Effective July 1, electronic signatures became legal for real estate deals, and some brokers fear an increase in fraud as a result.
“I think the change could raise the risk of fraud; if a crooked Realtor has a customer’s signature on a computer they could use it to make an unauthorized purchase in that client’s name,” Joseph Park of JP Mortgage Services told MortgageBrokerNews.ca. “It will also give Realtors the power to increase the offer price without a client’s actual signature.”
The amendment to the Electronic Commerce Act will allow purchasers and sellers of land, borrowers, and lenders to sign contracts, mortgages, and deeds electronically.
It changes a rule requiring written contracts that dates back to 1677 English Law.
Bob Aaron, a real estate lawyer expressed his own concern about the potential for fraud in a column for the Toronto Star.
“Since the law does not define how to determine whether a signature is reliable, it is up to individual real estate agents and lawyers using electronic signatures to satisfy themselves that the legal requirements have been met,” Aaron wrote.
And while some are concerned it could increase instances of fraud, not all brokers are as apprehensive.
“I suppose there is always the risk that it could increase fraud but I think lawyers will catch it,” Ken Priest of Mortgage Intelligence told MortgageBrokerNews.ca. “The lenders who do accept it will ask for government issued photo and identification, so I don’t think it will increase fraud.”