Follow HUD Rules When Using Electronic Signatures, Document Delivery
In the early stages of the COVID-19 pandemic, HUD made certain limited electronic signing and document delivery options available to help reduce virus exposure for important resident interactions such as income recertifications and applicant processing. In a new notice issued by HUD’s Office of Multifamily Housing, HUD has expanded the electronic option for owners in a continued effort to limit COVID-19 exposure for staff and residents by minimizing face-to-face interactions.
Notice 2020-04, “Electronic Signature, Transmission, and Storage–Guidance for Multifamily Assisted Housing Industry Partners,” explains acceptable procedures for using e-signatures and transmitting or delivering documents electronically. The guidance is intended for industry partners who work in conjunction with HUD to provide multifamily housing, including owners of HUD-assisted sites, management agents, and service providers in Projected-based Section 8, Section 202, and Section 811 programs. The guidance also applies to HUD Contract Administrators. And the notice applies to all HUD forms and owner- and management agent-created documents related to asset management, Section 8 contract renewal, and occupancy policies.
The notice offers a framework to implement and evaluate policies for electronic signatures and documents at your site. We’ll go over the five requirements your signing process must meet so you can accept e-signatures. And we’ll explain how to comply with the rules for transmitting documents electronically.
The notice pertains to all HUD forms and owner-created documents related to Office of Multifamily Housing Programs’ asset management, Section 8 contract renewal, and occupancy policies. Any such forms and documents that comply with HUD guidelines may be signed, transmitted, and stored electronically. Types of forms and documents other than official HUD forms include, but are not limited to:
- Documents transmitted among the owner, HUD, Contract Administrator, and other service providers;
- Documents submitted by and provided to applicants or tenants;
- Documents submitted to and from third-party verifiers to the owner; and
- Documents used for other HUD Multifamily Housing business purposes.
While not required by HUD, it’s important to note that some state and local laws or entities may require the use of “wet signatures” on some forms, such as:
- HUD-50059, “Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures”;
- HUD-9887, “Document Package for Applicant's/Tenant's Consent”; and
- Leases and lease addenda.
Five Requirements for E-Signatures
According to the notice, HUD permits, but doesn’t require, industry partners to use e-signatures. Owners and management agents using e-signatures must give applicants and residents the option to use original signatures and paper documents upon request.
If the law requires a signature, an e-signature can satisfy that requirement if it’s functionally equivalent to a traditional paper-based approach. In a paper-based transaction, the most used form of signature is a person’s name, written in ink, in his or her own handwriting. This is called a “wet signature.” HUD says e-transaction laws similarly recognize that e-signatures can take many forms and be created by many different technologies, as long as five requirements for a signing process are met:
1. Electronic form of signature. The following isn’t an exhaustive list, but it illustrates the variety of options available for use as an electronic form of signature. As technology advances, future methods may be adopted. Examples of commonly used electronic forms of signature include:
> Symbols such as:
- A typed name (such as one typed at the end of an email message by the sender or typed into a signature block on a website form by a party);
- A digitized image of a handwritten signature that’s attached to an electronic record;
- A shared secret (that is, a secret code, password, or PIN) used by a person to sign the electronic record. (“Shared” means that the secret is known both to the user and to the system);
- A unique biometrics-based identifier (such as a fingerprint, voice print, or a retinal scan); or
- A digital signature.
> Sounds such as:
A sound recording of a person’s voice expressing consent.
> Processes such as:
- Using a mouse to click a button (such as clicking an “I Agree” button); and
- Using a private key and applicable software to apply a “digital signature” or scanning and applying a fingerprint.
2. Intent to sign. For an electronic form of signature to be legally effective as an e-signature, it must be executed by the signer with an intent to sign. Designing a signature process that establishes the intent to sign can be done through a variety of methods that clearly indicate that a signature is being created and that it will be legally binding. According to HUD, it’s important that the record, and/or process by which a person applies an electronic form of signature to the record, be designed to indicate the means by which the signer can indicate his or her intent to sign the record. Here are some examples:
- “By signing below, I agree to the foregoing contract terms”;
- “Click to agree”;
- “By signing below, I attest that the information provided is true and agree to allow the O/A or HUD to verify such information”; and
- “I hereby certify that…”.
3. Association of signature to the record. In a paper-based transaction, a document is typically signed by writing one’s name directly on the document to be signed. Similarly, the same requirement carries over to electronic records. The e-transaction laws require that the electronic form of signature be made a part of the record being signed. Specifically, in order to be legally sufficient, the signature must be attached to or logically associated with the record being signed. “Association” means:
- The process must be clear to the signer as to exactly what it is that he or she is signing;
- The signer must have an opportunity to review the record before signing it and to clearly understand the parameters of the record he or she is signing; and
- The electronic form of the signature applied by the signer must be linked to the record being signed.
The association must be done in a manner that allows someone to later determine that the record has been signed. And the data constituting the electronic form of signature must be stored in a way that permanently associates it with the electronic record that was signed.
4. Identification and authentication of the signer. If it’s ever necessary to prove the validity of an e-signature in court, it will be necessary to prove “who” signed. Meeting this burden of proof requires establishing a link between an identified person and the signature.
While authentication of the signer’s identity is an important part of the signing process, it may or may not be the electronic form of signature that provides proof of identity. As long as the overall signing process addresses identity and authentication, it’s acceptable.
5. Integrity of the signed record. Owners using e-signatures must ensure that documents signed electronically can’t be altered. If changes to the document are made, the electronic process must be designed to provide an “audit trail,” showing all alterations, the date and time they were made, and the identity of the person who made them.
Electronic Transmission of Documents
When local, state, or federal law permits, HUD is allowing electronic transmission of HUD-approved or required documents. When transmitting documents electronically, owners must use methods that are compliant with HUD’s security requirements and with the National Institute of Standards and Technology (NIST). These include removable electronic media, such as SD cards, or direct access through system log-ins.
Applicants, residents sending documents to owners. If an owner chooses to use electronic communication procedures, applicants and residents may also choose to communicate electronically with the owner. HUD says their choice to do so must be made affirmatively and not assumed with an opt-out procedure. They may complete most documents online or by hand and then transmit and/or scan and email them electronically to an owner.
Applicants and owners may also submit information and documents using other methods, such as online systems, tablet or smart phone apps, email, or other electronic media. Owners may designate specific methods as acceptable for electronic transmission. But applicants and residents must have the opportunity (if they desire) to provide information and documents in paper copy, including both before they’ve provided any information or documents electronically or after they’ve done so and wish to discontinue.
Owner transmissions to applicants, residents. An owner may provide documents and notices electronically or make such documents available in an electronic format when state and local laws permit. When choosing to provide documents electronically, the owner should inform applicants or residents of their option to receive such documents in paper form.
If required notices, forms, and brochures are distributed electronically, HUD recommends that the owner request an electronic acknowledgement of receipt. Where HUD doesn’t specifically require applicant or tenant acknowledgement of receipt, owners should nonetheless maintain records showing that they provided applicants or tenants with the electronic file or the electronic address used to access the document.
When providing documents, forms, or notices electronically, the owner must be sure to comply with tenant notification requirements in Handbook 4350.3, HUD program notices, and state and local laws, and regulations. When local, state, federal laws or regulations require that specific documents be provided by first-class mail, delivered in person, or other specified means, this document must be provided using the stated required procedures and may not be solely transmitted electronically. Transmission methods. When transmitting documents electronically, owners must use NIST-compliant methods. Examples include putting the documents inside an encrypted wrapper, such as a password-protected DOC, PDF, or ZIP file.
Passwords shouldn’t be included in the same transmission as the documents. It’s preferable to provide the recipient with the password by calling or texting, or putting it in a separate email. HUD strongly recommends using an encrypted transfer mechanism such as a shared link with an encrypted cloud storage service, an encrypted mail service, or web encrypted transfer tools.
Other possible methods for transmitting electronic documents and data must comply with HUD’s security requirements. They may include but are not limited to the following:
- Removable electronic media, such as thumb drives or SD cards;
- Direct access (that is, providing login information to a system in order to access electronically signed and/or stored documents); and
- Other compliant technology as developed.
Comply with Accessibility Laws
Under the Americans with Disabilities Act (ADA), owners must provide all tenant and applicant notices and communications in accessible formats. According to the recent HUD notice, this can include providing reasonable accommodations in the event that a resident or applicant with a disability is unable to use an electronic system or file. Reasonable accommodations would include allowing the person to complete, sign, and/or submit documents in paper copy.
The Fair Housing Act and Section 504 of the Rehabilitation Act also require owners to be able to adapt the form or type of signature for a resident or applicant with a disability. Alternative methods, such as a signature stamp, may be acceptable, as long as the method complies with legal requirements.
Finally, according to the notice, it’s the responsibility of owners to ensure that persons with Limited English Proficiency (LEP) have access to required communications across technological platforms. According to the notice, owners may consider formats including multilingual websites and other electronic media.
- You are permitted, but not required, to use electronic methods.
- You must provide non-electronic options to residents and applicants upon request when feasible.
- When transmitting documents electronically, use methods that comply with HUD’s security rules and the National Institute of Standards and Technology.