Court Confirms Duty to Read Electronic Documents

Add a time stamp using Authentisign | Arizona Association of REALTORS®

A real estate agent and a client were undertaking business together by “long distance”. Documents were forwarded by an electronic software and signature platform known as “Authentisign”.

Included among the documents was a Buyer Representation Agreement which obligated the Buyer to pay a commission on any property which fell within the description within a limited time period. So, when the proposed deal fell through, the Buyer moved on to another agent and acquired another property. The first agent would be entitled to a commission on this sale, if the agreement were upheld.

The Buyer took the position that he didn’t know about the Buyer Representation Agreement and didn’t realize he had signed it.

He claimed there was no email to him mentioning or explaining the document. Naturally, it was there as one of the documents in the Authentisign package, and he indeed had signed it.

The Buyer complained about the Authentisign program and the fact that it moves from one location to the next where signatures or initials are required. He didn’t print the document either before or after he signed it.

In a number of cases, buyers had been successful using the non est factum defence where a Buyer Representation Agreement had been slipped into the documents and had been signed by accident. These cases were “in person” meetings.

The Trial Judge in Lachance v. Charran,  28 December 2017, concluded that the Buyer didn’t read the documents that had been sent, print them, or request an explanation from the agent before signing them. Obviously, there was no undue pressure placed upon him to sign the documents.

The Trial Judge decided that the Buyer had a responsibility to know what he was signing, and that he failed to exercise reasonable care to protect himself in the circumstances, and accordingly determined that the agent was entitled to his commission.

COMMENT

It is going to be very, very difficult for clients to claim that they didn’t understand documents when they simply immediately sign them and return them without reviewing them carefully, asking what they mean, and clarifying any issues that may arise.

Real estate agents have a fiduciary duty to explain the documents they wish to have signed. I would reasonably expect that another case with slightly altered facts would go in the other direction. The big issue here is really one of “trust” between the two parties.

Simple caution: don’t sign documents either in person or electronically unless you understand them.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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