Electronic signature - Good practices

Here is an overview of proper practices to adopt when using electronic signatures in the course of your professional activities, in order to get documents or forms signed by clients.

Choose a certified firm

First, remember that you are strongly recommended to do business with an OACIQ-certified firm. The use of a non-certified system is not advisable as it exposes you and your clients to many risks. Read the article entitled Is the electronic signature secure? Yes!

Inform your agency executive officer

When a broker wishes to use an electronic signature system for his work, he must first seek the authorization of his agency executive officer. Since the officer is responsible for maintaining the records, books and registers, he may set certain guidelines regarding the use of electronic signatures by brokers acting on behalf of the agency under his responsibility.

Important rules to follow

A broker who uses an electronic signature system must evaluate whether this method is appropriate for each situation where documents need to be signed. Do not forget that having documents or forms signed using an electronic process does not release the broker from his ethical obligations, including when it comes to informing clients about the content of the documents they are signing or to verifying their identities.

A document or form may be signed using an entirely electronic process or a mixed process; for example, one of the parties could hand-sign the documents while the other party signs electronically. Whether the document is signed entirely electronically or using a mixed process, in addition to the form signed by the parties, the broker must give his agency executive officer a copy of the authentication certificate or summary of proof generated by the electronic signature solution chosen. The purpose of this document is to describe the process used to obtain the electronic signatures.

When a broker wants to have a document signed electronically, apart from the email transmission of the document to be signed, it is important to use a second authentication mechanism to ensure the identity of the person signing the document. Authentication may be done using a password sent by SMS (text), for example, or with answers to questions previously agreed to between the broker and the signing party.

Then, when one of the parties signs a document, the place of signing must also be indicated. It is possible to add a blank field that will be completed by the signatory before the broker accepts the signature. The broker who begins the signing process is the one who must add the field(s) to be completed prior accepting the signature. A field is also needed to allow the other party to signify their acceptance or refusal, as the case may be.

With any document bearing one or more electronic signatures, it is important to include the authentication certificate describing the complete process used. This certificate must be kept by the broker’s agency that started the electronic signing process. The latter is not required to forward it to the agency representing the other party to the transaction. Only one copy of the original document (i.e. that has not undergone any medium change) on which there is one or more electronic signatures shall be sent to it and will be sufficient to maintain records.

Pay attention to the date and time

It is important to tell electronic signature system users and brokers receiving signed documents or forms using this process that, depending on the solution used, the dates and times appearing on the documents or the authentication certificate can be set based on Greenwich Mean Time [GMT] or on another time zone. Note that local time in Québec is established either as Eastern Standard Time [EST] or Eastern Daylight Time [EDT], depending on the time of year.

Verifying the time used by the electronic signature system could require additional management time in order, for example, to make sure that the acceptance period of a promise to purchase or counter-proposal is respected in order to make it legally binding between the parties. Thus a promise to purchase that is accepted by a seller at 10:05 EDT on October 2, 2013 could read 14:05 GMT, October 2, 2013 on the promise to purchase or the authentication certificate. To make sure that the local date and time of signing appear on an electronically signed document or form, we recommend that you visit the Greenwich Mean Time website at: www.greenwichmeantime.com.

Entering into a brokerage contract using the electronic signature process… Yes you can!

One frequently-asked question is whether a brokerage contract for a chiefly residential immovable containing less than five dwellings, where the seller is a natural person, can be entered into using an electronic signature process. Good news, the answer is yes.

Unlike when using a fax, a broker may have his client sign a brokerage contract using an electronic signature, since once the signing process is complete, the seller receives a duplicate of the contract and not a copy, as is the case when the contract is concluded by fax. However, the broker who has documents signed at a distance using an electronic signature process must also remotely verify the identity of any person he represents, in accordance with the rules described in the Guideline - Preventing Money Laundering and Real Estate Fraud.

To preserve the concept of contract duplicate, there cannot be two different signature methods when taking up a brokerage contract, for example, you signing manually and the client electronically. You should sign the document electronically and send it to your client so he can affix his electronic signature as well.

What about signing an acknowledgement of receipt of a promise to purchase or counter-proposal using an electronic signature process?

Since July 1, 2012, the promise to purchase and counter-proposal forms stipulate that the parties are legally bound from the time of acceptance, and not when the reply is notified to the party concerned, as used to be the case. However, the broker still has an obligation to notify without delay the promising buyer of the refusal or acceptance of his promise to purchase or counter-proposal, and to keep written proof of such notification in his record, for instance an email, a fax or a message via Immocontact.

In some cases, when using electronic signatures, all the signatories receive a signed copy simultaneously, but this is an exception. Therefore, the broker is still required to notify the buyer immediately of the refusal or acceptance of his promise to purchase, and to keep written proof of such notification in his record.

Your experience is important to us

If you have any questions or comments concerning the use of electronic signatures in your practice (other than questions concerning particular solution used), or if you are faced with special situations, do not hesitate to contact Info OACIQ.