By Neil Sharma
Electronic signatures, already sweeping through a myriad of other industries, became legally binding in Ontario real estate transactions on July 1, despite the province’s initial trepidation.
Ontario joins British Columbia, Alberta, Saskatchewan, Québec, New Brunswick, Newfoundland and Prince Edward Island as provinces that allow e-signatures in real estate transactions. **
The amendment to the Electronic Commerce Act originally was expected to occur under Dalton McGuinty’s government, but his resignation and the election tabled the motion. An unusually long subsequent review by the Law Society of Upper Canada caused further delay.
Many brokerages throughout the province have already trained their sales agents in software and protocol in preparation for the ECA revision.
“We’ve seen it being used in other provinces; it’s been used in the U.S. for a while and in Europe,” says Gurinder Sandhu, executive vice president of Re/Max Integra in Mississauga, Ont. “Online transactions have been around for years now and security levels have given peace of mind to consumers, and this is just another step in that direction. It just seemed inevitable that buyers and sellers wanted flexibility with the Internet.”
Concerns over security have been allayed. Sandhu says e-signature companies adopt the same impervious security measures that banks use for their online services, rendering hacking well-nigh impossible.
“When online banking was new, it was hard for people to comprehend, not knowing what kind of security there was,” he says. “We’ve gotten over that and we’re looking at companies endorsed by industries like CREA, and they operate with the same level of security as banks. At the end of the day, it’s encryption of signatures. It will help eliminate forgery and tampering. It also improves legibility of actual offers. When offers are faxed back and forth a number of times, legibility diminishes drastically.”
Re/Max Integra uses DocuSign, a San Francisco and Seattle-based company, and one of the first two e-signature companies chosen by CREA (the other was Instanet).
“We’ve made tremendous inroads, but it has taken time to get people accustomed to whether or not they can sign electronically,” says Glenn Shimkus, vice president of product for global real estate at DocuSign. “Now you hear about how they just can’t imagine running across town to get a signature.”
He says, “I’ve been following what’s happening in Ontario for a couple of years. At DocuSign, we have a bigger vision for transaction management to make sure we can help from when a listing is taken to the point where keys get turned over.”
Toronto-based DealTap, another electronic signature company, consulted with Ontario’s provincial government on going digital. DealTap has benefitted from a 50 per cent boost in sales since July 1.
“We played an educator role for key stakeholders on the benefits of going paperless and what the value is for all parties involved, especially for the consumer,” says Dusan Baic, head of marketing at DealTap. “It changed perceptions about security and legal issues that would arise from going digital.”
Many electronic signatures companies are cloud-based. One of the first companies to do it, and enhance security in the process, was Montreal-based e-SignLive by Silanis. Its e-SignLive software started with Amazon Cloud but has since partnered with IBM Cloud.
A built-in feature for all these products is an audit trail. As soon as sales agents or customers log in, everything they do – whether providing signatures, initials or simply changing pages – is time stamped right down to the second. Their IP addresses are also recorded. Everything is meticulously recorded, should a transaction become subject to litigation.
“One of the biggest issues when it comes to security and reliability is nobody will deny they were involved in a transaction,” says Michael Laurie, vice president of product strategy at e-SignLive. “They might claim the documents are not what they originally thought or they have concerns that documents have been modified. So, by recording the entire process, there’s proof.
“In addition to the active audit trail, digitally signed PDF documents are at the end of the process. When finished signing, we apply a digital signature to the documents for each electronic signature. Digital signature is a form of encryption – the most powerful encryption you can use – that ensures we can detect if anybody tries to modify PDFs after they’ve been signed. Security is engraved in the process from beginning to end,” Laurie says.
Martin Scrocchi, president and CEO of Instanet, says real estate agents stand to gain the most because of the time they’ll save completing transactions electronically.
“If you look at Toronto, getting to Scarborough from the other side of the city to get a signature in an hour just won’t happen on a Friday afternoon,” he says. “Clients in Park City, Utah (a tourism hotspot where the Sundance Film Festival is held) don’t actually live there; they live in England, the Emirates… everybody from everywhere else buys property there. Electronic signatures are especially helpful there.
“It also facilitates the sale faster. The consumer gets the document signed faster and it frees up more time for the Realtor, allowing them to do what they really do and not push paper.”
Scrocchi also says that in Toronto, where bidding wars are pervasive, time-stamped e-signatures could resolve disputed tenders. “If the last bid comes in at five o’clock, the deadline, and another one comes in five minutes later, the time stamp will let you know.”
Electronic signatures are slowly creeping their way into Canadian real estate transactions, but their implementation is seemingly more pragmatic than necessary at this early juncture, says Tristan Pungartnik, a broker with Royal LePage Heritage in Montreal.
“I’d say most brokers don’t make that their only way. They use it as an option for people who are limited by not having fax machines or are on vacation and not in town,” he says. “Another big reason is clients wouldn’t really know how to work it yet. It’s not so common, so for that reason it’s more of a backup plan now. Moving forward, I can definitely see it becoming the norm.”
Michel Côté, a broker for Re/Max Platine in Brossard, Que., has more than 20 years of experience in the industry. He doesn’t use e-signatures, but he says that’s going to change.
“We have to adjust ourselves,” said Côté. “It’s the new technology and it’s much easier for the buyers and sellers, especially if they’re not locals. I’ve heard good feedback from clients, too.”
** This story has been corrected from the original version, which incorrectly said Manitoba allows e-signatures for real estate transactions, and left B.C., Alberta and Saskatchewan off the list of provinces that does allow them.