Concert begins massive North Vancouver development

North Harbour spans a third of a mile of waterfront and will include 290,000 square feet of commercial space and more than 900 homes on the 12-acre site

 

North Harbour is largest North Vancouver development in decades. | Concert Properties

December 2020

The COVID-19 pandemic has affected almost every aspect of British Columbians’ personal and professional lives. It has accelerated adoption and use of technology as a means of communication and doing business. Nowhere is this truer than in the purchase and sale of real estate.

Technology was already changing the way realtors were conducting daily business. One of the most substantial recent changes relates to how sale contracts and listing agreements are transmitted and executed.

Over the past several years, it’s become more common for not only the preparation, but also the review and execution, of core transaction documents to occur electronically through one of several commercially available web-based computer programs. Buyers and Sellers to a transaction can sign and initial contract documents electronically from their computer, tablet, or phone. The pandemic and resulting social distancing requirements are currently making the use of such programs the rule rather than the exception.

One of the principal benefits of using an electronic signing program is the convenience and safety for both licensee and client. It makes meeting and associated travel, and in some cases printing, scanning and emailing, unnecessary. Realtor and client can create, transmit, or execute documents, solely in electronic form, asynchronously, with a few quick keystrokes, from wherever in the world they are.

However, with these significant benefits come meaningful risks, some of which are not openly obvious. Mitigating these risks requires the realtor to be sensitive to risks and perhaps modify past practices.

Ensuring a buyer or seller understands the documents they are signing is fundamental to a realtor’s professional standards and practice. Before the advent of electronic communication, typically your realtor would sit down with the client, go over the terms of a purchase contract or listing agreement, and through a conversation with them, ensure that they understood what they were offering or agreeing to. The process allowed both realtor and client to review the documents, notice, and or correct any drafting errors which may have crept in. This also allowed an opportunity for more advice and second thought.

Such meetings are invaluable from a risk management perspective. If a dispute develops later with a client as to the content of a document or their understanding of it, you could produce documents setting out the arrangements for the meeting and give evidence that you reviewed the document with the client and explained it to them, and the client was happy with it. This is powerful evidence should a client bring a claim. Faced with such evidence in examinations for discovery, a client will often admit the realtor did meet with them and reviewed and explained the document before they signed it.

When using an electronic signature program, all parties must keep in mind the benefits of such in-person meetings and be sensitive to the records to generate if such a meeting does not occur. Realtors must ensure that there is sufficient communication with the clients by other means, to ensure the client understands what they are offering or agreeing to, and sufficient review of the document, by both you and the client, together, to ensure any errors are caught and corrected.

Errors may creep into contract documents in many ways, some of which are not obvious or unique to the current electronic technology.

It bears repeating, that when preparing an offer or counteroffer, typos may occur. Many people find that typographical errors in documents are difficult to see when the review of the documents are conducted on a computer screen, particularly when they have typed the document, or the material portions of it, themselves.

Technology itself may cause errors. There have been several reports of electronic signing programs picking up old versions of documents created in the MLS Webforms. In some cases, a change in price was not picked up, and the error not caught by the realtor or client before the document was executed and sent to the other party.

Where parties use an electronic signing program, realtors must take into account that the client may be hurried or distracted when receiving a document, and may not, or may not be able to, review it carefully or at all.

Some electronic signing programs, when presenting a document to the client for execution, automatically scroll through the document without providing an opportunity to review, stopping at only the spots identified for initials or a signature. The buyer or seller may not take the time necessary, or be able, to manipulate the program to read the document in its entirety. They may be trying to review a document in small type on their cell phone, and not be able to read it correctly.

The client may assume the licensee has accurately understood and given effect in the document to their (perhaps summary or ambiguous) instructions.

To address these risks, it’s prudent for realtors to review each contractual document carefully: before you send to a client; with a client, while the document is in front of both you and client, by telephone or other means prior to electronic execution; and again, following execution, before you send to the other party. It’s also prudent to print the document at several points to review it in paper form.

To ensure a meaningful review occurs with the client, and is recorded, it is prudent to provide the client with contractual documents by email, and arrange a time to review them, by telephone, or video conference (perhaps using a “screen share” function), in detail, before you transmit them through an electronic signature program for execution. This creates a paper trail to later confirm such a review occurred.

The importance of being sensitive to the record cannot be overstated. All electronic signature programs generate logs, recording the time at which a party opens the document and when it is executed. Smart claimant’s counsel will demand production of these logs in any dispute. It will be impossible to maintain that there was a meaningful review of a document with a client where the log shows that there were only a few seconds between when the document was sent, opened, executed by the client, and returned to the realtor.

It is also prudent, when transmitting a document to a client by email or other electronic means, to include a warning stating that, as typographical errors or errors caused by technology may occur, the document should be reviewed carefully to ensure that it accurately reflects the client’s understandings or instructions.

Incorporating these steps and considerations into practice will provide realtors and their clients with the benefit of current technology, while minimizing the associated risk to all parties.

Source: Scott Cordell, Killam Cordell, Barristers