1. ELECTRONIC RECORDING – STATUTORY SOLUTIONS Patricia Brumfield Fry Professor of Law Emeritus University of Missouri- Columbia © Patricia Brumfield Fry, 2007

2. Perceived Obstacles to eRecording  Statutes of Frauds  Agreement to use electronic media  Original documents Negotiable NotesNegotiable Notes Return of document upon satisfactionReturn of document upon satisfaction  Notaries  Recording “The” document“The” document AuthorityAuthority

3. The Statutes  Uniform Electronic Transactions Act, approved by NCCUSL in 1999 (UETA) [enacted in all states except GA, IL, NY and WA]  Electronic Signatures in Global and National Commerce Act, enacted in 1999 (E-SIGN)  Uniform Real Property Electronic Recording Act, approved by NCCUSL in 2004 (URPERA) [enacted in AZ, DE, KS, NC, TX, VA and WI, plus Dist. Of Columbia, to date]

4. Statutes of Frauds  Amongst other things, require that any transfer of an interest in land be signed  Traditionally involved paper, pen- and-ink  UETA and E-SIGN Assure that electronic signatures and electronic transactions have same legal effect as paper signatures and paper transactionsAssure that electronic signatures and electronic transactions have same legal effect as paper signatures and paper transactions Assure that electronic records have same legal effect as paper recordsAssure that electronic records have same legal effect as paper records

5. Legal Effect – UETA §7, E-SIGN §7001(a)  7(a) “A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.”  7(c) “If a law requires a record to be in writing, an electronic record satisfies the law.”  7(d) “If a law requires a signature, an electronic signature satisfies the law.”

6. Electronic Signatures  “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. UETA §2(8)  E-SIGN §7001(c)(6) excludes oral communications and recordings from use when consumer consent is sought

7. Consent to Use Electronics  UETA §5 - Act does not require electronic record or signature. UETA applies only if each party agrees to use electronic means  E-SIGN §7001(b) is to the same effect  E-SIGN §7001(c) outlines specific procedures which must be followed for consumer consent to deal electronically

8. Originals  Specific legal rights and liabilities attach to negotiable instruments and law not preempted by UETA and E- SIGN requires paper and pen. Of concern to mortgage bankers, secondary marketsOf concern to mortgage bankers, secondary markets UETA and E-SIGN contain provisions permitting those specific rights to exist in an electronic environmentUETA and E-SIGN contain provisions permitting those specific rights to exist in an electronic environment

9. Originals cont’d  Recording statutes refer to “the deed” or “the conveyance” and the like.  Every state has a statute requiring return of the document marked paid upon satisfaction  UETA §12 and E-SIGN §7001(d)(1) and (3) specify that if a law requires originals “that law is satisfied by an electronic record...”

10. Notarization and Acknowledgment If a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record. If a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record. UETA §11, E-SIGN §7001(g)

11. Notaries cont’d A requirement that a document or a signature... Be notarized, acknowledged... is satisfied if the electronic signature of the person authorized to perform that act, and all other information required to be included, is attached to or logically associated with the document or signature. A physical or electronic image of a stamp, impression, or seal need not accompany an electronic signature. URPERA §3(c)

12. Governmental Agencies - UETA  §17: Each governmental agency may decide whether and to which extent it will create and retain electronic records.  §18(a). Each governmental agency may decide whether and to which extent it will send, accept or retain electronic records and signatures.  §18(b). Each governmental agency may specify manner, format, systems, processes and procedures.

13. Enactment of UETA §§ 17-19  Enacted in some form in AL, AK, FL, HI, ID, IN, IA, KY, LA, ME, MD, MN, MS, MT, NE, NH, NJ, NM, ND, OK, OR, PA, RI, SD, TN, UT, VA, WY and District of Columbia  Other states have enacted statutes, before or after UETA, granting authority to recorders

14. Governmental Agencies - § 7004 – (a)”... nothing in this title limits or supersedes any requirement by a... state regulatory agency that records be filed with such agency... in accordance with specified standards or formats.” – (b)(1) State regulatory agency, if authorized by law, may issue rules interpreting § 7001, subject to stated limits

15. Governmental Agencies cont’d – (b)(2) State regulatory agency “is preempted by [§ 7001] from adopting any regulation... unless” the regulation Is consistent with § 7001Is consistent with § 7001 Does not add to the requirements of § 7001Does not add to the requirements of § 7001 Methods selected are substantially equal to methods imposed on paper and will not impose unreasonable costs on electronicsMethods selected are substantially equal to methods imposed on paper and will not impose unreasonable costs on electronics Agency finds substantial justification for regulationAgency finds substantial justification for regulation Methods do not require or grant greater legal status to any particular technologyMethods do not require or grant greater legal status to any particular technology

16. Governmental Agencies cont’d – (b)(3) State regulatory agency may interpret to specify performance standards to insure accuracy, integrity and access – These performance standards may impose a specific technology if (i) serves important governmental interest and (ii) substantially related to the achievement of that interest.

17. Governmental Agencies cont’d – (c)(1) “[N]othing... shall be construed to grant any... state regulatory agency authority to impose or reimpose any requirement that a record be in a tangible printed or paper form.” – NOTE: E-SIGN contains no definition of “state regulatory agency”

18. State v. Federal Law? – E-Sign § 7002 provides that State law controls (a) If a State enacts UETA uniformly or(a) If a State enacts UETA uniformly or (b) If a State enacts another law consistent with E- Sign § 7001 and “such alternative procedures or requirements do not require, or accord greater legal status or effect to, the implementation or application of a specific technology... [for] creating, storing, generating, receiving, communicating, or authenticating electronic...”(b) If a State enacts another law consistent with E- Sign § 7001 and “such alternative procedures or requirements do not require, or accord greater legal status or effect to, the implementation or application of a specific technology... [for] creating, storing, generating, receiving, communicating, or authenticating electronic...”

19. UNIFORM REAL PROPERTY ELECTRONIC RECORDING ACT (URPERA) – Establishes (again) validity of electronic documents – Authorizes (again) electronic recording of paper or electronic documents – Authorizes establishment of standards

20. Contacts – Patricia Brumfield Fry Office: 573 884 7761Office: 573 884 7761 Fax: 573 882 4984Fax: 573 882 4984 Email: fryp@missouri.eduEmail: fryp@missouri.edufryp@missouri.edu – National Conference of Commissioners on Uniform State Laws Office: 312 915 0195Office: 312 915 0195 Fax: 312 915 0187Fax: 312 915 0187 Web: www.nccusl.orgWeb: www.nccusl.org