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Young v. Rose: Court Considers E-Signature Requirements

An Arizona appellate court has considered whether a real estate professional’s e-mails to her clients could constitute an electronic signature when the real estate professional failed to physically sign the actual representation agreement with her clients.

Real estate salesperson Julie Young (“Salesperson”) represented Jason and Jordan Rose (“Buyers”) in their search for a home over an 18-month period during 2006–2007. During that time period, the parties entered into a series of representation agreements. The final agreement expired in 2007.

In 2009, the Salesperson sent the Buyers an e-mail about four properties she thought they might find interesting. In the e-mail, the Salesperson asked the Buyers to let her know if they would like her to investigate any of the properties. One of the Buyers wrote back and said to let them know if the price dropped on two of the properties. The Salesperson responded that the price had already dropped on one of the properties. The Salesperson also e-mailed the Buyers a new Buyer-Broker Agreement (“Agreement”) and asked them to execute the agreement. 

The Buyers printed the Agreement and manually signed it, returning the signed version via e-mail to the Salesperson. The Salesperson never physically signed the Agreement and instead sent an e-mail back to the Buyers saying “thank you”. All of the Salesperson’s e-mail correspondence contained her electronic business card that had her name, address, telephone number, and photograph. The Agreement lasted for six months, and designated the Salesperson as the Buyers’ “exclusive broker” for homes located in zip codes 85018 or 85253.

During the term of the Agreement, the Buyers purchased a home in the 85253 zip code using another real estate professional. The other real estate professional received a commission from the transaction. The Salesperson filed a lawsuit against the Buyers, alleging breach of contract. The Buyers filed a motion to dismiss the lawsuit, arguing that the Agreement was never signed by the Salesperson or her brokerage. The trial court agreed with the Buyers and dismissed the lawsuit, and the Salesperson appealed.

The Court of Appeals of Arizona, Division 1, reversed the trial court and sent the case back to the lower court for further proceedings. Arizona law has four requirements for real estate brokerage agreements: first, the agreement must be written in clear and unambiguous language; second, it must clearly define all material terms such as compensation; have a definite commencement and expiration date; and be signed by all parties to the agreement. The Salesperson could claim a commission if she had a valid brokerage agreement. The Salesperson conceded that the only way she could have signed the agreement was through her e-mails to her client, and so the question for the court was whether her e-mails constituted a valid signature.

The court ruled the question over whether the e-mails constituted an electronic signature was a factual issue for the trial court to resolve, and so the case was returned to the lower court for further proceedings. The court rejected the Salesperson’s argument that the brokerage agreement statute did not require strict compliance; instead, the court found that the Salesperson had to demonstrate all four elements of the statute in order to collect a commission. 

Arizona law provides that an electronic signature “satisfies any law that requires a signature.” To enforce an electronic signature, it must also be established that the parties intended their transaction be governed by electronic means. Therefore, the Salesperson would need to show that the parties had agreed to contract electronically and also that her e-mails to the Buyers constituted her electronic signature. As the court noted, courts have varied in their interpretation of what constitutes an electronic signature, with some finding the name in the header of an e-mail sufficient to constitute a signature while others have required some method of authenticating a signature. The court sent the case back to the trial court for further proceedings.

Young v. Rose, 286 P.3d 518 (Ariz. Ct. App. 2012).