Ask Lucas

Ask Lucas 026: What are the Best Digital Signature Tools for a Rental Lease?

Summary:

Blake from Maryland is wants to sign a lease with a remote applicant who is currently living in Texas. Will a digital signature hold up in court and what are the best tools to digitally sign a lease?

Resources Mentioned:

  • HelloSign – Free for 3 docs/month, available on iOS, Android, Web
  • CudaSign – From $1/month, available on iOS, Android, Web, Mac
  • SignEasy – From $5 for 10 docs, available on iOS, Android, Web
  • DocuSign – From $10/month, available on iOS, Android, Web, Windows

Full Transcript:

Lucas: Welcome to the 26th episode of Ask Lucas. Today we’re talking about digital signing tools. Today’s question is from Blake in Maryland, and he wants to sign a lease with a tenant who is currently out-of-state. I’m Lucas Hall from Landlordology and Cozy, and this is a bite sized Q&A show where I answer you questions about landlording and property management. If you have a question just leave a recorded message on asklucas.com, or call us, leave us a voice mail and I’ll try to answer it in this podcast.

Landlordology and Ask Lucas are brought to you by Cozy. Cozy is the best property management tool for landlords and managers to screen their tenants and collect rent online. I use it myself and it personally helps me manage my rentals all the way from application to move out. The best part is, it’s completely free. That’s right, you heard me right. It’s completely free. There’s no other company on the planet that lets you process online rent payments, order credit reports, and even in-depth background checks at no cost to you. Simply put, Cozy delivers peace of mind to over 100,000 property managers, landlords, and renters in every city in America. Check it out for yourself at Cozy.co. That’s C-O-Z-Y-.C-O.

Now let’s hear from Blake in Maryland.

Blake: Hi Lucas. My name’s Blake and I’m about to be a first time landlord for my home that I own in Maryland. I’m active duty military and I’m moving to Fort Bragg, North Carolina and will be renting my house out. I’ve found a possible renter that is moving here from Texas who is also military. I had a few questions regarding Maryland law and digital signing, or mailing and using the Postal Service possibly to sign leases. Can’t really find a whole lot of documentation to read up on it myself so I found the ability to ask you a question directly. Thought maybe you might have some insight for me.

I know with my realtor that I’m working with purchasing a house in North Carolina, we used something called DocuSign to digitally sign leases, any sort of agreements that way. I was wondering if you know if that would hold up in court should I need to take somebody to court for breaking a lease or what have you. If you could please give me any insights you might have. I really appreciate it. Thank you.

Lucas: Hey, Blake. Thank you for your question and thank you for your pursuit of Landlordology. I have been in almost every type of lease signing situation you can imagine, so I’ll try to help you out as best I can and tell you what I’ve done, and what your options might be.

To recap for our listeners, you have a place in Maryland that you own and that you currently live at, but you are moving to North Carolina and you’re renting out your home. Makes sense. A lot of people do it. That’s a great idea, and I wish you the best of luck. I think it’s a great idea. Luckily you have someone in Texas who wants to rent your place in Maryland, but because that person is in Texas, you can’t get together with him or her and sign that lease. So what do you do? Right?

This is a problem that a lot of people face. It is so common because people travel a ton. They move around for military. They move around for jobs. They move around for any reason. They oftentimes aren’t going to be at the new rental until they first move there. It’s too expensive to fly, or it’s too far to fly, or it’s just not worth it to do a lease signing. So what do you do?

Well, let’s talk about the different ways to sign a lease. The obvious one is you get together. This is one of my favorite. You call the person up. You say, “Hey, let’s meet at Starbucks. It’s great to see you again.” Or, “It would be great to see you again. I’ll buy you a cup of joe and we can sign this lease and go over it.” I think that’s awesome because you get to review the lease with the applicant. You can go over every clause. You can let them ask questions, answer them, and walk through it. But that’s not possible always. In your case definitely not.

The other way is to mail it. You send it and then you put little sticky tabs on where you want them to sign. They look at the paper, they sign it, and they mail it back to you. That’s okay. I honestly don’t think it’s a wise decision to do that simply because you’re adding upwards of 10 days possibly in mail time, transfer time, transportation time, to get that letter back and forth, and it’s just unnecessary. What I suggest, and if you don’t have access to that applicant right there in your town, or city, and you can meet with them at Starbucks, then do a digital signing tool for sure. It’s one of my favorite methods of doing remote signings. I have a couple of tools that I really like.

Let me start out by saying, to answer your question, digital signing tools and digital signatures are certainly 100% legal. With that said, I’m not a lawyer, nor is this legal advice, but I will tell you that it will hold up in court according to the E-sign Act of 2000. It’s an act that Congress passed on June 30th, I believe, of 2000. It basically says that any sort of electronic signatures are weighted just as heavily and just as strong as any sort of physical signature. It’s an act that was written to help promote e-commerce, and to help promote transactions across state lines. I think it was great that they did that. They did it back in 2000, so it’s got 15 years under its belt.

Next, now that we know that digital signings will actually hold up in court, what kind of tools are out there for you to use? You know, ever since that act was signed all these tools have popped up on the web. You can find a couple dozen of them just by typing in “digital signatures” into Google. I’ll tell you my favorites. My favorites are my favorites because I use them for leases. They work well for that industry. They may not work well for other industries, but for rentals and leases they absolutely do.

My first and foremost favorite is a company called HelloSign. It’s hellosign.com. What they do is, they give you a 3 signings a month for free. It has some amazing integration with your Google account. You can actually save those pdf documents, or other forms of that file, to your Google Drive, or Google Docs account. You can share it that way too. Pretty neat integration and it’s free, and it works well. I’ve never had a problem with a tenant who didn’t understand how to use it. It was just very point and click. A 5-year-old could do this is the impression that I got when getting feedback from my tenants. It was just so easy. HelloSign is my favorite. Again, it’s free.

My next favorite is a company called Sign Now. I think it was re-branded to CudaSign because a company called Barracuda bought them. CudaSign, C-U-D-A-S-I-G-N, .com. They’re also really fantastic. The company before CudaSign, it was called Sign Now and it just did a really great job. Really simple. Has a little more features than HelloSign, but that’s about a dollar a month, so we’re not talking about a lot of money. It’s $12 a year. That’s really great and it’ll save all the documents for you. You can go back and look at those. It’s just really easy. They also allow you to have multiple signatures, multiple signers, as well does HelloSign. They also do that. You could have 6 tenants on a lease and 1 landlord. You could even set the order in which they would sign it, which is pretty neat.

The next one is called SignEasy. That url is getsigneasy.com. That’s a little more expensive at about $5 a month, but still we’re not breaking the bank. It’s comparable to both HelloSign and CudaSign.

Then, last but not least, is kind of the industry leader. That is Docusign. You mentioned that earlier, about that’s how you were dealing with your realtor and that’s what they used. A lot of brokerages and attorneys, or law offices, use DocuSign because it is just, it has a ton of features. It has all kinds of red lining features, and it can go back and forth to multiple parties, and then you can correct things. It’s really a fantastic tool, although it can be kind of expensive. I’ve seen anywhere from $10 a month, upwards to $50 or more, depending on what kind of account you’re looking for. The reason I don’t use DocuSign is because it kind of feels like I’m killing a fly with a cannon. It just has all these extra features I don’t need. I really just need something that’s free or a dollar, and it just lets me sign documents with tenants from wherever they are.

Those are my 3 favorite tools. Digital signing is a legitimate form of signing a lease, and it will act as a legitimate signature, a legally binding signature. Every state has their own e-sign law in addition to the federal level law that I mentioned earlier, that act that was signed in 2000, so you do want to check with Maryland, or North Carolina, or wherever. I guess it would be with Maryland because your house is there. Check with those, that locality, or even that city it might be in to see if there’s anything else added onto that e-sign act, but generally speaking, it’ll work well for you. I suggest check out those tools.

Again, those tools are HelloSign, CudaSign, SignEasy, and DocuSign. Thanks man. I hope that helps you and good luck with your rental. I have a feeling you’ll do well. If you’re asking these types of questions you’ll do well. Keep in touch.

About Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.
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