Save A Tree – No More Paper Copies – No More Ink

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It seems to us that, in at least one way, ordinary consumer transactions are moving much more quickly into the future than are commercial real estate transactions. We’re thinking about the way they are replacing paper documents with purely electronic ones. Broker generated property sales contracts and leases are increasingly, completely paperless. Residential loans are moving into the paperless world with signatures directly on tablet computers.

For years, many jurisdictions have accepted facsimile signatures on entity (corporate, limited liability company, etc.) filings, including printed signatures that read: “/Jane Doe/.” More and more real property recording offices require electronic filing, mostly using pdf copies of scanned or generated documents. Again, goodbye ink. In fact, at this time, a very serious project is afoot at the federal level to create a registry where “paper” notes will be electronically filed, whereupon the “sacred” original will be destroyed, yes – destroyed. Heresy, you say? Perhaps, but the electronic version will be the one and only authentic note.

Yet, there appears to be life in the time-honored adage: “You can’t teach an old dog new tricks” when it comes to commercial real estate transactions (and, in fact, all manner of commercial transactions).

Under current laws, unless there is a specific law to the contrary, if contacting parties agree that facsimile signatures are to be just as valid as “wet” (ink) signatures, no one has to exchange wet-signed documents. In fact, no one has to exchange paper copies at all. The parties can send and receive electronic copies and print them on paper at will (if they wish).

So, why do we still insist that “four” or “six” copies be signed and delivered? We think it is the “old dogs” problem. For a ten document closing, why require that 40 documents be signed? Is it only because that’s what we’ve always done? If so, why do newly minted attorneys call for “four originals”? Oh, we know. They lack the temerity to question their old dog supervisor or mentor when “taught” that we need four copies of everything.

We use the “four” example because of our experience with two-party transactions. The four copies get distributed as follows: one for each party and one for each of their attorneys. Now, our office’s files are electronic. So, when we get a paper copy of an agreement, we scan it and send the paper copy to the shredding bin. Almost all of our clients do the same (but for “notes” and sacred documents like notes). We suspect that in commercial transactions, the counterparty and its attorneys do the same thing. So, we demand four copies of each document with “wet” signatures and then destroy them. [A greater mystery to us is why people scan a document and them save it.] Why not just exchange “pdf” format documents?

Dissenters, please let us know what we’re missing. Please.

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Comments

  1. Jason Kirkham says:

    I entirely agree with your note. In fact, I don’t understand why more commercial real estate transactions aren’t circulated for execution electronically via systems like DocuSign. For everything other than documents that need to be recorded, witnessed or notarized, an electronic signature should suffice.

  2. @SilvestriL says:

    It is time for the old dogs (including me) to learn new tricks. I have been working to reduce the number of “original” execution documents in my practice, but the responses I get from clients and other participants are inconsistent. Thanks for the great post.

  3. I have been using electronically signed documents for many years now. At first, client’s and opposing counsel) were reluctant. However, once we had completed the first transaction and no trees were needed, the client’s were hooked. In fact, I picked up my largest client today partly because he was able to sign a critical deal on his smartphone while on the go. Yet, I still get opposing counsel rejecting my request to sign documents electronically. Like you said, why?

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