The takeaway from Digital Signatures

Estonia, that small European country on the shores of the Baltic Sea, is currently the world reference when it comes to digital public administration.

They are the example to follow when it comes to how a democratic state, really focused on the citizen, should provide its public services completely digitally and with guaranteed security. Of the 1.3 million Estonians, 98.2% have a digital citizen’s card that gives them access to more than 500 government and public services.

Automation, digitization and the mass adoption of digital signatures by the population has had a huge impact on the way people have begun to perceive digital public services in terms of the impact they have on their productivity and happiness, and has also enabled the country to have a very positive result in economic terms, saving around 2% of its GDP every year.

It shouldn’t be difficult to understand why.

Consider thousands of people, in a single day, moving around unnecessarily just to sign a document or contract. The loss of productivity, money, increased stress and time that would be saved by a simple change in mentality and digital habits.

I suggest that we now look at the concept of identity so that we can somehow create a better real estate market: more connected; more efficient; more secure and more transparent.

At the moment, if you think about it, in a very simplistic way you could say that each of us has a fractured identity that is spread across countless public and private institutions, and a state that is not connected at all, is not secure or transparent enough. This should worry us.

Therefore, this lack of digital habits seems to be a problem within this paradigm, with no obvious solution and which becomes more worrying when you realize that Portugal is part of the European Union with a market of more than 508 million people, 27 different legislations and a pressing need for all European citizens to be able to make documentary or financial transfers, in real time, and with the integrity and reliability required.

If we want to have an efficient, much more productive Europe, capable of producing much more added value on a daily basis and much more competitive in international markets, we need to create a single, secure and interconnected digital market.

Faced with this need, the European Community Electronic Signatures Act, better known as eIDAS, was created in 2014.

This regulation introduced a radical paradigm shift in digital identification and electronic signatures and forever changed the way we do business and the way European companies and citizens will be able to interact from now on. It also introduced a predictable regulatory environment that defined the technical and business requirements for companies, citizens and public authorities to carry out secure and reliable digital interactions. In addition, the eIDAS regulation also defines the requirements for compliance with the PSD2 open-banking directive and the corresponding digital certificates. It includes standards for verifying the identity of all holders, as well as the operation of the Qualified Trust Service Providers, better known as TSPs that issue them.

Although each Member State has had the autonomy to interpret and transpose the law autonomously, the regulation has been responsible for establishing the restrictions so that this new digital environment is, in fact, interoperable and does not suffer fragmentation of any kind. It’s as if we were operating as a federated European state in technological terms, and that was just one consequence of making the initial vision of all the European Community pioneers feasible.

In use since 2016, eIDAS has been developed on the basis of two fundamental principles:

1. transparency: it ensures that people and businesses can use their own national electronic identification (eID) systems to access public services available online in other EU countries;

2. Interoperability: it has created an internal European market for trust services, guaranteeing that they will work across borders and have the same legal status as their traditional, fully paper-based equivalents.

It also seems clear to me that this regulation was drawn up by the European Commission with the aim of strengthening trust in the European single market’s online transaction system, offering a digital and secure environment from the outset.

This is one of many initiatives that the EU has been running for a long time with a focus on innovation and digital development in each of its member states to strengthen its single digital market.

Long Story Short.

Digital signatures have increasingly become standard business practice in the EU for people and companies to provide legal consent. Everything is possible, from multi-million dollar contracts, to managing any business issue, or even accessing government services, the advantages of adopting digital signatures are obvious and it’s easier to visualize them by giving real examples.

Two examples from the context of mediation and the real estate market:

Example 1. A real estate consultant meeting a client in person, just to sign the Real Estate Contract that had already been agreed, the client being convinced to give the professional the opportunity to find him the best possible offer.

Example 2. We have a client in Switzerland and the way we get the brokerage contract is by registered mail. It often gets lost and this process is one of the most archaic I know.

Between diesel, parking meters, possible tolls and all the time spent during this process, we always have an unfounded cost in the end.

Standardizing the use of digital signatures in the day-to-day running of a company greatly facilitates access to government digital services, guarantees the integrity and legality of the act, reduces a company’s vulnerability to fraud and, of course, greatly reduces the costs (opportunity and financial) and time that could be producing value.

The consultant’s focus must be on raising money and not on the administrative process, so, as we already know, we must respect Pareto’s Law, which will certainly make us more hyper-mega-productive in order to achieve the ratio we all want:

Achieving that 20% of our time results in 80% of our results. Especially since we know that this is a market where the cost of opportunity is often a differentiating factor, or in the last resort, so that they can focus on the continuous acquisition of properties and on building relationships of trust and proximity.

It seems clear to me that mediation can, and should, find an opportunity in this new paradigm, and that it could mean acquiring international clients, with full legal and digital security, anytime and anywhere through an intuitive and simple experience.

Anyone who has digitized their business will have a competitive advantage over everyone else.

An electronic signature is a set of data, in electronic format, which is linked or logically associated with other data in the same format and which is used by the signatory to sign an electronic document (Regulation (EU) No 910/2014 of the European Parliament and of the Council of July 23, 2014 or eIDAS Regulation).

Three types of electronic signatures fit into this concept, but I just want to focus my article on advanced signatures (AES) and qualified signatures (QES), which have different legal security and are the product of interest to the real estate market.

Advanced electronic signatures (AES) guarantee the authenticity and integrity of a signed document and provide a more robust approach to electronic signatures, incorporating additional key security protocols. According to the measures stipulated by eIDAS, an AES must be uniquely linked to the individual, capable of identifying the signatory and is designed using data to create an electronic signature that the signatory can, with a high level of confidence, use under their exclusive control and is linked to the data it signs in such a way that any subsequent change to the data is detectable (immutability).

The qualified electronic signature (QES) offers the highest level of security for electronic signatures and has the same legal value as a handwritten signature. Yes, the same legal value. It is a signature based on the same security protocols as an advanced signature. However, there is a fundamental difference between an advanced electronic signature and a qualified electronic signature. The latter requires a qualified signature creation device (QSCD) that generates signatures with a qualified certificate, i.e. it is issued by certified devices and is accompanied by a certificate issued by an EU trusted provider, in accordance with the requirements set out in the eIDAS Regulation, described above. A document on which a qualified signature is affixed provides full proof of the statements attributed to its author, pursuant to Article 376 of the Civil Code and Decree-Law No. 12/2021 of February 9. Furthermore, unlike the AES, a QES requires face-to-face or video verification of the signatory as a prerequisite in the case of video technology. All those working in mediation should use the Digital Mobile Key or the citizen’s card to obtain their qualified signature at the lowest possible cost.

There is no doubt whatsoever about the benefit/cost of the decision to massively standardize the adoption of this type of technological and legal instrument in the day-to-day running of real estate brokerage or any other player in this complex market.

In mediation, with all the competition that exists, it seems to me to be a huge competitive advantage.

Finally.

For those who may still doubt the legality of this type of solution, I would remind you that, on average, only 3% of all contracts reach the litigation stage and I can say that I look forward to the day when some trusted provider in the European community can prove and guarantee case law in this type of case, in relation to the validity, legal and technological security of this type of process.