One such digital signature program is called Authentisign. The Metropolitan Regional Information System (MRIS) provides Authentisign to its Realtor clients for a $69 annual fee. This program can be used in English or Spanish, is approved for use with Federal Housing Administration (FHA) documents and complies with the requirements of the Federal Electronic Signatures in Global and National Commerce Act (E-SIGN).
E-SIGN was enacted in 2000 and provides that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” This landmark legislation opened the door for secure, authentic, legible and instantaneous signing of legally binding real estate contracts.
Are these programs secure? DocuSign, the official electronic signature solution for the members of the National Association of Realtors, uses digital certificates to provide security and authentication. User authentication is enhanced by the fact that it is e-mail based, requires an access (PIN) code, and employs third-party identity checks. Virtually all electronic signature solutions generate an “audit trail” that includes the path the documents traveled and computer-generated event information such as the date and time the documents were signed as well as the IP address of the computer used to sign and send the documents.
In a recent interview with Security News Daily, Tom Gonser, DocuSign’s founder, states, “E-Signatures give the user the ability to prove that a transaction has occurred that’s way beyond what you can do with paper.” Once a signed document is uploaded and the e-signature attached to it, the company’s firewall-protected server encrypts it and then “hashes” it — i.e., creates a mathematical algorithm of the file that can be checked to see whether it has been corrupted.
Perhaps as digitally signed real estate sales contracts become ubiquitous, more lenders will become comfortable accepting them in connection with mortgage loans and short sales. Routinely, despite the mandates of the E-SIGN legislation, many short-sale servicers, such as Bank of America, continue to refuse to accept short-sale purchase and sale contracts that are digitally signed by all parties.
Bank of America has insisted that all parties go through the hassle of manually re-signing the 50 to 60 pages of documents that now comprise the standard purchase and sale package. These refusals come despite pronouncements from their own investors, such as Freddie Mac, that digital signatures on purchase and sale agreements are now acceptable.
The time has come for all participants in the real estate industry to embrace digital signatures on contracts and electronic filings of real estate documents in our land records offices.
Harvey S. Jacobs is a real estate lawyer in the Rockville office of Joseph, Greenwald & Laake. He is an active real estate investor, developer, landlord settlement attorney and lender. This column is not legal advice and should not be acted upon without obtaining legal counsel. Jacobs can be reached at hjacobs@jgllaw.com.
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