Electronic Signatures for Real Estate Deals

I was, from the beginning, all in favour of and have supported the switch-over to an electronic registry system for the Province of Ontario. That said, now the Ontario Government wants to allow the electronic signature of agreements of purchase and sale. This, I believe, ventures into dangerous territory.

We have had electronic signature in Ontario for several years since the Electronic Commerce Act passed in 2000 but in my experience it is only employed by builder vendors as the purchasers sign personally.

With the universal use of fax, I do not see how electronic signature of agreements of purchase and sale will speed up the process.

Further, it has been my experience that prospective purchasers all too often sign agreements of purchase and sale without legal assistance on the say so of real estate agents. Electronic Signature will only further exacerbate this unwise practice.

The government’s proposal includes protection as to fraud but does not consider the unwitting purchaser for whom it will be made even easier to fail to give sufficient consideration to the agreement of purchase and sale as all he/she will have to do is push “send.” At least with a signature he/she has the opportunity to see the document in writing, consider consulting with a lawyer before performing the physical act of signing. A house purchase or sale is the most expensive purchase a person will make in his/her lifetime.

The Government’s proposal will look at the following:

  • that the method used is reliable for the purpose of identifying the person who signs;
  • that it ensures that the electronic signature is permanent;
  • that the signature is accessible so as to be usable for subsequent reference by anyone entitled to have access to the document or authorized to require its production.

Of course the real estate industry has been pushing the government to allow electronic signatures.

I do not know what we gain by electronic signature on the agreement of purchase and sale when all other documents involved in the purchase and sale are on paper in any event. Real estate purchases and sales are the farthest legal process, from a paperless world there is in law, so why bother.

Unless the legislation, if passed, is made mandatory, I for one will insist upon the personal signature of agreements of purchase and sale for my clients. I am certain that the bulk of sole practitioners will take the same approach and insist upon personal signatures, if given the opportunity to have input in the agreement of purchase and sale process.

We will always have to meet with our clients so electronic signature on the agreement of purchase and sale will not do away with the, at least one and almost invariably the two meetings we have with our clients. One is to discuss the purchase or sale at the very beginning and one to sign up just before closing.

April 2015