Does Your Use of Electronic Signatures Comply with License Law & Commission Rules?
The law that governs the use of electronic records and electronic signatures is called North Carolina’s Uniform Electronic Transactions Act (hereafter referenced as “UETA”) and can be found in NCGS § 66-311 et. seq. UETA has a few exceptions, but it applies to electronic records and electronic signatures in the conduct of a transaction including a real estate transaction.
According to G.S. 66-314, UETA applies to any electronic record or electronic signature created, generated, sent, communicated, received or stored on or after October 1, 2000. This law further makes the use of electronic records and signatures legal so long as the parties agreed to use electronic means.
Question: What is considered an electronic record?
Answer: An electronic record is any information on a tangible medium that is created, generated, sent, communicated, received, or stored by electronic means.
Question: What is considered an electronic signature?
Answer: The UETA defines an electronic signature as a:
Further, the UETA requires all three elements to be present to constitute a valid electronic signature.
Question: How long does an electronic record need to be retained according to the UETA?
Answer: The UETA does not specify the minimum amount of time electronic records must be retained. However, it states that record retention requirements imposed by other laws will be satisfied by retaining an electronic record that (1) accurately reflects the information set forth in the record at the time it was generated as an electronic document, and (2) remains accessible for later reference.
Question: Does the Commission require brokers to retain electronic records?
Answer: Yes. License Law and Commission rules require brokers to retain all records related to a transaction regardless of the format of the original record(e.g. hard-copy or electronic) The Commission does not require any specific format of record retention so long as the records are legible and available upon request. A broker is required to retain all records for a least three years following:
Therefore, brokers must ensure that they retain all of their electronic records using the management software of their preference pursuant to the record retention requirements under Commission Rule 58A .0108.
Question: Is obtaining an electronic signature satisfactory to prove the document was reviewed with the client and explained by the broker?
Answer: Not necessarily. Most electronic signature tools such as DotLoop or Docusign simply indicate where the client needs to place signatures or initials, but Commission Rule 58A .0104, for example, requires that a broker provide AND REVIEW the Working With Real Estate Agents Disclosure. Agency principles require the review and explanation of all documents signed by the client. Brokers should also retain accompanying emails and notes that indicate they met these obligations, not just proof that the client signed the document. If you have any further questions or comments, please contact the Commission at 919-875-3700 or email@example.com.