BILL NUMBER: AB 2143INTRODUCED BILL TEXT INTRODUCED BY Assembly Member Irwin FEBRUARY 17, 2016 An act to amend Sections 27391, 27393, and 27397.5 of the Government Code, relating to electronic recording. LEGISLATIVE COUNSEL'S DIGEST AB 2143, as introduced, Irwin. County recorder: electronic recording. The Electronic Recording Delivery Act of 2004 authorizes 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 for recording of specified digitized electronic records, subject to specified conditions. The act authorizes a county recorder to enter into a contract with specified entities for the delivery for recording, and return to the party requesting recording a digitized electronic record that is an instrument affecting a right, title, or interest in real property. The act also authorizes a county recorder to contract with the specified entities or their authorized agents to be an authorized submitter of a digital or digitized electronic record that is an instrument of reconveyance, substitution of trustee, or assignment of deed of trust. The bill would authorize a county recorder to also enter into a contract with an authorized submitter for the delivery for recording, and return to the party requesting recording, of a digital or digitized electronic record that is an instrument to be recorded consistent with a specified provision, or for the submission of a digital or digitized electronic record. The bill would require an authorized submitter, as specified, and any agent submitting documents on behalf of an authorized submitter, to provide proof of financial responsibility in the form of general liability coverage, as provided. Existing law requires the Attorney General, in consultation with interested parties, to adopt regulations for the review, approval, and oversight of electronic recording delivery systems. Existing law authorizes the regulations to include specified requirements and procedures. This bill would additionally authorize the regulations to include requirements for general liability coverage as described above. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 27391 of the Government Code is amended to read: 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) Upon system certification, a county recorder may enter into a contract with a title insurer, as defined in Section 12340.4 of the Insurance Code, underwritten title company, as defined in Section 12340.5 of the Insurance Code, institutional lender, as defined in paragraph (1), (2), or (4) of subdivision (j) of Section 50003 of the Financial Code, or an entity of local, state, or federal government for the delivery for recording, and return to the party requesting recording, of a digital or digitized electronic record that is an instrumentaffecting a right, title, or interest in real property.to be recorded consistent with subdivision (a) of Section 27201. The contract may provide for the delivery of documents by an agent. However, the agent shall not be a vendor of electronic recording delivery systems. (c) (1) A county recorder may enter into a contract with an authorized submitter not authorized pursuant to subdivision (b) for the delivery for recording, and return to the party requesting recording, of a digital or digitized electronic record that is an instrument to be recorded consistent with subdivision (a) of Section 27201. The contract may provide for the delivery of documents by an agent. However, the agent shall not be a vendor of electronic recording delivery systems. (2) An authorized submitter authorized pursuant to this subdivision and any agent submitting documents on behalf of an authorized submitter pursuant to this subdivision shall provide proof of financial responsibility by providing a certificate of insurance evidencing an amount of general liability coverage of at least one million dollars ($1,000,000).(c)(d) A county recorder may refuse to enter into a contract with any party or may terminate or suspend access to a system for any good faith reason, including, but not limited to, a determination by the county recorder that termination or suspension is necessary to protect the public interest, to protect the integrity of public records, or to protect homeowners from financial harm, or if the volume or quality of instruments submitted by the requester is not sufficient to warrant electronic recordation. A county recorder may also terminate or suspend access to a system if a party commits a substantive breach of the contract, the requirements of this article, or the regulations adopted pursuant to this article.(d)(e) Notwithstanding Section 27321, a county recorder may require a party electronically submitting records to mail a copy of the recorded electronic document to the address specified in the instructions for mailing upon completion of recording.(e)(f) 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. SEC. 2. Section 27393 of the Government Code is amended to read: 27393. (a) The Attorney General shall, in consultation with interested parties, adopt regulations for the review, approval, and 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). 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 statement of 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 to ensure that substantive modifications to an operating system, compilers, related software, or source code are approved by the Attorney General. (7) Procedures for initial certification of vendors offering software and other services to counties for electronic recording delivery systems. (8) Requirements for system certification and for oversight of approved systems. (9) Requirements for general liability coverage required by subdivision (c) of Section 27391.(9)(10) Requirements for fingerprinting and criminal records checks required by Section 27395, including a list of employment positions or classifications subject to criminal records checks under subdivision (f) of that section.(10)(11) Requirements for uniform index information that shall be included in every digitized or digital electronic record.(11)(12) Requirements for protecting proprietary information accessed pursuant to subdivision (e) of Section 27394 from public disclosure.(12)(13) Requirements for certification under Section 27397.5. (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 of an electronic recording delivery system, to the county recorder and the district attorney of the affected county, and to all technology vendors associated with that system. SEC. 3. Section 27397.5 of the Government Code is amended to read: 27397.5. (a) A county recorder may include in the county's electronic recording delivery system a secure method for accepting for recording a digital or digitized electronicrecord that is an instrument of reconveyance, substitution of trustee, or assignment of deed of trust.record. (b) A county recorder may contract witha title insurer, as defined in Section 12340.4 of the Insurance Code, underwritten title company, as defined in Section 12340.5 of the Insurance Code, an entity of state, local, or federal government, or an institutional lender, as defined in Section 50003 of the Financial Code,an authorized submitter or their authorized agents, to be an authorized submitter of the documents specified in subdivision (a). (c) With respect to the electronic submission of the records described in subdivision (a), the requirements that an authorized submitter be subject to a security audit under Section 27394 and a criminal records check under Section 27395 shall not apply where the certification requirements of subdivision (d) have been met. (d) (1) In order for subdivision (c) to apply, the county recorder and the Attorney General shall certify that the method of submission allowed under the system will not permit an authorized submitter or its employees and agents, or any third party, to modify, manipulate, insert, or delete information in the public record, maintained by the county recorder, or information in electronic records submitted pursuant to subdivision (b) of Section 27391. (2) Certification under this section may be withdrawn by either the county recorder or the Attorney General at any time either determines that the requirements of this subdivision are not met. (e) For purposes of this section, an agent of an authorized submitter shall not include a vendor of electronic recording delivery systems.