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Digital signatures for real estate transactions
May 21, 2015

by Josh Nekrep

 

Today, you can sign for just about anything digitally, except when purchasing or selling a house in Manitoba. The Manitoba real estate industry is lagging behind much of Canada in the area of digital signatures and it’s the consumer that is put at greater risk as a result.

Today, if you want to buy or sell a house, you’ll need to physically sign paper documents, often printed on carbonless copy paper, like people did with most things when I was just a young boy. This is because the industry is restricted by a piece of provincial legislation — The Electronic Commerce and Information Act — that prohibits electronic signatures in most of the documents used by all REALTORS® in the province. 

The legislation dates back to the year 2000, which doesn’t sound like that long ago.  However, consider that at the time it was written into law, Gmail was four years away from being invented, if we dared watch a video online we probably used RealPlayer, Wikipedia was not yet invented, and there was no Facebook or Twitter, or even MySpace. Technology has changed at a rapid pace and not surprisingly, legislation has fallen behind.

Perhaps one of the more common objections to digital signatures is the risk of fraud. With media stories about illicit hackers and identity theft, it’s no surprise that people might raise an eyebrow at the thought of something as important as a real estate transaction being conducted fully digitally.  What people fail to realize is that digital signatures now offer a far greater level of protection and a far smaller risk of fraud than a conventional “wet” signature.

A request for a digital signature can be sent to a recipient’s e-mail address — password protected by a password that is communicated separately — and the signing can be electronically logged by IP address and geographic location. In contrast, the security behind today’s wet signatures is, “Yes, that sort of looks like this other thing you signed sometime before.” 

The process would look something like this: I prepare your offer to purchase and call you on the phone with a password that you’ll need to open the documents. Minutes later, you check your e-mails and you see an e-mail from me containing a link. You click on the link, enter the password I just gave you, and you are prompted to read and digitally sign and initial the document in the places I’ve marked.  You can do this either freehand with a mouse, with your finger on a tablet or smartphone, or by simply typing your name and initials into the box. When you’ve signed and initialed all the boxes, you simply save the document and I am notified that you’ve completed your part.

Next, I transmit your signed offer to the listing agent who reviews the offer and e-mails it to the vendor for signatures. This can all take place securely  and in just minutes.

If you had to defend the authenticity of a signature in court, would you rather depend on a comprehensive electronic audit trail or on the word of a witness who recalls seeing the client sign the document?

Today, the technology exists to securely and easily have documents signed, transmitted and stored electronically. It is being used in many industries already, but real estate has not yet been able to take advantage. 

In an industry where “time is of the essence,” the offshoot of this is delays in document signatures and delivery, greater risk of fraud to the consumers, a tremendous amount of inefficiency within the industry, and a less-than-green process increasing the environmental impact of the industry. Countless hours are spent every day shuttling folders of printed paper from location-to-location, while modern systems exist to do the same thing in minutes without even starting your car.

WinnipegREALTORS® and the Manitoba Real Estate Association are working together to bring this issue to the attention of other business groups and the provincial government. Hopefully, in the not too distant future, electronic signatures on an offer to purchase in Manitoba will be allowed and become a common practice.

(Josh Nekrep is a director of WinnipegREALTORS® and an active member of its technology committee.)