Practice Tip: Electronic Signatures, Are They Enforceable?
| May 12, 2020
Advice from your Mortgage Broker Practice Advisor, Gary Siegle
Industry professionals interact with members of the public daily. However, with the continuation of the COVID-19 pandemic, you’re no longer able to conduct business as usual.
The Government of Alberta has encouraged industry professionals to continue business with physical distancing measures in place. Understandably, the widespread acceptance of digital signatures is growing.
An electronic signature is a handy and quick alternative to a handwritten signature on a paper-based agreement, particularly now as we strive towards contact-free interactions.
The heightened use of digital signatures poses a set of questions.
Are electronic signatures legitimate? Do industry professionals need to hold off until they can meet their clients in person?
Digital Agreements and Signatures
As Albertans continue to physically distance ourselves, real estate and real money transactions requiring signatures may proceed without interruption with the use of eSignature technology.
According to the Electronic Transactions Act (ETA), electronic records and transactions are just as valid and enforceable as paper-based transactions. As such, RECA views electronic real estate purchase agreements, mortgage representation agreements, and more with electronic signatures in the same light.
If you are looking to create a valid digital contract that complies with the ETA, it must be:
- organized in the same or highly similar fashion as a paper-based form
- accessible for future reference
- capable of being retained
Like electronic agreements and contracts, electronic signatures are just as binding as written signatures, provided that the electronic signature identifies both the individual who signed and the purpose of the signature in relation to the signed documents.
The electronic signature collection process does not fall under RECA’s legislation, and there are no approved electronic agreement or signature platforms or programs for the lawful collection of electronic signatures. Technology changes too quickly for an approved list to remain intact for long.
Both parties must mutually agree on a preferred method and determine if their method complies with the ETA. Mortgage professionals should verify the specific requirements for each lender.
Read more about RECA’s interpretation of electronic signatures in the industry in RECA’s Information Bulletin: Electronic Agreements. The bulletin provides an in-depth look at the enforceability of electronic contracts.
Albertans rely on professional real estate services. All industry professionals should work cooperatively with their clients to discuss COVID-19 and find a solution for relieving the concerns of everyone involved. Visit reca.ca for guides and tools on navigating your professional practices through COVID-19.