Getting paid Commission when signing electronically
Everyone thought that by signing documents securely through electronic signatures, it would be easier to prove a claim for commission. A recent case will make you tighten up your procedures to ensure you are not caught on the wrong side of things.
A franchisee known as First Canadian Corp. and its agent David brought an action for commission against buyer Lloyd for $8,828.13. This was based on a Buyer Representation Agreement (BRA) signed by Lloyd through the Authentisign system at the time they put in an offer with David on another property which was not accepted. Lloyd later purchased a different property during the term of the BRA and franchisee First Canadian Corp. and David sued for commission.
In an interesting defence, Lloyd claimed that he had never signed a BRA before and that both the Agreement of Purchase and Sale for the property that was not accepted and the BRA were sent for signature in one email, as one attachment. When the attachment was clicked open for signature, the Authentisign system then automatically moved from one signing page to another, without the review of the entire agreement. Thus Lloyd claimed that he thought he was only signing the Agreement of Purchase and Sale that was not accepted, and had no idea that he had also signed the BRA.
The judge reviewed several cases where buyers had successfully avoided paying commission under a signed BRA where they could prove the legal defence of non est factum, meaning that they did not understand what they were signing, typically when documents were signed in a hurried manner late at night, without proper explanation.
In a decision dated December 28, 2017, Deputy Judge K.J. Brooks of the London Small Claims Court held in favour of franchisee First Canadian Corp and David. While the judge stated that the agent did not follow proper practice in explaining the documents, he found the buyers were careless in not reviewing the BRA document on their computer screen and could thus not later claim that they did not understand what they were signing.
Still, the case could have gone either way. Here are 5 things to remember when signing anyone to a BRA, whether in person or through an electronic method:
1. Explain all key provisions of the BRA in advance;
2. To the extent possible, try and sign the BRA early in the process, preferably before the time you actually obtain your first offer to submit;
3. If using electronic signature, make sure that in any email, you clearly set out all documents that you are asking to be signed;
4. Make sure you remind the client to view any electronic document in advance and email themselves a copy of the signed document before sending it back to you; and
5. Email the client a copy of anything signed afterwards for everyone’s records.
At our firm, we are 100% digital and over 90% of clients choose to sign documents electronically through our mobile signing process, where we come to the client home at their convenience to sign the closing documents so they do not have to take time off work. All documents are signed digitally, with each document reviewed with the client before signing to ensure their understanding. Immediately after signing, all documents are emailed directly to the client for their records.
Contributor: Mark Weisleder, LLP
If you have any questions on this topic or have a situation where your own clients would benefit from our mobile signing service, where we go to our clients from 7am – midnight, 7 days a week at the time and location of their choice, we would be delighted to assist you.