Electronic recording comes to New York

Article III of Chapter 57-a of New York State's Technology Law, entitled the Electronic Signature and Records Act (ESRA), was recently amended in a way that could potentially significantly impact the methods and customs of real estate closings. On September 23, 2011, governor Cuomo signed legislation (Senate Bill 2373A and Assembly Bill 6870A) which authorizes county recorders to record instruments affecting real property which are submitted as a "digitized paper document" or as an "electronic record." Previously, ESRA allowed documents signed electronically to be received, accepted, recorded and stored by government entities in an electronic format, but expressly did not apply "to any conveyance or any other instruments recordable under Article 9 (Recording instruments affecting real property) of the Real Property Law." The new law, codified as Real Property Law Section 291-i (Validity of electronic recording), which is set to take effect on September 22, 2012, will eliminate this exclusion and permit electronic recording by county clerks of deeds and other instruments affecting real property. The new law affirms the validity of digitized paper documents, electronic records, electronic signatures and notarization. A "digitized paper document" is defined as "a digitized image of a paper document that accurately depicts the information on the paper document that cannot be altered without detection." An "electronic record" is "information evidencing any act, transaction, occurrence, event or other activity, produced or stored by electronic means and capable of being accurately reproduced in forms perceptible by human sensory capabilities." It should be noted that the new law makes the electronic recording of documents voluntary for county clerks; however, once allowed by the county clerk, it must be available for all filers. Those county clerks that do elect to participate must follow the rules and regulations mandated by the New York State Office for Technology, the designated Electronic Facilitator under ESRA. Further, the legislation amended Real Property Law 317, to provide that a digitized paper document or an electronic record will be considered "delivered" on the date and at the time such document or record is successfully transmitted to a recording office. The recording officer must then record the documents in the order they were received, and immediately send an electronic or written notification of their receipt of the delivery stamp to the recording party. The delivery stamp will be limited to regular business hours maintained by the recording officer. The new legislation is certainly a step toward the reduction, if not the ultimate elimination, of a paper-intensive closing process. One thing is for sure-as we advance in the digital age and become less of a paper intensive universe, there is certainly the real possibility that the days of the "sit-down" closing will become a thing of the past. As rules are further refined in the upcoming months, BBWG will continue to provide further details to our clients. If you have any questions or would like further information regarding the new legislation, please feel free to contact me at [email protected]. Craig Price is a partner in Belkin, Burden, Wenig & Goldman LLP's Transactional Department, New York, N.Y. The owner was represented in the proceeding by Kara Rakowski ([email protected]) a partner, and Alyssa Sandman ([email protected]) an associate in BBWG's Administrative Law Department. About Belkin, Burden, Wenig & Goldman LLP Belkin Burden Wenig & Goldman, LLP (BBWG) is a full-service firm providing legal services relating to all areas of real estate law including landlord tenant disputes, mortgage foreclosures, leases, co-op and condo disputes, real estate transactions and financing, land use and zoning, real estate administrative proceedings and bankruptcy and creditors' rights. BBWG serves clients in New York and Connecticut, including New York City, Long Island, Stamford, Westport, Milford, Greenwich, Hartford, Bridgeport, Orange County, New York County, Kings County, Nassau County, and Suffolk County. For more information on BBWG, visit their website at www.bbwg.com.