Defining Executed Documents
When someone refers to an executed document, you can generally understand that they are talking about a document that has been fully completed in accordance with the relevant law. For example, a deed is executed when it has been signed, witnessed and delivered. At that point, it will become effective and be legally enforceable unless there are any legal rules prohibiting it.
The meaning of the term ‘executed’ is a legal definition, rather than a more general one that simply means completed. When a contract or legal document has only been partially completed or might need further information to be properly filled out , it is referred to as a non-executed document.
In this context, the term ‘executed’ doesn’t just apply to the completion of all relevant fields. It is also used to refer to the granting of rights and powers provided for in certain types of documents, such as a power of attorney or trust deed. Again, it is generally speaking a legal term that refers to something being carried out under the laws in place in the relevant jurisdiction.
The Role of Executed Documents in Legal Agreements
Executed documents are essentially the finalization point of an enforceable agreement. They are written for the purpose of closing a deal and they set forth the terms of an agreement between the parties involved. The document is executed by one or more parties and becomes legally binding once signed (unless stipulated otherwise in the contract itself) to be binding on the parties.
The most common uses of an executed document include confirming an intention to enter into an agreement, formulations of a contract and acceptance of an agreement already formed by the exchange of written or verbal communications. With regards to enforcing the terms of an agreement between two or more parties, executed documents provide both a clear paper trail and oral indication that a deal has been made, that all terms of that deal have been mutually agreed to, and that everyone involved is fully aware of what the deal is and what the repercussions of breaking it are.
For example, upon signing mortgage agreements, executors agree that the conditions of the mortgage are fully understood and that the mortgage is legally enforceable. It may also state that any failures to meet those obligations will result in penalties.
How to Execute a Document
Prior to the execution of a document, it is important to review the document to determine how it is required to be executed and whether a statutory form is required. In particular, if the document in question is either a deed or a power of attorney, the following substantive steps are then required to correct execution.
First, the document must actually be signed. All parties to the document must sign (with certain exceptions where the law allows some signatories to sign on behalf of others). The way in which a person’s name is handwritten, typed or printed does not usually change its effect, provided that the intention of the parties as evidenced from the face of the document makes it clear that it is the name that should have appeared.
Second, the document must be attested to by at least one independent witness, who is not named in the document. For the document to be correctly executed, the witness must sign the document in the presence of the person or persons executing the document. In this context, "full and frank disclosure" means that the witness should be able to explain the purpose or the effect of the document without having to look it up.
Third, if the document is a deed, it must have a signature clause at the end. For instance, if the document is a company guarantee it may have a clause in the form: Witness my hand this (…) day of (…) Besides serving as a signpost to the witness, this clause serves a specific function. It will be required if the document is to be stamped with stamp duty and "marked" (a stamping process), and the deed will not be valid unless these processes have been complied with.
In the case of a power of attorney, it is a mandatory requirement for it to be attested to by an independent witness, who must be a suitably qualified person described in the relevant statute.
Types of Executed Documents
There are a number of types of documents that often require execution, mostly associated with contractual and business matters, property ownership, and estate planning. Each of these document types has its own requirements for execution, as follows:
Contract
Contracts or agreements between two or more parties often require execution by specific individuals. For example, leases, vendor agreements, and purchase and sale contracts may require the signature of an officer or director of the corporation or business entity involved in the transaction. If the contract is related to the purchase or sale of real property, any deed or other real estate document related to the transaction may also require execution by the officer.
Wills
Wills are other common types of executed documents that are essential for estate planning. Proper execution of a will is critical to determining its validity and enforceability. Generally, the testator, the individual making the will, must sign the will in the presence of witnesses. These witnesses must be over 18 years old and mentally competent. It is a good idea to have two witnesses sign the will, although in some states a single witness may be sufficient.
Deeds
When real property transfers hands, there are various forms of conveyance, and each may require execution by the parties to the transaction. For example, a grant deed usually requires that the granter or seller of the property sign the deed in the company of witnesses. The transferor must also provide a notarized signature to create a deed of trust for a buyer.
Notarized Documents
A number of states require notarization for many different types of business and legal documents. This involves an official signature and stamp from a notary public, or a licensed notary lawyer. This process is meant both to deter fraud and to make the documents admissible as evidence if necessary.
Information provided by a lawyer is for educational purposes only. Nothing should be construed as legal advice.
Common Pitfalls and Mistakes when Executing a Document
Executing a document is seldom as simple as it sounds. If an individual has never studied contract formation or agency, questions about how a document is supposed to be signed may arise when the contract is being signed. For example, is the document properly executed if it is signed and returned by email or fax? Are witnesses or an acknowledgment by a notary public required? What if the signatory is a corporation’s president (or general partner of a partnership, trustee of a trust, executor of an estate, managing member of a limited liability company, etc.) and is signing the document in his or her capacity or office? Does the signatory need to provide a bank personal identification card or some other form of identification? Does the document need a corporate seal or stamp?
When a party is asked to sign a document that appears to be missing a required signature, mark, notary or acknowledgement, the party may be reluctant to sign it. However, without the trust and loyalty of the other party, the party may not wish to proceed with the transaction. Parties who have become confused and frustrated with document-signing protocols may think briefly of scrapping the entire business deal. But before assuming the deal is off, it might be a good idea to thoroughly investigate the validity of the perceived error. After all, many times, errors are not fatal to enforceability.
There are many "trick" questions that require quick legal analysis to determine whether the contract is still enforceable. For example, if a contract is signed by an agent but does not indicate that it was signed on behalf of his or her principal, in which person’s name can the lawsuit be brought, the agent or the principal? The answer is pretty straightforward: generally, where one signs a contract with an indication of intent to bind another person or entity, the contract is deemed signed on behalf of that person or entity. However, there can certainly be times where a court finds a more nuanced analysis is required, where the documentary intention of the parties is key , and where a party is not considered to have made an implicit promise to the other party regarding who would sign the contract.
It is interesting to note that the federal Electronic Signatures in Global and National Commerce Act ("ESIGN") provides that contracts and other records may not be denied enforceability because they are in electronic form. However, under Uniform Commercial Code ("UCC") Section 1-202 and California Commercial Code Section 3506, an electronic signature is not acceptable unless the original (so-called "wet" or "ink") signature would otherwise be required. Although ESIGN clearly states the default rule is that electronic signatures are enforceable and UCC is the exception to the rule, some legal practitioners remain concerned that established authorities take precedence over legislative enactments. For example, is the contract enforceable in a state court if it is in electronic format and a physical copy is not available for filing (and/or not produced prior to trial)?
What seems like a mistake may not actually be fatal to the enforceability of a document or contract. In Wilshire Insurance, a party was granted relief from a judgment because the document at issue was not signed by a representative authorized to bind the corporation. A similar issue was noted in Stokes v. Keeler, where an individual is required to sign on behalf of a trustee of his or her revocable living trust. The signature block of the deed that was recorded was not clear that the individual was executing the instrument as trustee on behalf of the trust, so the court ruled that the property had not been effectively conveyed. The court, however, allowed for reformation of the deed to reflect that it should have read "By [individual’s name], as Trustee of the Stokes Family Trust dated [year]."
The lessons to be learned are that even apparent mistakes in a contract or deed may not always be fatal to a court enforcing the agreement or transfer of real property. When an apparent defect or mistake may be present, rather than refusing to sign the contract and losing out on the deal, it may be advisable to continue with signing the document, to the extent possible. This will ensure the ability to later argue that the contract should have been performed as it was written given the parties’ agreement, and allow a party (or the party’s successor-in-interest) to seek reformation.
How to Electronically Execute a Document
In addition to ink signatures, documents may be executed electronically. Under the federal E-SIGN Act and the Uniform Electronic Transactions Act (as adopted in most states), electronic signatures relating to transactions in excess of $5000 are acceptable (with some exceptions). An "electronic signature" is defined under the law as an electronic sound, symbol or process that is attached to an electronic record and executed or adopted by a person with the intent to sign. The benefits of electronic execution can be substantial. Execution and signature on a document can occur in seconds with the right digital signature and execution platform. Execution on the platform eliminates trips to the notary and the post office and allows multiple parties to execute from anywhere there is internet access. Not only does remote execution enhance productivity, it also creates a substantial reduction in printing and shipping costs. However, the potential for fraudulent signatures has kept most people fearful of the new technology. Many of the top platform providers have incorporated industry-standard fraud protection features to develop a trusted platform for electronic execution:
- Certificate-Based Digital Signature – everyone transacting is required to use a certificate-based digital signature, which is a secure method of electronic signature with a series of advanced security features.
- IP Address Tracking – the IP address of everyone transacting is recorded to help ensure the security of each electronic transaction.
- Encrypted Messaging – all electronic communications between a company and its customers are encrypted to help safeguard any sensitive information.
However, if an e-signed document is recorded against real property, some title companies will request the original copy, even with a certificate-based digital signature.
Notary Signatures and Execution
A key feature of executed documents such as contracts, deeds, mortgages, will, powers of attorney and the like, is that their execution may be witnessed by third parties. For most people this will involve the signing of the document in front of a member of the general public who acts as a witness. However, it is not uncommon for a will, deed or mortgage to require execution in front of a notary public.
A notary public is a person authorised by law to administer oaths or affirmations to persons seeking to make a solemn declaration for a legal purpose. A notary public is also usually given the authority to take affidavits and deposit the exhibits contained within them within the jurisdiction in which he or she is authorised to practise. The exhibits which can be taken are usually limited to documents which relate to an overseas purpose. Fees are usually chargeable for providing these services which vary depending on the amount of work involved.
Crucially, the authority to act as a notary public is derived from statutory powers which are separate and independent from those conferred by the Oath of Office.
On being appointed to act as a notary public, the person authorised is required to obtain a certificate from the Ministry of Foreign Affairs showing his appointment. The Ministry’s certificate must then be verified and authenticated by the appropriate official at one of its offices. Only the authentication of the Ministry’s certificate confers notarial validity.
For notarial purposes under UAE law, a notary public must practice under the aegis of one of the UAE Courts, Ministry of Justice, UAE Public Notaries Office. Notaries issued with certificates of appointment under UAE laws are required to keep a record book containing minute details of their notarial acts and their clients requiring notary services. This book must be stamped and bear the seal of the notary public.
The Consequences of Not Executing a Document
A common problem in real estate transactions involves documents which have not been executed by all parties, or properly executed. Non-executed – or improperly executed – documents can have significant legal implications. This article focuses on the enforceability of non-executed documents and the legal implications of their non-execution.
For documents that are ostensibly properly executed but not signed by all required parties, the issue is – when, if ever, will a document be enforceable if not signed by all necessary parties? For instance, a deed or mortgage is not valid (and therefore not enforceable) unless it is signed and sealed by the grantor. Under certain circumstances, however, a signature will be presumed unless there is clear evidence to the contrary. "The analogy to [marital contracts] in actions involving . . . testimony explaining the absence of a person’s signature is a presumption arises as to the intent of the person to execute the contract where his signature appears on the contract and is admitted into evidence. When the party against whom the contract is sought to be enforced produces the contract with a signature on it which is shown to be that of the person against whom the contract is sought to be enforced, the law presumes that the other provisions of the contract were included at that person’s request or on his behalf . " Williams v. Harmon-Tullis Inv. Co., 528 So.2d 714, 716 (Ala.1987). The general rule is that a contract is not void due to the lack of execution by one of the parties. An important caveat to this rule is that the contract has been signed by one or more parties who are not allegedly trying to avoid their performance.
There are many other areas of law where the non-execution of documents creates significant complications. The following are some examples: A mortgage or deed that has not been recorded may create problems at a later time when the rights of third parties are intertwined with the ownership interest of the homeowner. As a general matter, under the "race-notice" system of recording statutes, priority is granted to the first party to record its interest. The prevailing view is that a recorded lien is superior to an unrecorded lien even if the unrecorded lien was created earlier than the recorded lien. Some states have established a "notice after notice" status which essentially allows a later purchaser to have priority over prior unrecorded transactions.
Non-executed documents may also cause administrative issues. Documents in improper form or not signed by all necessary parties may be returned by the county recorders’ office, despite the substantive legitimacy of the transaction.