eClosings?

eClosings?

A new concept is being tried, which involves the electronic close of escrows. Some companies are contemplating whether to move forward with handling escrows electronically through escrow companies, which have virtual offices.

Under this concept, all of the documents would be sent to the parties electronically. The parties would then sign through a system, such as DocuSign, and return them to the escrow company. It is contemplated that the entire transaction would be electronic.

It does not seem that today’s legal environment is ready to allow electronic signatures. There are concerns about fraud relating to signing electronically. Further, most lenders still require “wet” signatures sometimes in particular colors (i.e. blue or black ink). Also, the eClosing processes have not yet dealt with notarizing documents, as required before recordation.

While it is an interesting concept and likely going to occur in the future, today’s legal environment does not appear to be ready for eClosings.

-Shannon B. Jones, Partner, sbj@sbj-law.com