New Zealand Law Society - Realforms takes the pen away from sale and purchase agreements

Realforms takes the pen away from sale and purchase agreements

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A New Zealand company has developed a way of conducting a house sale and purchase agreement entirely online.

Realforms New Zealand says a recent agreement was drafted, e-signed, negotiated, edited, accepted and finalised for a residential property in Christchurch without the use of a piece of paper or a pen.

The secret of it is in having e-signatures legally binding.

“This is the future of the way business will be done in real estate, and indeed in lots of other contractual areas, and it’s great to be a leader and partner in it,” says Realforms CEO Jordan McCown, who claims the process is a world-first.

“We’re thrilled this world-first occurred in New Zealand. Initially, we were going to launch in Australia, but, their e-signature legislation was archaic in comparison to the more modern legislation in New Zealand.”

He says the Electronic Transactions Act 2002 specifies that electronic witnessing is legal.

Mr McCown says that while S&P agreements in New Zealand don’t require a witness, there are other supplementary agreements such as the pre-settlement disclosure statement – which is required for apartments – that do require a witness.

“We wanted to operate in an environment with just one agreement and a progressive electronic transactions act and little or no competition. New Zealand is an ideal environment for Realforms,” he says.

In late September a Christchurch real estate agency initiated the sale of a property through Realforms.

Four vendors and one purchaser

One Agency Morris Properties Owner Michael Morris conducted the sale between four vendors and one purchaser.

Realforms says Mr Morris began the process by drafting the digital Sale and Purchase Agreement through the Realforms web application, entered the purchasers’ details, linked their email address to their e-signatures, then through the application, emailed the digital S&P.

The purchasers digitally accepted each section of the S&P – which usually requires printing and initialing each page – and were prompted to download a government guide and e-signed (which usually requires printing, ink, and scanning) and submitted the agreement.

The S&P was sent to the vendor’s conveyancer who then requested three amendments on three separate occasions. On each occasion Mr Morris made these amendments in the Realforms web application to the S&P and re-sent the agreement to all parties who digitally accepted the changes.

The four vendors then electronically signed and submitted the digital S&P. Mr Morris dated the agreement and clicked finalise, at which time the Realforms web app locked the document from any further online changes and attached an audit trail of who did what and when.

Digital fraudsters have recently turned their attention to property sales and this winter the ANZ Bank advised its clients of an increase in fraudsters stealing real estate deposits by compromising email addresses, usually the real estate agent’s email.

There have also been recent instances of attempted frauds on lawyers involved in property transactions through alteration of bank account details during the transaction.

Scam prevention

Mr McCown says the company will have stronger measures in place from 2019 to prevent scams.

“At the moment we wouldn’t be able to guarantee prevention of such scams. However, from 1 January next year, we will offer global electronic identification to assist agents, solicitors and banks in their due diligence process. This will greatly assist all parties in AML compliance.”

The Realforms web app is secured through the Google Cloud Platform, Cloudflare and bank-grade SSL Certificates.

Mr McCown says the firm is in the process of creating digital versions of NZRET’s deposit forms.

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