BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |AB 2143                          |Hearing    | 6/15/16 |
          |          |                                 |Date:      |         |
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          |Author:   |Irwin                            |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |6/6/16                           |Fiscal:    |Yes      |
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          |Consultant|Weinberger                                            |
          |:         |                                                      |
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                        County recorder:  electronic recording



          Expands, until January 1, 2027, the scope of the state law that  
          allows for the digitized electronic delivery, recording, and  
          return of some types of recordable instruments.


           Background 

           County recorders accept, officially record, and return copies of  
          legal documents, notices, or papers.  Among the papers that they  
          record are "instruments," which are written papers signed and  
          delivered by one person to another that transfer the title to or  
          create a lien on property, or give a right to a debt or duty.  

          A recorder of any county may, in lieu of a written paper, accept  
          for recording digitized images, digital images, or both, of a  
          recordable instrument, subject to specified conditions (AB 3264,  
          Frazee, 1988).  The Electronic Recording Delivery Act (AB 578,  
          Leno, 2004) authorizes the digitized electronic delivery,  
          recording, and return of specified types of instruments  
          submitted by title insurers, underwritten title companies,  
          institutional lenders, and government entities through an  
          electronic record delivery system (ERDS) upon approval by the  
          county board of supervisors and certification by the Attorney  
          General.  The Act requires the State Attorney General, in  
          consultation with interested parties, to adopt regulations for  
          the review, approval, and oversight of electronic recording  







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          delivery systems.

          County recorders want the Legislature to expand state law to  
          allow additional types of instruments to be recorded though an  
          ERDS and additional types of entities to submit instruments  
          through an ERDS.


           Proposed Law

           State law allows a county recorder to enter into a contract with  
          a title insurer, underwritten title company, institutional  
          lender, or an entity of local, state, or federal government for  
          the delivery for recording, and return to the party requesting  
          recording, of a digitized electronic record that is an  
          instrument affecting a right, title, or interest in real  
          property.  The contract may provide for the delivery of  
          documents by an agent.   However, the agent must not be a vendor  
          of electronic recording delivery systems.

          State law allows a county recorder to accept for recording a  
          "digitized" electronic record, which means a scanned image of  
          the original paper document.  Assembly Bill 2143 additionally  
          allows a recorder to accept for recording a "digital" electronic  
          record, which means a record containing information that is  
          created, generated, sent, communicated, received, or stored by  
          electronic means, but not created in original paper form.

          State law allows a recorder to accept, through an ERDS, records  
          that are submitted by a title insurer, underwritten title  
          company, institutional lender, or an entity of local, state, or  
          federal government.  Assembly Bill 2143 additionally allows a  
          recorder to accept, through an ERDS, records that are submitted  
          by an authorized submitter other than a title insurer,  
          underwritten title company, institutional lender, or an entity  
          of local, state, or federal government.  The authorized  
          submitter and any agent submitting documents on behalf of the  
          authorized submitter must provide proof of financial  
          responsibility by providing a certificate of insurance  
          evidencing an amount of general liability coverage of at least  
          one million dollars ($1,000,000).  Assembly Bill 2143 requires  
          the Attorney General (AG) to adopt regulations governing the  
          requirements for general liability coverage.









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          State law requires county recorders to submit, to the office of  
          the Insurance Commissioner, annual statistical reports on the  
          number of deeds, deeds of trusts and mortgages, reconveyances,  
          and trustee's deeds that are recorded and filed.  Assembly Bill  
          2143 clarifies that these yearly statistical reports must  
          include electronically transmitted documents and requires county  
          recorders to count and report documents in the same manner  
          without regard to method of transmission.

          Assembly Bill 2143 clarifies that language in existing law  
          referring to "an instrument affecting a right, title, or  
          interest in real property" means an instrument that is  
          authorized or required to be recorded pursuant to a specified  
          statute.

          Assembly Bill 2143 makes additional technical and conforming  
          changes to state law.

          Assembly Bill 2143 directs that the changes it makes to current  
          law will remain in effect only until January 1, 2027, and as of  
          that date are repealed.


           State Revenue Impact

           No estimate.


           Comments

           1.  Purpose of the bill  .  The process of recording digital and  
          digitized documents submitted through the electronic delivery  
          systems is faster and more efficient than the recording process  
          for paper documents.  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.  By  
          expanding both the types of entities that state law authorizes  
          to electronically record documents and the types of electronic  
          documents that can be recorded, AB 2143 will allow all of the  
          parties in the recording process to save even more time and  
          money through the use of electronic recording delivery systems.   








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          2.   Double-referred  .  The Senate Rules Committee has ordered a  
          double-referral of AB 2143 -- first to the Senate Governance &  
          Finance Committee, which has jurisdiction over bills relating to  
          county recorders, and then to the Senate Judiciary Committee,  
          which has jurisdiction over bills relating to real property  
          ownership.


           Assembly Actions

           Assembly Local Government Committee:9-0
          Assembly Appropriations Committee:20-0
          Assembly Floor:               77-0


           Support and  
          Opposition   (6/9/16)


           Support  :  County Recorders' Association of California;  
          California State Association of Counties; California Mortgage  
          Association.

           Opposition  :  Unknown.



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