In a sign of the times, the Ontario authorities in Canada have issued a statement today confirming speculation that they are looking at esignatures as a means of completing real estate transactions. While the idea of electronic signatures on official documentation is not new, it is not something which is widely advocated in the real estate industry. Indeed, the vast majority of financial investment markets have shied away from electronic signatures as a means of closing deals.
So, what have the Ontario authorities got in mind and will they be able to prevent potential fraud?
Why consider electronic signatures?
Electronic signatures have been around in some shape or form for many years now, indeed many legal professions will allow these as an initial authority with “hard copies” made available at a later date. It seems as though the Ontario government is looking towards using electronic signatures in place of traditional signatures and therefore allowing people to close deals on potentially huge financial transactions.
Quote from PropertyForum.com: “The US authorities have this week announced plans to revise the visa system for Chinese students moving to the country. Previously Chinese students studying in America were forced to renew their visa annually which stopped many of them from making long-term plans for their future in the US.”
When you do take into account the very fast world we live in, the fact that people may not be available immediately to sign paperwork and deals can be lost if timescales lengthen, perhaps electronic signatures are the way forward?
What does the real estate industry think?
While many people e-mail documentation and instructions to their lawyers and advisers, the vast majority will still require traditional signatures to transfer money and close deals. The industry is not against using electronic signatures in the short, medium and longer term and indeed it may well help to close deals which could otherwise fall apart. It will be interesting to see whether other areas of Canada take on this potential change and indeed whether it is something which is adopted by the worldwide real estate industry.
There are still concerns regarding potential fraud, with real estate already governed by very strict money-laundering regulations, so what can the authorities do to address these concerns?
It is very easy to send an e-mail or electronic message in this day and age and we can literally send them from our mobile phones on the move. While the real estate industry has not lodged any complaints about the potential introduction of electronic signatures in real estate transactions, there will need to be some protocols in place.
The Internet has moved on over the years and it is now feasible to record a detailed audit trail for each and every electronic message/e-mail that you receive. The idea behind this audit trail is that an electronic signature can be traced back to the original sender although this would also require significant security from the sender’s side. It is possible, it is feasible and indeed the systems are already in place to create a very detailed and informative audit trail. Will it be enough?
It will be interesting to see whether the Ontario authorities are able to push through this move to make electronic signatures an acceptable authority in the real estate industry. There are concerns regarding fraud, there will obviously need to be strict security measures in place although the creation of an audit trail is fairly simple and should cover various legal requirements. We will keep an eye on the situation regarding the plans to replace traditional signatures with electronic signatures within the Ontario real estate industry.