This blog was originally published on May 6, 2020, but has been updated to reflect the Government of Alberta's recent legislative changes to the Guarantees Acknowledgement Act. Given the unfolding situation with COVID-19, we will continue to provide updates as things progress.
It is an understatement to say that COVID-19 has interrupted business operations across all sectors. With many Albertans quarantining or self-isolating, work and social gatherings have increasingly moved online. The virtual realm also applies to commercial transactions with electronic signings and closings becoming an important tool, as the public health emergency has prevented in-person meetings. In the coming months, businesses will likely require borrowed funds to navigate through the global crisis, and they will almost certainly look for innovative methods to do this in the "new normal". Businesses can continue their commercial transactions virtually, including in the context of lending institutions funding loans during these uncertain times, though with some additional complexity.
Commissioning Corporate and Court Documents Virtually
After declaring a public health emergency in Alberta last month, the Government of Alberta began implementing measures to reduce the spread of COVID-19. On April 2, 2020, it issued a Ministerial Order temporarily allowing for various court and corporate documents to be executed electronically via videoconference in order to maintain social distancing recommendations. Accordingly, solicitors can now commission several documents under the Land Titles Act and the Personal Property Security Forms Regulations via electronic means. The process outlined in the Order is similar to the process outlined in the March 25, 2020, Court of Queen's Bench of Alberta – Notice to the Profession and Public relating to remote commissioning of affidavits.
When commissioning an affidavit taken by video conference, both the commissioner and the deponent must have a full copy of the affidavit and all exhibits in front of them. The document must contain a section stating that it was commissioned electronically and both commissioner and deponent adhered to the steps detailed in the Order. Once both parties have selected a secure virtual platform, they can initiate the process, ensuring that it is completed in one session. Immediately after signing and commissioning the affidavit, the deponent must send an electronic version of the document to the commissioner and then courier the original signed copy to the commissioner. The commissioner then reviews the version sent to them by the deponent to verify it is identical to the version reviewed by the commissioner during the video session. The commissioner then completes the affidavit only upon being satisfied that the two copies are identical. For court documents, the Queen's Bench Notice then requires both copies of the affidavit to be attached to a certificate signed by the commissioner confirming the process was necessary because it was impossible or unsafe for medical reasons for the deponent and commissioner to be physically present together.
Obviously, the process outlined above is more complex and time consuming than it would otherwise be in a non-pandemic environment, but the Government of Alberta and the Alberta Court of Queen's Bench have recognized that the normal process of commissioning affidavits may not be practical (and is actually riskier to public health) given the current state of affairs.
Electronic Signings for Guarantees
On May 8, 2020, the Government of Alberta issued another Ministerial Order—this one suspending the requirement under the Guarantees Acknowledgement Act that lawyers must execute guarantees in person and physically sign a Guarantor's Acknowledgement Certificate. The Order provides that guarantees now have effect where the guarantor appears before a lawyer by two-way video-conferencing and acknowledges to the lawyer that the guarantor executed the guarantee. The guarantor must also sign a certificate acknowledging that electronic means were used to execute the guarantee, which must be done in the lawyer's presence by two-way video-conferencing. The Guarantees Acknowledgment Act Certificate should also be amended so as not to claim that the guarantor and solicitor met in person when they, in fact, did not. The Order is in effect until August 14, 2020, or until the Minister deems the Order unnecessary under the Public Health Act, whichever date comes first.
Parties should take additional precautions to protect against fraud, especially in the context of client verification and identification when using video-conferencing. Although the Government of Alberta has modified its rules to permit face-to-face verification via video conference, the digital realm always carries risks. For example, in the context of real estate transactions, certain title insurance policies will cover events of allegations of fraud where client identification and verification, execution of documents, or commissioning of oaths have been conducted electronically.
Potential Delays with Registries
The closure of non-essential businesses has caused delays to courts and various land titles and personal property registries across Canada. Lenders and borrowers should ensure all court proceedings and registration matters are completed as soon as practically possible to avoid missing any deadlines. Notably, title insurance providers may provide gap coverage for COVID-19-related delays; individuals should discuss these policies with their advisers to avoid funding delays.
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