Top 5: FAQs on deeds and documents
So you have just spent many weeks (or even months) negotiating and drafting terms to your documents, and the time has finally come when these documents need to be signed – now what? How you sign these documents is important because if they are not signed correctly they may not be valid!
It may seem like another daunting legal formality to worry about, but in this blog I shall answer some of the frequently asked questions around deeds and documents.
When do I need to use a deed?
In a small number of transactions, there is a statutory requirement for the contracting parties to execute documents as a deed. These include leases, land transfers, sales by mortgagee, mortgages and charges, powers of attorney, appointments of trustees, releases and variations, and gifts of tangible goods that are not accompanied by delivery.
It is possible that the validity of the relevant agreement or transaction may be affected if the parties do not comply with the applicable statutory requirements.
When a party executes a deed, their signature is required to be witnessed.
A party to a deed cannot be a witness to another party’s signature in that same deed (for example, if person A and person B are parties to the same deed person A could not be a witness for person B’s signature, and vice-versa).
Indeed, it is worth noting that a signatory’s spouse, cohabitee or civil partner is not prohibited from acting as a witness. An employee or director of a party to a deed can witness that party’s signature. It must be remembered that the purpose for having a witness is so that, if and when evidence is required to be given against the signature of a party to a deed, that witness will be able to give unbiased evidence. It is therefore advisable that independent witnesses should be requested.
Whilst there may be no prohibition against a minor acting as a witness, it should be considered that this could become problematic if the signature is later challenged. If you are unsure on this point, maybe pose the question “is this witness reasonably mature?”
What are some benefits of using deeds?
Contracting parties may wish to structure their agreement as a deed to secure some of the benefits associated with deeds. The use of a deed could be preferred where:
- there may be an argument that insufficient consideration has passed under the contract. Signing a document as a deed generally removes the contractual requirement of consideration being present in the agreement; and
- the limitation period – being the period from the date on which a fact enables a person to bring an action against another – of 6 years under a simple contract is not satisfactory to the parties. Under a deed, the limitation period is generally 12 years.
Can counterparts of the same document be signed to form one document?
From time to time deeds and agreements are signed in counterparts. Signing counterparts involves the contracting parties signing separate (but identical) copies of the same document.
But do the contracting parties not have to attend a signing meeting? No, it is typical that in the written agreement there will be a clause which states that together the various signed copies will form a single binding agreement.
But what if there is no such clause in the agreement? The inclusion of a ‘Counterparts’ clause is not essential for a deed or other agreement, and does not necessarily cause the agreement to be non-binding.
Do signatures to simple contracts need to be witnessed?
With many agreements being made informally, and not always necessarily being made in writing, the formalities of signing a simple contract are (thankfully) not too onerous. Only the contracting parties to a simple contract need to sign the agreement, there is no legal requirement for it to be witnessed!
However, there may come a time when the validity of the agreement is challenged, so evidence of having a signature witnessed may prove helpful.
What can Chattertons do for you?
These are just some of the questions commonly asked in relation to the execution of deed and documents. If you would like to talk to a member of our specialist corporate law solicitors, please contact your local office or complete our online enquiry form.