BILL ANALYSIS Ó
AB 2143
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
2143 (Irwin)
As Amended June 28, 2016
Majority vote
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|ASSEMBLY: |77-0 |(May 23, 2016) |SENATE: |38-0 |(August 15, |
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Original Committee Reference: L. GOV.
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.
The Senate amendments:
1)Change the evidence of liability coverage required by this
bill from $1 million to an amount that is reasonably adequate
to protect against liability and cover potential losses, and
require this amount to be set through rule or regulation by
the Attorney General (AG) in consultation with interested
parties.
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2)Require annual statistical reports, which county recorders
must submit to the Insurance Commissioner pursuant to existing
law, to include electronically submitted documents, and
require documents for the purposes of these reports to be
counted and reported in the same manner without regard to
their method of transmission.
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 Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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. The bill also allows any
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person or entity that provides a certificate of insurance
evidencing an amount of general liability coverage reasonably
adequate to protect against liability and cover potential
losses to submit electronic records. The amount of this
liability coverage must be set through rule or regulation by
the AG in consultation with interested parties.
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 also requires annual statistical reports, which
county recorders must submit to the Insurance Commissioner
pursuant to existing law, to include electronically submitted
documents, and requires documents for the purposes of these
reports to be counted and reported in the same manner without
regard to their method of transmission.
This bill contains a sunset date of January 1, 2027. This
bill is sponsored by the County Recorders 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."
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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
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
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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:
0003839