Electronic Signatures for Real Estate Transactions in Ontario
These signatures will be permitted in Ontario effective 1 July 2015. Certain changes to the Electronic Commerce Act will permit this.
Here is the definition in the Act:
“electronic signature” means electronic information that a person creates or adopts in order to sign a document and that is in, attached to or associated with the document.
There are several types of e-signatures:
1) A code type signature,
2) A click type signature,
3) A copy type signature, and
4) A wet type signature.
Code Type E-signature
This would be the safest format. It is encrypted. Software systems are used to personalize it and safeguard its use. Actually, it could be a symbol or a group of numbers, group of words or a combination of both. Numerous software systems, programs and websites will use this format. Naturally, it is also the most expensive.
Click Type E-signature
Copy Type E-signature
In this situation, you will have some kind of an image for your signature. This could be a copy in JPEG or PNG format. It looks like your signature. It was a “copy” of your signature. You take a document and insert your JPEG image. It’s identical all the time. It’s just one image.
This insertion and subsequent delivery of your document constitutes your “e-signature”.
Wet Type E-signature
In this case, each signature and each set of initials will be original. This is much better protection. There is a safeguard here. The individual will sign with their finger or s stylus onto a computer screen. Their signature and their initials will be different each time.
The final document will then be flattened into a “PDF”. Again, this will be your “e-signature”.
Legal and Binding Effect
The intention of the Electronic Commerce Act is to ensure that e-signatures and digital contracts are enforceable.
Previously, there had been caution about real estate transactions.
Documents to which the Electronic Commerce Act does not apply
31. (1) This Act does not apply to the following documents:
1. Wills and codicils.
2. Trusts created by wills or codicils.
3. Powers of attorney, to the extent that they are in respect of an individual’s financial affairs or personal care.
4. Documents, including agreements of purchase and sale, that create or transfer interests in land and require registration to be effective against third parties.
5. Negotiable instruments.
6. Documents that are prescribed or belong to a prescribed class.
It is section 4 above which will be deleted effective 1 July 2015, meaning that it will then be fine to use a e-signature for real estate transactions.
Going forward, Wills, Testamentary Trusts, Powers of Attorney, negotiable instruments (cheques) and specified documents that are prescribed by regulation will not fall under the Act. They will still need to be in writing.
Brian Madigan LL.B., Broker