Canada's Condominium Magazine

E-signatures on real estate documents acceptable July 1

As of Wednesday, July 1, it will be legal in Ontario to sign a purchase of sale agreement for real estate property electronically. Purchasers and vendors will be able to make offers and carry out any back-and-forth amendments without the need for copying and faxing hard copies of the documents. The “cumbersome process” of making a paper-based offer, counter-offer, counter-counter-offer, and so on, will be simplified. Now any changes to an offer can be done on the real estate agent or client’s tablet or laptop, duly initialed electronically by means of an application such as DocuSign, and sent through the ether. The Ontario Real Estate Association called the change “great news for realtors as well as consumers.”

The law makes an electronic signature legally equivalent to a handwritten signature on a paper document. According to the Government announcement about the change to the Electronic Commerce Act (ECA), it will now be easier and less time-consuming to send documents electronically. This, is says, is part of its economic plan, the part that goes to creating “a dynamic and innovative environment where business thrives.”

Ontario becomes the sixth province to allow electronic signatures in real estate deals. Previously, it was possible to sign documents electronically, but real estate transactions were exempted. One of the main concerns was the lack of standards of reliability or security for e-signatures. Consultations with lawyers and real estate professionals revealed that they were worried about “opportunities for fraud” being created by the use of e-signatures. To prevent such fraud, they wanted to ensure that the authenticity of any e-signature should be verifiable; that some form of audit trail should be created in the system for future reference; that the information be available to law enforcement agencies if necessary; and that the electronic documents and signatures should be kept for a specified minimum time.

The agreement of purchase and sale is one of the most important documents in a real estate transaction. The ability to sign it electronically will make the process of buying or selling more efficient. This is great news for realtors as well as consumers across the province.

Determining reliability up to the individual

The law doesn’t define how to determine a signature’s reliability. The government says that, just as with handwritten signatures, “it is up to the person relying on them to decide if they are sufficiently reliable.” There is “no generally agreed method” for identifying people or authenticating their identities. Real estate agents, lawyers and the parties to real estate transactions will have to satisfy themselves that everyone is who he says he is.

People who choose to sell their homes without the use of real estate agents may be at greater risk of fraud. Before the law was changed, some expressed concern that people could expose themselves to fraud if they were able to create their own electronic documents and enter into negotiations with a purchaser.

The government says that it will, if necessary, make regulations about the method to be used in e-signing and set standards for the technology. No doubt there will be a period of adjustment as realtors and home buyers adapt to the new system. Signatures on paper are, of course, still permitted.

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