BILL NUMBER: AB 578 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 23, 2004
AMENDED IN ASSEMBLY JULY 3, 2003
AMENDED IN ASSEMBLY MAY 12, 2003
AMENDED IN ASSEMBLY MAY 5, 2003
AMENDED IN ASSEMBLY MAY 1, 2003
AMENDED IN ASSEMBLY APRIL 24, 2003
INTRODUCED BY Assembly Member Leno
FEBRUARY 18, 2003
An act to add Section 27362 to, to add Article 6
(commencing with Section 27390) to Chapter 6 of Division 2 of Title 3
of, and to repeal Sections 27279.4 and 27398 of, the Government
Code, relating to county recorders, An act to add
Article 6 (commencing with Section 27390) to Chapter 6 of Division 2
of Title 3 of the Government Code, relating to county recorders,
making an appropriations therefor, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 578, as amended, Leno. County recorders: electronic
recording.
(1) Existing law generally specifies that the recorder of any
county may, in lieu of a written paper, accept for recording a
digitized image of a recordable instrument, subject to specified
conditions.
This bill would enact the Electronic Recording Delivery
System Act of 2003 2004 , to
authorize a county recorder, upon approval by resolution of the board
of supervisors and system certification by the Attorney General, to
establish an electronic recording delivery system for the delivery
and recording of specified digitized electronic
records, and in specified cases, digital
electronic records , affecting the right, title, or
interest in real property , subject to specified
conditions, including system certification, regulation, and oversight
by the Attorney General. It would require participating
counties to pay for the direct cost of regulation and oversight by
the Attorney General, and authorize those counties to impose fees to
cover those costs. It would authorize the Attorney General to
charge a fee directly to a vendor seeking approval of software and
other services as part of an electronic recording delivery system.
It would require an applicant seeking authorization to
submit documents electronically to obtain approval of the county
recorder. Fees paid to the Attorney General under
these provisions would be deposited in an unspecified account, which
would be created in the Special Deposit Fund and continuously
appropriated to the Attorney General for these purposes.
This bill would authorize the Attorney General or a district
attorney or city prosecutor to seek a civil penalty of up to
$50,000 for each violation of the provisions of the act enacted by
the bill or its implementing regulations and to seek
specified civil remedies.
This bill would, until January 1, 2011, authorize specified
counties, subject to approval by their respective boards of
supervisors, to participate in an electronic recording pilot project
for the delivery and recording of digital electronic records, subject
to specified criteria.
The Attorney General would be required to evaluate the electronic
recording delivery systems, including pilot projects
and report to both houses of the Legislature on or before
June 30, 2007 2009 .
(2) Existing law authorizes the board of supervisors of
any county to provide for specified fees for the filing and indexing
of documents with the county recorder.
This bill would provide that a county establishing an electronic
recording delivery system shall pay for the direct cost of regulation
and oversight by the Attorney General and, to pay these costs,
authorize the county to impose a fee of up to $1 for each instrument
recorded, impose a fee upon any vendor seeking approval of software
and other services as part of an electronic recording delivery
system, and impose a fee upon any person seeking approval as an
authorized submitter of electronic records.
(3) Existing law requires the Attorney General to appoint an
Electronic Recordation Task Force, consisting of specified
representatives, to meet on a regular basis to address the technical,
legal, security, and economic issues associated with electronic
recordation, and recommendations on specified issues.
This bill would repeal this provision.
(4) This bill would authorize specified counties, subject to
approval of their respective boards of supervisors, to notify by mail
the party or parties executing deeds, quitclaim deeds, and deeds of
trust, to impose a fee for the cost of the notice, and to require, as
a condition of recording, that the document contain specified
information. It would require each county providing notification
pursuant to these provisions to report to the Legislature on or
before June 30, 2007, regarding the discovery of fraudulent deeds,
quitclaim deeds, and deeds of trust as a result of the notices.
(5) This bill would declare that it is to take effect
immediately as an urgency statute.
Vote: 2/3. Appropriation: no yes
. Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 27279.4 of the Government Code is
SECTION 1. (a) It is the intent of the Legislature to enact
legislation to develop a system to permit the electronic delivery,
recording, and return of records that are instruments of
reconveyance, substitutions of trustees, or assignments of deeds of
trust.
(b) It is the further intent of the Legislature that electronic
recording delivery systems be a voluntary county option subject to
regulation to promote security and uniformity, reduce costs, and
deter real estate fraud.
SEC. 2. Article 6 (commencing with Section 27390) is added to
Chapter 6 of Division 2 of Title 3 of the Government Code, to read:
Article 6. Electronic Recording Delivery Act of 2004
27390. (a) This article shall be known and may be cited as the
Electronic Recording Delivery Act of 2004.
(b) For the purposes of this article, the following definitions
shall apply:
(1) "Authorized submitter" means a title insurer, an underwritten
title company, an entity of local, state, or federal government, or
an institutional lender, as defined in subdivision (j) of Section
50003 of the Financial Code, or the agents or employees of any of
these, who has entered into a contract with a county recorder
pursuant to subdivision (b) of Section 27391, and contracted with a
vendor approved by the Attorney General pursuant to subdivision (b)
of Section 27392.
(2) "Computer security auditor" means computer security personnel
hired to perform an independent audit on the electronic recording
delivery system, approved pursuant to Section 27394 and not
disqualified pursuant to Section 27395. The computer security
auditor shall be independent of the county recorder and the
authorized submitter and shall not be the same contractor hired to
establish or participate in a county's electronic recording delivery
system or in the authorized submitter's portion of that system.
(3) "Digital electronic record" means a record that is created,
generated, sent, communicated, or stored by electronic means, but not
created in original paper form.
(4) "Digitized electronic record" means a scanned image of the
original paper document.
(5) "Electronic recording delivery system" means a system designed
to receive for recording, and to return to the party requesting
recording, digitized or digital electronic records.
(6) "Security testing" means an independent security audit by a
computer security auditor, including, but not limited to, attempts to
penetrate an electronic recording delivery system for the purpose of
testing the security of that system.
(7) "Source code" means a program or set of programs, readable and
maintainable by humans, translated or interpreted into a form that
the electronic recording delivery system can execute.
(8) "System certification" means the issuance of a confirmation
letter regarding an electronic recording delivery system by the
Attorney General, as described in Section 27392.
27391. (a) Upon approval by resolution of the board of
supervisors and system certification by the Attorney General, a
county recorder may establish an electronic recording delivery
system.
(b) (1) Upon system certification, a county recorder may enter
into a contract with a title insurer, an underwritten title company,
an entity of local, state, or federal government, or an institutional
lender, as defined in subdivision (j) of Section 50003 of the
Financial Code, to facilitate the delivery for recording, and return
to the party requesting recording, of a digital electronic record, or
a digitized electronic record, that is an instrument of
reconveyance, substitution of trustee, or assignment of a deed of
trust.
(2) Any party entering into a contract with a county recorder
pursuant to paragraph (1) shall contract with a vendor approved by
the Attorney General in implementing that contract.
(c) If a county recorder elects to utilize an electronic recording
delivery system pursuant to this article, he or she may refuse to
enter into a contract with any party or may terminate or suspend
access to a system if the county recorder deems it necessary to
protect the public interest, protect the integrity the of public
records, or protect property owners from financial harm. A county
recorder may also terminate or suspend access to a system in the
event a party commits a substantive breach of the contract or does
not comply with this article or the regulations adopted pursuant to
this article.
(d) A county recorder may require a party electronically
submitting records to mail a copy of recorded electronic document to
the address specified in the instructions for mailing upon completion
of recording.
(e) No cause of action or liability against the county recorder or
any other government entity shall occur or arise from the decision
of the county recorder to refuse to contract with any party or to
terminate or deny access of any party to the system.
27392. (a) No electronic recording delivery system may become
operational without system certification by the Attorney General.
The certification shall affirm that the proposed county system
conforms to this article and any regulations adopted pursuant to this
article, that security testing has confirmed that the system is
secure and that the proposed operating procedures are sufficient to
assure the continuing security and lawful operation of that system.
The certification may include any agreements between the county
recorder and the Attorney General as to the operation of the system,
including, but not limited to, the nature and frequency of computer
security audits. Certification may be withdrawn for good cause.
(b) The Attorney General shall approve vendors offering software
and other services for electronic recording delivery systems pursuant
to regulations adopted as described in paragraph (7) of subdivision
(b) of Section 27393.
27393. (a) The Attorney General shall, in consultation with the
County Recorders Association of California and the California
District Attorneys Association, adopt regulations for the review,
approval, and oversight of electronic recording delivery systems.
Other interested parties may be consulted. Regulations shall be
adopted pursuant to the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3). The
regulations shall comply with Section 12168.7.
(b) The regulations adopted pursuant to subdivision (a) may
include, but need not be limited to, all of the following:
(1) Establishment of baseline technological and procedural
specifications for electronic recording delivery systems.
(2) Requirements for security, capacity, reliability, and
uniformity.
(3) Requirements as to the nature and frequency of computer
security audits.
(4) A detailed and uniform definition of the term "source code"
consistent with paragraph (7) of subdivision (b) of Section 27390,
and as used in this article, and applicable to each county's
electronic recording delivery system.
(5) Requirements for placement of a copy of the operating system,
source code, compilers, and all related software associated with each
county's electronic recording delivery system in an approved escrow
facility prior to that system's first use.
(6) Requirements for ensuring approval by the Attorney General of
substantive modifications to an operating system, compilers, related
software, or source code.
(7) Procedures for approval of vendors offering software and other
services for electronic recording delivery systems.
(8) Requirements for system certification and for oversight of
approved systems.
(9) Requirements for fingerprinting and criminal records checks
required by Section 27395, including a list of employment positions
or classifications subject to criminal records checks and including a
definition of "secure access" as specified in subdivision (f) of
that section.
(10) Requirements for uniform index information that shall be
included in every digitized or digital electronic record.
(11) Provisions to protect proprietary information accessed
pursuant to subdivision (e) of Section 27394 from public disclosure.
(c) The Attorney General may promulgate any other regulations
necessary to fulfill his or her obligations under this article.
(d) An electronic recording delivery system shall be subject to
local inspection and review by the Attorney General. The Attorney
General shall furnish a statement of any relevant findings associated
with a local inspection to the county recorder of a county
participating in the inspected electronic recording delivery system,
to the district attorney, and to all technology vendors associated
with that system.
27394. (a) To be eligible to establish an electronic recording
delivery system, a county recorder shall contract with, and obtain a
report from, a computer security auditor selected from a list of
computer security auditors approved by the Attorney General.
(b) The Attorney General shall approve computer security auditors
on the basis of significant experience in the evaluation and analysis
of Internet security design, the conduct of security testing
procedures, and specific experience performing Internet penetration
studies. The Attorney General shall complete the approval of
security auditors within 90 days of a request from a county recorder.
The list shall be a public record.
(c) An electronic recording delivery system shall be audited, at
least once during the first year of operation and periodically
thereafter, as set forth in regulation and in the system
certification, by a computer security auditor. The computer security
auditor shall conduct security testing of the electronic recording
delivery system. The reports of the computer security auditor shall
include, but not be limited to, all of the following considerations:
(1) Safety and security of the system, including the vulnerability
of the electronic recording delivery system to fraud or penetration.
(2) Results of testing of the system's protections against fraud
or intrusion, including security testing and penetration studies.
(3) Recommendations as to the need for security testing of an
authorized submitter's system, pursuant to subdivision (e).
(4) Recommendations for any additional precautions needed to
ensure that the system is secure.
(d) Upon completion, the reports and any response to any
recommendations shall be transmitted to the board of supervisors, the
county recorder, the county district attorney, and the Attorney
General.
(e) (1) A computer security auditor shall have access to any
aspect of an electronic recording delivery system, in any form
requested. Computer security auditor access shall include, but not
be limited to, permission for a thorough examination of source code
and the associated approved escrow facility, and necessary
authorization and assistance for a penetration study of that system.
(2) If it is necessary to extend security testing to any portion
of an authorized submitter's system, an authorized submitter may
employ, at its own expense, a computer security auditor for this
aspect of security testing. The security auditor shall meet all the
requirements of this section and shall complete and submit all
security testing and reports as required by this article and any
regulations adopted pursuant to this article.
(f) If the county recorder, a computer security auditor, a
district attorney for a county participating in the electronic
recording delivery system, or the Attorney General reasonably
believes that an electronic recording delivery system is vulnerable
to fraud or intrusion, the county recorder, the board of supervisors,
the district attorney, and the Attorney General shall be immediately
notified. The county recorder shall immediately take the necessary
steps to guard against any compromise of the electronic recording
delivery system, including, if necessary, the suspension of an
authorized submitter or of the electronic recording delivery system.
27395. (a) No person shall be a computer security auditor or be
granted secure access to an electronic recording delivery system if
he or she has been convicted of a felony, has been convicted of a
misdemeanor related to theft, fraud, or a crime of moral turpitude,
or if he or she has pending criminal charges for any of these crimes.
A plea of guilty or no contest, a verdict resulting in conviction,
or the forfeiture of bail, shall be a conviction within the meaning
of this section, irrespective of a subsequent order under Section
1203.4 of the Penal Code.
(b) All persons entrusted with secure access to an electronic
recording delivery system shall submit fingerprints to the Department
of Justice for a criminal records check according to regulations
adopted pursuant to Section 27393.
(c) Once the Department of Justice has ascertained the criminal
history information, it shall forward written notification of
criminal convictions or pending criminal charges, or both, to the
division of the office of Attorney General charged with oversight
duties regarding this article. The Attorney General shall request
subsequent arrest notification service from the Department of Justice
pursuant to Section 11105.2 of the Penal Code for all persons
subject to a criminal records check pursuant to this section.
(d) The Attorney General shall deliver written notification of an
individual's ineligibility for access to an electronic recording
delivery system to the individual, his or her known employer, the
computer security auditor, and the county recorder.
(e) The Department of Justice may charge a fee sufficient to cover
its costs under this section.
(f) The Attorney General shall define "secure access" for purposes
of this section by regulation and by agreement with the county
recorder in the system certification.
27396. (a) The Attorney General shall monitor the security of
electronic recording delivery systems statewide, in close cooperation
with county recorders and public prosecutors. In the event of an
emergency involving multiple fraudulent transactions linked to one
county's use of an electronic recording delivery system, the Attorney
General may order the suspension of electronic recording delivery
systems in any county or in multiple counties, if necessary to
protect the security of the system, for a period of up to seven court
days. The Attorney General may seek an order from the superior
court if it is necessary to extend this order.
(b) (1) The Attorney General, a district attorney, or a city
prosecutor may bring an action in the name of the people of the state
seeking declaratory or injunctive relief, restitution for damages or
economic loss, rescission, or other equitable relief pertaining to
any alleged violation of this article or regulations adopted pursuant
to this article. Injunctive relief may include, but is not limited
to, an order suspending a party from participation in the electronic
recording delivery system, on a temporary or permanent basis.
(2) Nothing in this subdivision shall be construed to prevent the
Attorney General, a district attorney, or a city prosecutor from
seeking legal or equitable relief under any other provision of law.
27397. (a) A county establishing an electronic recording delivery
system under this article shall pay for the direct cost of
regulation and oversight by the Attorney General.
(b) The Attorney General may charge a fee directly to a vendor
seeking approval of software and other services as part of an
electronic recording delivery system. The fee shall not exceed the
reasonable costs of approving software or other services for vendors.
(c) In order to pay costs under this section, a county may do any
of the following:
(1) Impose a fee in an amount up to and including one dollar ($1)
for each instrument that is recorded by the county. This fee may, at
the county's discretion, be limited to instruments that are recorded
pursuant to the electronic recording delivery system.
(2) Impose a fee upon any vendor seeking approval of software and
other services as part of an electronic recording delivery system.
(3) Impose a fee upon any person seeking to contract as an
authorized submitter.
(d) The total fees assessed by a county recorder pursuant to this
section may not exceed the reasonable total costs of the electronic
recording delivery system, the review and approval of vendors and
potential authorized submitters, security testing as required by this
article and the regulations of the Attorney General, and
reimbursement to the Attorney General for regulation and oversight of
the electronic recording delivery system.
(e) Fees paid to the Attorney General pursuant to subdivisions (a)
and (b) shall be deposited in the ____ Account, which is hereby
created in the Special Deposit Fund, and, notwithstanding Section
13340, is continuously appropriated, without regard to fiscal years,
to the Attorney General for the costs described in those
subdivisions.
27398. The Attorney General shall conduct an evaluation of
electronic recording delivery systems authorized by this article, and
report to both houses of the Legislature on or before June 30, 2009.
(a) The evaluation shall include an analysis of costs, cost
savings, security and real estate fraud prevention, and
recommendations as to improvements and possible expansion of the
provisions of this article.
(b) (1) It is the intent of the Legislature that the electronic
delivery, recording, and return of digital and digitized electronic
records pursuant to this article be limited to an instrument of
reconveyance, a substitution of trustee, or an assignment of deed of
trust, because these documents pose less risk of real estate fraud
loss to property owners and financial institutions than other
documents affecting the right, title, or interest in real property.
(2) Therefore, the evaluation conducted under this section shall
also include a study of the feasibility of expanding the provisions
of this article to cover the delivery, recording, and return of other
digital and digitized electronic records.
27399. (a) The authority granted in this article is in addition
to any other authority or obligation under state or federal law.
(b) Nothing in this article shall be construed to repeal or affect
Section 27279, 27279.1, 27279.2, 27297.6, 27387.1, or 27399.7.
repealed.
SEC. 2. Section 27362 is added to the Government Code, to read:
27362. (a) A county establishing an electronic recording delivery
system under Article 6 (commencing with Section 27390) shall pay for
the direct cost of regulation and oversight by the Attorney General.
(b) The Attorney General may charge a fee directly to a vendor
seeking approval of software and other services as part of an
electronic recording delivery system. The fee shall not exceed the
reasonable costs of approving software or other services for vendors.
(c) In order to pay costs under this section, a county may do any
of the following:
(1) Impose a fee of up to one dollar ($1) for each instrument that
is recorded by the county. This fee may, at the county's
discretion, be limited to instruments that are recorded pursuant to
the electronic recording delivery system.
(2) Impose a fee upon any vendor seeking approval of software and
other services as part of an electronic recording delivery system.
(3) Impose a fee upon any person seeking approval as an authorized
submitter.
(d) The total fees assessed by a county recorder pursuant to this
section may not exceed the reasonable total costs of the electronic
recording delivery system, the review and approval of vendors and
authorized submitters, security testing as required by this article
and the regulations of the Attorney General, and reimbursement to the
Attorney General for regulation and oversight of the electronic
recording delivery system.
SEC. 3. Article 6 (commencing with Section 27390) is added to
Chapter 6 of Division 2 of Title 3 of the Government Code, to read:
Article 6. Electronic Recording Delivery System Act of 2003
27390. (a) This article shall be known and may be cited as the
Electronic Recording Delivery System Act of 2003.
(b) For purposes of this article, the following definitions shall
apply:
(1) "Authorized representative" means either of the following:
(A) Any employee, contractor, designee, or agent of an authorized
submitter to an electronic recording delivery system.
(B) Any employee, contractor, designee, or agent of a county
recorder who is entrusted with access to the electronic recording
delivery system.
(2) "Authorized submitter" means any of the following entities
that has qualified pursuant to this article, including Sections 27391
and 27392, and including any regulations adopted pursuant to this
article, and that has been approved by, and contracted with, a county
recorder to electronically record documents:
(A) An entity, agency, branch, or instrumentality of local, state,
or federal government.
(B) A title insurer or underwritten title company as defined in
Section 12340.4 or 12340.5 of the Insurance Code.
(C) An institutional lender, as defined in subdivision (j) of
Section 50003 of the Financial Code.
(3) "Computer security auditor" means computer security personnel,
hired from either the public or private sector, to perform an
independent audit or review of the electronic recording delivery
system. The computer security auditor shall be independent of the
county and shall not be the same contractor hired to establish or
participate in that electronic recording delivery system.
(4) "Digital electronic record" means a record containing
information that is created, generated, sent, communicated, received,
or stored by electronic means, but not created in original paper
form.
(5) "Digitized electronic record" means a scanned image of the
original paper document.
(6) "Document" means an instrument or record that otherwise meets
the requirements of this article and affects the right or title to,
interest in, or possession of, real property.
(7) "Electronic" means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities.
(8) "Electronic document" means a document that is created,
generated, sent, communicated, or received by electronic means.
(9) "Electronic recording delivery system" means a system to
deliver for recording, and for return to the party requesting
recording, digitized electronic records or, pursuant to paragraph (3)
of subdivision (a) of Section 27392 or Section 27398, digital
electronic records, affecting the right, title, or interest in real
property.
(10) "Electronic signature" means an electronic sound, symbol, or
process attached to or logically associated with an electronic record
and executed or adopted by a person with the intent to sign the
electronic record.
(11) "Security testing" means an independent computer security
audit, including, but not limited to, the use
of computer security auditors to attempt
to penetrate an electronic recording delivery system for the purpose
of testing the security of that system. Security testing, including
penetration studies, shall be subject to regulation by the Attorney
General.
(12) "Source code" means a program or set of programs readable and
maintainable by humans, translated or interpreted into a form that
the electronic recording delivery system can execute.
(13) "System certification" means issuance of a confirmation
letter regarding a specific electronic recording delivery system by
the Attorney General. The system certification shall include any
agreements between the Attorney General as to the operation of the
electronic recording delivery system, including, but not limited to,
the frequency of computer security audits.
27391. Any applicant seeking authorization to submit documents
under this article shall obtain approval of the county recorder. The
county recorder shall have discretion to grant approval based upon
the requirements of this article and regulations adopted pursuant to
this article. A county recorder may not be held civilly liable for
denial of an application pursuant to this section. The recorder
shall be guided in the exercise of his or her discretion by the
following factors:
(a) Whether accepting electronically delivered records from the
person or entity is in the best interest of the county and the
public.
(b) Whether the person or entity requesting access to the program
for the purpose of electronically delivering documents has effective
security precautions in place to safeguard against potential fraud
and forgery of documents during the electronic delivery process.
(c) Whether the person or entity requesting access demonstrates
the maintenance of sufficient financial ability to indemnify losses
for which it is responsible that might be suffered by the county or
members of the public.
(d) Whether the volume and quality of electronic records submitted
will be sufficient to warrant electronic delivery.
(e) Whether factors of cost, capacity, or security require the
limitation of the provision of access to persons requesting to
participate, based upon business reasons for recording documents,
scope of authority under a license, if any, and volume of documents
recorded in previous years.
(f) Whether the authorized submitter is legally authorized to
conduct business in this state.
27392. (a) (1) Upon approval by resolution of the board of
supervisors and system certification by the Attorney General, a
county recorder may establish, in accordance with this article, an
electronic recording delivery system.
(2) Except as specified in paragraph (3) and in Section 27398, an
electronic recording delivery system shall be limited to the delivery
for recording of documents that are digitized electronic records.
Authorization for delivery of electronic documents under this article
may only be granted to an authorized submitter that is a title
insurer or underwritten title company or an entity, agency, branch,
or instrumentality of local, state, or federal government.
(3) An electronic recording delivery system may provide for the
delivery for recording of a digitized or digital electronic record,
or both, that is limited to an instrument of reconveyance, a
substitutions of trustee, or an assignment of a deeds of trust.
Authorization for delivery of electronic documents under this
paragraph may be given to any authorized submitter.
(b) Any system developed pursuant to this article shall provide
for proper offsite archival procedures in accordance with guidelines
developed pursuant to Section 12236.
(c) Any system developed pursuant to this article shall require a
governing contractual relationship between the recorder and each
authorized submitter that includes, but need not be limited to, the
following components:
(1) A requirement that the submitter comply with this article and
any implementing regulations.
(2) Provisions governing the identification and supervision of
authorized staff.
(3) Mutually agreed upon standards of operation of the electronic
recording delivery system.
(4) Permission by the authorized submitter for security testing.
(5) A provision specifying that the agreement may be terminated
pursuant to this article.
(6) A requirement that all electronic documents originate and be
submitted from a location within the United States.
(7) A requirement that the authorized submitter and its authorized
representatives consent in writing to the jurisdiction of California
courts as to any alleged civil cause of action related to the
operation of any electronic recording delivery system. Nothing in
this paragraph is intended to affect a contract to submit a dispute
to arbitration.
(d) Notwithstanding Section 27203, a recorder shall refuse to
enter an agreement with an authorized submitter, or shall refuse to
accept an electronically delivered document from an authorized
submitter whenever either of the following occur:
(1) An authorized submitter or an authorized representative with
secure access to an electronic recording delivery system has been
convicted of a felony or convicted of a misdemeanor related to theft,
fraud, or a crime of moral turpitude. This determination shall be
made pursuant to Section 27395. A county recorder may continue to
accept electronically delivered documents from an authorized
submitter if the authorized submitter documents that it has
terminated all access of the authorized representative to the
electronic recording delivery system.
(2) The recorder reasonably believes that the submitter or
authorized staff has engaged in improper conduct relating to the
recording of documents.
(e) The county recorder may terminate access to any electronic
recording delivery system, or any part of a system, or may terminate
access of any authorized submitter, or any authorized representative,
at any time he or she deems it necessary to protect the public
interest, to protect the integrity of public records, to protect
homeowners or real property owners from financial harm, or in the
event an authorized submitter or its agents or employees violates any
rules or regulations established by the county recorder for
maintenance of the system or any provision of the contractual
agreement required by this article. No cause of action or liability
against the county recorder or any government agency shall arise from
the decision of the county recorder to terminate or deny access of
any person to the electronic recording delivery system, pursuant to
the requirements of this article.
27393. (a) To be eligible to establish an electronic recording
delivery system, a county or county recorder shall contract with, and
obtain a report from, a computer security auditor selected from a
list of computer security auditors approved by the Attorney General.
(b) The Attorney General shall approve computer security auditors
on the basis of significant experience in the evaluation and analysis
of Internet security design, the conduct of security testing
procedures, and specific experience performing Internet penetration
studies.
(c) The Attorney General shall complete the approval of security
auditors within 90 days of a request from a county recorder. The
list shall be a public record. The computer security auditor shall
conduct ongoing monitoring of the electronic recording delivery
system and issue periodic reports, with the frequency of monitoring
and reporting to be determined by regulation. The reports of the
computer security auditor shall include, but not be limited to, all
of the following considerations:
(1) Safety and security of the proposed system, including the
vulnerability of the electronic recordation system to fraud or
penetration.
(2) Results of testing of the system's protections against fraud
or intrusion, including security testing and penetration studies.
(3) Recommendations of any additional precautions or provisions
needed to ensure that the proposed system is as secure and protects
the integrity of the recorder's records.
(d) Upon completion, the reports and any response to any
recommendations shall be transmitted to the board of supervisors, the
county district attorney and the Attorney General. A county may not
begin an electronic recording delivery system until security
testing, as defined in paragraph (11) of subdivision (b) of Section
27390, has demonstrated that the system is secure and system
certification has occurred. The Attorney General shall not approve
any electronic recording delivery system, unless it fulfills the
requirements of this article and the regulations of the Attorney
General.
(e) An electronic recording delivery system shall be audited, at
least once during the first year of operation and periodically
thereafter, as set forth in regulation and in the system
certification, by a computer security auditor. The nature and scope
of the audit shall conform to this article and regulations adopted
pursuant to this article. Audit reports shall be submitted to the
Attorney General, the county district attorney, and the county
recorder. In conducting the audit, the primary role of the computer
security auditor shall be to protect the public interest and ensure
that electronic recording delivery systems are reliable and secure.
(f) A computer security auditor shall have access to any aspect of
an electronic recording delivery system, in any form requested.
Auditor access shall include, but not be limited to, permission for a
thorough examination of source code and the associated approved
escrow facility, and necessary authorization and assistance for a
penetration study of that system.
(g) If the county recorder, a computer security auditor, a
district attorney for a county participating in the electronic
recording delivery system, or the Attorney General reasonably
believes that an electronic recording delivery system is vulnerable
to fraud or intrusion, the county recorder, the board of supervisors,
the district attorney, and the Attorney General shall be immediately
notified. The county recorder shall immediately take the necessary
steps to guard against any compromise of the electronic recording
delivery system, including, if necessary, the suspension of the
electronic recording delivery system.
27394. (a) In lieu of the requirements set forth in Section
27321, after acceptance for recording, the county recorder shall
electronically transmit a copy of each recorded electronic document
accepted under this article to the authorized submitter. The
authorized submitter shall be responsible for mailing either by
United States Postal Service or electronically a copy of the recorded
electronic document to the address specified in the instructions for
mailing upon completion of recording.
(b) When a signature is required to be accompanied by a notary's
seal or stamp, that requirement is satisfied if the electronic
signature of the notary contains all of the following:
(1) The name of the notary.
(2) The words "Notary Public."
(3) The name of the county where the bond and oath of office of
the notary are filed.
(4) The sequential identification number assigned to the notary,
if any.
(5) The sequential identification number assigned to the
manufacturer or vendor of the notary's physical or electronic seal,
if any.
(c) In addition to, and notwithstanding Section 27361.5, a county
recorder, with approval by resolution of the board of supervisors,
may require, but need not be limited to, the following index
information on the first page or sheet of a digital or digitized
electronic document presented for recording:
(1) The parcel identifier number of the real estate.
(2) The address of the real estate, to the extent available.
(3) The name of the authorized submitter presenting the document
for recording.
(4) The name of the authorized requestor of a document for
recording.
(5) The marital, corporate, partnership, or other similar legal
status of a person who is a party to the document.
(6) The date of the document.
(7) The number of pages or sheets contained in the record,
including the first page or sheet.
(8) The transmittal information to identify the sender and provide
recording record information.
(9) If the document is a grant deed, quitclaim deed, or deed of
trust, evidence that the grantor has given informed consent to the
use of an electronic document.
27395. (a) (1) All individuals who are entrusted with access to
the electronic recording delivery system as an authorized submitter,
authorized representative, or computer security auditor, shall submit
two 8 by 8 fingerprint cards bearing the legible rolled and flat
impressions of their fingerprints together with a personal
description, prepared by a local public law enforcement agency, which
shall transmit the card to the Bureau of Criminal Identification and
Information in the Department of Justice. Positions subject to this
subdivision shall be determined by regulation and shall be set forth
in a county's system certification.
(2) The Attorney General may utilize an alternate system of
examining fingerprints if that system meets the same standard of
reliability and security set forth in this subdivision and is
approved and operated by the Department of Justice.
(3) The Department of Justice may forward one copy of the
applicant's fingerprint cards to the Federal Bureau of Investigation
for the purpose of obtaining any record of a previous out-of-state
conviction of an applicant.
(b) The Department of Justice shall ascertain whether an
individual applicant who is an authorized submitter, an authorized
representative, or a computer security auditor has suffered a felony
conviction or a misdemeanor conviction for theft, fraud, or a crime
of moral turpitude, including whether the individual applicant has
pending criminal charges.
(c) The Department of Justice shall charge a fee sufficient to
cover the cost of processing the fingerprint submission and to cover
the cost of the Department of Justice maintaining and storing all
applicant records.
(d) (1) Once the Department of Justice has ascertained the
criminal history information of an applicant, it shall forward a
written notification of criminal convictions or pending criminal
charges, or both, to the division of the office of the Attorney
General charged with oversight duties regarding this article.
(2) The Attorney General shall request subsequent arrest
notification service from the Department of Justice pursuant to
Section 11105.2 of the Penal Code for all persons subject to a
criminal records check pursuant to this section.
(e) The Attorney General shall deliver written notification of an
applicant's ineligibility for access to an electronic recording
delivery system to an applicant, his or her known employer, whether
it be a public or private employer, to the related authorized
submitter, and to the county recorder of the jurisdiction where the
applicant seeks access to an electronic recording delivery system.
(f) No person applying to be, or who has previously been approved
as, an authorized submitter, an authorized representative, or a
computer security auditor may be employed in the security status of
having access to an electronic recording delivery system, if he or
she has suffered a felony conviction or misdemeanor conviction for
theft, fraud, or a crime of moral turpitude or if he or she has
pending criminal charges for any of these crimes, as detailed in the
criminal history reviewed by the Department of Justice.
(g) A plea of guilty or no contest, a verdict resulting in a
conviction, or the forfeiture of bail, shall be a conviction within
the meaning of this article, irrespective of a subsequent order under
the provisions of Section 1203.4 of the Penal Code, allowing the
withdrawal of a plea of guilty or no contest, and the entry of a plea
of not guilty, the setting aside of a verdict of guilty, or the
dismissal of accusations, whether by indictment or information.
27397. (a) The Attorney General shall, in consultation with the
County Recorders Association of California and the California
District Attorneys Association, adopt regulations establishing
standards for the review and approval of authorized submitters and
authorized representatives and the review and approval by county
recorders of systems and processes to conduct electronic recording
and providing for the regulatory oversight of electronic recording
delivery systems. Regulations shall be adopted pursuant to the
Administrative Procedure Act, Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3.
(b) No electronic recording delivery system may become operational
without the approval of the Attorney General pursuant to applicable
regulations adopted pursuant to this article.
(c) The regulations shall include general guidelines relating to
security, capacity, reliability, and uniformity, and shall comply
with Section 12168.7. The regulations shall establish minimum
standards to ensure that a county recorder has the capability of
identifying security problems that may make the system susceptible to
fraud or any attempt to tamper with official records, and shall
establish specific guidelines, including the approximate frequency of
security testing, and standards for security and security testing.
(d) The regulations governing security shall require that each
electronic recording delivery system comply with all requirements
deemed by the Attorney General to be consistent with the public
interest in electronic recording delivery systems being as reliable
and secure as possible.
(e) The regulations shall also contain all of the following:
(1) A statement of a uniform definition of the term "source code"
consistent with this article and applicable to every electronic
recording delivery system throughout the state.
(2) The placement of an exact copy of each source code associated
with each approved electronic recording project in an approved escrow
facility prior to that system's first use.
(3) A requirement that any modification to a source code held in
escrow that is associated with an approved electronic recording
delivery system be approved by the Attorney General.
(4) An expression of standardized policies and procedures for the
establishment and operation of approved escrow facilities.
(5) Establishment of baseline technological and procedural
specifications for electronic recording delivery systems.
(f) Regulations may also provide for initial certification of
vendors offering software and other services to counties for
electronic recording delivery systems.
(g) The Attorney General shall monitor the security of electronic
recording delivery systems statewide, in close cooperation with
county recorders. In the event of an emergency involving multiple
fraudulent transactions linked to one county's use of an electronic
recording delivery system, the Attorney General may order the
suspension of electronic recording delivery systems in any county or
in multiple counties, if necessary to protect the security of the
system, for a period of up to seven calendar days.
(h) (1) The Attorney General or a district attorney may bring an
action in the name of the people of the State of California seeking
declaratory or injunctive relief, restitution, rescission, or other
equitable relief pertaining to any alleged violation of this article
or regulations adopted pursuant to this article.
(2) The Attorney General, a district attorney, or a city
prosecutor may seek a civil penalty of up to fifty thousand dollars
($50,000) for each violation of this article or its implementing
regulations. In assessing the amount of civil penalty, the court
shall consider all relevant circumstances, including, but not limited
to, the nature and seriousness of the misconduct, the number of
violations, the persistence of the misconduct, the length of time
over which the misconduct occurred, the willfulness of the defendant'
s misconduct, and the defendant's ability to pay.
(3) Nothing in this subdivision shall be construed to prevent the
Attorney General, a district attorney, or a city prosecutor from
seeking legal or equitable relief under any other provision of law.
(i) An electronic recording delivery system shall be subject to
local inspection and review by the Attorney General. The Attorney
General shall furnish a statement of any relevant findings associated
with a local inspection to the county recorder of the inspected
electronic recording delivery system, the district attorney, and to
all technology vendors associated with that system.
27397.5. No right that a party may have to recover damages in
relation to an electronic recording delivery system may be waived or
disclaimed in any title insurance policy, escrow instruction, or
other document pertaining to the real estate transaction.
27398. (a) Subject to the approval of their respective boards of
supervisors, the Counties of Alameda, El Dorado, Fresno, Los Angeles,
Orange, Placer, Riverside, San Bernardino, San Mateo, Santa Clara,
Tulare, and Ventura may participate in an electronic recording pilot
project for the delivery and recording of digital electronic records.
Participation in a pilot project shall be limited to an authorized
submitter that is a title insurer or underwritten title company, or
an entity, agency, branch, or instrumentality of local, state, or
federal government.
(b) Except as set forth in this section, all of the requirements
contained in this article shall also apply to an electronic recording
pilot project implemented under this section.
(c) The Attorney General may enact any additional regulations
necessary to ensure the security of a system based upon digital
electronic records, including regulations related to the acceptance
of a document containing an electronic signature or digital
notarization.
(d) Subject to the requirements of this article, a pilot project
established under subdivision (a) that is in lawful operation on June
30, 2007, may continue in operation until December 31, 2010.
(e) This section shall remain in effect only until January 1,
2011, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2011, deletes or extends
that date.
27398.5. (a) Subject to approval of their respective boards of
supervisors, the Counties of Alameda, Contra Costa, El Dorado,
Fresno, Orange, Placer, Riverside, San Bernardino, San Mateo, Santa
Clara, Tulare, and Ventura may, within 30 days of recordation of a
deed, quitclaim deed, or deed of trust, notify by mail the party or
parties executing the document. The recorder may require, as a
condition of recording, that a deed, quitclaim deed, or deed of trust
indicate the assessor's identification number or numbers that fully
contain all, or a portion of, the real property described in the
legal description. If the description contains more than one
assessor's parcel, all assessor's parcels shall be indicated. The
form of the entry shall
be substantially as follows:
Assessor's Identification Number __-__-__.
(b) This section shall not apply to the recordation of any
document where the federal government, or state, county, city, or any
subdivision of the state acquires title.
(c) The failure of the county recorder to provide the notice as
permitted by this section shall not result in any liability against
the recorder or the county.
(d) In addition to any other recording fee, the recorder may
collect a fee from the party filing a deed, quitclaim deed, or deed
of trust, other than a government entity, pursuant to subdivision
(a). The fee shall not exceed the cost of the notice, or four
dollars ($4), whichever is less.
(e) On or before June 30, 2007, each county providing notification
pursuant to subdivision (a) shall report to the Legislature
regarding the discovery of fraudulent deeds, quitclaim deeds, and
deeds of trust as a result of the notices.
27399. Nothing in this article shall be construed to authorize
any public agency to intrude upon the autonomy or business practices
of the county recorders of the State of California in any manner not
specifically set forth in this article.
27399.5. The authority granted in this article is in addition to
any other authority or obligation under California or federal law.
Nothing in this article shall be construed to repeal or affect
Section 27279, 27279.1, 27279.2, 27279.3, 27297.6, or 27387.1.
27399.7. The Attorney General shall conduct an evaluation of
electronic recording delivery systems authorized by this article,
including the pilot projects authorized pursuant to Section 27398,
and report to both houses of the Legislature on or before June 30,
2007. The Legislature may, based on this evaluation, consider
whether the pilot projects should be expanded or extended, or limited
or terminated, and whether any amendments to this article are
warranted.
SEC. 4.
SEC. 3. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order that county recorders may alleviate fiscal constraints by
implementing electronic recording delivery systems at the earliest
possible time, it is necessary for this act to take effect
immediately.