electronic signatures which involves the document being uploaded to a cloud-based electronic signing platform where the signatories can access the document for signing via a link. In the long term, Land Registry would like to adopt a more secure type of electronic signature known as a qualified electronic signature which relies on technology to verify the identity of the signatory.
Do you still need to obtain a “wet ink” signed deed?
Deed packets containing wet ink signed paper deeds, always called “the originals”, and all the other documents required but not registered at the Land Registry, have always been retained for commercial properties.
A deed signed and completed using the Mercury Option 1 process creates a virtual original and, strictly speaking, there is no need to assemble and save a wet ink version. However, paper deeds packets are a useful record that survive well long-term and it would be a major change not to have a complete deed packet for each property. We expect many will still be created despite Mercury Option 1 currently being acceptable to the Land Registry.
Limitations on Mercury signing
- Large plans
The Land Registry requires that all plans attached to registrable deeds are signed. In a Mercury signing, scanning, printing, wet ink signing and then re-scanning a large plan may present difficulties in retaining original scale without distortion. To resolve this problem, the Land Registry has recommended that the transferor’s conveyancer signs the plan (a typed signature is acceptable) as agent for the transferor.
- Companies with more than one signatory
Some companies sign by way of two directors, or a director and secretary. Others may use a seal. Are these compatible with a Mercury signing? It is unclear whether a single party’s execution can be “split” (where one signatory wet ink signs one print of the execution page, and one signatory wet ink signs another print) or signed “sequentially” (where one signatory signs the document and then sends a scan of that to the second signatory to print and wet ink sign the same execution page). Until the Land Registry issues guidance on this point, it may be worth considering executing by a single director in the presence of a witness.
- Unrepresented parties
The Land Registry has stated that, in all cases, the parties to the relevant deed must be represented by a conveyancer.
Alison Murrin is an expertise counsel at Ashurst LLP, Emma Broad is managing practice development lawyer at Dentons, Siobhan Hayes is a knowledge management counsel at Reed Smith, and Katherine Lang is a knowledge lawyer at Baker McKenzie
