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

SPONSOR Martinez

ORIGINAL DATE

LAST UPDATED

1/25/07

HB

SHORT TITLE

Enacting the Uniform Real Property Electronic

Recording Act

SB 201

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

Senate Bill 201 relates to Recording Real Property Documents; Enacting the Uniform Real

Property Electronic Recording Act.

SB 201 would enact the Uniform Real Property Electronic Recording Act. This act provides

legal authority for the optional 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 and the State Commission of Public Records to

begin accepting records in electronic format, storing electronic records, and setting up systems

that would provide for security protection to ensure that electronic documents are accurate,

authentic, adequately preserved and resistant to tampering.

FISCAL IMPLICATIONS

SB 201 may provide some cost savings to counties by allowing clerks to accept and store

recorded documents in electronic format.

Senate Bill 201 – Page

2

SIGNIFICANT ISSUES

According to DFA, SB 201 would be substantially in the same format as the one created by the

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

Electronic recording, or “e-recording," has been under consideration by the real estate industry

for some time. Industry groups, such as the Property Records Industry Association, have been

advocates for e-recording. The act explicitly recognizes the piecemeal aspects of the individual

efforts and attempts to provide some uniformity to the legal structure of electronic recording.

The act also represents an extension of the work of the conference to give legal effect to

transactions that are executed electronically. The conference previously approved the Uniform

Electronic Transaction Act (UETA), which permits electronic records and the electronic

execution of documents between parties.

The NCCUSL commentary continues by stating that the Act accomplishes three main things.

First, it allows for the recording of an electronic document and permits an electronic signature

and an electronic notary to suffice, notwithstanding any other legal requirement to the contrary.

Second, it authorizes the recorder to implement electronic recording functions. Third, it

provides for the creation of an electronic recording commission or enables an existing state

agency to adopt standards to implement the Act.

The Act’s commentary recognizes that various “legacy laws" exist, which limit the

recordability of documents. First and foremost, there is the issue of fraud. Ohio law has

traditionally required that instruments be signed and acknowledged to be recorded. The Act

permits electronic signatures as previously noted. The act’s definition of “electronic signature"

is fairly broad. A second concern relates to the effectiveness of electronic documents the

recorder receives. The act does not address this matter; instead, it recognizes the diversity of

state law. Filing around the clock by fax machine and e-mail becomes a very real possibility

under the act. Questions regarding matters such as presentment, priority and notice are left up to

individual states to decide.

A third concern is the matter of funding. The Act recognizes that an electronic recording system

may involve “relatively large ‘front-end’ expenses" and encourages states to resolve the issue of

funding prior to passage. While the act does not mandate an electronic recording system by its

terms, and permits the continued use of paper documents, it would be unwise to ignore the cost

issue of an electronic system.

SB 924 became effective January 1, 2007. It allows an electronic signature to qualify as a

sufficient signature. Such electronic signature also satisfies the requirement that a document be

notarized, verified, or taken under oath. The county recorder of deeds may convert paper

documents into electronic form for the purpose of indexing, storing, and archiving and may

accept fees and documents electronically. This act also establishes the Electronic Recording

Commission to adopt standards for implementing this Act.

PERFORMANCE IMPLICATIONS

The Uniform Real Property Electronic Recording Act (UTEA) was adopted by the National

Conference of Commissioners on Uniform State Laws at its annual conference held in 2004.

Senate Bill 201 – Page

3

Furthermore, the UETA has been adopted in 46 states, the District of Columbia and the U.S.

Virgin Islands. There is some momentum for the adoption of the Act. It was approved by the

American Bar Association’s House of Delegates in February 2005. The Act has also been

introduced in the legislatures of eight other states.

SB 201 represents an effort to provide statutory authority to county clerks statewide to come into

compliance with the UTEA, as well as the Uniform Real Property Electronic Recording Act

adopted by the US Senate.

ADMINISTRATIVE IMPLICATIONS

Enactment of SB 201 could simplify county archival procedures, including, but not limited to the

searching and retrieval of documents in the clerk’s office.

OTHER SUBSTANTIVE ISSUES

In its current format, SB 201 offers some additional language to the “The Uniform Real Property

Electronic Recording Act" that was not present in prior bills. SB 201 contains language making

the recording of electronic real property document as “optional". Furthermore, SB 201 also

includes new language in the Administration and Standards Section that identifies the State

Commission of Public Records as an agency that will work in conjunction with the Information

Technology Commission and the county clerks of New Mexico to adopt standards to implement

this statute. In addition, new text also requires the standards of the act to provide for security

protection to ensure that electronic documents are accurate, authentic, adequately preserved and

resistant to tampering.

AMENDMENTS

The NCCUSL commentary includes the matter of funding. Additional language providing

resources to counties may be an item that should receive consideration

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

If the Uniform Real Property Electronic Recording Act of SB 201 is not enacted, then current

administration of real property documents by county clerks would remain unchanged and the

state would not advance towards current national standards and uniformity to the legal structure

of electronic recording would not be realized.

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