BILL ANALYSIS Ó
AB 2143
Page 1
ASSEMBLY THIRD READING
AB
2143 (Irwin)
As Amended April 12, 2016
Majority vote
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Local |9-0 |Eggman, Waldron, | |
|Government | |Mullin, Bonilla, | |
| | |Chiu, Cooley, Beth | |
| | |Gaines, Gordon, | |
| | |Linder | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |20-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Patterson, Daly, | |
| | |Eggman, Gallagher, | |
| | |Eduardo Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
------------------------------------------------------------------
AB 2143
Page 2
SUMMARY: Allows additional persons and entities to deliver
electronic records to county recorders for recording and expands
the types of electronic records that may be delivered to a
county recorder for recording. Specifically, this bill:
1)Repeals, until January 1, 2027, current law that limits the
types of documents that can be submitted electronically for
recording, pursuant to a contract between a county recorder
and a title insurer, underwritten title company, institutional
lender, or an entity of local, state or federal government, to
the following: a digitized electronic record that is an
instrument affecting a right, title, or interest in real
property.
2)Allows, until January 1, 2027, any digital or digitized
electronic record that is required to be recorded by a county
recorder, as specified, to be submitted electronically for
recording, pursuant to a contract between a county recorder
and a title insurer, underwritten title company, institutional
lender, or an entity of local, state or federal government.
3)Allows, until January 1, 2027, a county recorder to enter into
a contract with an authorized submitter not authorized
pursuant to 2) above, for the delivery for recording, and
return to the party requesting recording, of a digital or
digitized electronic record that is required to be recorded by
a county recorder.
4)Allows a contract between a county recorder and an authorized
submitter described in 3) above, to provide for the delivery
of documents by an agent, and prohibits an agent from being a
vendor of electronic recording delivery systems.
AB 2143
Page 3
5)Requires an authorized submitter described in 3) above, and
any agent submitting documents on behalf of an authorized
submitter to provide proof of financial responsibility by
providing a certificate of insurance evidencing an amount of
general liability coverage of at least $1 million.
6)Requires the Attorney General (AG) to adopt regulations
governing the requirements for general liability coverage
required by 5) above.
7)Makes conforming changes.
EXISTING LAW:
1)Authorizes, pursuant to the Electronic Recording Delivery Act
of 2004 (ERDA), a county recorder to establish an Electronic
Recording Delivery System (ERDS) upon approval by the county
board of supervisors (Board) and certification by the AG.
2)Allows county recorders to contract with the following
entities to accept the following types of documents through
their ERDS: Title insurers, underwritten title companies,
institutional lenders, or any entity of local, state or
federal government may submit a digitized electronic record
that is an instrument affecting a right, title, or interest in
real property. These submitters must complete security
clearance measures, including a computer security audit and a
criminal records check.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
AB 2143
Page 4
1)Unknown costs to the California Department of Insurance, but
likely less than $150,000, to address inconsistencies in
terminology being introduced by this bill. (See Comment #3 in
the Assembly Appropriations Committee analysis.)
2)Minor and absorbable costs to the Department of Justice to
update regulations.
3)Potential cost savings for counties from increased
e-recordings. County Recorders assert that e-recordings are
more cost effective than traditional paper recordings. This
bill will expand the potential use of e-recordings by counties
that already use it, as well as encourage counties that do not
currently allow e-recording to make the transition.
COMMENTS:
1)Bill Summary. This bill expands the ERDA to allow a greater
range of people and institutions to submit electronic records
to county recorders. It expands provisions that allow only
title insurers, underwritten title companies, institutional
lenders, or any entity of local, state or federal government
to submit electronic documents to also allow any person or
entity that provides a certificate of insurance evidencing an
amount of general liability coverage of at least $1 million to
submit electronic records. The bill also expands the types of
records that can be submitted, to include digital records. (A
digital record is a record that was not created in paper form,
but contains information that is created, generated, sent,
communicated, received, or stored by purely electronic means.)
ERDA is currently limited to digitized records (a scanned
image of the original paper document), except in very limited
instances. This bill contains a sunset date of January 1,
2027. This bill is sponsored by the County Recorders
AB 2143
Page 5
Association of California.
2)Author's Statement. According to the author, "Current law
allows specified title organizations and financial
institutions to electronically record certain legal documents
with county recorders provided that they register with the
Department of Justice and meet minimum liability requirements.
AB 2143 will expand electronic recording to all entities that
register with the Department of Justice and hold minimum
liability insurance. Since 2004, electronic recording has
proven to be safe, efficient, and cost effective for both
private enterprise and government entities. It's time to
expand this to all entities and bring California into the 21st
century."
3)Background. AB 578 (Leno), Chapter 621, Statutes of 2004,
established ERDA and created a statewide system for county
recorders to record electronic records of real property
instruments. AB 578 required the AG to adopt regulations for
certification and oversight of ERDS and associated software
and other services. AB 578 followed several years of
legislative action regarding electronic recording.
In order to establish an ERDS, a county recorder must be
authorized by resolution of the county Board and must obtain
system certification from the ERDS Program, which is
administered by the AG. A county's ERDS must meet specified
security standards and all persons with a secure access role
are required to undergo fingerprint criminal history checks.
Both the AG and the County Recorders Association of
California, sponsor of this measure, attest that there have
been no instances of fraud connected with the use of ERDS
since it became operational. To date, the AG has certified
ERDS for 24 counties. The County Recorders Association of
AB 2143
Page 6
California is seeking to allow a number of high-volume
submitters, such as attorneys and companies that presently
submit numerous real estate documents in paper form, to
electronically submit records to recorders. They state that
the bill is not intended to allow individuals to submit single
documents electronically. The safeguards in existing law, as
well as the liability insurance requirement in this bill,
appear to be sufficient provisions to achieve this intent.
4)Arguments in Support. The County Recorders Association of
California, sponsor of this bill, writes, "The 2004 Electronic
Recording Delivery Act (ERDA) authorized specified entities to
electronically record documents. Millions of documents have
been recorded by means of an electronic recording delivery
system since the enactment of ERDA. In California there are
no known instances of fraud perpetrated by use of electronic
recording delivery systems. County Recorders and authorized
submitters have experienced positive results from the ERDA.
?The process of recording digital and digitized documents?is
expedited and more efficient compared to paper documents."
5)Arguments in Opposition. None on file.
Analysis Prepared by:
Angela Mapp / L. GOV. / (916) 319-3958 FN:
0003034
AB 2143
Page 7