How do eContracts work?
Mark explained that when a purchaser shows interest in a property, a solicitor or agent emails them a copy of the sales advice, contract and a floor plan (if it’s an off-the-plan contract).
Once the contract is agreed on, the details of the purchaser(s) are added to complete the contract and the eContract is sent to the purchaser(s) to sign.
Once signed by the purchaser(s), a link of the contract is sent to the vendor for signing.
Colin Biggers & Paisley also send a narrative description of how to sign the form electronically and a video to make the process clear to everyone.
If a solicitor is involved in the process and it is required that they sign a section 66W certificate, the process is modified slightly, but this is integrated into the system.
Mark explained: “The process from start to finish to have a fully exchanged contract takes in some cases seconds and other cases minutes, without anyone being shown a paper contract.
“The system is very simple to use and works extremely well. We have had no problems at all from agents, or purchasers and the acceptance from solicitors has been high, and we have issued nearly 2,000 eContracts without any problems.”
He added that all they require for eContracts is buyers to prove their identity with a passport or driver’s licence and provide their email address, phone number and their signing details.
Colin Biggers & Paisley first used an eContract in August 2015 at an auction of 34 properties.
Mark added: “Not one purchaser expressed any concern at signing the contract on an iPad and all were delighted to receive online copies of their contract signed by the vendor just minutes later.”
What does the law say?
Mark explains that eContracts are legal and have been in existence for over 108 years.
He added that the two key legal factors in determining if a contract for sale is binding, are set out in section 54A of the Conveyancing Act 1919 in NSW and are:
- that it is in writing; and
- the contract is signed by the party to be charged (or their authorised representative).
Mark explained: “We now have numerous cases in Australia where it has been determined that an email constitutes writing for the purposes of the Conveyancing Act and that a person’s name typed at the foot of that email may constitute a signature.
“However, we don’t recommend this method when entering into a contract and we have incorporated the REINSW contract for sale into our eContract system which is what we send to everyone to sign.”
Frequently asked questions
How secure is the system?
Mark said: “eContracts entered into by the Colin Biggers & Paisley exchange system are far more secure than paper contracts, especially on large scale projects. A purchaser cannot accidentally or deliberately alter it after it has been issued by the vendor.”
Are eContracts acceptable to financers?
Mark explained that eContracts are acceptable to financers and that they have approved construction finance for developers utilising eContracts for the sale of apartments off the plan for large scale projects.
What are the key benefits for a developer?
Mark said: “The benefits are quick sales, because the sales team is able to quickly prepare contracts which can be signed anywhere in the world instantly.
“We had one situation in Queensland recently where a lady turned up to purchase a property but her husband was in Shanghai.
“However, using the eContract system, she simply signed the contract as the first purchaser on the iPad before it was sent to her husband in Shanghai and the contract was signed by him two minutes later.”
What are the risks?
Mark said: “There is no risk of contract tampering or pages going missing using eContracts. I have worked in the legal profession for nearly 40 years and have had numerous experiences of people altering contracts and not showing the other parties.
“We have also frequently had situations where people have lost pages, and no one was sure what the contract was between the parties.
“However, using eContracts this issue is not possible as the pages cannot go missing.”
Is it more cost effective?
Mark said: “Legal fees are substantially less because you don’t have to pay for printing, copying, a courier, and storing charges which can be considerable.”
Find out more by watching REINSW’s webinar here.