In California, electronic signatures for real estate transactions are legal and governed by both federal and state laws. These laws set out the conditions under which electronic signatures are valid and enforceable, particularly in transactions involving real estate.
Key Laws Governing Electronic Signatures in California:
1. Federal Law – Electronic Signatures in Global and National Commerce Act (E-SIGN Act):
In the past, real estate transactions were consummated by signing the dotted line with ink after printing the documents. Now, most, if not all, real estate transactions are being finalized by using electronic signatures. Technology is directly affecting real estate transactions since software programs allow the parties to electronically review and sign the papers. So, in this article, we will be discussing how technology affects real estate transactions and the relevant rules and regulations.
On June 30, 2000, the Electronic Signatures In Global and National Commerce Act (“E-SIGN Act”) was passed to ensure the validity for electronic records and signatures in commercial transactions. It was formally enacted under 15 U.S.C. §§ 7001, et seq. It actually grandfathered pre-existing contracts that were consummated between users and commercial entities in delivering electronic information. Yet, any contracts that were executed on or after October 1, 2000 are subject to the statute’s provisions.
The E-SIGN Act has several requirements. For example, a commercial institution should provide notice to the consumer and obtain prior consent. It should provide notice to the consumer regarding hardware and software requirements. It should be able to associate the electronic signature with the records. It should ensure proper retention and accurate reproduction of those records for a period that is legally required.
When the government needs to acquire private property for public use, it can do so through a procedure known as eminent domain. The Fifth Amendment to the United States Constitution prohibits the government from taking property from a private individual or business “without just compensation.” Eminent domain is intended to provide a means of determining fair compensation. When the government exercises eminent domain over real property that is subject to a lease, both the property owner and the lessee are entitled to compensation. A California appellate court recently ruled on a dispute between a former property owner and its former tenant in the aftermath of an eminent domain proceeding. The court’s decision addressed the various types of property that can be involved in an eminent domain or other condemnation action.
The California Eminent Domain Law (EDL) limits the government’s use of eminent domain to situations in which it needs private property for public use. If a civil action for eminent domain is necessary, the government must name all owners of record as defendants along with anyone else the government knows “to have or claim an interest in the property.” This includes individuals or businesses that occupy the property under a lease.
A lease creates a real property interest for the lessee who is also known as the tenant. When real property is primarily used for commercial leasing purposes, lessees often stand to lose the most in eminent domain since they are the ones who will be displaced by the procedure. Therefore, many leases contain condemnation clauses, which address matters like the distribution of compensation if the property becomes unavailable or unusable because of government actions like eminent domain.
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Laws against forgery of documents have existed for almost as long as writing itself has existed. For most of that time, forgery techniques did not change very much. However, modern digital technology has significantly expanded opportunities for people to create fraudulent documents. Real estate transactions are making increasing use of “paperless” applications, but most areas of real estate remain firmly rooted in paper. This is particularly true of public real property records. While the media in California might report on how blockchain and other digital tools are changing the real estate business, yet real estate forgery is still mostly rooted in creating documents that could be printed onto paper.
California’s forgery statute, found in California Penal Code § 470 covers a broad range of activities. In addition to signing another person’s name to various documents without authority, the statute makes it a crime to intentionally “alter, corrupt, or falsify any record of any … conveyance” which includes real estate documents like grants or deeds. Under California Penal Code § 115, a person commits a felony when they knowingly file “any false or forged instrument” with a government agency, such as a county recorder’s office. State law allows county recorders to accept “digitized images, digital images, or both” of a recordable document for filing.
In fact, Section 502(c)(1) prohibits altering or deleting data stored on another person’s computer or computer network as part of “any scheme or artifice to defraud, deceive, or extort.” This can include attempts to falsify or forge digital documents affecting real estate transactions.
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The world is growing increasingly “paperless” as more documents move into digital spaces. People born in this decade might only know terms like “sign on the dotted line” and “before the ink is dry” as something their grandparents would explain. Without hard copies of important documents, though, our legal system needs new ways to indicate that a person has agreed to a contract. Now, electronic signatures (a/k/a “digital signatures” or “e-signatures”) provide evidence of assent without the need for a pen and printer. Federal and state laws, such as the Electronic Signatures in Global and National Commerce (E-SIGN) Act, establish standards for proving the legitimacy of electronic signatures. In real estate transactions, electronic signatures are allowed in any situation where the law does not specifically require otherwise.
The E-SIGN Act defines an electronic signature as any “electronic sound, symbol, or process” that meets the following criteria:
1. It is “attached to or logically associated with” a document (e.g., contract); and
2. The person who “executes or adopts” it intends to do so.
Electronic signatures are possible with hardware, such as the signature pads at many retail checkout counters; and software, such as the signature features in applications like Adobe Acrobat or services like DocuSign. The signature must meet the standards set by federal or state laws and an electronic signature must be acceptable for that document.
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In general, subletting your apartment is a great way to save the cost of rent when you leave for a period of time–for example, to go on vacation or study abroad. However, subletting your apartment without considering the legal implications or local requirements can lead to a legal nightmare. At the Law Offices of Salar Atrizadeh, an attorney with knowledge and expertise in real property litigation and transactions can review applicable real property law with you and ensure that subletting your apartment is in your best interest
What Should I Do Before Subleasing My Apartment?
First, it is important to make sure that the area you live in allows for subletting and short-term leases. In some cities, such as New York City, it is illegal to rent for shorter than 30 days. California allows for subleases, unless a rental agreement specifically prohibits subleasing. To avoid future legal conflicts, make sure to check with your landlord to ensure the lease agreement allows for subleases. Additionally, it helps to consult an attorney who can review the law that applies in your area so you are aware of your rights and responsibilities under a sublease agreement. Even after you sublet your apartment, you are still responsible to your landlord for the property. For instance, if a subtenant causes damage to the property the landlord can initiate a lawsuit against you to collect a judgment for the cost of the damages. Therefore, it is in your best interest to make sure that the subtenant is a reliable tenant. As such, it is a good idea to ask for a security deposit. This way, if a subtenant does damage the property you have the authority to keep the deposit to cover any maintenance or repairs.
In January 2013, the California Homeowner Bill of Rights will take effect, providing unparalleled protection for homeowners across the state. This Bill, which is the first of its kind, will reform the foreclosure process and provide unique protection for homeowners. The Attorney General of California, Kamala Harris pioneered the Bill in an effort to find a solution to the state’s foreclosure crisis. Under this legislation, homeowners in this state will have the best protection against foreclosures and lender abuses in the nation.
The foreclosure rates in California are one of the highest in America. This law comes at a time when homeowners struggle with banks to keep their homes, a battle that banks win more often than not. Indeed, a recent audit of the foreclosures in San Francisco revealed that 99% of the underlying loans had some legal issues. In addition, 84% of those loans exhibited “clear violations of the law.” However, after California passed the Bill, homeowners should be able to take on lenders more effectively in an effort to keep their homes.
A key provision in the Bill restricts “dual-track foreclosures.” As a result, lenders will be barred from continuing foreclosure proceedings while they are in loan modification discussions with homeowners. The Bill also imposes civil liability against lenders for utilizing “robo-signing” to file foreclosure documents. Through robo-signing lenders’ employees approve foreclosures without first reviewing the underlying mortgage documents. In order to help improve communications between lenders and homeowners, the Bill will also require that lenders present a single contact person for each customer. This will ensure that homeowners are able to facilitate sufficient communications with their lenders in order to efficiently reach a solution regarding their mortgages.
The United States government recently filed suit against 17 financial companies, including, but not limited to, the largest domestic banks, for selling Fannie Mae and Freddie Mac mortgage-backed securities worth billions of dollars that turned bad when the housing market collapsed.
Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. were some of the financial firms which were targeted by the lawsuits. Also, European banks including the Royal Bank of Scotland, Barclays Bank, and Credit Suisse were also included in the recent lawsuit.
These complaints were filed by the Federal Housing Finance Agency. This agency oversees Fannie and Freddie which purchase mortgage loans and securities issued by lenders. The total price of the mortgage-backed securities sold to Fannie and Freddie equals $196 billion.
The federal government is suing Deutsche Bank, accusing the bank of committing fraud by repeatedly lying to the government and for reckless lending practices in underwriting thousands of federally insured mortgages that ultimately cost taxpayers hundreds of millions of dollars.
U.S. Attorney Preet Bharara said the bank “repeatedly and brazenly” took part in shoddy lending practices for mortgages “that were really ticking time bombs.” Bharara says sometimes the bank even failed to verify that a mortgage applicant even was employed. “In fact, they often seemed to treat red flags as if they were green lights. … While the homes the defendants issued loans for may have been built on solid ground, the defendants’ lending practices were built on quicksand.”
To read more go to http://www.realtor.org/RMODaily.nsf/pages/News2011050402?OpenDocument
Quick Facts
– Judicial Foreclosure Available: Yes
– Non-Judicial Foreclosure Available: Yes
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