Make Copy, Electronic Signature Valid at Your Option

Most commercial property leases don't contain a provision specifying whether a copy or an electronic signature on the document is as valid as an original signature. In the absence of such a clause, the presumption is that only the original signature of the owner or tenant is binding. But more often than not, commercial property owners and tenants close transactions electronically via PDF or email, which currently predominate, or fax, which already is outdated, says New Jersey real estate attorney Marc L. Ripp, senior associate general counsel at Mack-Cali Realty Corporation.

In some circumstances, a tenant could argue that a fax, email, or PDF signature is not as valid as an original signature, and therefore, the party that has provided only a non-original signature is not bound. (The success of this argument will vary by state, because many states have enacted general business laws similar to the federal Uniform Electronic Transactions Act that apply.)

“The introduction of a copy and electronic signature clause covers any question as to whether a PDF, email, or fax signature is binding,” says Ripp, who represents commercial property owners. To draft a clause that is favorable to you, make it at your option whether a fax, PDF, or email signature will be treated as an original so that you can always opt to disavow a fax, PDF, or email signature and insist upon an original.

Here is model language provided by Ripp that you can adapt and use in your leases. Be sure to show it to your attorney before using it.

Model Language

Copy and Electronic Signature. Tenant expressly agrees that if the signature of Owner and/or Tenant on this Lease is not an original, but is a digital, mechanical, or electronic reproduction (such as, but not limited to, a photocopy, fax, email, PDF, Adobe image, jpeg, telegram, telex, or telecopy), then, at Owner's sole option, such digital, mechanical, or electronic reproduction shall be as enforceable, valid, and binding as, and the legal equivalent to, an authentic and traditional ink-on-paper original wet signature penned manually by its signatory.

A clause that makes it totally up to the owner whether a copy or electronic signature will satisfy the requirements to provide an authentic signature may be viewed by a tenant as too “owner-friendly.” However—although it might reduce tenants' flexibility—they do have the power to withhold non-original signatures if they are hesitant. And tenants usually agree to the clause because they have a solution if they decide that they don't like it: Send the original signature, not a fax, PDF, or email.

“That's really the simple solution if the tenant doesn't like the language in an owner-friendly clause,” Ripp points out. “The language can be totally neutralized by the tenant not sending a copy or electronic signature, but only giving an original one,” he says.

An alternative that provides more certainty for the tenant is to redraft the clause into a more neutral version where both parties agree that a copy or electronic signature will be just as binding as an original. But the preferred version is to keep the option only in your hands, stresses Ripp. “It is not a terribly controversial clause, so there really shouldn't be any pushback,” he adds. In fact, many tenants, especially those who conduct business from different cities or internationally, see a copy and electronic signature clause as a positive.

Insider Source

Marc Leonard Ripp, Esq.: Senior Associate General Counsel, Mack-Cali Realty Corp., Mack-Cali Centre II, 650 From Rd., Ste. 220, Paramus, NJ 07652-3517; (201) 967-0324; mripp@mack-cali.com.

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