The Growth Of E-signatures For Real Estate Contracts
Following the outbreak of COVID-19, more and more businesses have implemented remote working measures to ensure the safety of their employees and clients, enabling easier social distancing through home-based or hybrid working. But what does that mean for the signing of vital documents?
Prior to the virus, many organisations across the globe were already implementing – or experimenting with – electronic signatures.This approach to document signing and witnessing made property sale processes quicker and more practical. After all, with e-signing, the parties involved did not necessarily have to travel to meet one another or rely on traditional mail as they might with “wet ink” signatures, saving time and effort.
Of course, as more people began to work from home around the world following COVID-19, e-signatures became an invaluable tool.It was vital for industries such as real estate to push on due to their influence on the global economy, and the need for signatures from buyers, sellers, witnesses, solicitors and other parties remained. So, how is the use of the e-signature currently employed in the world of real estate, and what does the future hold? In this article, we take a look at these key questions.
What Are E-Signatures?
As the name suggests, this form of signature is a digital identifying mark used in place of the more established in-person “wet-ink” version. As the use of e-signatures has grown in recent years, a range of different types has evolved: Simple E-Signatures, Advanced E-Signatures and Qualified E-Signatures.
Simple E-Signatures
A Simple E-Signature is an official identifying mark of the signatory in question that does not adhere to any particular security requirements.Signatures of this kind could simply be the individual’s name typed into the signature box of an electronic form or a jpeg or pdf of the relevant individual’s signature pasted into the document at a suitable point. There is also a “hybrid” option, where the signatory receives the document via email, prints it, signs it, scans it and emails it back.
Advanced E-Signatures (AES)
Advanced E-Signatures are often undertaken via specialist platforms. A document bearing a signature of this kind must not be amendable after the signature is added. The signature should have a clear and unique link to the signatory and must have been created using equipment that is totally controlled by that individual. The identification of the signatory must be easily established solely through the use of the signature provided.
Qualified E-Signatures (QES)
Considered the most secure of e-signature types, a QES is recognised as a high-level legal signature throughout the European Union and other major global bodies. The arrangement of a QES is relatively complex, and so its use is not always practical. Usually, a unique e-signature “key” is generated for the signatory in question, usually in an in-person meeting attended by a representative of a certified authority, where an official ID must be produced. Means to firmly identify the user of the key often include ID tokens or PIN codes. Their key is commonly used for the following three years.
E-Signatures In Real Estate
Most territories around the world currently accept Witnessed Electronic Signatures (WES) in some form when it comes to real estate matters like mortgages and the exchange of property contracts. However, this varies from country to country – and even between regions or states in the cases of Australia, the US and other multi-jurisdiction territories.
Many larger real estate and conveyancing organisations accept advanced or qualified e-signatures on contracts, though this depends on the individual company – and smaller firms may still be working on the rollout of some of these changes due to their complexity.
Real Estate E-Signatures Around The World
At the time of writing, the governing authorities in many countries in the West consider the e-signature a valid form of identification and permission – so long as the process is correctly undertaken. The UK’s Law of Property Act 1989 states that “contractual intention” must be proven throughout exchanges relating to the signature, that all relevant terms of the agreement are incorporated and that the documents in question are signed by all relevant parties.
Some territories in Europe are stricter than others when it comes to the qualifying elements of an E-Signature, with France demanding at minimum the use of AES and Scottish authorities stipulating the vital need for witnessing in order for a document to qualify.
In the US, the type of signature required varies from state to state, though e-signing is well established there and a wide range of options are available across the country – permitting easy “e-Closings” on mortgages and other real estate documentation.
At the time of writing, the official implementation of e-signatures in Australia is still considered temporary, and the legislation relating to the approach varies between regions. PEXA, an Australian organisation specialising in digital conveyancing settlements, began operations before the COVID outbreak. However, most e-signatures in the country are created via a hybrid method that still includes pen-and-ink at some stage.
Witnessing E-Signatures
In the majority of territories, real estate contracts must be witnessed in writing before they are considered valid. During the rollout of current e-signature methods, concerns have been raised regarding the security of witnessing. In some cases, video-witnessing is implemented, while many forms of QES remove the need for the witness to be present in any way due to its high-security standards.
Where a witness must have paperwork sent to them to sign, steps are often taken to prevent the individual in question from having access to any confidential information, with only relevant text included – and, in some cases, only the signature pages being sent.
What Happens From Here?
As the use of this handy remote resource progresses, it is likely that relevant legislation across the globe will begin to “sync up” in many respects – and, hopefully, a common platform will develop to enable easier cross-border document signing.
The use of e-signatures in the real estate world seems to be here to stay – something that will hopefully result in smoother, safer and faster property transactions globally.
