Electronic Leases in Oklahoma

14 Replies

So, I hate clutter.  The only thing I hate more than generic clutter, is paper clutter... so I became a landlord, since that obviously meant I wouldn’t have to deal with paper. 

I own a couple rentals in Oklahoma City, currently have four leases, and I’m already wanting to throw my small 3 foot high filing cabinet I bought at Walmart in a burning garbage can...including all contents.  

I’m being a little dramatic here, but I’d really like to get paper out of my life entirely. The night-terrors of paper only get worse as plans of expanding my small business become more and more real. I love being a landlord, but paper sucks! I already keep redundant copies of all documents associated to the business online in Google Drive. Is there any legal issue I would run into if I only kept scanned copies of leases electronically, or better yet, only had completely electronically generated and signed documents like real estate agents use?  

I would hate to have my adversion for paper result in my tenants owning my properties or my truck. So are there specific rules I need to follow if I’m having tenants sign documents electronically?  Are the laws specific state to state?  Or are we at the point where electronic signatures can totally stand in place of wet signatures. 

Any advice is greatly appreciated. 

Pierce,

I only have rentals in my state and as such, always retain the hard copy. Reason being if I ever go to court, the Judge will want to see the original copy. The only other reason for keeping the originals is for Landlord vetting programs. They (via federal laws) will require that you retain the records for 5 yrs.

With several hundred units I can tell you going paperless is the best option. You may need to have paper involved every now and then for things like a Pay Or Quit notice, but you can scan and keep a digital copy.

So @Neal Collins , are laws written in OR that state that electronic documents are just as good as paper?  Or are you just confident in your system?  

@Charlie Vess that’s what I figured would be the issue. Nothings ever wrong til you got to court. Just want to make sure I’m covering myself before starting on a different system. 

As an auditor I have a habit of running my finger over the signature to feel the texture bump of an original signature. I also prefer blue ink. So, for safest, I would say retain the originals. However we are in the digital age and digital signatures are gaining popularity and pen and ink are starting to become extinct. This is your judgement call. Surely if you have any originals over 7 years old, I would scan them to your computer and trash the paper. The newer docs, I can't help you with. This is at your discretion, but surely make sure you have a clear scan before disposal.

@Neal Collins thanks for the suggestions on software.  Those will give me a good jumping off point for deciding on a final system. 

I’ll post what software I decide on after I make a decision for anybody else tracking the paperless goal. 

@Jamie Engledow , I appreciate the feedback from an auditors perspective. Have you run into a situation yet where a company you are auditing has gone paperless?  If so, what are some of the things you look for in that company to ensure the integrity of their record keeping?

Pierce, it looks like @Tracy Streich, @Neal Collins, and @Deborah Burian have answered your question.   But I thought you (and the rest) might also appreciate an attorney’s perspective on the enforceability of electronic transactions and records under Oklahoma law specifically.

I see two separate legal issues at play here:

ISSUE 1: ELECTRONIC TRANSACTIONS.  Electronic transactions are expressly permitted under Oklahoma’s Uniform Electronic Transactions Act.  Here’s the law:

“(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(c) If a law requires a record to be in writing, an electronic record satisfies the law.

(d) If a law requires a signature, an electronic signature satisfies the law.”  See 12A Okl. St. Ann. § 15-107.

However, keep in mind that an electronic transaction is only enforceable if the parties both intended and agreed to conduct the transaction by electronic means.  Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties' conduct.  See 12A Okl. St. Ann. § 15-105.  If you swap emails with someone and they agree to sign a Dotloop contract, then obviously they have agreed to conduct the transaction by electronic means.

The next question is, what is my “original” when the contract was signed electronically?  The answer is: whichever document was first “generated in its final form as an electronic record or otherwise.”  See 12A Okl. St. Ann. § 15-112.  In other words, whatever document first gets “spit out” by your signature software is the file you want to treat as your original.  Per Section 15-112, you can rely on this document as your original:

“If a law requires a record to be presented or retained in its original form, or provides consequences if the record is not presented or retained in its original form, that law is satisfied by an electronic record retained in accordance with subsection (a) of this section.”  See 12A Okl. St. Ann. § 15-112.

For a full understanding of the issue, I suggest that you read Section 112 and all of its comments, although having to do that might give you worse nightmares than having to keep paper records…

ISSUE 2: ELECTRONIC COPIES:  What if you want to scan in all your current hard copies and burn the rest?  Would a court rely on that copy and enforce it against your tenant?  In general, the answer is “yes” based on the following statute:

“A duplicate is admissible to the same extent as an original under this rule or as may otherwise be provided by statute unless:

1. A genuine question is raised as to the authenticity of the original; or

2. In the circumstances it would be unfair to admit the duplicate in lieu of the original.”  See 12 Okl. St. Ann. § 3003.

So, in most cases you could enforce a copy of the original.  However, the tenant could try and raise a “genuine question” as to the “authenticity of the original.”  Likely, this really is no genuine question, but the tenant could make it look like there is.  For instance, the tenant could handwrite some additional terms on their copy of the lease, and then claim that the modified copy is the true original.  In this situation, you would wish that you still had the original in your hands. 

In other words, a digital copy of a physical original is generally enforceable, but not 100% bulletproof.

That said, I’d suggest holding onto the physical originals that you already have.  Eventually, you won’t have any left as you start conducting all of your transactions electronically from the beginning.

Sorry for the long response, but this is a key issue and it was interesting to me. I hope that helps you sleep better at night!

Ryan

Originally posted by @Deborah Burian:

@Pierce Lovesee - while my accountant has assured me that an appropriate digital doc is an acceptable replacement for paper, I still keep paper copies of leases and scan everything else.  It's one drawer. Good luck to you.

I realized I was unclear as to WHY I keep paper copies... It's Oklahoma.  In addition to tornadoes, we have epic ice storms and it's not that uncommon to do without power for several days.  The lease is the foundation of my tenant/landlord relationship.  I always want to be able to lay hands on plus there is something very powerful about showing the tenant their very own smudged signature and initials that YES, they DID know that.

@Ryan Jones I really appreciate your feedback. Adding in the letter of the law was super useful for me and I’m sure it’s useful for others as well.  It’s good to know that’s spelled out. I guess if I want to fully proceed I’d need to either get my existing tenants written authorization to keep electronic copies of the lease as original or just wait until they move out/resign. Really appreciate the information. 

@Deborah Burian that’s an excellent point with the adverse weather in OK!  I could definitely see some stressful situations coming up if power is out and I need to clarify a point of the lease. Definitely something to consider.