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Electronic Signatures

 by Matt Leask

 

Information Technology has become widespread enough, and advanced enough, to the point where most people expect to be able to complete just about any task using their smart phone from pretty much anywhere in the world. I am one of these people, I’ve had a cell phone my entire adult life. I use my smart phone for just about everything, so I don’t blame clients when they question me on having to come and meet with me face to face to close a real estate transaction.

Software has become commonplace for obtaining signatures on various real estate documents, including agreements of purchase and sale (AKA “Offers”). The Electronic Commerce Act, which came into force back in 2000 in Ontario, allows for the use of electronic signatures. Prior to this legislation, it was unclear whether electronic communications satisfied certain legislative requirements that specific types of contracts need to be made in writing and signed by the parties. The Act specifically allows for electronic execution and transmission of contract and ensures that the enforceability and validity of contracts in this country does not depend on the medium in which it is written, signed, sent or received.

Interestingly, the original legislation did not allow for electronic signatures on agreements of purchase and sale for the transfer of real property. It was not until 2013 that amendments to the act allowed for real estate agreements to be signed electronically.

So why then, does the lawyer closing your real estate deal require you to meet with her face to face? You may think it is because we’re behind the times and attached to traditional ways of doing things, but in fact, the main reason is protection of our clients, and protection of the general public from fraudulent practices.

Lawyers are a self-governed profession, and the Law Society of Ontario sets out the rules by which lawyers in this province must abide. One of those rules requires us to “verify” the identification of our client(s) anytime we’re are involved in receiving, paying or transferring funds on behalf of our client(s). Verifying in this instance means when you come and meet with me to close your real estate deal, I need to actually hold an original piece of identification in my hand to make sure you are who you claim to be.

The reason behind this rule is grounded in a real risk of fraud in the purchase, sale, and financing of real estate. Lawyers are the only people empowered to transfer land in this Province, and part of our responsibility is to protect our clients and the general public from being defrauded of their home or their money. Perhaps in the future technology will become readily available that will allow for remote signings without the risk of identity theft or other fraud, but until then, you’ll need to do things the old-fashioned way when it comes to buying and selling your home.

 

Matt Leask is an associate within the Lancaster Brooks & Welch LLP corporate and commercial department. He may be reached to discuss a corporate or real estate matter at 905-641-1551.

 

 

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