We all know the look – the “I am looking at you but not listening to you because it does not apply to me” look. We have all given this look. Unfortunately, over the last few years this look has been frequently used when electronic consent and email delivery were discussed. This is not a new issue. In fact, this topic has been heavily covered in Legal Updates, Hottips, magazine articles, continuing education courses and the Legal Hotline. Not an easy topic to wrap your mind around, this issue involves an interaction of laws that most agents describe as challenging and counter-intuitive.
Today, the look is gone. Hands are raised and questions are coming fast. Whether the sudden interest is driven by consumers now requesting emailed documents, or whether agents have a better understanding of how the law applies to the transaction, more questions are being asked and confusion is on the rise. We are revisiting the topic due to the mandatory use of the WB-11 Residential Offer to Purchase, WB-13 Vacant Land Offer to Purchase and WB-14 Residential Condominium Offer to Purchase going into effect on July 1, 2011.
First let’s get the unpleasant legal stuff out of the way. There are two laws at play: E-Sign, the federal law addressing electronic commerce and requiring consumer electronic consent, and E-Commerce, the Wisconsin law addressing electronic commerce. Both of these laws must be followed in consumer transactions. Generally these laws apply to residential transactions where the property or the sale proceeds will be used for personal, family or household purposes.
The federal law respects the fact that federal, state and local laws may require that consumers receive information, notices and disclosures in writing. Thus federal E-Sign law allows the electronic version of such paperwork, but only if consumer transactions meet the special requirements under the federal E-Sign law for electronic notices and disclosures. The federal law mainly focuses on the protection of consumers in residential transactions.
Basically, the federal law wants to confirm that a consumer can receive an electronic consent that includes federally mandated language advising them of their rights if they choose to receive, by email, documents that are otherwise required to be in writing. The general concern is that consumers are able to receive emails, open up attachments, receive specific federal disclosures, agree to and confirm system requirements, provide email addresses and send back the consent electronically.
10 things real estate agents need to know about email delivery
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Two steps for every contract: Step #1: Consumer electronic consent. Step #2: Inclusion of email delivery language.
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Electronic consent must be achieved electronically: A signed hard copy or faxed consent from the consumer would not be sufficient. The electronic consent must make an entire roundtrip from agent to consumer electronically. For a step-by-step example of how to achieve electronic consent, read the June 2010 Wisconsin Real Estate Magazine article, “Behind the Curtain: E-Commerce and E-Sign Exposed,” at www.wra.org/WREM/Jun10/BehindCurtain.
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If you cannot receive electronic consent from your consumer, then you cannot include email delivery in a contract.
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The law is concerned about consumers; agent-to-agent electronic consent is not required.
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Consumer electronic consent is required regardless of the email address inserted in the offer to purchase: In essence the federal law is saying it does not matter who the email address belongs to; if there is an email address included in the offer, then electronic consent must have first been achieved. Review lines of 51-52 of the WB-11, which state, “[E]ach consumer providing an email address below has first consented electronically to the use of electronic documents, email delivery and electronic signatures in the transaction, as required by federal law.”
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Addendum D includes email delivery language; it is not electronic consent.
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Addendum D includes email delivery language and is not required with the revised offers to purchase.
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Addendum D, or similar language, is needed with the listing and buyer agency agreements and nonrevised offers to purchase: The listing contracts, buyer agency agreement and non-revised offers to purchase do not include email as a form of delivery. To achieve step #2, agents must add email delivery language either by incorporating Addendum D, or a similar addendum, or language into the additional provisions of the form.
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Do not check the email delivery box and insert an email delivery address when writing or accepting the offer unless you have first received the consumer’s electronic consent: A licensee drafting a consumer’s offer that includes an email address in the offer is affirmatively stating or representing that the consumer has previously provided electronic consent. A party who signs an offer that includes an email address is also affirmatively stating and representing that the he or she has provided proper electronic consent and is committing fraud if this is not true. It is arguably incompetent practice to include an email address without first obtaining the consumer’s electronic consent.
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The listing broker is not required to request proof of electronic consent from the cooperating broker: The listing company may find it beneficial to confirm on behalf of the seller that the buyer electronically consented to email as a form of delivery and the use of electronic signatures. This may be a greater priority for the listing broker if the transaction involves a buyer-customer since the agent is drafting the offer as a subagent of the listing company.
Additional resources
Wisconsin Real Estate Magazine Articles
Legal Updates
WRA E-Commerce Resource Page at www.wra.org/ecommerce
One last thing: zipForm is going Digital Ink
In August 2011, Wisconsin REALTORS® Association members will receive access to a new zipForm product — Digital Ink. Designed to also work with the Main Street Platform, this product will give members the ability to have a completely paperless transaction, offering secure digital signatures, automatic routing of documents to each signer and accessibility to mobile users. And if that is not enough, it will have the federal electronic consent requirement built right into the system. Basically the program is designed to prevent the process from moving forward until the electronic consent has been obtained. For those who are not ready for this technology, it is optional — you don’t have to use it until you are ready.
Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.