By Kelly K. McQueeney, Orten Cavanagh Holmes & Hunt, LLC. 

It’s DocuSign, it’s an email, it’s a fax, it’s a thumbs up emoji? Maybe…. 

Colorado law recognizes the use and validity of electronic signatures under the Uniform Electronic Transactions Act (UETA) (C.R.S. § 24-71.3-101 – 24-71.3-121). The result is that electronic signatures have the same legal effect and enforceability as handwritten signatures.

So, what is an electronic signature? For community associations, you may have used electronic signatures for signing contracts, proxies, etc. You may be familiar with software such as DocuSign, which produces a lovely script signature on the document, similar to or better than your handwritten signature. However, electronic signatures are defined more broadly under UETA. An electronic signature means “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” (C.R.S. § 24-71.3-102(8).)

Given the variations permitted for electronic signatures, the UETA requires that the “intent to sign” be clear. UETA does not require parties to use electronic signatures and, in fact, applies when parties agree to use electronic signatures in a transaction. Additionally, electronic signatures are not allowed in all cases, including wills, family court matters, and certain real estate transactions. UETA does not require any specific software or security to authenticate signatures, but it does require certain elements to give legal effect to an electronic signature and the underlying transaction:

• There must be a clear intent to sign.

• The parties must consent to the electronic transaction (i.e., and the use of electronic signatures). 

• The electronic signature must be logically associated with the record, contract, or transaction. 

• The electronic transaction must produce a record the parties can retain and use for future reference. 

One of the risks of electronic signatures is that parties’ intent to sign electronically may not be clear. This will become a question for the Colorado courts if a dispute arises between the parties (e.g., if one party claims there is no valid agreement or contract).

Courts will consider the circumstances of the transactions and whether there is an electronic signature that meets the statutory elements above. Courts may rely on parties’ past conduct and dealings in establishing a party’s intent to sign electronically. For example, if parties have regularly used email or text messaging in the past, the court may find the email signature block and/or text messaging sufficient as an electronic signature and consent to be bound. Unfortunately, when so many businesses now have email and text as their preferred means of communication and negotiation, parties’ intent and consent can get wrapped up in seemingly informal electronic communications. While DocuSign and other similar platforms may be overkill in all circumstances, incorporating more secure e-signature platforms into your practice for major projects, underlying service contracts, and change orders can help delineate parties’ intent and consent and is overall good practice if utilizing electronic signatures.

While electronic signatures have become more popular for vendor contracts, another way electronic signatures may come up for community associations, although less common, is with proxies. The Colorado Revised Nonprofit Corporation Act allows for appointments of a proxy by electronic transmission (e.g., email) if it is done such that it includes written evidence from which it can be determined that the member sent the proxy. (C.R.S., § 7-127-203.) Again, here, the identity and the intent need to be clear for the electronic transaction and the electronic signature to be valid and enforceable. While DocuSign may not be required for proxies, it would be helpful. However, community associations may verify email addresses or find other means to try and verify and authenticate the identity and intent for electronic proxies.

There are many benefits to electronic signatures for community associations. Electronic transactions are more efficient and convenient and can improve participation by both community directors and members. There are several e-signature platforms that offer signature security that provide encryption, verification, and other means to reduce forgery risks. There are also options now for electronic notarizations and acknowledgements, which are recognized by statute. That said, the challenges remain as to authenticating electronic signatures and establishing parties’ intent if disputed. As such, community associations and their contractors may benefit from utilizing recognized e-signature platforms, when possible, for services. For other times, it is recommended to keep track of email or text conversations and make sure your intention and expectations are clear before you hit SEND. 

Kelly K. McQueeney is a transactional attorney at Orten Cavanagh Holmes & Hunt, LLC. Kelly has practiced law for over 12 years, but began her career in Colorado's HOA industry as a community association manager, supplying her with additional perspectives when providing counsel to her clients.