Court Rules That Sending an Email Can Bind You, Even Without Signing It  

The real estate industry runs on electronic signatures nowadays. In our market most contracts are created and signed on CTM eContracts. Buyers and sellers can click on “Select Font Signature” and see their name appear in a script font. Then they click “Save” and click “Accept” to show that they accept that the font signature is theirs. That document is considered signed.

In the beginning, I was leery of this technology, insisting that our clients use a stylus or finger to personally sign their name on a touch screen device such as a smartphone. Ultimately I relented, realizing that the closing based on those electronically signed documents does involve a “wet signature” witnessed by a Notary.

Electronic signatures became legal as a result of UETA, the Uniform Electronic Transactions Act, which became law in 1999. It was followed in 2000 by the E-Sign Act, which legalized electronic signatures for interstate and international transactions.  The following is from www.BakerMckenzie.com:

UETA provides a framework for states to enact state law concerning the enforceability of e-signatures and the validity of electronic records. Forty-seven states and the District of Columbia, Puerto Rico and the US Virgin Islands have adopted some form of UETA. The only states that have not adopted UETA are New York, Illinois and Washington, but each of these states has enacted legislation similar to UETA to govern how electronic transactions are handled….

UETA and the E-Sign Act provide that: (a) a record or signature may not be denied legal effect or enforceability solely because it is in electronic form; (b) a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation; (c) if a law requires a record to be in writing, an electronic record satisfies the law; and (d) if a law requires a signature, an electronic signature satisfies the law.

It followed, as a result of this law, that electronic messages (emails) between two parties can constitute a contract if both parties have signed their emails by typing their names. The more detailed the emails (covering terms as well as price) the more likely that a court would deem them enforceable contracts.

A Sept. 28 article on Forbes.com by Joshua Stein carried the headline, Yes, Sending an Email Can Create a Binding Contract.  It reported on an appellate court decision in New York State that went further to declare that typing your name on such emails was not necessary, that merely clicking “send” from your email account made any signature “an unnecessary formality.”  Here are some key paragraphs from that Forbes article:

This case means that pressing “send” on an email is now potentially equivalent to signing a piece of paper containing whatever statements appeared in the email. An actual typed signature is not necessary….

The moral of the story: before sending an email that could be interpreted as committing to some agreement, consider whether that’s what you really want. If not, make it clear in writing that your email isn’t intended to create any form of binding agreement.

Many standard email disclaimers say exactly that, automatically, on every message that goes out. Careful email senders should not rely on those disclaimers to protect them. If an email sounds like a serious and meaningful agreement to material terms, the courts just might decide that’s what it is, and enforce it accordingly.

Although that was the decision of a New York State appellate court, we should probably consider that Colorado courts or the United States Supreme Court might issue a similar opinion. So, how does this affect buyers and sellers of real estate? 

If you’re represented by a real estate agent, you’re not sending emails directly to the other party in a transaction, but if you are unrepresented and you exchange emails with a prospective buyer or investor, you could easily find yourself negotiating and agreeing to terms and price before undertaking the creation of a contract with various other important terms and deadlines. Be careful!

At the very least, when discussing price and terms with a prospective buyer or seller, always add that “this is not a contract, which still needs to be created separately and signed by both parties.”

Today’s Technology Is What Allows Real Estate to Keep Functioning

The practice of real estate has come a long way from the days when homes were only listed in books the size of a big-city telephone directory. (You do remember telephone directories, don’t you?)

Back then life was simpler, but that depends on how you define “simpler.” Purchase contracts were one or two pages instead of 20 pages, and they had to be hand delivered, as did subsequent documents such as inspection and appraisal objections. Mortgage applications and information was all faxed, if not delivered in person.

Actually, life is simpler today. All documents are typically emailed back and forth and signed electronically, except for closing (which has to be done in front of a Notary). 

As you know, homes for sale can now be searched and viewed online. An in-person showing or two is common before submitting an offer, but not always necessary. Because our narrated video tours are just like an in-person showing, led by the listing agent, I’ve had out-of-state or even foreign buyers ask me to create a purchase contract, knowing that they can always terminate (which they haven’t) when they fly in for the home inspection. Here’s an example of one of our current video tours:

Example of a Golden Real Estate narrated video tour – 1957 S. Taft St. – Listed last week

Facetime is also a great tool for showing homes. When one of our own buyers from out of state expresses interest in a home which they learned about from an MLS email alert — another new technology tool — our agent will use Facetime or take our video camera and do a narrated walk through of that listing (because the listing agent did not create such a tour), and post it on YouTube as a private or unlisted video, and send a link for it to the buyer. 

Zoom came along just in time for COVID-19, replacing GoToMeeting as the “go to” software for virtual meetings.  A classmate from long ago sent me a link for a virtual 6-person band performance of an adaptation of the Bee Gees’ “Stayin’ Alive” cut, with COVID-19 lyrics. What a hoot!

Even this column is made possible by technology that wasn’t available when I was a newspaper publisher. I create it on my laptop using MS Publisher, create a PDF of it, and send it to the newspaper on deadline, which is two days before you see it in print.  Then I post it on this blog, which has hundreds of subscribers, and email it to 900 people who have chosen to receive it by email because they no longer subscribe to a printed newspaper.

Of course, this newspaper, like most, is also available in a “digital replica edition” on its website, which reaches even more readers. I love technology and how it has made life simpler!