When Must I Use Wet Signatures vs. eSignatures?

In today’s era where instant, digital interactions are prized, the question isn’t so much when to use eSignatures. The question is when must companies use wet signatures, instead. While the eSignature has been legally binding across almost every jurisdiction and industry for over 20 years, there are still situations where nothing but a wet signature will do. Here, we’ll explore the rare but important circumstances that demand breaking out the pen and paper.

What is a Wet Signature?

A wet signature is a handwritten signature in wet ink that you make on a piece of paper. Since the ESIGN Act was passed in 2000, and the Uniform Electronic Transaction Act (UETA) in the US, eSignatures became legally recognized. Over the years, eSignatures have largely supplanted traditional wet signatures across nearly every industry thanks to their greater convenience. However, there are still exceptional circumstances that require wet signatures to be used. These exceptions will be the subject of the following sections.

When Are Wet Signatures Required in Banking?

The vast majority of bank forms and documents allow eSignatures. Even high-value bank transactions, such as taking out mortgages, can be handled using eSignatures. But there are exceptions. The following events and scenarios require a wet signature on physical paper:

• Wills: US exceptions include Nevada, Florida, Indiana, Arizona, Utah, and Colorado, which have adopted the Uniform Electonic Wills Act. Canadian exceptions to the eSignature will ban include Ontario, Manitoba, and Quebec. More and more jurisdictions are approving e-wills.
• Trusts
• Deeds: While technically, deeds can be signed using an eSignature, they typically aren’t. That’s because deeds require physical witnesses. If a deed is electronically signed, it’s recommended to include a clause for the witness to confirm they were physically present.
• Notary public services

When Are Wet Signatures Required in Insurance?

Across the US and the rest of the world, eSignatures make it easy for agents to get policyholder approval, sign off on first notice of loss (FNOL) forms, and much more. The federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et. seq.) permit the insurance industry to use and accept electronic signatures and records if the consumer consents to engage in an electronic transaction. In New York State, regardless of how consent is obtained, insurance companies must maintain proof that a consumer has agreed to engaging in electronic transactions. Until recently, the insurance industry in India has mandated wet signatures on health insurance policy proposals. However, it has since then done way with such requirements. The exemptions will apply to all health, motor, fire insurance (covering dwellings and/or contents issued to individuals), package insurance (issued to individuals) and all miscellaneous policies issued to individuals where the sum insured does not exceed ₹5 crore. The wet signature can be avoided only if insurers inform customers through text message about the issue of policy documents electronically, and have in place mechanisms to verify receipt of the document and preserve all e-records. “Wherever policyholders demand a physical version of the policy document/copy of the proposal, the same shall be made available,” the regulator said. The exemption will be in force till March 31, 2021.

When Are Wet Signatures Required in Real Estate?

A seller needs some form of a written document to transfer the ownership of their home to a buyer. Historically, the seller had to physically sign the document and a notary had to witness the seller sign it. Today, there are some states that accept electronic signatures and remote online notarization. This means that a seller could sit at home in front of a computer that has a microphone and camera, and electronically sign their sale documents in front of a notary. The notary will be elsewhere, but through a secure electronic program, the notary can see the seller while he or she electronically signs the documents, get ID verified, and keep an electronic record of the seller signing the documents. For remote online notarization to work, there needs to be a system that can make sure the seller is who you say they are and have actually signed the documents to avoid fraud in the transaction. Remote online notarization companies today have a system in place that allows them to view the person signing the documents and review government identifications to ensure the person that is signing is who that person says they are. The system also archives the video and exchange of documents for proper recordkeeping. The second issue is that your government offices must be willing to accept electronic signatures. When a seller signs a document before an online notary, they are electronically signing the documents. Many recorders of deeds and courthouses require original documents with original wet signatures. The third obstacle in the system is lenders that may require original documents and wet signatures on all documents. Lastly, some state laws require wet signatures on certain types of documents and courts may require wet signatures on documents before granting a judgment on a case.

When Are Wet Signatures Required in Healthcare?

Generally, documents that require patient signatures, such as Release of Information (consent) forms and Treatment Plans, require wet signatures. If any party in a healthcare transaction doesn’t consent to provide the digital signature, a wet signature should be accepted instead.

When Are Wet Signatures Required? By Jurisdiction

While eSignatures are generally legally recognized around the world, there are some broad exceptions. Here is a breakdown of those exceptions by location.

In English Law

Documents required to be filed with the UK tax authorities or Land Registry.

In US Law

• Promissory notes
• Notarized documents
• Mortgages
• Deeds of trust
• Other collateral documents

In Canadian Law

• promissory notes
• personal guarantees
• Notarized mortgage documents
• Securities registered with the Bank of Canada

In German Law

• A transfer or pledge of shares in a GmbH (the term for a German limited liability company)
• A transfer of real estate, or a mortgage/land charge over real estate would require to be notarized

In French Law

Electronic means cannot be used for certain documents, such as private deeds relating to personal or real security, whether under civil law or commercial law, unless they are entered into by a person for the purposes of his or her profession.

In Japanese Law

• Where a wet ink signature or seal is required
• Documents required to be in written hard copy form, for example, security documents that are required to be perfected or validated or certain term lease agreements under the Act on Land and Building Leases

In Luxembourgish Law

If a wet ink signed document is required, for example, for contracts that create or transfer rights in real estate and contracts that require by law the involvement of courts, public authorities or professions exercising public authority.

In New York Law

• The Electronic Signatures and Records Act (ESRA) excludes certain classes of documents from the general rule that electronic signatures and records are deemed the same as wet ink signatures and hard copy originals, including:
• Where a wet ink signature is specifically required by other law (for example, certain judicial, regulatory, registry, or other governmental filings or documents; two illustrative examples are: recorded real estate documents where the local recording office has elected not to accept electronic signatures and documents involved in bankruptcy cases where local rules require wet ink signatures)
• Negotiable instruments and other instruments of title (unless an authoritative electronic version is created that is unique, identifiable and unalterable and cannot be copied except in a form that is readily identifiable as a copy)

In Polish Law

If a wet ink signature, including notarial deeds, or QES is required by law or a contractual arrangement, the document cannot be signed by digitally. Examples include:

• Real estate purchase agreements
• Registered pledge agreement
• Declaration on mortgage

In Singaporean Law

The Exclusion List set out in the Electronic Transactions Act (Cap. 88) (the Act) includes negotiable instruments, documents of title, bills of exchange, indentures, declarations of trusts, powers of attorney and contracts for the sale or other disposition of immoveable property.

In Slovakian Law

If a written form of the document is required by law, a contractual arrangement or the internal policies of one of the parties, it is not recommended to sign the document this way. Documents which need to (i) be made in the form of a notarial deed, (ii) be apostilled or are subject to superlegalization, or (iii) be made in the presence of a notary public or witnesses cannot be signed this way.

In Spanish Law

• If wet ink signatures are required, for example, certain negotiable instruments
• Documents that need to be raised to the status of public deed by a notary public, and/or entered in the relevant public Registry, or any other formality is required
• Certain commercial contracts in Spain are raised to the status of public deed for different reasons usually to certify evidence of capacity and validity and because public deeds are considered executive title for enforcement purposes

In Dutch Law

• Documents which by law require the intervention of a court, a public authority (for example, a civil law notary) or a professional who exercises a public function, for example notarial deeds such as a deed of transfer of shares or real estate
• Documents which by law require a QES, for example documents which require an electronic signature under the Land Register Act, electronic insurance policies and electronic arbitral awards

In Emirati Law

If wet ink signatures are required for example, the document is required to be notarised or the document relates to the sale, purchase or lease of immoveable property

In Czech Law

• If a written form of a document is required by statute, by the agreement between the parties or pursuant to the internal policies of one of the parties, it is not recommended to sign the document this way.
• Documents requiring officially verified signatures (e.g. share purchase agreements in relation to shares in a limited liability company) and documents which need to be made in the form of a notarial deed (.e.g. a memorandum of association of a joint-stock company or limited liability company) cannot be signed this way

In Chinese Law

• If wet ink signatures are required, for example documents transferring interests in immoveable property and documents to be filed/registered with authorities

Wet Signatures vs. eSignatures

Wet signatures are not as secure to use in business and government settings because wet ink can be copied but it is harder to forge. Digital signatures expire after a certain amount of time so they’re not very good for long-term transactions or legal documents. They can’t be forged like wet ink, though. eSignatures are more secure than wet ink or digital copies and they don’t expire so they’re good for long-term transactions, legal documents, and agreements. Despite the obvious advantages of eSignatures, wet signatures are occasionally the only legal option available during a transaction.