How Does the E-SIGN Act Apply to Real Estate Documents?

The world is growing increasingly “paperless” as more documents move into digital spaces. People born in this decade might only know terms like “sign on the dotted line” and “before the ink is dry” as something their grandparents would explain. Without hard copies of important documents, though, our legal system needs new ways to indicate that a person has agreed to a contract. Now, electronic signatures (a/k/a “digital signatures” or “e-signatures”) provide evidence of assent without the need for a pen and printer. Federal and state laws, such as the Electronic Signatures in Global and National Commerce (E-SIGN) Act, establish standards for proving the legitimacy of electronic signatures. In real estate transactions, electronic signatures are allowed in any situation where the law does not specifically require otherwise.

What Is an “Electronic Signature”?

The E-SIGN Act defines an electronic signature as any “electronic sound, symbol, or process” that meets the following criteria:

1. It is “attached to or logically associated with” a document (e.g., contract); and
2. The person who “executes or adopts” it intends to do so.

Electronic signatures are possible with hardware, such as the signature pads at many retail checkout counters; and software, such as the signature features in applications like Adobe Acrobat or services like DocuSign. The signature must meet the standards set by federal or state laws and an electronic signature must be acceptable for that document.

The E-SIGN Act and UETA

In 1999, California enacted the Uniform Electronic Transactions Act (UETA). The following year, Congress enacted the E-SIGN Act. The UETA governs the use of electronic signatures in most real estate transactions within California. The E-SIGN Act applies to transactions that cross state lines. The two laws have a great deal of overlap. For example, the UETA’s definition of “electronic signature” is almost identical to the one found in federal law.

The E-SIGN Act states in its very first section that a signature cannot “be denied legal effect, validity, or enforceability” on the sole basis that it is electronic, provided that no other law requires a physical signature. The statute does not supersede those other laws. If a law requires an individual or business to retain records, then the E-SIGN Act allows them to meet this requirement by keeping accurate electronic records that are accessible to anyone legally entitled to review them.

The E-SIGN Act and UETA allow electronic signatures on documents that must be notarized. A notary public must also electronically sign the document and must include the same information that they would include if they were notarizing a paper document.

Electronic Signatures on Real Estate Documents

Electronic signatures are common in certain types of real estate documents, such as a contract between a real estate broker and a client. Documents that must be filed in the public record may still need to be physically signed. The Los Angeles County Recorder, for example, is responsible for filing deeds and other real property documents, and appears to accept filings only in physical form. That said, California law allows county recorders to accept “digitized images, digital images, or both, of a recordable instrument.”

Salar Atrizadeh, Esq., is an experienced attorney with more than ten years of experience in advocating on his clients’ behalf. Please contact us online or by calling our law firm to schedule a confidential consultation.