Technology is having a significant impact on a lot of industries, and excitingly, real estate is no exception.
While our industry does have a slight reputation for being a little behind the likes of retail, the last few years have seen technology in our space improve in leaps and bounds and we are now rapidly catching up with those other industries that lead the pack.
Unfortunately, as a highly regulated industry, perhaps more so even than these pack leaders, our capacity to adopt new technology and evolve our service is limited by the ability of the law to keep up with these advancements.
We have to make sure any change we make to how we do business is always in compliance with the law of the time — even if that law hasn’t yet considered new and better ways things can be done.
A great example of where the law is starting to catch up in a way that will have tremendous impact on the industry, creating more streamlined and efficient service, is electronic signatures. Read on to find out what has changed and how it will affect you and your business.
Electronic signatures in real estate: how has the law changed?
According to Sarah Heuvel, tenancy expert with JemmesonFisher, last year saw some major changes in parliament with regards to electronic signature; these amendments will pave the way for changing how we establish residential tenancy agreements.
To be administered correctly, residential tenancy agreements require the witnessing of the tenant’s signature. Traditionally, and in line with the Electronic Transactions Act 2000 and associated Regulation, this signature needs to be made in person, on paper.
“Previously, the Electronics Transactions Regulation prohibited a lease agreement being signed electronically because of that witnessing requirement,” says Sarah. “But there has been a recent change to the Conveyancing Legislation Amendment Bill 2018 (NSW) which effectively removes that requirement, so now leases can be signed electronically.”
Sarah goes on to confirm the newly introduced process: “You still need to have a tenant’s signature witnessed, however this can be made electronically now.”
Are electronic signatures safe?
The technology to sign documents electronically has been around for years, with several big companies facilitating the process for major businesses operating in a number of sectors.
What really held up adoption of the process, especially when it came to real estate, was a security concern — could electronic signatures on contracts really be trusted? Would the signature process still be applied in such a way that it is air-tight and we know who signed and when?
These days, the answer to those questions is a resounding yes — in fact, electronic signature may now be as safe, if not safer than a traditional on-paper signature because of its inbuilt tracking.
Using reputable companies like Docusign, the signature process is methodical and process-driven. Signatures are made within their purpose-built system and every movement of every document is carefully tracked.
The basic process is as follows: the contract is created and uploaded into the signature platform, let’s say Docusign, by a solicitor or agent.
Signature fields are attached to the document, the tenant or landlord’s details are added (as provided by them and ideally already validated), and with the click of a button, the contract is forwarded to those people using the email addresses provided.
When the recipient receives the document, they open it up as a PDF online (so it’s compatible with almost any device you can think of) and they sign and date it, then simply click a submit button. The agent is then notified the contract has been signed and they can access it to print or file it.
One of the great benefits to this process is now, rather than passing around two copies of a contract that are identical, a workflow can be created to send the same contract to all parties before it is returned to the creator. This helps ensure contract integrity and that nothing is added to the contract without every party being explicitly aware.
The other major benefit is the details you can’t see. When a signature is made, the platform doesn’t just save a picture of a squiggle, it also records data about the signature, for example, the IP address of the computer where the signature was made, what time it was made and other identifying information. If a person were to dispute that the signature is in fact theirs, they would need to argue against some fairly solid and unbiased data, free from human error.
Can sales contracts be signed electronically?
While tenancy agreements and other similar documents (or those not requiring a witness) may be able to be signed electronically, sales contracts cannot yet include an electronic witness signature.
If you do a quick Google search, you’ll see this is an area of hot debate, as some solicitors argue the point is irrelevant as sales contracts don’t require a witness to sign, while others argue traditional contracts with traditional signatures are currently best for sales, as that witness signature is an important part of the process.
EAC members can access free legal advice from the experts at JemmesonFisher subject to the terms of their membership with EAC.