ELECTRONIC SIGNATURES AND DOCUMENTS RESOURCE PAGE
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Webinar Date (Click the link below to register for the webinar) |
Time |
Topic |
Presenter |
| 5/29/2013 | 2pm-3pm | zipLogix Digital Ink® | Fatima Sogueco |
| 6/14/2013 | 2pm-3pm | zipLogix Digital Ink® | Fatima Sogueco |
| 6/27/2013 | 2pm-3pm | zipLogix Digital Ink® | Fatima Sogueco |
Click the logos below for more information on each solution:
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TABLE OF CONTENTS
Overview
Legal Background
Electronic Notarization
Electronic Recordation
Who's Accepting Electronic Signatures
News and Updates
C.A.R. Resources
Electronic signatures are gaining momentum in the real estate industry. Although some financial institutions are reluctant to accept electronic signatures on all documents related to a real estate transactions (such as loan documents and REO sales), the real estate industry is gradually moving towards this standard which allows for greater accessibility and convenience. As electronic signatures and other aspects of a “paperless” real estate transaction become more widespread, it will become increasingly important for real estate agents to have an in-depth knowledge of electronic signatures and electronic documents. This page provides C.A.R. members with facts and resources related to electronic signatures and electronic documents.
What is an electronic signature?
An electronic signature is (1) an electronic sound, symbol or process (2) attached or associated with a contract or other document and (3) adopted by a person with the intent to sign. There are different types of electronic signatures.
What is a digital signature?
A digital signature is a type of electronic signature. There is a digital code attached or embedded in the electronic document. Not only does it uniquely identify the signer, but it ensures the original content of the document and uses encryption technology to prevent alteration. Digital signatures permanently secure the identity of signers and the document’s contents. The signer’s digital identity is referenced within the digital signature at the time of signing. Once it has been signed, the document’s integrity is protected. An alteration of the original document will invalidate all digital signatures on the document and bring into question the integrity of the document’s contents. Digital signatures provide a higher level of security than other types of electronic signatures.
Are Electronic Signatures Legal in California?
Yes. The Uniform Electronic Transactions Act (UETA) (state law) and the Electronic Signatures in Global and National Commerce Act (ESIGN) (federal law) state that a document or signature cannot be denied legal effect or enforceability solely because it is in electronic form. Both laws allow electronic signatures to be used in real estate transactions. More information about electronic signatures is available through C.A.R.’s Legal Q&A entitled “Electronic Signatures and Records in Real Estate Transactions.”
How Do I Prove a Document was Electronically Signed?
Although rare, legal disputes can arise from time to time concerning the authenticity of signatures and content within documents in real estate transactions. Such disputes typically involve:
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Contract repudiation - A buyer or seller claiming that he or she did not in fact sign or authorize a contract; and
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Fraud or mistake - A buyer or seller claims that the content of a document is different from the document that he or she actually signed.
The authenticity of electronic signatures and documents can be proven in a variety of ways. In fact, electronic signatures can be authenticated in ways that wet ink signatures and traditional paper documents cannot. A major advantage to using an electronic signature software program like zipLogix Digital Ink® is that such software programs typically create automated records that keep track of important information like when a document was signed, what computer a document was signed from and what the document looked like when it was signed. These automated records can be used together with a description of how the electronic signature program works to provide the proof a party to a dispute needs. In this section of the website, we’ll call the automated records together with the description of how an electronic signature software program works “System Information.” System Information can be obtained from your electronic signature service provider and can include the following items:
1. Signer authentication - Information about how a signer’s identity is verified prior to signing or accessing a document. The software may force the signer to access the software via a link sent to the signer’s personal email account or force the user to verify his or her identity by providing personally identifiable information, such as a social security number, birthdate, etc. A robust authentication procedure makes it less likely that someone can fraudulently pose as a signer.
2. Activity logs - This can include information about what computer the software was accessed from, what part of the software or web pages were accessed by the signer, what actions were taken by the signer in each part or on each web page and when those actions were taken.
3. Document “metadata” - Metadata is information that describes, helps locate, or otherwise makes it easier to find, use and manage data and electronic documents. For example, metadata related to an electronically signed document file could include when the document was viewed and from where, when it was signed, where it was sent afterward and whether the document was modified.
4. Data security - Information about how the software is physically and electronically secured to prevent tampering after a document is signed. For example, the software may use encryption to produce “hash values ” that are associated with a signed document. If so, any change to the document would change the “hash value” and show that the document has been tampered with.
5. Audit procedures - Information about the audit procedures the software uses to ensure that the software complies with all of the above information. This helps to show that the software’s records are reliable.
6.
Retrieval - Information about the procedure by which all of the above was obtained. It should be obtained in a reliable manner by individuals with knowledge of the systems and procedures.
While System Information is particularly useful to authenticate electronic signatures and documents, there are other methods of validating or invalidating electronic and traditional wet ink signatures. The chart below provides a non-exhaustive list of the more common materials, testimony, and facts that can be collected and used to prove that a party signed a document, or that the document was or was not altered. As you can see, in many cases it may be easier to find the proper evidence for electronic signatures and documents than for traditional wet ink signatures and paper documents.
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No. |
Authentication Method |
Location of Authentication Materials |
Available for Electronic Signatures? |
Available for Wet Ink Signatures? |
| 1 | System Information | Electronic signature system provider |
YES |
NO |
| 2 | Declaration of Custodian of Records | Entity that stores signatures or signed document in the ordinary course of business (e.g., Electronic signature system provider) |
YES |
YES |
| 3 | Testimony of Signing Party | Signing party |
YES |
YES |
| 4 | Testimony from a person who witnessed the signature | Must locate witness |
YES |
YES |
| 5 | Circumstantial evidence that a party signed the document - e.g., did the signer behave as if he or she signed the document? | N/A |
YES |
YES |
| 6 | Non-expert opinion of a person familiar with the signature of the party | Must locate witness |
YES |
YES |
| 7 | Signature comparison by the jury or an expert | Expert testimony or rely on jury determination |
YES |
YES |
What C.A.R. Forms Should NOT be Signed Electronically?
E-SIGN and/or UETA exclude certain documents from being enforceable under those laws, and thereunder it is recommended that they not be signed electronically:
Landlord – Tenant forms
Seller Financing Forms
Home Equity Contract Forms
Verification of Electronic Signature
WHY ARE C.A.R. LANDLORD TENANT FORMS BLOCKED FROM USING ELECTRONIC SIGNATURES?
Electronic signatures are valid, binding and protected methods for entering into contractual relationships or providing disclosures as specified in both California (UETA) and Federal (E-Sign) law. Some types of documents or records are exempt from the coverage of one or both of those laws. Of the 28 C.A.R. forms falling in the Rental/Lease and Property Management category, 14 obviously or arguably fall outside the protection of UETA and E-Sign. For example, the lease/rental agreement (C.A.R. form LR) addresses the handling of a tenant security deposit at both the commencement and termination of the agreement and such a provision is explicitly covered by Civil Code section 1950.5 specifically referenced as an exclusion to electronic signatures in UETA. The notice to pay rent or quit addresses a possible eviction and therefor clearly falls within an exception mentioned in E-Sign. Other forms in this category are less obviously excluded from the protections of UETA or E-Sign, such as the Pre-move out inspection statement (C.A.R. form PMOI) (which can be construed as a right for the tenant to cure a breach by fixing damages to the property) or the Notice of Termination of Tenancy (C.A.R. form NTT) (which can lead to eviction if the tenant does not vacate). Other, non-rental related forms are exempt from the electronic signature laws, such as the Notice of Default Purchase Agreement and the Seller Financing Disclosure. C.A.R. blocks forms from being signed using electronic signatures so that C.A.R. members do not allow their clients to inadvertently sign a document electronically that is not protected by Federal or State law. Because such a large portion of the rental related library is clearly or arguably not covered by these laws, it was thought that the better practice would be to block this entire subset of the C.A.R. forms library in order to avoid confusion.
ELECTRONIC NOTARIZATION
California law and regulations support the electronic notarization of documents, but certain notarial acts (including acknowledgement which is used in real estate transactions) require the person to appear in person in front of the notary. Under California law, for an electronic notary to be valid, the notarization must include the valid electronic signature of the party as well as the electronic signature of the notary and an electronic seal from the notary. In these cases, this electronic notarization may be done entirely electronically. However, for acknowledgements (which verify the identity of the person), the California Secretary of State (whose office regulates notaries) has indicated that video information or other electronic means of identifying the person are not adequate, and that the person requiring the acknowledgement must appear in person before the notary and provide proof of identity. Furthermore, certain documents (such as title documents) require that the notary obtain the thumbprint of the party, which can only be done in person. (Electronic thumbprints are not accepted for notarization at the current time.) The California Secretary of State may in the future modify these rules, but as a result, the entire real estate transaction cannot be notarized electronically but at least part must be done in the presence of a notary.
ELECTRONIC RECORDATION
Instruments affecting interests in California real property may be electronically recorded through the use of an Electronic Recording Delivery System (“ERDS”) that has been established by a county recorder. Under California law, once a county has established an ERDS and the ERDS has been certified by the California Attorney General, the county recorder may enter into contracts with “authorized submitters” to receive digitized electronic records from those parties for recording. Authorized submitters can include title insurers, underwritten title companies, institutional lenders or another government entity. Only authorized submitters may submit documents for electronic recording. As a result, many agents may not ever have direct experience with electronic recording. Nevertheless, as an aspect of a paperless real estate transaction, the wide adoption of electronic recordation may help industry players become more comfortable with the use of electronic documents, electronic signatures and paperless real estate transactions in general. Up to date information on which California counties have adopted an ERDS and currently accept electronic records can be found here.
ACCEPTANCE OF ELECTRONIC SIGNATURES
Bank of America - Electronic Signatures Reference Guide, September 2012
Federal Housing Administration - FHA - Mortgagee Letter 2010-14
Fannie Mae - Selling Guide Part A, Subpart 2, Chapter 5
Freddie Mac - Single Family Seller/Servicer Guide Volume 1, Chapter 3
See NEWS below
California Department of Corporations - Escrow Bulletin, March 2009
• Requires verification of authentication and use of a consent form. C.A.R. publishes a consent form entitled Optional Verification of Electronic Signature for Third Parties (OVS).
California Department of Real Estate (“DRE”)
• The DRE does not officially endorse electronic signatures, but has indicated they are acceptable for many real estate transactions.
Share your experience - Help C.A.R. and fellow REALTORS® track acceptance in the real estate industry! Let us know about your experiences with electronic signatures - which lenders are accepting electronic signatures and on what documents?
News
Transactions Go Paperless, California Real Estate, January/February 2011.
E-Signatures Safer than the Real Think, Experts Say, msnbc.com, January 25, 2011.
iAdapt: How Agents Should Use the iPad, Chicago Agent Magazine, October 24, 2011.
Freddie Mac expands guidance on e-signatures, other changes, May 15, 2012
Legal Updates
• United States District Court, Northern District of California upholds the validity of an arbitration agreement executed with an electronic signature structured as a click-through “Accept” button. Swift v. Zynga Game Network, Inc., 805 F. Supp. 2d 904 (N.D. Cal. 2011).
• United States District Court, Northern District of California upholds the validity of an arbitration agreement executed with an electronic signature structured as a click-through “I Agree” button on an iPad screen. In re Apple and AT&T iPad Unlimited Data Plan Litigation, 2011 WL 2886407 (N.D. Cal.)
C.A.R. ELECTRONIC SIGNATURE TOOLS
Integrated zipForm® 6 E-Signature Solutions
zipLogix Digital Ink® is offered as a free member benefit from C.A.R. More information on this product is available at http://www.car.org/tools/zipForm6/esign/digitalink.
DocuSign® is offered on a monthly or annual basis via a subscription paid by the zipForm® user. More information is available at http://www.car.org/tools/zipForm6/esign/docusign.
Security and Authentication
Both zipLogix Digital Ink® and DocuSign® are widely used electronic signature platforms, and use digital signatures or digital certificates to provide greater security and authentication. User authentication is leveraged by email, access (pin) code, and third party identity check. An electronic signature solution customarily furnishes an “audit trail” that includes the core elements required to detail all of the events that occurred in the signing transaction. The audit trail typically is a document with detailed, computer generated event information (date/time stamped, XML format).
Advantages of Electronic Signatures
Reduce Your Environmental Impact. Electronic signatures reduce waste, emissions and paper usage. You’ll substantially decrease the amount of carbon dioxide generated by shipping documents, burdens on landfills by keeping discarded paper out, and the toxic chemicals and destruction of forests required to manufacture paper.
Contact & Support Resources
zipLogix Digital Ink
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DocuSign®
For further information email cs@car.org.
