Digital Signature Legality for Consulting Agreement in United States

How to eSign a document: digital signature legality for Consulting Agreement in United States

hi I'm Annie Fitzsimmons I'm your Washington Realtors Legal Hotline lawyer today we're talking about signature blocks now signature blocks may not sound like a fun topic to you but let me tell you if you don't have the correct signature block you don't have a binding agreement and too many brokers have never really thought about what their clients signature block should look like because for generations we've had primarily in that least in the residential industry we've had primarily human beings purchasing property but more and more in today's world we have entities buying and selling property and we also have a human being signing for property on behalf of another we're going to talk about all of those different configurations of buyers and sellers in today's video because it's important that you understand the significance of who actually signs the contract that you've prepared and that you want to be made binding by that signature because if we don't have the right signature for the actual party to the contract then we don't have a binding agreement so what am I really talking about here let's start with the preliminary commitment for title and you have probably heard me say countless times that when you take a listing the very first thing you should do after you take the listing is order the preliminary commitment for title and that's still a true statement and as soon as you get the preliminary commitment for title you need to open it and you need to read it and there are a variety of things you're going to look for on that preliminary commitment for title but the thing we're talking about today is who owns the property who is identified as the fee simple owner of the property and let's just say that the fee simple owner of the property is the Mickey Mouse family trust now a trust always has a date associated with it we'll get to that in a minute but for the purposes of our story here let's say that you've already taken this listing and you met with Mickey Mouse and Mickey Mouse hired you to sell his property and you prepare the listing agreement and Mickey Mouse signed the listing agreement Mickey Mouse that's all it says Mickey Mouse and now two days later three days later you receive the preliminary commitment for title and you look at the first page and you see that the feasable owner of the property is actually the Mickey Mouse family trust is that significant is it significant that the owner of the property is the Mickey Mouse family trust and then the signature that you have says Mickey Mouse and the answer is absolutely 100% yes that's hugely significant because as it stands you don't have a signature on the listing agreement from the owner of the property why because the individual Mickey Mouse cannot bind the Mickey Mouse family trust by the signature Mickey Mouse alone now it ultimately may be Mickey Mouse who signs the listing and signs the purchase and sale agreement in order to create a binding agreement but if all that it says is Mickey Mouse Mickey Mouse doesn't own the property entitled to the Mickey Mouse family trust so what do you need to do the very first thing you need to do is pick up the phone and call your title officer and have a conversation with your title officer I see that the fee simple owner is a Mickey Mouse family trust my listing agreement is signed by Mickey Mouse is the listing agreement signed by the owner of the property and if not what should the signature block look like and is this same signature block that you're going to give me the signature block that I should use on the purchase and sale agreement on the form 17 on any seller counteroffers on any documents going forward signed by the seller and the answer by the from the title company will be yes once the title officer gives you the signature block to use that will be the signature block that this seller needs to use on every contract created with respect to the sale of this property now the signature block for the family trust is going to look a lot like this it's going to say the Mickey Mouse family trust dated July 4 1776 and then you're going to see a space for Mickey Mouse's signature and below the signature line itself where Mickey Mouse's signed it's going to say by Mickey Mouse its trustee by Mickey Mouse comma its trustee if we had a corporation let's say we had the Donald Duck Inc corporation then a corporate signature is very similar it would be Donald Duck comma Inc comma a Washington corporation and then you'd see Donald Duck signature and below Donald Duck's signature it would say bye Donald Duck comma its president and if you have an LLC or a partnership all of those signature blocks are going to be similarly formatted to that an LLC is going to be signed by its managing member a partnership is going to be signed by its managing partner but but what I don't want to try and communicate to you through this video is that you need to memorize what these signature blocks look like you you have enough to remember in this industry you don't have to memorize what signature block should look like what I want you to make sure you know from this video is that the signature block is critically important because if you don't have the right signature block for an entity you don't have a binding agreement the way you're gonna figure out what a signature block looks needs to look like is not because you have everything I've just said memorized but because you remember the importance of calling your title officer and asking that person what should the signature block in this case look like what does the signature block need to look like title officer so that your company will ensure title that's really what we care about what do we need to have the contract say as far as a signature in order to get insured title okay we've talked about entities what about when we have one human being signing on behalf of another human being we have a guardianship or a power of attorney for example let's say that pebbles Flintstone is signing on behalf as the power of attorney for her mother Wilma Flintstone in that case pebbles Flintstone would sign Wilma Flintstones name and underneath Wilma Flintstones name it would say Wilma Flintstone , by pebbles Flintstone , her attorney in fact again you don't have to memorize that but you do need to know what you need to talk to your title officer now when you call your title officer your title officer is going to already know who the owner of the property is because they produce the title report showing the fee simple owner but what the title officer is not going to have access to is the underlying documentation that supports the signing Authority for that entity or for that person for example if it was pebbles Flintstone signing for her mom is a power of attorney the title company is not going to have a copy of the power of attorney and they have to have a copy of that signed notarized power of attorney they're not going to have a copy of the family trust agreement for the Mickey Mouse family trusts they're not going to have a copy of the Articles of Incorporation for the donald duck corporation you as the broker are going to have to go out and get all of those documents for your client and I shouldn't say all of those documents for each entity you're gonna have one set documents and the title company is going to have to have a copy of those documents in order to be able to verify who has signing authority and and what that signature block should look like so it might take you a day or two to assemble all the documents that you need in order to give the title company what they need so that they can then tell you what the signature block should look like but this isn't something you can skip over this is not something that's just mmm not important this is the difference between creating a binding purchase and sale agreement or not having a binding purchase and sale agreement and if you don't want to do the legwork of getting the the paperwork from your client then you're not gonna close the transaction because even if you got through the purchase and sale agreement because everything worked well and you found yourself at the closing table the escrow company cannot create a deed without proof of signing Authority by the person who's signing on behalf of an entity or on behalf of another person so at some point in the transaction your client is going to have to provide the documentation that the title company will require in order to be able to ensure title we've spoken only with respect to sellers in this video everything I've said applies to buyers who are purchasing in the form of an entity or on behalf of another person the title company will not ensure a deed of trust for example signed by a partnership or an LLC or a trust unless they have the authorizing documentation proving that the person who signed that deed of trust has authority to sign on behalf of that entity or on behalf of that other person final thing I want to say on this topic I'm often asked once we have this what will seem like a fairly complex signature block how do I put that on every addendum where the seller or the buyer has to initial and the answer is you don't the the signature block the signature of the party only goes on the signature line of the of the contract itself so when the purchase and sale agreement it's going to show up on the face of form 21 on a listing agreement it's going to be on that second page of the listing agreement on the form 17 the seller only signs in one spot on page number I think it's six the and then if a seller signs a counteroffer the correct signature block has to go there all of the addenda that are initialed there their initial they're not signed you don't have to have a signature on those addenda to make them binding they are actually part of the purchase and sale agreement and the reason they're initialed is to show sellers or buyers acknowledgement to the terms on those forms that they're actually attached to the purchase and sale agreement which is signed by the entity so if you have questions on this topic or any other please send an email to me with respect to this topic also remember you need to talk to your title officer if you want to send an email to me my email address is Legal Hotline at W a realtor.org thank you for being a Washington Realtors member [Music] you