vendors would like to fax us the lien releases from their suppliers so it is a copy, not a wet signature. Will this be valid? How do we protect against fraud?
Nov 14, 2017
Your question brings up several interesting points. Wet signatures vs. electronic signature; "releases" as waivers vs. releases/cancellations; delivery methods of construction documents, etc. I'll spend a bit of time on each, below.
The first thing to determine is whether the "releases" you mean are waivers or cancellations, as very different rules apply. If you have already filed a lien, you would need to record a release/cancellation in the same manner as the lien itself was recorded. This is a more involved process than exchanging lien waivers - which seems like the releases you are talking about. Lien release/cancellations must be recorded, and not just emailed or faxed between parties. Lien waivers, on the other hand, are just exchanged between the parties.
For lien waivers, electronic signatures are perfectly acceptable. You can learn more about the reasons why you can use electronic signatures for lien waivers in this blog. Quickly, however, US law is clear that electronic signatures are as valid as “pen and ink” signatures. (Note, however, that if you are doing work in Texas, Wyoming, or Mississippi, the lien waiver must be notarized, which would require an additional step if you wished to sign electronically).
Accordingly, getting lien waivers emailed or faxed from lower-tiered parties is sufficient - and much more streamlined. While there is always the potential for abuse, in that a party could sign and deliver a lien waiver and still attempt to file a lien, that risk is not heightened by relying on electronic signatures rather than pen-and-ink signatures.