Court Invalidation of Electronic Signature Causes Concern About Real Estate Contracts

In December 2014, the California Court of Appeal held an employment arbitration agreement was unenforceable because the employer did not properly authenticate the employee’s electronic signature — raising some concerns about the enforceability of real estate contracts with electronic signatures.  The most widely used real estate forms in California can be signed digitally using Digital Ink® or DocuSign®.  However, each of these systems has an audit trail which can be used for authentication purposes. Further, the Appellate Court specifically noted other courts have upheld documents signed via DocuSign®. Therefore, the ruling of invalidation should have no impact on most real estate transactions.