In 2000, Congress enacted the Electronic Signatures in Global and National Commerce Act (ESIGN) to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.
To protect consumers, certain requirements must be met. Check with your state and title companies, and you may be able to use e-signatures on your documents for out-of-area clients.
1. Ensures Access to Documents and Promotes Awareness
The provision ensures that the consumer has access to a computer and to the Internet; ensures that the consumer has access to the software necessary to open the documents that are to be transmitted electronically; and raises the consumer's awareness of the importance of the documents received and the importance of receiving the documents electronically.2. Provides a "bright line" to identfy legitimate businesses
Though this item is primarily discussing the fact that the consumer consent portion of ESIGN should reassure consumers about the legitimacy of an online merchant, we in real estate can look on our use of e-signatures as a higher level service to our clients and a differentiator.3. Helps Prevent Deception and Fraud
As most state real estate practice statutes require timely delivery of all signed documents to the parties involved, this section of the ESIGN Act is redundant in some ways for our business. However, it attempts to prevent fraud before it occurs, as it deters companies from fraudulently changing the terms of contracts in cases where consumers electronically sign an agreemnt and consent to receive electronic disclosures.4. Legal certainty and protection
Businesses that implememt procedures for complying with sections of the ESIGN Act have some assurance that they have obtained consent and provided electronic documents in a manner sufficient to make the electronic transactions legaly valid.In addition, they obtain information to show that the record they provided could be accessed by the consumer. As a result, the consumer consent provision may protect e-commerce businesses from baseless legal claims by providing an electronic or paper document trail of the transaction when disclosures or other records are provided electronically to consumers.
5. Can we use E-Signatures per the ESIGN Act in real estate?
Docusign, one provider of e-signature services, says they are adding real estate and mortgage users at a rapid pace. Though I practice only in New Mexico currently, I did interview four title company principals, and they all stated that they would have no problem with contracts, counter offers, etc. with compliant e-signatures.The County Clerk will not accept deeds or other items for recording with e-signatures, but those aren't documents that we deal with as real estate brokers and agents anyway. It seems that many national lenders are also embracing e-signatures.
Do your due diligence, but consider e-signatures for your business, particularly if you consistently send documents for signature via email or facsimile.
