Technology

Electronic Signatures Gaining Acceptance and Popularity In Massachusetts Real Estate Transactions

by Rich Vetstein on November 12, 2011 · 2 comments

in Closings,Electronic Closings,Massachusetts Real Estate Law,Purchase and Sale Agreements,Realtors,Technology

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Compliance Concerns Unwarranted

Electronic signature technology has been quickly gaining steam throughout the U.S. real estate community, and has now arrived in earnest in Massachusetts. Electronic signature software lets you send legally binding documents and get signatures anytime, anywhere from any Internet-connected device. It’s mostly used in Massachusetts on Offers and Purchase and Sale Agreements. I’ve been using DocuSign, and with a little learning curve, it’s been fantastic.

Realtors and attorneys who use electronic signature software can simply email encrypted contracts to their clients for signatures, rather than deal with travel, signing 4 original copies, and coordinating all the signatures. It’s especially helpful for out of state clients.

The Massachusetts real estate industry, traditionally conservative and slower to adopt new technology, has been lagging behind more progressive states such as California when it comes to adopting electronic signature technology. Plus, it hasn’t helped that technologically challenged attorneys are often involved in the drafting of the purchase and sale agreement.

In my informal survey of Realtors, the biggest questions were (1) are electronically signed contracts legal and valid, (2) how does it work: and (3) will lenders accept them?

Are Electronic Signatures Valid For Massachusetts Real Estate Contracts?

The answer is yes. Under the Massachusetts Uniform Electronic Transactions Act (UETA), real estate contracts which are electronically signed in compliance with the law are legal and valid.

Electronic signature legislation was adopted over 10 years ago. In 2000, Congress enacted the E-SIGN law which validates certain contracts in electronic form and electronic signatures across the country. In 2004, Massachusetts adopted its UETA, codified in Mass. General Laws Chapter 100G, which is essentially adopts and updates the federal E-SIGN law. Lawmakers designed UETA and E-Sign to recognize that “a signature, contract, or other record relating to a transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” The Massachusetts UETA provides, simply, that “In a legal proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form.”

For offers and purchase and sale agreements, I have formulated the following rider provision to ensure electronic signature validity and enforceability. Feel free to use it.

This Agreement may be executed by and through electronic signature technology which is in compliance with Massachusetts law governing electronic signatures, including but not limited to, DocuSign®.  Electronic signatures shall be considered as valid and binding as original, wet signatures.  Signatures, originally signed by hand, but transmitted via e-mail or fax shall also be deemed valid and binding original signatures.

How Does It Work?

There are several electronic signature systems out there, including EchoSign, eOriginal, and DocuSign, which I use. All three providers warrant full compliance with federal E-SIGN and state UETA law and their European counterparts.

Since I’ve been using DocuSign, here is a quick video overview how it works.

As the individual requesting that a document be DocuSigned, you control who signs by providing the signer’s email address and other contact information. The document is routed to the signer’s email with a request to sign. DocuSign records the signer’s IP address and a time stamp of the signing activity. In addition, a signer can opt to provide geo-location information at the time of signing. If you require deeper levels of identity management, DocuSign offers additional authentication options, including: access code, knowledge-based ID check and biometric phone identification, among others.

As you can see, in many respects, an electronically signed contract is more secure and less susceptible to fraud and forgery than a traditional “wet” signature.

Are Lenders Accepting Electronically Signed Contracts?

Most are now. In fact, starting in 2012, FHA and the IRS will formally allow electronic signatures on loan and tax documents. However, I hear that some short sale lenders are still requiring wet signatures.

This is always the problem with adopting new technology. It’s disappointing because electronic signatures have been legal and valid for 10 years now. The law was passed by Congress and now all the states. As more and more agents and attorneys embrace the technology, we will see objections falling by the wayside, just as we did with faxed signatures.

Agents, are you using electronic signatures, and if so, how has it helped your business and clients? Have you run into issues or objections from lenders or attorneys?

_________________________________________

Richard D. Vetstein, Esq. is an experienced Massachusetts real estate closing attorney who’s handled over 1,000 closings. Please contact him if you need legal assistance purchasing residential or commercial real estate.





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How Will Real Estate Closings Look In 2021?

by Rich Vetstein on March 2, 2011 · 0 comments

in Closings,Electronic Closings,Offer To Purchase,Purchase and Sale Agreements,Technology

Post image for How Will Real Estate Closings Look In 2021?

Are Electronic Contracts And E-Signatures On The Way?

Catching my eye this week was a recent New York Times article discussing a New York state court opinion regarding the legal effect of e-mail in real estate contracts.  The ruling reaffirmed that e-mail may carry the same weight as traditional ink on paper contracts.

It made me think about the future of real estate contracts and how they will look. Will the common practice of executing four original purchase and sale agreements be replaced by some type of electronic PDF document with electronic signatures? (I hope so. They are in the West Coast now). Same for the standard Offer to Purchase? What about the stack of disclosures and loan documents signed at closings? (There must be a better way). And mortgages are already being electronically recorded in several Massachusetts counties.

I wonder how closings will be conducted in 2021?

Congress and state legislatures have already laid the groundwork for electronic real estate contracts and e-signatures. In 2000, Congress enacted the E-SIGN law which validated certain contracts in electronic form and electronic signatures. In 2004, Massachusetts adopted the Uniform Electronic Transactions Act (UETA), which is essentially updates the E-SIGN law. Lawmakers designed UETA and E-Sign to recognize that “a signature, contract, or other record relating to a transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” The Massachusetts UETA exempts several types of contracts and disclosures (e.g., wills), but not real estate contracts.

Old Traditions & The Statute of Frauds

But old traditions are hard to change, especially when it involves real estate.  As every first year law student learns, Massachusetts real estate contracts are governed by the Statute of Frauds.  This doctrine, originated in old English common law, says that any contract for the sale of real estate must be in writing and “signed by the party to be charged therewith.”  One can make a compelling argument that secured electronic contracts and signatures serve the purpose of the Statute of Frauds by providing some objective evidence, other than word of mouth, that there really has been a binding deal.

I haven’t found any cases dealing with the interplay between the UETA and the Statute of Frauds.  And there’s something about that “wet” ink signature on real paper that gives people security and comfort.  The same is true for our beloved Greater Boston Real Estate Board standard form Offer and P&S.  We’ll have to see how the issue plays out in the courts.

But if you can purchase a Ferrari online through E-Bay, why can’t you buy a home using a secure electronic contract?  How do you think technology will affect real estate in the future? What would you like to see change in the industry?





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A Real Estate Attorney’s Guide To Choosing A Massachusetts Real Estate Broker

by Rich Vetstein on March 16, 2010 · 3 comments

in Massachusetts Real Estate Law,Realtors,Technology

Choosing Massachusetts Real Estate Broker Realtor

As a real estate attorney, it should come as no surprise that people often ask me to recommend a real estate broker. I often give out several names, but I also give out this Guide To Choosing A Realtor, to help them focus on all the issues and ask the right questions.

Guide To Choosing A Massachusetts Real Estate Broker

Choosing a Realtor is the first and perhaps the most important decision a home buyer will make. For purchasing a home, your real estate broker is really a Project Manager, guiding you through the entire home buying process from going to open houses to closing and beyond. She will not only help you find your “dream home” and negotiate with the sellers, but she will help you assemble a team including a mortgage lender, home inspector, a real estate attorney, a contractor, and other service professionals. For sellers, your Realtor is the key to maximizing the return on your most important investment.

Given the overwhelming number of realtors in the marketplace, choosing the right one can be overwhelming. Here are my tips to selecting the best Realtor. It’s best to use all the tools available to find the best fit.

Step 1: Search, Create A List, Do Your Due Diligence.  You’ll want to obtain as many as 5-10 names. Take it seriously and do your due diligence.

  • Word of Mouth. Ask people you trust for recommendations. Ask your friends, family, financial planner, attorney, or local politician. Call local agencies and ask who their top producers are.
  • Ask Around Town. Good Realtors are actively involved in their communities, serving on town boards, school communities, new family networks, and chambers of commerce. These brokers know the neighborhoods like the back of their hands. They know the market. They can tell you who just sold, bought, and what listing expired. They know the best elementary schools. They know whether the quiet street in the summer turns busy when the school buses start rolling down. Find them.
  • Use the Internet. The Internet is an incredibly powerful tool to find potential Realtors and vet recommendations. Understand that all savvy, sales oriented Realtors have a web presence and they know how to leverage internet marketing and social media. Google the town/city and “homes realtors” and see what comes up. If you have a name of a Realtor, Google them and check out their website or blog. Check out his listings and just solds. Read their articles on ActiveRain, a realtor blog site. Check their Facebook or Twitter pages.
  • Use Multiple Listing Service as a Tool. Virtually every Realtor website enables you to access Multiple Listing Service (MLS) information. With MLS access, you should be able to get a sense of which Realtor has a high number of listings and sales in the town or neighborhood you desire. You will also see how the Realtor markets a listing. Is the listing well presented? Are the photographs high quality and sufficient? Is the home staged? Are the descriptions captivating and accurate?
  • Check License/Designations. You can check a Massachusetts Realtor’s state license status here on the Real Estate Board of Registration site. An indication of additional expertise is whether the Realtor holds a special certification such as Certified Residential Specialist (CRE), Accredited Buyer’s Representative (ABR), Certified Real Estate Brokerage Management (CRB). Click here for more info about these certifications.

Step 2: Interviews. Armed with the above information, a buyer or seller should narrow the pool with phone or personal interviews, and ask the tough questions.

  • Basics. Are you a full time broker? How many years experience do you have? What is your educational background and real estate training?
  • Listings. How many listings have you had in the last 2 years? How many sales of those listings? How many expired listings have you had in the last 2 years? What causes do you attribute to expired listings? How long, on average, do your listings take to sell?
  • Marketing. What’s your marketing strategy for new listings? What’s your pricing strategy? Do you recommend home staging? What marketing outlets do you find most effective, i.e, print advertising, MLS, online, direct mail, etc. Can you provide us with a Comparative Market Analysis (CMA)?  What type of research tools to you use? Would you recommend a broker’s open house or public open house for our listing?
  • Preparation. A good test of a Realtor’s acumen is whether he comes well prepared to your meeting. Is he armed with market data, listings, research, trends and the like? Does he have an initial pricing strategy? Does he have a game plan for searching properties?
  • Type of Agency?  Some Realtors represent solely buyers. Some focus only on sellers. Most cater to both. But there are different agency rules for each type of representation. By law, your Realtor must explain which agency you are operating under, and review and have you sign the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure form. We’ve prepared a handy fact sheet on broker agencies which you can download here.
  • Communication. Are you available to us when we need you? Do you use an assistant? Can we contact you after hours? By email or text? Are you good with demanding clients? How many current clients do you have? Being accessible and responsive separates the good realtors from the average.
  • Recommendations. Do you have written recommendations from clients or can we contact your 3 most recent clients?

Step 3. Select your Realtor. Go with your instincts. Remember, a good Realtor does not tell her client what he or she wants to hear. You are looking for independent, professional advice.

Feel free to print out this list and use it as a handy guide as you interview and select your Realtor. If you want some names of several excellent realtors in all of the major areas and towns, shoot me an email.





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Green Energy Trends: Geothermal Technology Becoming More Popular In Massachusetts

by Rich Vetstein on January 3, 2010 · 4 comments

in Green Technology,Home Improvement,Massachusetts Property Values,Massachusetts Real Estate Law,Realtors,Technology

Geothermal system diagram

I’m pleased to welcome guest blogger, Leslie Mann, a Realtor with Hallmark Sotheby’s International Realty who specializes in the Dover-Sherborn area of Massachusetts. Leslie is here to talk about geothermal technology, which is growing in popularity in Massachusetts.

Geothermal technology is a great way to heat and cool your home. It costs far less to run and maintain than conventional heating/cooling systems—and reduces your carbon footprint!

According to the EPA, geothermal heat pumps can save homeowners more than 70 percent over conventional air conditioners and up to 44 percent over traditional heating systems. Plus you can take advantage of federal tax credits for new and existing homes using geothermal heat pumps.

Instead of using fossil fuels like oil or gas, geothermal systems use the earth’s natural warmth to heat your home. In the winter, geothermal systems use the earth’s natural heat to heat your house, and in the summer they draw excess heat out of your home and allow it to be absorbed into the earth. A geothermal heat pump doesn’t create heat by burning fuel, like a furnace does. Instead, it collects the earth’s natural heat through a series of pipes, installed below the surface of the ground. Fluid circulates through the loop and carries the heat to the house.

Here are some additional homes for sale in Greater Boston’s Metrowest area that feature geothermal technology:

527 Bedford Rd Carlisle

9-room contemporary home for sale in Carlisle on 4+ acres with in-law suite featuring geothermal heating and cooling $1,055,000.

12 woodstock dr framingham

Five-bedroom Doeskin Hill estates contemporary home for sale in Framingham features four-zone FHA heating/geothermal cooling $1,099,000.

23 boulder brook wellesley

Described as “eco-chic” this new 4800 square foot center entrance colonial for sale in Wellesley featuring geothermal heating and cooling.  $1,950,000.

190 beacon st newton

These stylish contemporary townhomes for sale in Newton feature solar panels and geothermal
heating and cooling. $1,789,000

Thanks Leslie for the informative post! Check out Leslie’s great blog, Real Estate In Metrowest for more good tips.

By my own research, a 3 ton geothermal system costs about $7,500. But with the tax credits and energy savings, homeowners will quickly recover the added cost compared with a conventional fossil fuel system. It will be interesting to see whether Massachusetts homeowners, many of whom are environmentally conscious, will consider the benefits of geothermal heating and cooling systems. If I had the extra cash or was building a new home, I certainly would!





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Massachusetts Real Estate Law Year In Review: Top Posts Of 2009 And Predictions For 2010

by Rich Vetstein on December 28, 2009 · 0 comments

in Closings,Condominium Law,Electronic Closings,Fannie Mae,FHA,Foreclosure,HUD,Massachusetts Property Values,Massachusetts Real Estate Law,Mortgage Crisis,Purchase and Sale Agreements,Realtors,RESPA,Short Sales,Technology

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In the spirit of the New Year, let’s look back at the top legal issues of the past year and peer into the crystal ball for a glimpse at 2010.

Top 5 Posts For 2009

#1.  The Catch-22 Impact of New Fannie Mae Condominium Regulations. In January, Fannie Mae was the first government agency to drop a big bucket of cold water on condominium lending underwriting practices which some say contributed to the condominium market meltdown. FHA and others would follow later in the year. The new guidelines had condominium developers and associations, buyers and sellers in a tizzy, as Fannie Mae imposed much tougher pre-sale requirements, condominium financial guidelines and the imposition of unit owner HO-6 insurance policies, among other requirements.

#2.  New FHA Condominium Lending Guidelines Sure To Slow Financing and Chill Sales. The Federal Housing Administration (FHA) followed Fannie’s lead in tightening condominium lending requirements. Originally proposed over the summer, FHA delayed implementation of the new guidelines until earlier in the month and watered down some of the most stringent requirements, after major lenders and community association groups complained.

#3.  There’s Nothing Standard About The Massachusetts Standard Purchase and Sale Agreement. Great to see a post about buying a new home ranking so highly. An indicator of the recovery of the Massachusetts real estate market perhaps? Check out this post for the ins and outs of the very seller friendly standard form P&S and how to level the playing field if you are a buyer.

#4.  Massachusetts Land Court Reaffirms Controversial Ibanez Decision Invalidating Thousands of Foreclosures. If you were following the foreclosure mess, you couldn’t have missed this judicial bomb dropped by Massachusetts Land Court Judge Keith Long. The so-called Ibanez ruling invalidated thousands of foreclosures across the state because the lenders did not record their paperwork up to date at the registries of deeds. Lenders have appealed the ruling, but hundreds of foreclosure titles remain unmarketable in the wake of this controversial decision. More to come in 2010.

#5.  Short Sales Get Boost From New Obama Treasury Guidelines. On December 1, the Obama administration set long-awaited guidance on a plan for mortgage companies to speed up short sales of homes and other loan modification alternatives to stem the rising tide of foreclosures. The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed.

Honorable Mention. I would be remiss if I didn’t mention the new RESPA guidelines and the new Good Faith Estimate and HUD-1 Settlement Statement which go into effect Jan. 1, 2010.

2010 — The Year We Rebound

The Massachusetts Real Estate and Mortgage Market

All signs are pointing to a real estate rebound for the Bay State in 2010, with home and condominium sales surging over 50% from last year in November. I have definitely seen an uptick in new purchases on my end and we are preparing for a busy 2010. Along with good news from the real estate market, however, comes higher interest rates as the bond market reacts to positive news. My friend mortgage consultant Brian Cavanaugh at SmarterBorrowing.com does a good weekly mortgage market update and is presently advising borrowers to lock into current rates as he predicts rates will rise in 2010 to close to 6% for a 30 year fixed. Of course, when rates go up, buying power goes down, thereby cooling the market a bit.

Regulatory

Hopefully we’ve seen the end of increased regulation of the condominium market from the government giants. Let’s toast that they can let the market take its course with the new guidelines in effect.

Stimulus/Home Buyer Credit

As the economy continues to recover, you can probably bet that the Obama administration is going to let up on the stimulus/credit throttle for 2010. So take advantage of all the credits available now, because this is probably the last you will see of them for awhile.

Housing

On the housing front, Massachusetts builders are reportedly foregoing McMansions in favor of  the more affordable middle market of homes in the $400,000 to $600,000 price range. Finally!

Technology

Lastly, technology, the internet and social media will play an even bigger role in how realtors, lenders and real estate attorneys do business. The National Association of Realtors says that 87% of home buyers use the Internet to search for homes. I tell all my Realtor friends they must have a strong Internet presence and to take advantage of blogging, social media and Active Rain to boost their online presence.

For attorneys, in 2009 we saw the tip of the iceberg for electronic recordings and closings as well as online transaction management. Our office just set up an online transaction management system where buyers, sellers, loan officers and realtors can view the status of the loan whenever they want through a secure online portal. It’s a fantastic tool. While electronic closings are a way’s away from gaining the necessary critical mass of lender acceptance, many Massachusetts registries of deeds are now e-recording, and that will continue to rise. The next decade will certainly bring electronic closings and paperless transactions into the norm.

Well, let’s clink our glasses to a very happy, healthy and fruitful New Year!





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Creating A Memorable Blog To Market Your Law Practice Free Webinar Now Available Online

by Rich Vetstein on November 20, 2009 · 0 comments

in Blogging,Technology

Noted Boston legal marketing guru, Steve Seckler of CounseltoCounsel.com, and Richard Vetstein (that would be me) recently co-presented a free webinar for lawyers who are interested in blogging, called Creating a Memorable Blog To Market Your Law Practice.  The webinar is now up on the Web for all to check out and enjoy.  Click here to download.

While presented to attorneys, this webinar has great information for anyone interested in blogging for their business:Lastfm+for+Wordpress+logo

  • Why Blog?
  • What is a Blog?
  • WordPress vs. Professional Design Blog Firms
  • RSS Feeds
  • Widgets and Plugins Must Haves
  • Blog Design
  • Statistics
  • Good Writing Tips

Steve and I had a great time sharing our knowledge of blogging.





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Google Real Estate? Yup, Real Estate Listings Now On Google Maps

by Rich Vetstein 11.02.2009 Massachusetts Real Estate Law

In its never ending quest for world dominance, Google is now putting real estate listings on its popular Google Maps platform. I have to say that it’s pretty cool. Just go to Google Maps and type in a city/town or street address. On the “More” pull down menu on the right side, there is a [...]

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Electronic Real Estate Closings (E-Closings): The Future Of The Real Estate Closing Industry

by Rich Vetstein 09.25.2009 Closings
Thumbnail image for Electronic Real Estate Closings (E-Closings): The Future Of The Real Estate Closing Industry

An excited young couple about to close on their first home walk into into the closing attorney’s office. The day before they received via secure email all of the loan documents to review and approve with their personal attorney. The closing attorney arrives without any paper, armed only with a laptop attached to a digital [...]

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