In the slowly evolving world of real estate, many REALTOR® members are now using email, text messaging and telephone calls to help speed up negotiations and email to exchange documents with their clients and with other REALTOR® members. Electronic signatures, while not yet universally accepted, are becoming more common for real estate contracts.
A “wet” signature is a signature written in ink. These are the in-person signatures that are commonly used to indicate that a person agrees to the contents of a document.
A "digitized," wet signature is a graphic representation of a wet ink signature. A person signing a document using a stylus on a tablet is creating a digitized signature. A digitized signature can also be created by simply faxing a document with a wet signature.
An "electronic" signature is one where the user’s identity is confirmed by a service provider and a password protected signature representation is applied to an electronic document. This is done on-line. An electronic signature does not necessarily look like the writer’s handwriting.
Are there risks to using electronic signatures?
Electronic signatures are legally valid on most contracts in Alberta, due to the provincial Electronic Signatures Act.
The validity of electronic signatures on real estate purchase contracts has not been tested in the courts. While Alberta courts have generally agreed that electronic signatures meet the test for reliability for signatures, there has been no specific ruling on whether electronic signatures on real estate purchase contracts meet the “in writing” criteria for transfers of land. An original, wet signature is required to transfer land in Alberta because it requires registration to be effective (the exception to the application of the Electronic Signatures Act). The discussion around the validity of electronic signatures within real estate purchase contracts in Alberta appears to be whether it's just the transfer of land certificate (which is what is the document being registered) alone that needs the wet signature or if it is needed on the purchase contract as well.
Many other jurisdictions have already adopted electronic signatures for real estate purchase contracts or are moving in that direction. However, because there has been no Alberta case, that is one of the risks that Alberta REALTOR® members and their clients need to be aware of.
Not all organizations have adopted electronic signatures.
Most financial and lending institutions still insist on “wet” or digitized, wet signatures along with witnesses to those signatures. Witnesses are not required on real estate contracts, but do help with provability that a person has signed the contract. Because these institutions control the purse strings, some real estate contracts may need to be done with “wet” signatures rather than electronic signatures. This is something the consumer should verify acceptance with their financial institution and lawyer before signing a real estate purchase contract with an electronic signature.
Experts indicate the chances of fraud with electronic signatures are no greater than with wet or digitized, wet signatures. In fact, experts indicate that electronic signatures can provide a greater sense of security since there is an ability to track exactly when and where a signature was applied to a document. There is actually no ability to identify who the person was that clicked the signature box, but the identify of the exact computerized device where that click was made is recorded through its IP and MAC addresses.