Real estate officials say the industry could be poised for a major evolution as the idea of a paperless transaction took a giant step closer to becoming reality within the past few weeks.

President William Clinton signed the Electronic Signatures in Global and National Commerce Act into law Friday in Philadelphia.

Instead of traditional pen and paper, Clinton demonstrated the law’s effect by signing with a smart card encoded with numbers.

The law, which essentially lends the same validity to contracts, legal forms and signatures in electronic form as it does to those items in paper form, is expected to have significant influence on the financial services industry. But Realtors say the effect on the world of real estate is just as great.

“We were completely in favor of this bill, and we worked hard to get this bill passed,” said Edward Miller, a policy representative for the National Association of Realtors in Washington, D.C. “With the way technology is going, a lot more is happening online.”

“This is essential to the future of business,” said Fred Meyer, 2000 president of the Massachusetts Association of Realtors. “Everything is evolving to the Internet. You should be able to put together a transaction without having to go to the Registry or the lawyer’s office. Binding signatures submitted electronically is the logical outgrowth of everything that is happening, and it’s not difficult at all to envision.”

Part of the law reads: “A signature, contract or other record relating to [a] transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form.” The law applies to both interstate and foreign commerce.

“I think it’s fantastic,” said Jay Burnham, associate vice president with The DeWolfe Co. in Beverly and operates the Web site www.northshorerealestate-.com. “Obviously safeguards are needed, but it’s a step in the direction of speeding up the process.”

With the mountains of forms, contracts, disclosure statements and other paperwork involved in the sale of a property, Miller said the e-signature law will have a significant impact on the real estate business now that paper can be replaced by storage space on a computer disk.

“Rather than passing all of that paper, everything can be done through e-mail,” he said. “There’s a lot of stuff that goes back and forth when you’re buying or selling a house. It would be a lot easier than moving those stacks of papers around.”

“Everyone is moving toward e-commerce. It’s more efficient,” said Robert S. Kutner, MAR’s outside legal counsel for the past 22 years. “The Senate voted unanimously in favor of [the law]. That tells you how important and uncontroversial this is.”

Miller said that an added advantage of being able to move forms electronically is it would benefit consumer awareness. Homebuyers are often presented with a host of papers at their closing that they must sign, and they may not always get a chance to look at them thoroughly before doing so, he said. “Most people don’t even read them. But if we’re able to get them there earlier online, [the homebuyer] would have more time to read them over and know what they’re signing.”

The law will also benefit the home seller, Miller said. For example, offers on properties could be sent electronically. “And in areas like Boston where you have a hot real estate market, when you have counter-offers, you can have a bidding war that goes back and forth electronically, speeding up that process,” he said.

‘More Efficient’
And while the law will benefit consumers, it also would benefit the Realtor.

“It will help the Realtor become more efficient,” Miller said. Agents could realize savings through reduced paper costs, mailing costs, and time spent working with all of the different forms of paper.

“The market might eventually force those savings to be passed on [to the consumer],” Miller said.

In addition to providing consumers with the option of using electronic forms instead of traditional paper forms, the e-signature act also provides several areas of consumer protection.

For example, for those who still prefer paper transactions, the law “does not … require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party.”

Also, electronic forms will not be allowed to be used for the “default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual.”

Notice of cancellation or termination of utility services must also be provided in traditional paper form, according to the lawl’s language. Paper will also have to be used in cases where state law specifically dictates certain disclosures be made via paper notice.

Kutner added that consumers will have to agree to use electronic forms before the transaction, an added protection. “It’s not like they’ll get involved without a sense of what they’re doing,” he said.

To help the electronic format gain acceptance, NAR is working on developing a standard platform for the electronic transaction. The association announced in May it has teamed up with a number of major players in the industry – including Fannie Mae, GMAC Real Estate, Homestore.com, Wyldfyre Technologies, VeriSign, RE FormsNet, Prudential Real Estate and Re/Max – to build the Realtors Electronic Transaction Platform.

“We’re working to develop some open standards that can be used across the industry,” Miller said. He added that NAR and its partners did not have a definite timeline as to when the new platform would debut. Still, he said, that shouldn’t stop those in the industry from moving forward with the all-electronic transaction.

“Those that are comfortable using the Internet are already telling our people they want the ability to do things online,” he said. “But there are still a lot of people not comfortable with it, and that’s why NAR made sure the legislation offered consumers a choice.”

While Kutner doesn’t predict home transactions will be done completely without paper, he said e-signatures would prove to be very useful. “It’s going to catch on quickly in areas where e-commerce has already caught on, like in the area of mortgage loans where you may already fill out your applications online … It’s less likely someone will actually buy a house by clicking online, but delays that typically occur in financing could be avoided if everything was done electronically.”

Kutner pointed out that the federal law applies to foreign and interstate commerce, but not intrastate commerce. However, two states have already passed bills regarding intrastate commerce, and others are expected to do the same. “Uniform legislation has already been drafted,” he said, “and Massachusetts and other states should follow.”