Coming to the Table: Will Electronic Signatures Actually Change Real Estate Closings?
It will be 17 years this June since Congress passed the Electronic Signatures in Global and National Commerce Act, otherwise known as The E-Sign Act. Signed into law on June 30, 2000 this federal law provided the same authority and effectiveness to electronic signatures, as given to signatures made by putting pen to paper. New York subsequently passed the Electronic Signature and Records Act (ESRA), which confirmed the binding authority of electronic signatures on the state level.
Throughout these past 17 years electronic signatures and electronic documents have creates real change in real estate transactions in New York, but the tradition of an in-person real estate closing, or at least exchange of actual signatures through a the mail persists in New York. This has people in the real estate industry, particularly real estate lawyers, wondering if the electronic signature will ever alter the tradition of in-person real property closings.
What’s Holding Back New York’s Real Estate Transactions?
In part, the in-person closing is a continued distrust of electronic signatures. It can clear any doubt of authenticity when the individual signs essential documents, in particular financing documents and the deed, in front of the other party and his or her representative.
As well, governmental and quasi-governmental agencies and bodies involved in recording deeds, covenants, and liens have been slow to accept and facilitate the use of electronic signatures. It is 17 years in and many municipalities, counties, and other local governments in New York are just now implementing a system for electronically signed and recorded documents. A large stumbling block is the requirement that deeds and certain other documents in the transaction need to be notarized by an uninterested third party in order for those documents to be enforced and valid.
What Are the Benefits of an E-Closing?
Electronic signatures are more efficient. There is no printing, scanning, copying, and sending via the mail or need to sign multiple copies at the closing. Instead, agents from the principal parties involved in the transaction can simply provide an electronic signature and whisk the document off via on online filing system or email. There is also more efficiency in terms of the time it takes to exchange signed documents. Instead of sending original by mail or overnight courier, the parties can sign electronically and have instant copies.
It is estimated that an e-closing removes 80% of the time inefficiencies involved in a traditional closing.
An e-closing in New York can also keep legal and real estate agent costs lower. There is far less need to have a lawyer drive to the closing and sit through signing of documents. Instead, all parties and their representatives review and prepare for the e-closing simultaneously, even in separate offices or homes.
In some ways, an e-closing is more secure. There are fewer ways for a document to be left out or left behind in a closing room. There is less chance that a third party will come in contact with confidential information or undisclosed terms of the transaction contract. Now, there are also fantastic electronic ways to verify an e-signature as authentic and valid.
Speak with a NY Real Property Lawyer
If you want to consider an electronic closing or are uncertain how and when electronic signatures are accepted in a real estate transaction, speak with a New York real property lawyer. Sami Perez is happy to provide an initial consultation on these issues, and other issues of a real estate transaction and closing. Simply call (516)-216-5060 to schedule your free initial consultation today.
The information in this blog post (“Post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this Post should be construed as legal advice from The Law Office of Samilde Perez or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter.