Electronic signatures a legally valid means of binding parties to contracts under Federal and Georgia State law.
Can You Bind a Contract through “Texting?”Georgia law says…
Document signing services such as DotLoop and Docusign have become popular for their ease of use and convenience in obtaining signatures to real estate agreements. However, the signature laws that apply to electronic communications are broad and not limited to the execution of uploaded portable document format (“PDF”) forms on these websites. For example, in a recent Arizona lawsuit, the court addressed whether a “Thank You” typed at the bottom of an email constituted an electronic signature for purposes of enforcing a real estate brokerage agreement that had been attached to a prior email. Since it is possible for electronic communication, including texting and emailing, to legally bind parties to an agreement, it is important for real estate agents to be familiar with electronic signature laws known as the Uniform Electronic Transactions Act, or “UETA” adopted by many States, including Georgia.
There are three components to an electronic signature under UETA: the electronic record, the electronic signature and the electronic agreement. 1. The Electronic Record.
How it relates to the Statute of Frauds and where “Writing” takes on a new meaning.
The Statute of Frauds requires certain real estate agreements to be in a signed writing in order to be enforceable. Under UETA, an “electronic record” is deemed to satisfy the Statute of Frauds writing requirement and includes essentially any digitized information retrievable in perceivable form. In practical terms, a “writing” in our electronic world includes texts, emails, images and sounds, too, and not simply PDF forms uploaded to document signing websites. The Arizona case is important because it highlights that an electronic record can be a single document or file, or a series of communications. 2. The Electronic Signature.
How the signature is being redefined in a digital world.
Using pen and paper, such as in real estate closings, there are two components of a signature. There is first the hand-signed, wet ink mark; and second, the inscription of that signature on the face of a document. The electronic world under UETA incorporates these elements in a different way. UETA does not require the digital reproduction of a hand signature, but instead, validates any symbol (or even a sound) as an electronic signature, so long as it is “logically associated with a record and executed or adopted by a person with the intent to sign the record.” Compared to a physical signing, digital signing requires both a signature component and then the attribution of that signature, in some way, to a record.
It is doubtful that a party could ultimately prevail on an argument that the typed words “thank you” would be deemed an electronic signature. In addition, the Arizona case seems to lack the attribution element which is the connection between alleged electronic signature to the file attachment contained in a prior email. However, the case does show that an electronic signature can mean something different in the digital world than the traditional understanding. 3. Electronic Agreement.
How parties may inadvertently consent to electronic signing.
Electronically signed documents are valid under UETA only when the parties have “agreed to conduct transactions by electronic means.” However, and this is a vague element of the law, “Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.” In sum, the law requires an “opt in” but, in reality, context and conduct of the parties ultimately determine intent.
The conclusion from the Arizona case shows us that bona fide disputes will arise as we move to an increasingly electronic business environment. Here is my advice to you in an electronic environment: #1 – Be Aware.
Electronic signature laws do not distinguish between uploaded template files and data contained in other forms of electronic communication. It is important to remember that while email and text messages are convenient, they also can be considered an electronic “writing.” #2 – Communicate Clearly.
Always make clear that negotiations are discussions only until a formal agreement is presented. #3 – Be Consistent.
Since conduct, context and surrounding circumstances determine intent, it is important to be consistent in the signing and execution method used in a given transaction. By using a consistent signing method, it may be more difficult for a party to argue, for example, that the agreement was modified by a string of emails.
If you would like a full copy of the Arizona case, please let me know. I look forward to seeing you at the closing table.
Real Estate Attorney
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Atlanta, GA 30305
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