NOVEMBER
24,
2003
B a n k e r
&
T r a d e s m a n
•
I N D U S T RY S H I F T
New Technology Shatters Ways
Of Old-Style Real Estate Business
By Paul C. Bauer
E
volving technology affects the
way we live and
work in so many
ways.
Technology
continues to modify
the way we manage
real estate transactions and real estate
documentation.
From this practionerís non-technical vantage point, here are some of the current and
emerging technologies affecting the real
estate deal:
• Registry Technology: Many registries of
deeds around the country have some electronic capability. Given the vast numbers of
still-relevant historical documents, the volume of current transactions, and severe
budget constraints, this capability still has a
way to go. Some registries use proprietary
dial-up systems rather than the Web; others
have access only to indices rather than actual images of documents.
Many charge a fee for access to the system or documents. And almost all systems
are limited in how far back one can search
electronically. Nonetheless, from conversations with registry officials, we can look forward to greatly enhanced Web capability
from registries in the near future.
• Electronic Signatures and Electronic
PAUL BAUER is a partner in the real estate
group at the Boston law office of Kirkpatrick & Lockhart.
Document Recording: Many government
agencies permit electronic document filing.
In many instances, the SEC requires electronic document filings. Here in
Massachusetts, the secretary of state permits electronic recording of UCC financing
statements and business organization documents and reports. But in most instances
these documents do not require a signature
or do not constitute an agreement between
two or more parties.
Handwriting on the Wall
Acceptance for recording of electronic
deeds transferring property and agreements
between parties is a big, future step. To
encourage electronic commerce, in 2000 the
U.S. Congress enacted the Electronic
Signatures in Global and National
Commerce Act, called “ESign.” This act eliminated the traditional legal barrier requiring
signed, written documents by treating most
legal transactions using electronic technologies as equivalent to the traditional paper
transaction. ESign does not require that parties handle transactions electronically, but
overrides traditional barriers where the parties intend an electronic transaction – at
least in interstate commerce.
ESign demonstrates that there are technologies available to authenticate electronic
documents. An example most of us are
familiar with is credit card signature devices
in retail stores. Authentication technologies
include biometrics (such as fingerprints or
retinal scans), holographic signatures, and
digital signature technology.
Nonetheless, in many commercial trans-
C o m m e r c i a l
R e a l
E s t a t e
actions, parties are reticent to rely on electronic execution of documents. An even
greater obstacle exists with real estate
transactions that must be recorded with a
registry of deeds, as electronic documents
will likely not be commonplace until the registries will accept them.
To facilitate acceptance of electronic documents by registries, the National
Conference of Commissioners on Uniform
Laws is developing a model law, which could
be enacted by individual states, entitled the
Uniform Real Property Electronic Recording
Act. This act would provide a uniform structure for filing, indexing and storing electronic documents; a methodology for searching
electronic recorded documents; and a system for the conversion of paper records currently existing in the various recording
offices into an electronic format.
While not without issues, problems and
obstacles, the development of this act and
its possible enactment in one or more states
bears watching. Recording electronically
B11
without delay upon closing and the ability
for title examiners to work at their own
computer terminal will have positive real
dollar and time implications for transaction
parties.
• Due Diligence in Real Estate
Transactions: A major driver of closing
times on many real estate transactions is the
time it takes to review the property’s legal
condition. Although the information that is
available online varies from jurisdiction to
jurisdiction – indeed, it varies between government agencies – there now is a wealth of
property information available on the
Internet. When undertaking property due
diligence, lawyers often begin the process
online.
Frequently, assessor and tax collector
records, zoning code and permit requirements, building inspector, fire department,
and state environmental records are often
available from the local or state Web sites.
Obtaining this information in a timely fashContinued on Page B12
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B a n k e r
B12
&
T r a d e s m a n
•
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WINTHROP • LYNNFIELD • NORTH END
E s t a t e
Continued from Page B6
245 apartments in Tewksbury.
CB/Whittier has also been active on the
multi-family front, with such in-house specialists as Lemire and colleague Simon
Butler helping the firm to remain among
one of the most active locally in that arena.
The firm recently brokered the $45 million
sale of Jefferson at Wheeler Hill apartment
complex in Marlborough to the RREEF
Funds, and earlier this month sold a justcompleted apartment development in
Woburn for $33.5 million to the New
Boston Fund.
As the firm continues to pursue new
multi-family assignments, CB/Whittier is
coming off a solid year trading industrial
and so-called flex properties. One of the
biggest coups this year was the $15 million
sale of four flex properties to Everest
Partners, a deal brokered by Lemire that
bucked a general investment trend away
from such assets. Boston Capital
Institutional Advisors also disposed of a
few such properties, with two flex build-
◆ Reasonable closing costs
24,
2003
ings in Franklin selling in May for $24.8
million.
Looking to 2004, most brokers spoke
with expressed optimism that there will be
more product available for sale, and that
the improving economy will help temper
any investment efforts hurt by rising interest rates. McCaffrey said Trammell Crow is
already entertaining several assignments
for the coming year, while Swartz said he
believes users may become more active in
purchasing buildings as a way of avoiding
rent payments.
Swartz said he was also encouraged by
the tenor of a recent meeting he attended in
California sponsored by the Urban Land
Institute. “What really struck me was that
everyone from everywhere in the country
was saying they feel the economy is
improving,” Swartz recounted. And while
acknowledging that real estate tends to lag
any recovery, Swartz said there remains an
immediate flood of capital pursuing real
estate. “They are just looking for the right
opportunity,” he said.
■
New Technology Shatters Ways
Of Old-Style Real Estate Business
Continued from Page B11
ion allows attorneys the time to identify and
often solve issues prior to the scheduled
transaction closing date.
• Digital Storage of Real Estate
Documents: Converting existing real estate
transaction paper documents to electronic
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documents is here. Electronic storage has
become a desirable solution with easier filing and locating of documents, as well as,
management of databases to access information and share documents within an
organization and third parties. Now, highspeed scanners, the readily useable
Portable Document Format, vast computer
storage capacity, and intranets and
extranets make electronic storage and system- and team-wide document sharing universally possible.
• Extranets for the Real Estate Team:
With electronic documents now readily
manageable, extranets are a valuable tool
for use by real estate teams. A secure
extranet can permit parties on both sides of
a real estate transaction access to documents, information and communication to
improve transaction time.
With respect to organizational real
estate, the organization can share documents and information with its third-party
team members by a secure extranet that
allows access only to the appropriate subset of documents and information. Different
professionals can have different levels of
access to information. A company working
with its law firm, real estate brokers, insurance agents and property managers, for
example, can review its real estate portfolio
for opportunities to reduce cost and risk,
and better manage its portfolio.
Many law firms can provide a company
with an extranet to facilitate sharing,
accessing and managing the company’s real
estate documents and related legal information. Better access to information can
increase organizational awareness of its real
estate costs, risks and opportunities, for
example, landlord and tenant termination
rights, expansion and contraction rights,
rent increases, and similar lease matters.
Limits of space mean that this quick survey has not even touched on the impact
wireless technology has brought to closings, the benefit of the CD-ROM over the
traditional closing binders, the pluses and
minuses of 24/7 access raised by the advent
of the Blackberry, or possible technologies
considered for the future.
Nonetheless, it is clear that incremental,
sometimes halting, sometimes breathtaking, technological change is impacting even
the old economy, bricks and mortar business of real estate.
■