Friday, April 7, 2017

The Safety and Security of Online Contracts

In my last blog, I discussed the evolution of technology as it relates to the world of real estate and specifically, online contracts and signatures. In this posting, I will discuss this further, especially the safety and security of these online documents and signatures.

On July 25, 2000, the first paperless real estate transaction took place in Broward County, Florida. That transaction involved the purchase and financing of a home and took less than five minutes to record. Confirmed documents bearing all necessary recording data were immediately returned to the settlement agent via e-mail. Images of the recorded documents were immediately available on the county’s website.

Paperless real estate transactions save time, and time is money. The process of accepting a purchase and sale contract; executing closing documents, the promissory note and mortgage; a compliance review by the lender; transferring the deed and the mortgage to be verified and recorded at the county office building; and issuing the title on the property — all can be sent electronically to the market for loan servicing rights. This process from beginning to end can be completed within one business day.

It has become clear that innovation and the paperless real estate transaction are essential in maintaining accurate consumer records and coordinating a seamless real estate transaction with great benefits to the consumer, the lending institutions and all the real estate professionals involved. Real estate documents often contain sensitive information and represent some of life’s most important transactions. With regard to security, a key advantage with e-signatures is this: Should an e-signed document’s validity ever be called into question, agents and their organizations can know with certainty that those documents are legally sound and defensible because the evidence of the signature is embedded into the document itself. And because independent e-signatures adhere to published, international standards, the signed document is valid forever.

Signatures have been the bane of a real estate professional’s existence for generations. With purchase agreements and closings getting more complicated every year, with more and more layers of mandatory disclosures, regulations, title assurances, and anything else you care to name, it’s easy for customers to miss a signature or initial. Historically, this meant that the real estate agent winds up expending precious prospecting time driving across town to track down the parties, or spending money to prepare and send documents back to them via FedEx. Now, this can all be taken easily and quickly online.

The signature request allows me to send a ‘sign form request’ and allows my clients to sign with a truly wet signature using a tablet or cellphone! My client can also use a laptop touch pad and a traditional mouse on a desktop computer too. There are easy methods for the computer challenged client where they are allowed to type and pick a font for their signature as well.

Are these programs legal? Electronic contracts and electronic signatures are just as legal and enforceable as traditional paper contracts signed in ink. Federal legislation enacted in 2000, known as the Electronic Signatures in Global and International Commerce Act (ESGICA), removed the uncertainty that previously plagued e-contracts. This e-signature law made electronic contracts and signatures as legally valid as paper contracts, which was great news for companies that conduct business online

Are these programs secure? These signature solutions use digital certificates to provide security and authentication. User authentication is enhanced by the fact that they require multiple layers of authentication. Virtually all electronic signature solutions generate an “audit trail” that includes the path the documents traveled and computer-generated event information such as the date and time the documents were signed as well as the IP address of the computer used to sign and send the documents.

No one wants to have a real estate transaction delayed because of a paperwork kerfuffle. Fortunately, there’s a better way, thanks to a miracle of modern information technology. It’s time to embrace the e-signature!

If you have any questions about online signatures, call me, your Sarasota Hometown Realtor and I will be happy to discuss this with you and…help you buy or sell your home in Sarasota, Florida.

Sources and credits: The Washington Post, Online Sunshine/The Florida Statues, NOLO Press