Opening Statement
First, the drafting committee needs to decide on the name of the act. Is it “Recordation” or “Recording”?
Next, this drafting committee can go in one of two directions:
(1) It can focus its efforts on facilitating electronic recording within the structure of the versions of
the US land recording system that exists today, or
(2) It can extend its mission to encompass total reform of the land recording system in the US.
In the second event, it would only be fair to change the name of the act you are working on to something
like the Uniform Real Property Recording System Reform Act (URPRSRA).
There are many features that I would like to see be shoehorned into URPERA, but I know they are neither
likely to gain any consensus not get enacted in the short run. Therefore, I think that the issues should be
separated, and only those that are required to facilitate electronic recording within the existing land
recording system in the US should be considered by this drafting committee. I have separated the issues in
the following lists.
I have indicated with asterisks the issues that are included in the documents sent out by the drafting
committee. One asterisk indicates the issue is listed in the “List of Policy Issues” and two asterisks
indicate the issue is covered in the Gaudio draft but not listed in the “List of Policy Issues.”
The count of issues as I see them are:
Number of URPERA issues per drafting committee memo “List of Policy Issues”—15, divided into
Number of these issues within the scope of URPERA per my analysis—8
Number of these issues beyond the scope of URPERA per my analysis—7
Number of URPERA issues per my analysis—19
Number of other non-URPERA issues per my analysis—12
URPERA Issues
1. Is state law compliance with E-Sign assumed?
E-Sign pre-empts state legislation unless it meets the requirements of Section 102. Research should
determine for each state whether its statutes currently:
(1) Conform to 102(a)(1)(A), that is, model UETA enacted, probably not including a requirement that
Sections 17-19 conform, since they are optional, but certainly that Sections 3 and 11 conform.
(2) Alternatively conform to 102(a)(1)B).
(3) Conform to 102(a)(2), that is, reference E-Sign if enacted after E-Sign. (This applies to UETA as well
as other statutes.)
2a. Should model act be based on conformity to UETA or is it intended to stand alone?
If so, amendments to UETA Sections 3 and 11 (Are there others?) to conform them to the model act will
be necessary in some (many?) states.
If not, special language will be needed in those states that have enacted model UETA, with variations for
states that enacted Sections 17-19 and those that did not.
2b. Should the model act amend UETA 17-19 to promote adherence to national model
rules, following the precedent of revised Article 9 of the Uniform Commercial Code?
These sections are intended to apply to land recording. The scope of act commentary includes the
following comment:
“For example, real estate transactions were considered potentially troublesome because of the need to file
a deed or other instrument for protection against third parties. Since the efficacy of a real estate purchase
contract, or even a deed, between the parties is not affected by any sort of filing, the question was raised
why these transactions should not be validated by this Act if done via an electronic medium. No sound
reason was found. Filing requirements fall within Sections 17-19 on governmental records. An exclusion
of all real estate transactions would be particularly unwarranted in the event that a state chose to convert
to an electronic recording system, as many have for Article 9 financing statement filings under the
Uniform Commercial Code.”
© Carl R. Ernst, Ernst Publishing Co., LLC
1
Where should the responsibility lie to create national model rules? If not, how will the model act direct
the agency named in Section 17 to conform with provisions of this model act?
2c. If Section 17 of UETA names an agency to administer the rules that apply to electronic
recording, will this agency necessarily be the one to decide the rule-making issues?
Possible alternate controlling agencies include:
a. A state agency, such as secretary of state.
b. An association within the state, such as the state recorders association
c. A new entity, established by the model act, to control electronic recording.
d. What other choices?
2d. Do UETA 17-19 need to be rewritten to apply to the special case of document
recording?
These provisions of UETA were written with land recording in mind, but the language may not be fully
applicable to land recording. For example, 18(b) reads “To the extent [the designated agency] uses
electronic records” (my emphasis). Recording offices do not “use” records, they safekeep them on behalf
of the public. Therefore, it can be argued that Section 18 is inapplicable to your drafting effort.
3a. Will the model act be based on a guiding principle about what should be in rule vs.
what should be in statute?
3b. Who should write the actual rules in each state?
Possibilities include:
A state agency, such as secretary of state.
An association within the state, such as the state recorders association
A new entity, established by the model act, to control electronic recording.
A statewide task force consisting representing both the public and private sectors?
4. Will the model act take a position on the implementation of the electronic recording
system in recording offices in each state?
There are a number of alternative models, including the following:
(1) Individual office model—Each office is on its own. This option may means that only larger
recording offices may have systems if they are dependent on local funding only, or that all offices
will have systems if state funding allows it, but that is another issue)
(2) Cooperative model—Offices voluntarily coordinate their efforts to achieve some sort of
uniformity.
(3) Coercive (or some other more politically correct word) model—Centralized statewide service
bureau of some sort that funnels electronic recording to each participating recording office using
a standard computer interface.
This is not the issue of standards. Each recording office that offers electronic recording should be required
to follow the standard rules, as legally promulgated in that state.
5. Will the model act, or related rules, provide specifics about how electronic recording will
interface with the existing paper recording system?
Fact—Paper documents are never going away, never.
The idea, launched in Iowa because of the special circumstances there, of having electronic documents
entered into an entirely separate system not interfaced with the paper document system is not within the
scope of URPERA.
6. Will the model act address the problem that exists in a number of states where another
county office is required to review documents, fees or taxes before they can be recorded?
Although it has been stated that electronic recording automatically eliminates delays in recording, the fact
is that it’s not true. There are various impediments to “instant,” computerized acceptance of electronic
documents that need to be addressed.
7. What is the best way to embed the PRIA-created electronic document standards (XML,
XHTML, graphics standard) into the model act?
Will a provision specify that the recording offices will follow that standard or will that be left to the rules?
© Carl R. Ernst, Ernst Publishing Co., LLC
2
8. Should any provisions be drafted without a complete, accurate understanding of the
processes that exist today in each government office affected by the legislation?
Some of the materials distributed by the committee indicate a lack of understanding of the recording
process, for example. How will such deficiencies in knowledge be addressed?
9a. Will the model act take a position about an acceptable form of electronic signature, or
will alternatives be provided?
9b. If digital signatures are allowed, will victims of forgery be protected under the model
act?
Digital signatures are really good in making a document tamper-proof, once applied.
However, digital signatures do not authenticate the identity of the individual signing, they authenticate
that the individual signing has the password of a certain individual. There are two types of forgery
possible:
(1) Simple—Just get the incidents of identity that are acceptable to the CA, as I have done to get a
digital signature in my wife’s name, and use them. This works easily except where personal
appearance is required.
(2) Maybe also simple—although it may seem that forgery of an already-issued digital signature is
very difficult, it is easily accomplished by an accomplished confidence man, and once
accomplished, cannot be litigated successfully by the victim because of the “non-repudiation”
principle unless this model act provides for some remedy, or alternatively, for some sort of really
effective notice to individuals using digital signatures about the result of compromising the
password, even to a spouse or other close relative,.
9c. If digital signatures are allowed, how will the model act deal with the fact that
Certification Authorities are not required to maintain records indefinitely, and may also go
out of business at any time?
One solution to this problem would be to have MERS, MISMO or MBAA set up a CA that understands
the unique requirements of the land recording business.
9d. How will the model act deal with the problem of inconsistent electronic signature laws
from state to state?
10. Assuming that electronic documents will use technology that makes them unalterable,
how will the model act make provision for the case where such a record becomes
unreadable because of a computer error or just plain time?
The computer tapes from the early moon landing are unreadable to day because the medium on which
they were stored has a very short shelf life. If just one of the million computer bits in an electronic
document is altered (0 to 1 or 1 to 0), it is my understanding that the document will not be readable by
any computer. If this is correct, what will be the status of such a corrupted document?
This is a problem that does not affect digital images of paper documents.
11a. Will automatic indexing of party names be a basic principle of the model act?
The alternative is to leave the option to each index manager.
11b. If so, how will name indexing systems need to be changed to allow automatic indexing
by computer without human intervention?
One reasonable solution is to allow the computer application to index immediately based on the
documents, and then have an audit function to review documents weekly for errors and omissions.
11c. Does the model act need to deal with who provides electronic signatures to notaries
public?
Since the commissioning of notaries public is generally a function of the office of secretary of state or
equivalent agency in each state, does the model act need to enforce a particular standard in each state. My
recollection is that California SOS is refusing at this time to issue such signatures even though it is legally
responsible to under California law. Will this standard involve using the model act CA or will state or
other CA’s be allowed for this purpose. If the model act CA is not enforced, how will lapsed notary
signatures be auditable, if necessary for title or litigation purposes?
© Carl R. Ernst, Ernst Publishing Co., LLC
3
12. Are funding requirements of electronic recording systems a subject that the model act
should encompass?
If not, how will the charge that the model act is just another unfunded mandate be answered?
13. Are electronic recording fee structures a subject that the model act should encompass?
14. Will the model act take a position about who may use electronic recording, or will
options be provided?
The major alternatives are:
(1) Everyone with a computer can use, or
(2) Only a select group (title companies, attorneys, etc.) may use.
Each alternative presents certain problems. For example, if a select group, will a contract be required, and
if so, will the rules contain a model?
15a. Assuming Section 11 of UETA is in effect in a state, are any model act provisions
required to facilitate traditional acknowledgement functions within an electronic signature
context?
15b. Any acknowledgment details necessary in addition to state notary laws in order to
implement electronic signatures?
16. Should provisions be modeled to handle recordings of notices or documents under
related laws:
These documents include:
UCC
Federal tax liens
State tax liens
Statutory liens
Abstracts of judgments
17a. What payment methods will be allowed for recordation fees and related taxes?
17b. To the extent that recording offices in some states collect fees and taxes for other local
agencies, how will those agencies by forced to establish automated audit and acceptance of
payments within the electronic recording system?
18. How will the model act handle the fact that some states still require corporate seals to
be placed on corporate documents such as deeds and mortgages?
UETA handles the notary seal issue but not this issue.
19. How will “certified” “copies” or “representations” be provided?
No such thing as a copy in the transitional sense in electronic recording. All records are originals. Need to
consider a defined term like “representation” for a paper paradigm version. Certified computer record
could be wrapped by certifying official.
© Carl R. Ernst, Ernst Publishing Co., LLC
4
2. Uniform Real Property Recording System Reform Act (URPRSRA) Issues
1. Should the definition of “conveyance” be standardized nationally in a model act?
There are significant variations in the definition from state to state. See article by me.
2. Should grantees be required to sign conveyance documents?
You need to answer the question above first. Alternatively, maybe type of conveyance be can just means
“deeds” and land contracts in the traditional sense.
Although such a provision would make some sense with traditional signatures, and is (maybe) required in
some states, there are two problems:
(1) the signatures will also require the same identity provisions as grantor signatures, and
(2) the digital signature of the grantee will probably lapse before the property is transferred again, so
there would be no “matching” possible to the prior conveyance. Also, if a deed of trust is a
conveyance, the officer signing for the lender is of little interest to title examiners in the future.
3. Should real estate recording be made into a centralized, statewide function handled by a
state agency?
This is not a URPERA issue, since there is not at present such a function. A version of such a function has
been proposed in Iowa, but is not, my guess, going anywhere.
4a. Is title insurance necessary?
4b. Should the government get into the title plant business?
4c. Should all states require tract indexes?
4d. Should government be required to certify title?
Should government take over the title plant function?
Should government take over the title insurance function?
If so, who will be responsible for correcting the record in those 25% of cases where title companies
generate such corrections today?
5a. Should parcel identification systems be required in each state, and should they be
integrated with the recording process?
Very few states have a parcel identification system that is integrated with the recording process.
5b. Should a parcel identification system be required that is the equivalent of tract indexes
maintained by title abstract plants in many states today?
Very few states have tract system that is used for title abstracting, although more than 800 recording
offices require a parcel number on certain documents to be recorded. Parcel identification numbers are not
necessarily the equivalent of a tract index. A tract index requires the kinds of systems that title plants
operate (which do not depend on parcel identification numbers.
It has been suggested that tract indexes will “eliminate most of the ‘chain of title’ problems. This is
doubtful. In fact, title insurers and abstracters report that 25% of transactions require the recording of a
correction document in order to bring the land records into conformance with the law.
It has been suggested that a requirement of any such system be “accurate digitized land maps of each
county” in a state. What agency would be responsible for creating and maintain in such maps and how
would the effort be funded?
5c. Should a parcel identification or tract indexing system be coordinated with the county
assessor and treasurer offices?
Other than chain of title, the primary use of conveyance (in the sense of deed) and related transaction
forms and records is to provide information relevant to valuing a property for tax assessment, and the
name of the party to send tax notices to. Other information about the property, such as number of
bathrooms comes to the assessor from other sources.
6a. How should land records be made available to the public?
What restrictions should be placed on access? For example:
Remote Availability of records
Open on Internet
Restricted by contract
© Carl R. Ernst, Ernst Publishing Co., LLC
5
Restricted by group
6b. Should full-text searching capability of applicable electronic documents be required by
law?
6c. What privacy provisions should apply to access methods?
This issue addresses the SSN problem as well as the Internet access debate.
7a. Should the principles of acknowledgment be changed?
7b. Is the traditional in-person signing ceremony required or can it be replaced?
7c. If digital signatures are accepted, should traditional notary functions be altered to
eliminate the need for the ceremony which includes personal appearance?
If such a provision were contemplated, the drafters would have to deal further with the enormous
shortcomings of digital signatures, as noted above.
7d. Will biometrics also be on the list of acceptable signatures or as confirmation of identity
to replace acknowledgement?
This is a land recording system issue, not an electronic recording issue, because the traditional land
recording system already contains a means of confirming identity. The easiest and best biometric is a
digital picture of a person’s face, which can now be taken and added to an electronic document using a
$99 digital cell phone.
8a. Should the recording office be required to “authenticate” digital (PKI-type) electronic
signatures on documents submitted?
8b. If so, should the failure of a document to pass such a test be reason for rejection?
If national uniform electronic documents are desirable, who will be responsible for amending the laws in
each state to achieve such a result, and how would the design effort be funded?>
9. Should standards for paper documents be included?
10a. Should electronic systems be required to match references on subsequent documents
to assure the reference is accurate?
10b. Should all electronic recording systems be required to generate index entries
programmatically?
10c. What reasons for rejection, other than those that already apply under existing law,
should be added that are electronic-recording specific?
If so, then who becomes responsible for failures to get names and/or property descriptions right?
11a. Should the recording system for mortgages be changed to conform to the notice system
used for all other types of liens?
This solves a lot of problems in the long run.
Alternatively, Should each state (or whoever) be required to generate standard document forms?
If so, the next question can be asked.
11b. Should the master document statutes that some state have be utilized or modified to
allow recordation of deeds and mortgages by reference rather than recording the whole,
original document?
11c. Should three be a “lapse” provision for liens (notices and mortgages) that allows them
to be stripped from the record after a reasonable period of time?
12. What legal provision should apply to the aggregation by government of land recording
information with other related data, such as physical property attributes and property tax
information and other unrelated data, such as voter registrations or court records?
© Carl R. Ernst, Ernst Publishing Co., LLC
6