The Ontario government is looking to modernize real estate transactions by setting out the rules for electronic signatures on documents such as agreements of purchase and sale.
On Friday, the province announced consultations on the issue to last until the end of the year. The changes would allow it to implement an amendment to the Electronic Commerce Act passed in 2013.
The 2013 changes removed a provision in the act exempting electronic signatures for land transactions. The act itself dates back to 2000 as an effort to remove legal barriers to the use of electronic communications.
The proposed changes include new a draft regulation the government is considering for agreements of purchase and sale. It stipulates several requirements, including:
• the method used is reliable for the purpose of identifying the person who signs;
• ensures that the electronic signature is permanent;
• and is accessible so as to be usable for subsequent reference by anyone entitled to have access to the document or authorized to require its production.
The regulation follows years of discussion about the issue. The real estate industry, in particular, has pushed for the government to allow electronic signatures. The legal profession has shown openness to the idea but has concerns about fraud.
According to the consultation documents, regulators have raised concerns over a number of areas, including the need for a system capable of verifying the signature and clearly identifying it with the person who executes the document; an audit trail allowing an auditor who sent what communications in relation to a transaction; access to information for regulatory and law enforcement agencies investigating fraud; and a minimum duration for retaining real estate documents and associated metadata.
Some real estate lawyers, such as Toronto’s Lisa Laredo, are greeting the latest chapter in electronic signatures with some skepticism, especially in light of the concern over the definition of reliability and the fact that other documents involved in the process would be on paper anyway.
“We really do not live in a paperless world when it comes to real estate,” says Laredo, noting the process would probably go back to paper anyway if one party or lawyer doesn’t embrace the electronic option.
As well, she wonders how much effort electronic signatures would save given that, in her case, she generally only meets clients once and has to meet with them in person at some point anyway.
“You have to be able to identify the person,” she says.
She adds if she were to adopt electronic signatures, she’d still need the client to come to the office to do it on her own system.
“I think we as lawyers want to make sure we protect ourselves,” she says. “We have enough to deal with in terms of making sure we cross out Ts and dot our Is. Why would you take that extra risk?”