Common errors when using electronic signatures
October 13, 2016
Electronic signature services have simplified the process of obtaining signatures from consumers on agreements and offers. While electronic signatures change how a document is signed, your obligations to real estate consumers remain the same.
Real more on the Commission’s requirements for use of electronic signatures, here.
Most secure electronic signature services time-stamp the signatures when they are created, which marks the date and in some cases the exact time the signature was placed on an offer or agreement. When the date time-stamped with the signature is not the same as the date the form ought to have been signed, there could be an issue. Because of this, it is important for licensees to pay attention to when agreement are signed using secure electronic signature services.
For example, an agency relationship is formed with a seller and a Seller Brokerage Agreement is completed and effective June 3rd. The seller’s signature, however, is time stamped for June 5th, indicating that the agreement was signed after the effective date and that technically the agreement was not valid until the time it was signed on June 5th. The issue here is that the brokerage did not have the authority to market and represent the seller on the effective date and the seller did not technically give their authorization until the time the Seller Brokerage Agreement was signed on the 5th.
This type of error can create issues between the brokerage and the client, in this case a seller, as the brokerage did not have written authority to represent the seller on June 3rd and 4th and may have completed work on their behalf (i.e. listed property on MLS®, erected a sign on the lawn, etc.). Ensure the dates inputted on forms and agreements are consistent with secure electronic signature’s time stamps by providing consumers with the documents on time and having a conversation about the importance of timing when signing agreements and offers.
Witnessing in Advance
When signatures in real estate agreements are witnessed, the witness is vouching for the authentic signature of the person they observe signing. Witnessing a blank signature line in advance for convenience purposes is not correct practice and can put you at risk.
The proper mechanics of witnessing a signature, electronically or not, is to personally witness the person signing the documents at the time you see them sign their signature.
While witnessing can protect you and your client’s interests when signing agreements, the Commission does not require witness signatures. Certain sellers, however, may require that they be obtained (i.e. banks or insurance companies).
If you have any questions regarding the use of electronic signatures, contact our Compliance Team at 902-468-3511.