In recent years it has become increasingly evident that in order to be able to run a business no matter the conditions inside or outside the organisation, digital solutions replacing any paper-based in person processes are indispensable.
Although basic versions of electronic signature solutions have been used for more than two decades, many companies still rely on slow and manual approval and signature processes instead of using the much more technologically advanced versions we have today. Why is this the case?
While most people and companies are familiar with electronic signatures, there are still many misconceptions when it comes to signing sensitive legal or financial documents electronically. Let's take a look at the two biggest of these myths and see why e-signatures are actually much safer than you might think.
Myth 1: Electronic signatures are not legally binding
Hybrid business environments, in which paper and digital communication blend, make it increasingly challenging to determine what practices are, will remain or become legally binding.
As a means of clarifying the legality of electronic transactions, the European Union passed a Regulation in 2014 on electronic identification, authentication and trust services (eIDAS). With the enforcement of eIDAS reglementation, electronic signatures are now considered legally binding – if certain specifications and requirements are met.
The following key elements must be adhered to in order to ensure legality and security of electronic signatures:
- Clear identification of signatories: Those parties involved in the e-signing of a document must be easily identified. Generally speaking, clear identification can be achieved by confirming email addresses, phone numbers or using authentication through the platform itself. kodehyve sign relies on phone number confirmation and links each phone number to the personal identity of the signing parties. For each document about to be signed, the signer receives a validation code via SMS to confirm their identity before being able to enter the document.
- Intent to sign: Signatures are only valid if each party intended to sign the document. To prove the intent to sign, entering a name, an email address, a phone number or a One-Time-Password as well as checking a box are possible ways to ensure this. Broadly speaking, any action expressly taken by the signatory from her own will constitute a validation of the intent to sign. With kodehyve sign there is a complete process to ensure signatory’s intent to sign. The signatory is first requested to log into the platform and then has to explicitly click on a “sign” button and enter an OTP received via SMS. We use the SMS validation in order to confirm the signatory’s identity. At the first login, the signatory is requested to declare that her phone number is uniquely linked to her personal identity.
- Integrity of document: The document can not be tampered after it was signed and/or tampering can be detected resulting directly in an annulment of the agreement. With kodehyve sign, we use the eSeal provided by LuxTrust to ensure the integrity of the document adding an extra layer of security.
As a result of the eIDAS regulation, within the European Union electronic signatures are legally binding and are considered a reliable method of signing sensitive official and legal documents. Depending on the level of the electronic signature, it may even be difficult to reject them in court.
Myth 2: Electronic signatures are not safe
This is the most common misconception about e-signature. Electronic signatures have so many layers of security that they are even safer than a traditional wet signature. As opposed to handwritten signatures, electronic signatures cannot be misused or copied. By combining sophisticated regulations making them court-admissible with cutting-edge technology, electronic signatures become bulletproof, reliable, and offer accelerated operating processes.
kodehyve's goal through kodehyve sign is to ensure that transactions within the real estate ecosystem are secured by powerful and reliable electronic signatures to ensure that electronic signatures are safe and remain unaltered at any point in time. Legal requirements laid out by the eIDAS regulation are met by kodehyve’s technology guaranteeing seamless and secure electronic transactions.
Additionally, kodehyve sign’s advanced audit trails guarantee the traceability of any changes made and actions (creation, alteration, deletion) taken before and after the signature is made. Such records can be helpful in providing evidence of the authenticity and integrity of the electronic signature.
As well, timestamping provides an extra layer of protection by bounding the date and time of the signature to other data of the document in electronic form, certifying a document execution at a specific point in time thereby creating additional proof to the signature.
Good to know: In spite of VPNs blurring IP addresses, the sole declaration of the location of the signing party would still make the signature valid.
Besides, kodehyve sign uses 2-Factor-Authentication (2FA) along with a One-Time-Password (OTP) approach in order to make sure that only authorised and clearly identified parties can sign documents.
To ensure further safety and trust, kodehyve sign relies on an e-seal generated by LuxTrust which is an official European qualified trust services provider (QTSP).
Electronic signatures solutions are reliable options to ensure data protection and safety. Since the release of the General Data Protection Regulation (GDPR) in 2018 it also became increasingly relevant to ensure that all business actions, off- and online, are fully GDPR-compliant. Due to the number of often confidential information and parties involved in a real estate transaction, including agencies, architects, property developers, municipalities and many more, data privacy should not be taken lightly. Hence, storing data within kodehyve sign that is powered by Amazon Web Services (AWS) meets the highest security and safety standards for GDPR compliance.
Good to know: Even though e-signatures are legally binding, they are only valid when they are stored digitally. Printed contracts that were signed electronically will lose their legal validity once in a physical format. For more information we invite you to read LuxTrust article about Can we mix handwritten with electronic signatures in a digital document?
That being said, using e-signature services is not only safe, but also capable of withstanding false accusations due to their high degree of security and legality. The three levels of e-signature are receivable in court, the only difference will be the robustness of proof that will need to be furnished and the reversal of the burden of proof in case of a qualified e-signature. For example, if a party claims to have never signed a certain legal document and accuses the defending party of forging the signature on a document signed with a qualified e-signature, the party accusing must prove their claim. In this scenario, the burden of proof is reversed, and only qualified e-signatures are entitled to the presumption of reliability, as they have the same legal effect as a handwritten signature. However, e-signatures, whether simple or advanced, are also receivable in court, the only difference with the qualified e-signature is that they will require the defending party to prove that the signatures are valid in case of an accusation. More in-depth information about the three levels of e-signature can be found here.
Lastly, in the context of lux-sign, template contracts pre-approved and legally certified by Chambre Immobilière and their legal partners are available within the platform, which not only offers legal protection but also increases faith and confidence among all signing parties.
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