White Paper. The legal validity of use of DocuSign by real estate agents in Queensland

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1 White Paper The legal validity of use of DocuSign by real estate agents in Queensland CoreLogic is constantly trying to make the preparation, sale and settlement of Australian property more transparent, efficient and effective for property professionals and consumers. It has partnered with the world s most trusted electronic signature platform, DocuSign, to streamline the processing and settlement of Australian properties. This pioneering process requires that all parties feel confident in both the efficiencies and legalities surrounding the use of electronic signatures. CoreLogic has asked King & Wood Mallesons to research commonwealth and state laws and regulations to produce a series of white papers for CoreLogic to educate all parties involved. If you would like to learn more information about the contents of this document please call us on or visit us at corelogic.com.au/docusign

2 Use of DocuSign The legal validity of use of DocuSign by real estate agents in Queensland Prepared by King & Wood Mallesons for RP Data* 15 May 2014 Introduction DocuSign lets you sign documents electronically and send documents electronically for signature. What is the purpose of a signature? A signature has a variety of functions including identifying the author or sender of a document, authenticating statements made in a document and manifesting an intention to be legally bound. In each case, a signature demonstrates some particular association between the person signing and the document. It is the manifesting of intention that distinguishes a signature from the mere writing of a name or autograph. There is no legal requirement that a signature reflect a person s name or that a signature be written in pen on paper. DocuSign can be valid and legally binding in respect of the requirement for a signature. Where the law does not require writing or signature There are many instances where the law does not require that information be in writing or that a document be signed but it is standard industry practice for this to occur. For example, there is no general legal requirement that an agent s report to a landlord as to the condition of the property during the tenancy be in writing or be signed by the agent. Where the law does not require that information be in writing or that a document be signed, DocuSign can be used without the need to comply with any specific requirements. Where the law requires writing or a signature If the law requires that information be provided in writing or requires that a document be signed, DocuSign can be used to meet those requirements, as discussed below. King & Wood Mallesons The legal validity of use of DocuSign by real estate agents in Queensland 1

3 Electronic Transactions (Queensland) Act 2001 The purpose of the Electronic Transactions (Queensland) Act ( ETA ) is to facilitate the use of electronic transactions. Generally speaking and subject to certain conditions, under the ETA, if under a State law: a person is permitted to give information in writing, the information may be given by an electronic communication. a person s signature is required, that requirement is met if a method of signing is used to identify the person and to indicate the person s intention in relation to the information communicated. When does the ETA not apply? In Queensland, the ETA does not apply in some circumstances. These include: where a regulation specifically states that the ETA does not apply. where another State law has more specific information technology requirements, such as a particular kind of data storage device or for a particular kind of electronic communication, or more specific requirements in relation to electronic communications. where certain transactions or communications are specifically excluded by the ETA. These include documents that are required to be served personally or by post, where it is required by law that the signature of a witness be provided, and an authorisation under the Trusts Accounts Act. What does the ETA require in relation to writing? When used in Queensland legislation, writing includes any mode of representing or reproducing words in a visible form. It is not limited to paper. Additionally, if, under a State law, a person is permitted to give information in writing, the information may be given by an electronic communication, subject to the following circumstances: at the time the information was given, it was reasonable to expect the information would be readily accessible so as to be useable for subsequent reference; and the person to whom the information is permitted to be given consents to the information being given by an electronic communication. The DocuSign system can meet these requirements. King & Wood Mallesons The legal validity of use of DocuSign by real estate agents in Queensland 2

4 What does the ETA require in relation to electronic signatures? If, under a State law, a person s signature is required, the requirement is taken to be met for an electronic communication if: the method is used to identify the person and to indicate the person s intention in relation to the information communicated; and the method used was either (a) as reliable as appropriate for the purposes for which the electronic communication was generated, or (b) proven in fact to have fulfilled the functions set out in the first bullet point; and the person to whom the signature is required to be given consents to the use of the method. 1 The DocuSign system can meet these requirements. There has been little judicial consideration of the Queensland ETA. In one case, 2 concerning the lodgment of a submission to the Brisbane City Council, the Court held that selecting Accept on a web page (after entering name, address and similar details), was enough to satisfy the signing requirement. Because the Council designed the website in question, it was submitted that the Council consented to this method of providing a signature, and the Court appears to have agreed with this submission. Section 14(1)(c) of the ETA requires that the person to whom the signature is required to be given consents to the requirement being met by using the method that was used. In relation to consent : consent includes consent that can reasonably be inferred from the conduct of the person concerned; 3 and if the consent is given subject to conditions, there is no consent unless the conditions are complied with. 4 In our view, the consent does not have to be in writing; the consent does not have to be signed consent; and consent may be inferred from a course of conduct. For example, if a person provides an electronic signature on a document in a certain way, it is reasonable to infer that the person consents to the counter- party providing an electronic signature on that same document in the same way Electronic Transactions (Queensland) Act 2001, s14(1)(c). Harding v Brisbane City Council and Another [2008] QPEC 75 at 22. Electronic Transactions (Queensland) Act 2001, s6 and Schedule 2. Electronic Transactions (Queensland) Act 2001, s6 and Schedule 2. King & Wood Mallesons The legal validity of use of DocuSign by real estate agents in Queensland 3

5 Case Study Appointment of Real Estate Agent The Property Agents and Motor Dealers Act ( PAMDA ), stipulates that a real estate agent must not act as a real estate agent for a client unless the client first appoints the real estate agent in writing and that the appointment must be signed and dated by the client and the real estate agent (or someone authorised to sign for the real estate agent). Section 134(1) of PAMDA requires that the appointment be in the approved form. 5 The approved form is PAMDA Form 22a. The real estate agent must give a copy of the signed appointment to the client. The Property Occupations Bill has now been passed by Queensland Parliament, and will replace PAMDA upon commencement (the commencement date has not yet been proclaimed). The Property Occupations Bill has provisions that, although drafted slightly differently, have the same effect as PAMDA. Section 104(1) of the Property Occupations Bill provides that the appointment of a property agent or resident letting agent must be in the approved form. 6 Section 109 provides that the appointment must be signed and dated by both the client and the agent, and that a copy of the signed appointment be given to the client. The Bill does not provide detail of what constitutes an approved form however section 234 notes that the chief executive may approve forms for use. DocuSign meets the requirement of writing, because the DocuSign system is a system that reproduces words in a visible form. DocuSign meets the ETA s requirements in respect of the parties signatures as DocuSign can identify that the parties have signed the appointment and indicates their intention in relation to the appointment. Consent to use DocuSign can be reasonably inferred from the conduct of the parties choosing to use the system. Alternatively, if one does not wish to rely upon implied consent, it is recommended that the agent the client stating that the agent consents to the client using DocuSign for the purposes of being given information and for providing a signature, and asking for the client s similar consent. If the client does not provide their consent to use DocuSign, then the agent must print out the form and provide it to the client in the traditional way. The copy of the form, signed by both agent and client, must be given to the client. In our view, this can be provided using DocuSign, where the parties have consented to use the system. Case Study Agreeing to a marketing campaign DocuSign can be used when a client agrees to an advertising campaign and marketing budget. There are no specific requirements imposed by law in this situation, as the law does not require that the client s consent to this arrangement be in writing. Case Study Residential Tenancy Agreement Under the Residential Tenancies and Rooming Accommodation Act, the lessor or lessor's agent must give the lease document to the tenant for signing on or before the day the 5 6 If a form is prescribed or approved under an Act, strict compliance with the form is not necessary and substantial compliance is sufficient (s48a Acts Interpretation Act 1954 (Qld)). Electronic Transactions (Queensland) Act 2001, s6 and Schedule 2. King & Wood Mallesons The legal validity of use of DocuSign by real estate agents in Queensland 4

6 tenant occupies the premises under the agreement. Within 5 days after receiving the document, the tenant must sign the document and return it to the lessor or lessor's agent. Within 14 days after receiving the document signed by the tenant, the lessor or lessor's agent must sign the document and return a copy signed by both parties to the tenant. DocuSign can be used by the parties to sign a residential tenancy agreement and provide a copy of the agreement to the tenant once signed. DocuSign can identify the signatories and indicate their intention to enter into the tenancy agreement. Consent to use DocuSign can be reasonably inferred from the conduct of the parties choosing to use the system. However, as outlined above, if one does not wish to rely upon implied consent, it is recommended that the agent the parties stating that the agent consents to the use of DocuSign for the purposes of being given information and for providing a signature, and asking for similar consent. If a party does not consent, then the agent must print out the tenancy agreement and ensure the agreement is signed in the traditional way. If consent to use DocuSign is not received, a copy of the tenancy agreement signed by both parties must also be given to the tenant in the traditional way. Case Study contract of sale Under Queensland law, contracts for the sale of land are required to be in writing and signed by the parties to the transaction. 7 As discussed above, DocuSign meets the requirements of writing and the requirements for an electronic signature. DocuSign can therefore be used in relation to a contract of sale if the parties consent to its use. When DocuSign should not be used At the present time, we do not recommend that DocuSign be used in the following situations: for wills for a notice of termination or notice of breach, such as a notice to terminate a contract of sale or to terminate a lease where the law requires that the document be witnessed for court documents where a document has to be lodged with a government department, such as with the Department of Natural Resources and Mines, with the Residential Tenancy Authority or with the Office of State Revenue for an authorisation for a trust account 7 Property Law Act 1974 (Qld), s11. King & Wood Mallesons The legal validity of use of DocuSign by real estate agents in Queensland 5

7 Will an electronic signature provided using DocuSign hold up in court? There is no longer any presumption that electronic records are less reliable than non- electronic records. Under the Queensland evidence rules, electronic records can be reproduced allowing the record of an electronic signature to be admitted into evidence (if necessary). From a practical perspective, DocuSign technology can appropriately track electronic communication and maintain electronic records in an appropriately secure and permanent manner. These processes can be demonstrated to a court and as such, it can be shown that the appropriate level and amount of information surrounding the signing process was retained, using a system that is in itself reliable. *This paper has been prepared on behalf of RP Data for its sole use. The legal validity of the use of DocuSign in electronic conveyancing has not been considered. This paper is based on the assumption that DocuSign is configured appropriately to comply with the requirements outlined in this paper. If DocuSign is configured by individual users, independent legal advice should be sought to determine the validity of the configuration. King & Wood Mallesons The legal validity of use of DocuSign by real estate agents in Queensland 6