The legality of digital signatures
On November 12, 2012
By Peg Ritenour
Is your brokerage thinking about going paperless? Have you started to receive any offers to purchase from other brokerages that have been signed using digital signatures? If so, you’re not alone. The OAR Legal Assistance Hotline has been receiving several calls from brokers asking about the legality of electronic signatures.
Although electronic signatures have been legal since 2000, they have just become more widely used in the last couple of years. Laws passed by both the Ohio legislature and Congress were designed to eliminate confusion about the enforceability of e-signatures and electronic records, or e-records. Referred to respectively as “UETA” (the Oho Uniform Electronic Transaction Act) and the E-SIGN Act, the purpose of these laws is to reassure businesses and consumers that it is okay to conduct business transactions online.
At the heart of both UETA and E-SIGN are two key provisions: (1) an e-signature or e-record is not unenforceable simply because it is in electronic form and (2) an e-contract may not be denied enforceability solely because an e-record was used in its formation. Put another way, UETA and E-SIGN put e-signatures, e-records and e-contracts on the same footing as written signatures, records and contracts.
The number one question we’re receiving on the Hotline lately is whether a party must accept e-signatures or e-records. The answer is no. Neither Ohio or federal law requires anyone to use digital signatures or records. What it does provide is that if the parties agree to use them, even in a purchase contract, it is legal.
It is also important to understand that both UETA and E-SIGN are “technology neutral.” That is, neither law requires the use of any specific language or technology to create a signature. Instead, each law lets developing technology and the free market dictate the preferable method for an electronic transaction. Ultimately, therefore, the parties to the transaction have the freedom to specify the technology–and accompanying security measures–to accomplish the transaction. Therefore, simply typing your name at the bottom of an email or clicking on an “I accept” button may suffice.
Back in 2000 when these lase were passed, OAR prepared a White Paper on the E- signature laws. REALTORS who have questions about the use of such technology in real estate transactions are encouraged to review this White Paper which provides some solid advice from OAR’s law firm, Baker And Hostetler, that remains true today.