What do we mean when we say something is required 'in writing'?
November 16, 2016
The Commission talks a lot about ensuring you have items in writing. While the term may seem straight forward, there are some important rules to remember.
We require all real estate agreements facilitated through licensees, including amendments, to be in writing. This application of “in writing” necessitates written terms and bona fide signatures of all parties. This includes agreements between consumers and agreements between consumers and brokerages.
Bona fide signatures are required in these instances because agreements of purchase and sale, brokerage agreements and service agreements are legal contracts and so all parties (i.e. consumers and brokerage representative) are required to sign.
Bona fide signatures can be added to a document by the traditionally hand written method or by electronic means. If the brokerage uses an electronic signature software, the brokerage (or designated agent) must take appropriate measures to ensure the application creates a bona fide signature recognized by the courts. It is always recommended to see legal advice on this.
If the brokerage receives documents containing an electronic signature that they are unsure is authentic, the brokerage (or designated agent) is required to take appropriate measures to confirm the signature is in fact a bona fide signature. These measures include contacting the brokerage the document was received from to confirm the signature’s legitimacy. If, after attempts to clarify, the signature is still questionable, relay this to your client and seek instruction from them. A typical example that would not constitute a bona fide signature would be an agreement of purchase and sale with the person’s name typed in the signature line.
If the brokerage chooses to make an electronic signature service available to their clients, the brokerage must retain printed copies of all signed agreements and acknowledgements (i.e. Certificate of Authenticity) which includes the e-signature of a client or customer of the brokerage. It is not necessary for the brokerage to retain certificates from cooperating brokerages provided it is agreed that it represents a legal signature.
(The reason we reference both brokerage and designated agent is because the requirement to scrutinize signatures is interpreted as a fiduciary requirement and so depending on the agency model practiced (i.e. common law or designated agency), that duty will fall to the brokerage or designated agent respectively.)
Licensees must not engage in verbal offers/counter offers. Section 29 of the Real Estate Trading Act requires that all offers be presented in writing. When a licensee is representing a buyer, the buyer must understand that the licensee is prohibited from conveying verbal offers. Likewise, if a licensee is representing a seller and a verbal offer is conveyed by the buyer’s licensee, the seller’s licensee must respond by advising the buyer’s licensee to put any offers in writing. At the same time, the seller’s licensee has a fiduciary duty to tell the seller what was verbally offered. This is not considered conveying a verbal offer because it is seller’s licensee’s fiduciary duty to relay any and all relevant information to their client. The seller’s licensee must not respond back verbally with an acceptance or a counter offer, or they have conveyed a verbal offer.
While it may seem convenient and a good decision in the essence of time to convey an offer verbally, you are really just prolonging the presentation of a valid offer and generally doing your client a disservice. The legal requirement to have contracts to purchase and sell property in writing and signed by the parties to the transaction means that a verbal contract is unenforceable.
Signatures for disclosures
The NSREC also requires licensees to obtain certain written disclosures with bona fide signatures of consumers. They would include the Working with the Real Estate Industry form and, if applicable, customer status acknowledgements. Customer status acknowledgement are a best practice to use when servicing consumers as customers, but if you do use a customer status acknowledgement form it must be signed by the customer and a brokerage representative with bona fide signatures.
Email, texts and similar
Emails, texts and other similar forms of electronic communication do not constitute in writing with bona fide signatures.
However, it is acceptable to relay and receive information to clients and customers via email, text or other similar electronic means, for example,
- facilitating viewings,
- giving feedback concerning the viewings,
- advising the seller that the brokerage has not received the required trust deposit,
- advising the seller or the seller’s representative that the buyer is not satisfied with the inspection, etc.