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F I S C A L I M P A C T R E P O R T

SPONSOR Youngberg

DATE TYPED 3/8/05

HB 913

SHORT TITLE Uniform Property Electronic Recording Act

SB

ANALYST Hadwiger

APPROPRIATION

(in $000s)

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Office of the Attorney General (AG)

No comments were received from the New Mexico Association of Counties at the time this FIR

was prepared.

SUMMARY

Synopsis of Bill

House Bill 913 would enact the Uniform Real Property Electronic Recording Act. This act pro-

vides legal authority for the acceptance and recording of real estate documents by county clerks

in electronic format. The act authorizes clerks, in compliance with standards established by the

Information Technology Commission in consultation with New Mexico county clerks, to begin

accepting records in electronic form, storing electronic records, and setting up systems for

searching for and receiving these land records. The Act provides that laws requiring an original,

written, tangible document, a signature and either notification, acknowledgment, verification or

witnessing, are satisfied by an electronic document and appropriate electronic signatures. The

effective date of the Act is January 1, 2006.

House Bill 913 -- Page 2

Significant Issues

The proposed bill would be in substantially the same form as produced and recommended by the

National Conference of Commissioners on Uniform State Laws (NCCUSL) in August, 2004.

That organization explained the intent of the bill as follows:

The status of electronic information technology has progressed rapidly in recent years. Inno-

vations in software, hardware, communications technology and security protocols have made

it technically feasible to create, sign and transmit real estate transactions electronically.

Even though documents resulting from electronic transactions are valid and enforceable be-

tween the parties, there is uncertainty and confusion about whether those electronic docu-

ments may be recorded in the various local land records offices in the several states. Legacy

laws and regulations in many states purport to limit recordable documents to ones that are in

writing or on paper or require that they be originals. Other laws and regulations require

signatures to be in writing and acknowledgements to be signed. Being electronic and not

written on paper, being an electronic version of an original paper document, or having an

electronic signature and acknowledgement instead of handwritten ones, an electronic docu-

ment might not be recordable under the laws of these states. Despite these uncertainties, re-

corders in approximately 40 counties in several states began recording electronic docu-

ments. These efforts depend, however, on the initiatives of individual recorders and the op-

portunities available under the laws of those states. They are piecemeal and offer only lim-

ited interoperability among the recording venues and across state lines. They do not provide

a uniform legal structure for the acceptance and processing of electronic documents. The

Uniform Real Property Electronic Recording Act was drafted to remove any doubt about the

authority of the recorder to receive and record documents and information in electronic

form. Its fundamental principle is that any requirements of state law describing or requiring

that a document be an original, on paper, or in writing are satisfied by a document in elec-

tronic form. Furthermore, any requirement that the document contain a signature or ac-

knowledgment is satisfied by an electronic signature or acknowledgement. The act specifi-

cally authorizes a recorder, at the recorder’s option, to accept electronic documents for re-

cording and to index and store those documents.

The Administrative Office of the Courts (AOC) and Office of the Attorney General (AG) were

concerned that the proposed bill conflicts with many provisions of existing statute without spe-

cifically amending them. The AG wrote:

Section 3 of the Act provides: If a law requires, as a condition for recording, that a document

be an original, be on paper or another tangible medium or be in writing, the requirement is

satisfied by an electronic document satisfying the Uniform Real Property Electronic Re-

cording Act. However, existing laws which specifically and in great detail govern the clerk’s

duties with regard to recording documents are not amended or repealed by this bill. Notwith-

standing Section 3, the Act will conflict with those laws, and could cause confusion and un-

certainty. For example, NMSA Section 14-8-7 provides “It shall be the duty of county clerks

in this state to use either a good grade of nonfadeable permanent black ink or a good grade

of black record typewriter ribbon in recording all instruments of writing which by law they

are required to record.” NMSA Section 14-8-8 requires criminal penalties (fines) for clerks

not complying with that provision. NMSA Section 14-8-2 provides “It shall be the duty of the

county clerk to record in a book of good size, which he shall keep in his office for this pur-

pose, all land titles and other papers which by law should be recorded.” NMSA Section 14-

House Bill 913 -- Page 3

9-4 requires the clerk to accept a “writing” affecting the title to real estate, manually record

details in a “reception book”, and subjects the clerk to criminal penalties for failure to make

those entries. NMSA Section 14-8-16 governs the filing of plats or other real property de-

scriptions and requires certification by a licensed surveyor, and filing in duplicate. NMSA

Section 14-8-11 requires the Attorney General and the “state comptroller” to select the form

of recorded instruments for which recording fees may be charged, and county clerks are di-

rected to “purchase printed forms for recording in record books…” NMSA Section 14-8-6

requires clerks to affix endorsements “on that document” when received for recording.

NMSA Section 14-8-4 prohibits the filing of instruments of writing that are not acknowledged

and certified.

FISCAL IMPLICATIONS

The bill may provide some cost savings to counties by allowing clerks to accept and store re-

corded documents in electronic format.

AOC noted there will be a minimal administrative cost for statewide update, distribution, and

documentation of statutory changes. Any additional fiscal impact on the judiciary would be pro-

portional to the enforcement of this law and commenced proceedings. New laws, amendments to

existing laws, and resultant proceedings have the potential to increase caseloads in the courts,

thus requiring additional resources to handle the increase.

ADMINISTRATIVE IMPLICATIONS

Enactment of statutory procedures to allow county clerks to accept electronic documents and

signatures could simplify county archival operations, as well as searching and retrieving docu-

ments.

TECHNICAL ISSUES

See AG concerns above.

ALTERNATIVES

Amend other statutes governing county clerks to conform to the requirements in HB913.

POSSIBLE QUESTIONS

1.

Has the New Mexico Association of Counties endorsed this bill.

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