Rethinking the Statute of Frauds in the Era of Electronic Transactions in Real Estate

The Statute of Frauds requires certain types of contract to be in writing and signed by the parties. A contract for transfer of real estate is also within the Statute, meaning that terms of the contract must be in writing with the parties' signatures. Current laws have substituted the traditional requirements of the Statute. Today, both legislative and common law recognize as valid a contract for transfer of real estate in electronic form. With the legislation of UETA and ESIGN, a contract is not denied its legal effect solely because it was made in electronic form. Most states in the U.S. have adopted UETA. Also, even courts in a state where UETA is not in effect uphold the validity of real estate contract in electronic form. Parties are no longer required to write and sign on paper to make a contract for sale of real estate. Meanwhile, there are some concerns regarding electronic transactions in real estate. Parties may enter into a real estate contract without “thinking twice” because they are not required to write the contract terms and sign on paper for legal effect. Also, there are risks of electronic documents being forged. In addition, most real estate owners are not much informed of legal consequences of their activities online. They may end up with entering a legally binding contract without such intent. Because of these concerns, we need to rethink whether parties may enter into a valid contract for transfer of real estate in electronic form. We may make an exception to UETA and EIGN when it comes to a transfer of real estate. Alternatively, we may strengthen the authenticity of electronic signature to prevent forgery.