Electronic Signatures and Authorizations in the Rental Industry
While the concept of electronic signatures and authorizations was around well before the COVID-19 pandemic, the last couple of years has certainly shined a new light on these kinds of digital transactions. Data shows that tenants with online rent payment options have remained more likely to pay rent on time and in full throughout the social distancing and stay-at-home orders of the pandemic, and the rental industry as a whole has adopted many other virtual practices to keep things running smoothly despite unprecedented challenges.
One of these practices has been utilizing electronic signatures (eSignatures) as an easy, secure and timely way to have lease agreements and other important documents signed by both parties. Pandemic or not, landlords can use eSignatures to seamlessly move tenants through the application, lease signing and move-in processes.
Prior to using eSignatures myself, if a prospective tenant wanted to rent a property site unseen, I would have to send them a copy of the lease and then the tenant would have to print a copy, sign it, and then physically mail the lease back to me. This whole process could take days to weeks, leaving my rental property sitting vacant and collecting zero rent. eSignatures have moved this process entirely online, so this task now takes a matter of minutes instead of days.
During the pandemic, it was necessary to move as many rental related tasks remotely as possible, including the leasing process. Rather than scheduling a time to meet in person to physically sign a lease, I can send tenants a digital file to sign electronically. This is something I plan to continue even post-pandemic because of the time-saving convenience.
How landlords are using eSignatures
eSignatures allow multiple parties to give legal authorization, consent or approval on electronic documents and forms. Federally compliant eSignatures are legally binding and treated the same as a handwritten signature. These days, knowing how to properly use this technology is key to running a successful property management business.
Using eSignatures to remotely review, revise and approve documents from your computer or mobile device saves precious time and contributes to a paperless business operation. You’ll avoid having to schedule in-person meetings or the time-consuming process of printing, scanning and emailing important documents to tenants and owners. eSignatures go far beyond lease signing – I’ve been able to execute all kinds of contracts and important documents like addendums, owner agreements, vendor contracts and property notices. One of the best benefits of using eSignatures is that a digital copy of the signed document is readily available to you and your tenants. I have been asked so many times for a “copy of the lease” from tenants who misplaced theirs, and now they have a copy they can easily access and reference without adding more to my plate.
There are many different services you can use to integrate electronic signatures into your property management business – a comprehensive property management software will partner with a secure and compliant service and provide this to you as an option within the software platform.
A few risks to consider
As with any digital transaction, there are a few risks and best practices to keep in mind to ensure the security and privacy of everyone involved. Compliant eSignatures are attached to personal identification in order to verify that the signature actually belongs to the intended individual. This means the service you select also needs to protect the data of your business , your owners and your tenants. Many programs have the capability to electronically sign forms and documents, but not all applications are compliant and legally binding.
Look for a software or service that complies with all necessary standards and regulations like the U.S. federal ESIGN Act and UETA Act, as well as any regional laws or statutes. Your provider should highlight their security and compliance measures, and if implemented properly, these will ensure your eSignatures are even more risk-free than handwritten signatures.
eSignatures are becoming increasingly common, and with this comes credibility and the assumption that everything should have the option for an electronic signature. Personally, when I’m working with vendors who don’t offer the option to electronically sign a document or contract, it makes me wonder why they haven’t adopted modern technology. It’s safe to assume tenants and property owners are thinking the same thing if their property manager isn’t offering this convenient and reliable option.