As we move further into the Digital Age, advances in technology and law open the door for more transactions to be fully conducted online. While companies like Zillow (for real estate listings), DocuSign (for e-signatures) and QuickenLoans (for digital mortgages) are steadily moving the residential home buying process into a fully integrated digital transaction, few commercial real estate firms utilize similar technologies for similar processes. Commercial real estate firms are missing out on the time and cost savings realized by utilizing a tech-enabled approach to doing business.
Commercial real estate firms can take a big step in joining the digital revolution by reducing the use of paper and moving towards the electronic execution, exchange, and storage of documents. Three reasons to go digital:
- Save money. Costs associated with a paper-driven approach, like the cost of the paper itself, are typically considered a necessary part of doing business. However, as reported by the Minnesota Pollution Control Agency (MPCA), costs for using paper, like printing/photocopying, scanning, storage, delivery and disposal, “can add up to 31 times more than the cost of purchasing paper.” On the other hand, the biggest costs associated with electronic documents are the cost of the subscription service and storage (if not otherwise handled in-house).
- Save time. In addition to cost savings, electronic documents can make a transaction more efficient. Preparing, executing and delivering paper documents not only take a significant amount of time, but can also be delayed by scheduling conflicts and deal changes. Through the use of electronic documents, signings and closings will no longer be held hostage while waiting for traveling or vacationing signatories to return—all that is needed is a computer with a camera and a secure internet connection. Also, a change in terms or adding a new party to a document is an easy adjustment to any electronic document, whereas the traditional approach could delay any closing when dependent upon the next courier delivery schedule.
- Save the environment. If saving time and money are not enough of a benefit to move towards digital documentation, then firms should also consider the environmental benefits of ditching paper. Air, water and land pollution are just a few consequences of paper and pulp manufacturing, which according to the MPCA are also among the top 10 greenhouse gas emitting industries. Companies like Bank of America are committed to environmental sustainability and as a result have reduced their paper use by 31% through “transitioning customers to online banking, reducing employee printing, and increasing the digital delivery of key documents.”
With all of the benefits tied to electronic documents, outside of tradition, it is difficult to pinpoint the reason that most commercial real estate firms are so slow to change. However, in all fairness, there are still a number of jurisdictions that pose legal barriers. The passage of the E-Sign Act in 2000 (and the earlier adoption of the Uniform Electronic Transactions Act by 47 states, the District of Columbia, and the U.S. Virgin Islands) established the validity of electronic signatures and documents for both interstate and foreign commerce transactions. However, these laws do not otherwise overrule other state-specific laws that are unique to real estate transactions. A majority of states have passed laws permitting electronic notarization through platforms like DocVerify and Notorize. Additionally, 33 states plus the District of Columbia have adopted the Uniform Real Property Electronic Recording Act (URPERA) to grant county clerks and recorders the legal authority to accept and file electronic real property records.
In summary, commercial real estate firms should evaluate their business processes to determine where time and cost savings can be achieved by moving towards a digital document system. While going fully digital might not be possible in all jurisdictions currently due to legal barriers, firms should be ready and willing to make the change as laws catch up with technology.
This article content should not be construed as legal advice. For specific advice, consult an attorney.
This article was originally published on Crewnetwork.org.