Numerous laws are now in place that promote the use of electronic documents by giving them the same status as their paper counterparts.
For centuries, paper was the standard for business, legal and government documents. Anyone who has ever stood in line in the National Archives to view the original Declaration of Independence understands the emotional importance we place on paper documents. But this importance is more than mere cultural tradition?staunch contract legislation has long dictated that a legally binding agreement must be set forth in a document printed on paper and signed in ink.
It?s not hard to understand the historical reluctance to give e-documents equal status with paper documents due to the perceived ?ethereal? nature of electronic information. But while it is true that systems do crash, and power does go out, paper documents have similar drawbacks. Countless records are lost every year due to fire or flood?or are simply lost. Paper documents are expensive to copy, cumbersome to archive, and time consuming to transport. E-documents can be effortlessly backed up on multiple media in secure locations, take up very little real ?space,? and can be sent around the world in a matter of seconds.
Most importantly, security software allows e-documents to be at least as secure as anything printed on paper.
That?s why the following pieces of legislation were introduced and enacted, and these laws give authority to the practice of electronically recording documents. Though this process began years ago, the legislation is still evolving and not all states have enacted all of the following acts.
Uniform Electronic Transactions Act (UETA)
The Uniform Electronic Transactions Act (?UETA?), promulgated by the Uniform Law Commission in 1999, addressed the sufficiency of electronic contracts.? It established that electronic documents and signatures are just as effective and binding as paper transactions.? Recognizing that new technology could change the methods by which a party might sign an electronic record, UETA expanded the definition of ?signature? to include not just ink signatures, but any electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. All but a handful of states have enacted this act.
It is important to note that UETA did not change the substantive requirements for mortgages and other contracts.? Other state law will determine substantive contract sufficiency issues.
UETA simply equates electronic records and signatures with their written counterparts.?
Electronic Signatures in Global and National Commerce Act (ESIGN)
The federal Electronic Signatures in Global and National Commerce Act (?ESIGN?) enacted by Congress in 2000 dealt with similar issues.? The ESIGN Act provides that a signature, contract, or other record relating to a transaction affecting interstate commerce may not be denied legal effect, validity, or enforceability solely because it is in electronic form.? Likewise, ESIGN provides that a contract relating to such a transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.
Uniform Real Property Electronic Recording Act (URPERA)
While UETA and ESIGN establish that electronic mortgages and other contracts are enforceable between the parties involved, more was needed to make the relevant documents recordable and thus effective against third parties.? That issue is addressed by the Uniform Real Property Electronic Recording Act (?URPERA?) promulgated in 2004 by the Uniform Law Commission. URPERA provides that the requirement for a real estate record to be in writing is satisfied by an electronic document.? It also establishes uniform standards for recording electronic documents in the state.
Model Notary Act (MNA)
The remaining legal barrier to electronic recording was notarization.? Traditionally, a notary public would be present to verify the party?s identity and observe the signature.? The notary would then acknowledge the signature and affix a notarial seal.
That process may work well with paper documents, but creating a verifiable electronic acknowledgment and notarial seal is a different matter.
Fortunately, the traditional paper-based notarial process works just fine for electronic recording in many jurisdictions.? As further explained in the following section, many electronic recording systems begin with written records that can by notarized using the traditional process.? It is only for purely electronic recording that notarization presents a problem.
Technology has provided the solutions for a verifiable acknowledgment and seal.? However, the law needed to catch up.? The Model Notary Act (?MNA?) provided the statutory authority in those states that have adopted it.? The first version of the MNA was approved in 2002 and provided that a state may permit notarial acts to be performed electronically.? In 2010 a new MNA was approved that expanded the provisions applicable to electronic notarization.