October 23, 2017

Kentucky To Consider E-Recording Reforms

The past two decades have seen a paradigm shift in the way states sign, record, and notarize documents. Once hindered by paper document and "wet" signature requirements, the modern recordation process in many states has evolved to allow recording of real estate records electronically. States first began adopting laws to equate "e-signatures" with pen-and-paper signatures in the mid-1990s, and in 1999, the Uniform Law Commission created a model state law â the Uniform Electronic Transactions Act (UETA) â to broadly accept all forms of e-signatures. The next year, Congress passed the Electronic Signatures in Global and National Commerce Act (E-SIGN) to nationalize the use of e-records and e-signatures.

Today, many states have not merely achieved the visions of UETA and E-SIGN, but have surpassed them. Nearly all states have adopted UETA, but Indiana, Tennessee, and Virginia have also adopted the Uniform Real Property Electronic Recording Act (URPERA), a 2004 uniform law allowing clerks and recorders to e-record real property transactions and land records. In addition to URPERA (which, as of 2014, has been adopted in 28 jurisdictions), West Virginia, Nevada, and Pennsylvania have gone even further by adopting 2010's Revised Uniform Law on Notarial Act (RULONA) allowing notaries to electronically perform notarial acts.

But Kentucky has remained stubbornly behind, one of only four states in which not a single county clerk will accept real estate recordings electronically. The primary reason is that Kentucky adopted a non-uniform version of UETA that excepts documents relating to real estate transactions. A second reason is the state's county clerks have been suspicious that any sort of reform will result in more work, or lower fee income, or both.

Despite this stagnation, however, significant progress is being made in 2017, thanks to newly-created factions pushing Kentucky in the right direction. Recently, the annual Conference on the Law of Financial Institutions held at the University of Kentucky College of Law entertained a reform proposal that stressed the need for adaptation over resistance, and articulated the potential benefits of real estate e-recordings. The presentation urged banks and lawyers to (1) pursue legislation to remove Kentucky's UETA real estate exemption; (2) adopt URPERA for its clarity and conformity with adjacent states; and (3) adopt RULONA to allow e-notarization and deter fraudulent "robo-signing." In addition, the Kentucky Secretary of State's Office recently commissioned an Electronic Notary & Recording Task Force. The first meeting of the Task Force, designed to review technologies, pursue the requisite legislation, and determine the best e-recording practices for Kentucky, is scheduled to occur later this month. The goal of the Task Force is to propose legislation for consideration by the 2018 General Assembly.