The Time for Electronic Recording is Now: New Jersey Passes New Law Updating Title Recordation Procedures
In our electronic age, New Jersey’s antiquated laws governing document recordation were in serious need of some updates. A new law was recently passed modernizing the New Jersey Statutes by requiring the acceptance of electronic alternatives to paper documents, in addition to paper documents. In addition, provisions of the statute, disbursed over various sections that logically belonged together, have been compiled in a more concise and coherent fashion, and antiquated language and procedures have been removed. The revisions clearly result in a much more reader- friendly version of the law relating to title recordation in New Jersey.
Assembly Bill A-2565 P.L.2011, c.217 revising the New Jersey statutes pertaining to the recording of title documents was signed into law by Governor Christie on January 17, 2012. The New Jersey Law Revision Commission (NJLRC) approved this revision project following the enactment of the federal Electronic Signatures in Global and National Commerce Act (E-sign), and New Jersey’s enactment of the Uniform Electronic Transactions Act (UETA). The legislative statements (Statements) issued by the Senate Community and Urban Affairs Committee (Senate) and Housing and Local Government Committee (Assembly) related to A-2565 note that “while the use of electronic deeds and mortgages is not expected to occur in the near term, both E-sign and UETA encourage the development of systems that will accept electronic documents without disrupting the ongoing process of title recordation.”
Title 46, chapters 15 to 26 of the New Jersey statutes currently govern the recording and indexing of title documents. Most of these statutes were written when recording meant storing and including paper documents in large books. Amendments then allowed recording offices to microfilm documents and later permitted the use of any other method of recording that was “in conformance with rules, standards and procedures promulgated by the Division of Archives and Records Management (Division) in the Department of State (Department) and approved by the State Records Committee pursuant to its authority under section 6 of P.L.1994, c.140 (C.47:1-12) and the “Destruction of Public Records Law.” The recording system is intended to be fluid, preventing its extinction, by allowing for the approval of new methods of recording documents as recording technology advances. However, as the Senate and the Assembly note, with an increase in the use of new recording methods, comes an increase in the need for regulatory authority to assure uniformity.
The new law is a significant revision to Title 46 in many ways including the addition of three new chapters, chapters 26A, 26B, and 26C, replacing and repealing certain sections, and the legislature’s attempt to simplify the statutes by “combining overlapping provisions and deleting unnecessary ones,” simplifying language and reassembling numerous sections. Some of the material, substantive revisions as highlighted in the NJLRC’s comments include (but are not limited to):
TITLE 46, CHAPTER 26A, RECORDING:
- Definition added: “Document” includes both: (1) Paper documents, and (2) Electronic documents, documents created, communicated or stored by electronic means.
- Definition added: A document is “recorded” if (1) The document or its image has been placed in the permanent records of the recording office, and (2) The document has been indexed as provided by this chapter. Prior to this revision, the statutes did not state directly what is meant by “recording” and the NJLRC notes that cases were not consistent as to when a document is recorded.
- Documents that may be recorded: The portions regarding the recording of instruments concerning personal property have been deleted since as the NJLRC notes, “Liens against personalty, other than personalty that is or will be fixtures, are recorded by filing a UCC form with the division of Commercial Recording.”
- Prerequisites for recording: The opening language has been changed to facilitate the electronic filing of documents such that the recording office need not receive an original document to record and an image will suffice if certain requirements are met.
- Form of documents and maps; cover sheet or electronic synopsis: The section preserves the ability to file paper documents but also allows for acceptance of electronic documents. Authority is given to the Division of Archives and Records Management to establish statewide form requirements for electronic recording. The form requirements for maps are also now included in this section.
- Duty to record; recording officer’s books, methods: This section states requirements for recording standards and methods including the requirement that the method produces a clear, accurate and permanent image of a document and a method that allows the document to be found by the indexes maintained. References to other books for different kinds of documents required by Title 46 or other law have been deleted, with the NJLRC noting that this revision allows for a single set of books and indexes for newly-recorded documents. The revision also permits unique identifying numbers to be used in addition to book and page numbers. Time limits for recording or rejection of a document by recording officers are also added.
- Sequence of recording: This section is new in that it allows the person submitting two or more documents at the same time to determine the order in which they are recorded rather than having the recorder record according to the priority of their dates.
- Documents filed as provided by other statutes: This section provides that documents that are now “filed” pursuant to other laws be recorded and indexed with recorded documents using the same methods. The NJLRC notes that this change will not only simplify the recording office processes, it will allow a single search to disclose all county-filed or county-recorded documents that affect real estate.
- Notices of settlement: This section clarifies that one notice of settlement can be recorded for a conveyance and a mortgage and the form of the notice has been slightly simplified. The timeframe for effectiveness for the notice is changed from 45 days to 60 days from the date of recording and the effective period may be extended for one period of 60 days by recording an additional notice of settlement before the expiration or discharge of the notice of settlement.
- Effect of recording: The revision requires that documents have to actually be recorded to give notice. The new definition of “recording,” as noted above, requires that a document be indexed and placed in the permanent records of the recording office. In addition, the revision does not require that a document be duly acknowledged or proved and certified to have the effect of notice. The section that limits the notice effect to documents on record for six years despite defects in acknowledgement, proof or certificates has been removed. As long as a document is recorded, notice is effective. The revision goes further to state that a deed or other conveyance of an interest in real estate shall be of no effect without notice. The NJLRC notes that the section “embodies one of the basic principles underlying the recording statutes, that an unrecorded document is ineffective against later claimants who have no notice of it…If a party makes a conveyance in a form that does not permit it to be recorded, then a subsequent bona fide purchaser, mortgagee or creditor who could not learn of the conveyance from the land records is not bound by the conveyance absent notice of it at the time he acquired the interest for value or docketed the judgment. This principle is in accord with the statute of frauds, 25:1-11, which makes unwritten conveyances enforceable as conveyances only in some cases where possession is transferred. Transfer of possession frequently is notice to prospective purchasers or mortgagees.
TITLE 46, CHAPTER 26B, MAPS:
The substance of most of the sections pertaining to maps remains unchanged. Some sections have been reworded or rearranged. In the section entitled “Filing and indexing of maps, fee,” references to the way that maps are stored and the format of a map and its copies have been deleted, and, the new law seems to aim to allow for technological advances in map filing.
TITLE 46, CHAPTER 26C, GENERAL AND TRANSITIONAL:
Regulations: This section states that the Division in consultation with the County Clerks and Registers of Deeds shall adopt regulations to establish format and technical requirements for recorded documents to foster state-wide uniformity in title recordation and otherwise to implement the new law. Regulations shall be adopted within 12 months after the effective date of the new law.
Uniform Electronic Transactions Act (UETA) superseded: This section states that to the extent that the new law conflicts with Sections 17 and 18 of the UETA, the new law supersedes. The new law modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act but does not modify, limit, or supersede Section 101(c) of that act or authorize electronic delivery of any of the notices described in Section 103(b) of that act.
Review of Document Filing and Recording Fees: Within 2 years of the effective date of the new law, the Division and the Department shall adopt rules and regulations requiring county clerks and registers of deeds and mortgages to report the number of documents recorded or filed and all document filing and recording fees that are collected by their offices, categorized by document type, to the Division and to the Department. The goal of the rules and regulations will be to develop and implement a standard form and procedure for county clerks and registers of deeds and mortgages to utilize so as to report on the foregoing in a clear and concise manner. Within 3 years of the effective date of the new law, the Division and the Department will issue an interim report on same and within 4 years, a final report. The report will specify an average state-wide fee for the filing or recording of each type of document and may contain recommendations of the division and the department to the Legislature for the establishment of standard per document filing and recording fees. 5 years after the date of adoption of the new law, the Legislature shall consider the establishment of standard per document filing or recording fees.
In summary, the new law better accommodates the recording of electronic alternatives to paper documents and will guide the development of uniform recording procedures as we progress from a technological standpoint. It will be interesting to watch how the law relating to title recordation in New Jersey evolves in our rapidly changing information age. As many county clerks and lawyers have already discovered, there will come a day when electronic recordings and filings will be mandatory because of the potentially prohibitive expense of maintaining two systems, one for paper and one for electronic alternatives. The current legislation moves our system one step closer to a world in which all of our documents will be filed and recorded electronically. As with all regime changes, advantages and disadvantages will result. For now, Happy E-recording.