Electronic Transactions, Signatures, and Records
Blog, Real Estate
May 10, 2019 |
Technology continues to alter the practice of real estate. Letters and phone calls give way to emails and text messages. Professionals use online tools and programs to facilitate review and signatures on transactional documents. Understanding the parameters for conducting transactions electronically will help avoid risks to your clients or your practice.
The Uniform Electronic Transactions Act (“UETA”) has been adopted by 47 states, the District of Columbia and the U.S. Virgin Islands. Ohio’s statute governing electronic signatures can be found in Revised Code Chapter 1306.
UETA applies any to electronic record or electronic signature created, generated, sent, communicated, received, or stored on or after September 14, 2000. The law covers transactions where both parties have voluntarily agreed to conduct the transaction electronically. UETA is not compulsory and cannot be used to force a party to participate in an electronic transaction. Whether a party has agreed to conduct a transaction electronically is determined from the context and surrounding circumstances, including the parties’ conduct. UETA specifically excludes transactions governed by laws pertaining to the creation and execution of wills, codicils, testamentary trusts, and certain transactions covered by the Uniform Commercial Code.
Of course, an electronic transaction contemplates electronic signatures. An electronic signature is defined as an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. In 2018, language was added to the definition to clarify that a signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature. The security procedures, context, and surrounding circumstance of a party’s creation and use of an electronic signature establishes whether an electronic signature is attributable to a person. As with manual signatures, real estate licensees cannot sign electronically on a client’s behalf without a signed and notarized power of attorney.
If the law requires a record to be retained, UETA requires retention of the electronic record. The electronic record must accurately and completely reflect the information set forth in the record after it was first generated in its final form. It must also remain acceptable for later reference. For real estate licensees, electronic records satisfy the record retention requirements set forth in license law.
If the law requires a notice to be sent, and the parties have agreed to conduct business electronically, UETA permits the notice to be sent electronically. The electronic record must be capable of retention, storage or printing by the recipient at the time of receipt. An electronic record is received when the recipient is able to retrieve the electronic record and the record is in a form capable of being sent electronically.
Real estate professionals can minimize risks with sound business practices when conducting an electronic transaction. Consider the following:
- Make sure the parties consent to an electronic transaction
- Never sign, manually or electronically, a document for a client
- Inform your client that electronic communication can be binding
- Follow up verbally to be sure electronic communication has been delivered
- Use secure software that can authenticate signatures