The world has changed. This is a statement that holds true perpetually in real estate, but especially concerning the technology used in the practice of real estate today. Electronic lock boxes, advanced MLS® systems, big data analytics, and even the advent of NFTs in some jurisdictions, are all examples of how the old systems have been outmoded for the sake of security, efficiency, and convenience. To be clear, the skills required to be a REALTOR® remain primarily relational, even though all these technologies have made the process different; sometimes for better and sometimes for worse. Like any tool, technology can be used in the right and wrong way, one of the tricky tech tools to navigate is electronic signing. Let’s consider some of the best practices around electronic signing to ensure the tool is being used to its highest and best use.
The Right Tool for the Right Job
Real estate is a heavily regulated and legally weighty industry. When contracting between parties many different legislations are brought to bear on the contracts at various times and with various gravity. When choosing an electronic signing platform, essentially a REALTOR® is looking for a tool that will replace the legal weight of an ink signature and this should be done carefully. Any signing platform used should restrict the ability to alter the document after the signing of the parties, provide a validation or authentication certificate for the signing activities, and provide a true flattened copy to all parties after signing. With the availability of multiple applications today, these should be the basic criteria you look for before deciding on the best application to use.
Legal Enforceability
To date I haven’t heard of a precedent-setting case regarding electronic signatures in Alberta, however, Alberta does have an Electronic Transactions Act which legislates this activity. In the AREA contracts, the parties additionally agree between them that a digitized signature will have the same function as an ink signature. This agreement between the parties allows that if an electronic signature, as defined by the Electronic Transactions Act, is used then it will function in the same legal way as if the person signed it in person.
Relationship Considerations
As a matter of best practice, core relationship agreements should be treated with a higher level of service. These would be the buyer representation or seller representation agreements establishing legal rights and responsibilities between parties as well as a creation of an offer to purchase. These types of agreements must be reviewed carefully with consumers to ensure they understand their rights and obligations before signing to ensure a REALTORS® obligation of competent service is promoted. In practice, this should look like a comprehensive review of each section of the agreement to clarify and allow for questions, either in person, or using a one-on-one interactive technology such as FaceTime, Zoom, Skype, or similar applications the client is comfortable with. Only after such a comprehensive meeting should the documents be signed either in-person or electronically, never leaving the review of such important legal documents to the consumer to view by themselves, on a smartphone before clicking submit.
Witness Signatures
In Alberta, the validity of the contract is not tied to the necessity of witnesses to the signing. AREA contracts allow for witness signatures; however, this is designed for in-person signing where the REALTOR® or someone else physically present, and watching the signatory sign, can acknowledge that they witnessed that event. When electronic signing is used, there is no way to verify who was in the room when the signing happened so there should generally not be witness signatures. As a matter of law, if the person didn’t physically see the consumer sign, they are not a witness and should not sign as one, electronically or otherwise.
Check and Double-Check
One of the complex issues surrounding electronic signing is the placing of initial blocks, signature blocks, and signing dates which is a function of the REALTOR® setting up the signing. Once the document has been prepared with the necessary information and all the signing and initial blocks placed, take one final pass through the document slowly to ensure that all the information is there, as well as all the necessary initials and signatures. If one gets missed there is no one else to blame, and it could become a serious issue in a hot market.
Electronic signing is an incredibly powerful tool for the time deficient REALTOR® who is already pressed on all sides to bring increased value to their clients. By using electronic signing to quickly gather necessary signatures for all parties scattered around different locations a REALTOR® can solidify agreements the parties have made. When used correctly and not to compromise or bypass the proper advising and teaching role of the REALTOR® electronic signing is a valuable tool. Every tool is useful for the right job, but when a good tool is used in the wrong way it can be a disaster.