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Who Pushed the Button?

Posted March 13th, 2019 under pitfalls, smart buying, smart selling.

Since becoming legal, electronic signatures have made tremendous inroads in the real estate industry. Agents love the convenience of not having to travel to their clients to discuss offers and have them signed in person. (Is that really a good thing?) Clients love being able to sign at any time from the comfort of their home.

Realtors belonging to the Toronto Real Estate Board (TREB) don’t even have to buy the software, as it is included in our annual fees. For individuals, setting up e-signatures will cost around $12 per month on a one-year contract, with a number of providers to choose from.

But how do e-signatures actually work? The companies selling e-signature software claim that it’s very simple and very safe.

When you electronically sign a document, the computer records the exact time the signature is made and the IP address (internet location) of the computer used. The person signing must also enter their private password.

After hearing this explanation, I decided to write my signatures by hand each and every time.

The problem is, the process still comes down to somebody sitting in front of a computer pushing a button. Even though a private password has been entered, what physical proof is there of who typed in the password and pushed the button? What if the buyer or seller gets cold feet and claims that it was not them?

It’s not like passwords are a guaranteed form of security. People have all kinds of bad habits, like writing down their passwords in obvious places, or picking easy-to-guess passwords. There’s also a whole type of hacking—known as phishing—devoted to tricking people into sharing their passwords.

You might be wondering who would try to fake a signature from inside the victim’s own house. Two unpleasant scenarios come to mind: spousal abuse and elder abuse. How can we prove an electronic signature was not coerced?

(Perhaps we could also have a camera pointed at us while we push the button, to make sure the right person is signing. Throw in face recognition and we’re almost all the way to Orwell’s 1984.)

Electronic advances are fabulous, but humans are still as frail and fickle as ever. The humble in-person signature has two advantages: first, it requires a witness to put their own name on the line beside it. Second, it is typically executed in the presence of the real estate agent or lawyer, creating an opportunity for that outside person to detect any coercive or dishonest situations.

For now, I’ll stick to in-person signatures.

Want to know more about contracts? Just ask me, I'll be happy to help.

--Peter

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