Wording from the act itself states that with regard to the general scope of the Act, the Act’s coverage is inherently limited by the definition of “transaction.” The Act does not apply to all writings and signatures, but only to electronic records and signatures relating to a transaction, defined as those interactions between people relating to business, commercial and governmental affairs. In general, there are few writing or signature requirements imposed by law on many of the “standard” transactions that had been considered for exclusion. A good example relates to trusts, where the general rule on creation of a trust imposes no formal writing requirement. Further, the writing requirements in other contexts derived from governmental filing issues. For example, real estate transactions were considered potentially troublesome because of the need to file a deed or other instrument for protection against third parties. Since the efficacy of a real estate purchase contract, or even a deed, between the parties is not affected by any sort of filing, the question was raised why these transactions should not be validated by this Act if done via an electronic medium. No sound reason was found.
Now the question is, will each state recognize this act in real estate transactions? In these transactions there are multiple entities involved each with it’s own attorneys of whom will make interpretations of the ramifications of this act differently. The act itself says it found no reason that a contract could not be electronically signed but as of yet, in Texas anyway, it is not standard real estate practice. (There are exceptions to this however which I’ll discuss later). Each transaction consists of a title company which insures clear title to a property, a lender, real estate brokers and other ancillary services. Within this group of necessary parties all will have to be on board with an electronic signature. For this reason electronic signatures may not become standard practice at all. Some loan documents require notarization at the close of the transaction meaning the parties are required to sign in person and in front of the notary. Further, in that the title company insures and assures clear title to a property it must be diligent in assuring the proper parties have transferred title. If a simple click transfers title to a property we would have fraudulent transactions running rampant and the title to a property would become useless.
For this reason it is left to each state’s real estate commission to decide if this act is a viable option for consummating a transaction. To my experience when attorneys are involved so too are multiple interpretations of just about any written document or spoken word. And like a jury trial for a murder, if there is a shadow of a doubt, err-ing on the side of caution is usually the outcome. An offer to purchase via the Internet on the other hand is a different story. There are rules in place that will allow for a purchaser or a licensed Realtor to validate an offer to purchase on the net and follow the mouse click up with earnest money in the form of a wire transfer. The UETA will ratify this as as intent to purchase along with any contingencies which may be set forth in the contract. However the electronics end essentially end at that point. The purchaser and seller will still have to sign in person in front of a notary. At some point in the future, if things progress to such measures, we may have finger printing verification so parties abroad may verify identity but that is still a risky proposition.
Interestingly enough, when I was in the title business in the late 1980’s there was talk of putting the closing documents on a disk, sending it to the parties to review, print, sign, and return. This actually was, and is possible as long as the parties find a notary where they are, sign in front them and send back the paperwork. The UETA didn’t really change real estate transactions when all is said and done but it does make it easier to ratify the intention to purchase remotely.