The county recorder in San Mateo, Calif., thought he had an excellent pilot project to test a fully functional electronic document recording system - and the technology worked. Business partners were behind the project. Standards had evolved to make different systems function together. And state legislation had been passed, making electronically signed documents legal.
There was just one hitch. California's notaries insisted they still attach their seal to the property documents, technology or no.
It took about seven months of wrangling with California's secretary of state to straighten out the problem, said Warren Slocum, San Mateo's clerk-recorder-assessor. Finally, the secretary of state agreed to change the guidelines, allowing California's notaries to embed specially made electronic seals on the reconveyance documents. Although it wasn't the perfect solution, it allowed the pilot project to move forward.
But the story's not over. Although the pilot clearly proved the technology works, plans to move forward with a full-scale electronic document recording system are on hold, according to Slocum. "The state Attorney General is worried about the potential for fraud and may not wish to see this type of solution take place in the near future," he said.
New Solutions, Not New Practices
Slocum's predicament reflects the ongoing struggle within the electronic document recording industry and county government. Technology, standards and legislation have converged to offer compelling new solutions for the electronic recording of real estate documents. But politics, tradition and fear of change have slowed its acceptance. "We aren't trying to change any practices or laws," said Steve Jordan, project manager for Ingeo, an electronic document software firm that worked on the San Mateo project. "We're just trying to help them do their job better."
Technologically, a solution exists for virtually every situation, including software that can manage all sorts of file types, electronic signatures, workflow solutions and integration tools. Standards also have become more realistic, thanks in large part to the formation of standard-setting committees, such as the Property Records Industry Joint Task Force and the Mortgage Industry Standards Maintenance Organization.
They haven't solved the entire standards puzzle, but these groups have done a good job of collaborating to ensure a framework for developing good standards exists, according to industry experts. Specifically, they have focused on Extensible Markup Language (XML) standards to improve how different computer systems send, receive and read electronic data.
Meanwhile, legal barriers to electronic document transactions have fallen. Five years ago, Congress passed the electronic signature law known as E-SIGN. Many states also have adopted and passed the Uniform Electronic Transaction Act (UETA), although a number of legislatures have interpreted the rules differently.
All of these advancements have turned electronic recording from a concept into a viable method for filing documents. Mortgage lenders, title companies and banks have joined with system vendors and county governments to lay the groundwork for systems that will benefit just about everyone.
Slocum pointed out that his county would see significant gains in productivity, and he believes electronic recording would reduce carpal tunnel syndrome, the scourge illness in today's workplace. By eliminating the constant rekeying of data from paper documents into his county's computer system, workers not only will save time, but also their health.
Electronic recording technology comes at a time when government jurisdictions face an explosion in paperwork. San Mateo has seen document recordings rise significantly as the number of refinancings and new mortgages has surged. The same is true in St. Louis County, Minn., where the number of documents filed at the county recorder's office grew 40 percent without any additional staff, said County Recorder Mark Manocelli.
A similar situation also existed in Salt Lake County, Utah, where the recorder's office staff shrunk from 100 employees to 60, while the number of filings soared, thanks to a boom in