ESIGN Act – validating electronic records and signatures nationwide
On June 30, 2000, the U.S. Congress passed the Electronic Signatures in Global and National Commerce Act, or ESIGN, facilitating the use of electronic records and electronic signatures for both interstate and foreign commerce transactions.
The ESIGN Act ensures that contracts entered into electronically relating to any interstate or foreign commerce transactions are both valid and legal. According to ESIGN, a contract cannot be denied validity, legal effect, or enforceability solely because it was formed using an electronic signature or an electronic record.
In other words, electronic signatures (eSignatures), as well as electronic records (eRecords), are viewed as equally binding and valid as they would be in handwritten or paper format.
ESIGN further defines eSignatures as electronic sounds, symbols, or processes attached to or logically associated with something executed and adopted by a person as his or her signature.
As a result, this legislation enabled many forms of technology to be used such as encrypted digital signature systems and electronic signing pads, capturing images of the signature and creating records that provide secure verification of the signer’s identity.
Because this statute opened so many doors for interstate business, simplifying processes while maintaining security of records and information, Congress, at the request of industry leaders, declared June 30 “National ESIGN Day” in 2010.
While ESIGN exists as the federal law issuing the overall guidelines for eSignatures and eRecords involved in interstate and foreign commerce, individual states also have their own laws regarding eSignatures.
NCCUSL/ULC
Formed in 1892, the National Conference of Commissioners of Uniform State Laws (NCCUSL) is an association of state-appointed commissioners who gather to discuss and debate where uniform law should exist among the states and draft acts accordingly.
In 2007, NCCUSL was renamed as the Uniform Law Commission (ULC), and still exists as a non-profit, unincorporated association. Its membership of roughly 350 commissioners appointed by each state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, is comprised of attorneys, who may also serve as legislators, judges, or legal scholars.
Today, the commission has drafted more than 300 uniform laws, helping to dispel confusion in various areas of law with comprehensive solutions that can be adopted by state legislatures. To name a few, the ULC is primarily recognized for its efforts in commercial, real property, family, probate and estates, and health law.
In real property law specifically, the commission played a major role in propelling the adoption of uniform state laws for eRecording by approving the Uniform Electronic Transactions Act (UETA) in 1999 and drafting and proposing the Uniform Real Property Electronic Recording Act (URPERA) in 2004.
State Legislation of eSignatures, eRecording, and UETA
Around the mid-1990s, states began adopting laws equating different types of eSignatures to pen-and-paper signatures.
Because the majority of states gave legal recognition to almost any type of eSignature, the Uniform Law Commission created a model state law in 1999 called the Uniform Electronic Transactions Act, or UETA, broadly accepting and recognizing all forms of eSignatures.
Going hand in hand with ESIGN, UETA’s purpose was to create uniformity among the states’ laws to validate and facilitate the use of both eRecords and eSignatures in commercial transactions. Although many states had already adopted legislation regarding electronic transactions, UETA is recognized as the first national, comprehensive effort to prepare state law for the electronic commerce era we see today.
New York, for instance, enacted a law called the Electronic Signatures and Records Act (ESRA), declaring signatures created by electronic means would be as legally binding as handwritten signatures. In addition, ESRA clarifies electronic records have the same legal force as those produced in paper or microfilm formats. The legislation also designates New York’s Office of Information Technology Services to promote, support, and encourage electronic commerce and electronic government throughout the state.
Under UETA, electronic records can be relied upon for business, commercial, and government activities. Additionally, an eSignature has the same legal effect as a wet-ink signature. So whether a document was electronic from its inception with electronic signatures, or if it began its lifecycle as a paper record with wet-ink signatures that was then converted to an electronic format, it has the same legal standing, including recordability in the public land records, as the paper records we have relied upon for centuries.
Nearly every state in the U.S. has adopted UETA, and approximately 40% of the nation’s counties offer eRecording to customers. Some states, including Arizona, Colorado, and Hawaii, offer eRecording in every county statewide.
Today, Simplifile is the most widely-used eRecording service throughout the nation with new counties eagerly implementing this user-friendly technology every day. See our network of eRecording counties.
While UETA at a state level and ESIGN at a federal level made sales contracts, mortgage instruments, and other transactions with signatures in electronic formats legal, another monumental law, the Uniform Real Property Electronic Recording Act (URPERA), was enacted to specifically address electronic real estate document transactions and authorize land records officials to accept, store, and protect them in electronic form.
URPERA – Real Property Law
In 2004 the Uniform Law Commission proposed the Uniform Real Property Electronic Recording Act (URPERA).
While the UETA and ESIGN made eRecording, sales contracts, mortgage instruments, and other transactions with signatures in electronic formats legal, URPERA aimed to provide statutory assurance to land record officials by specifically addressing electronic real estate document transactions and authorizes officials to accept, store, and protect these documents in electronic form.
As a proposed uniform law, the next step was up to each state legislature to pass the law, should they choose to adopt it. Today, many of them have done just that.
According to the Uniform Law Commission, URPERA equates electronic documents and eSignatures to original paper documents and manual signatures, so that any requirement for originality (paper document or manual signature) is satisfied by an electronic document and signature.
In other words, URPERA gives county clerks and recorders additional surety in the ability to electronically record information on real property land records. It also establishes standards for recording offices to follow when implementing eRecording. However, depending on the existing language in a state’s recording statutes, the adoption of URPERA may not be a requirement for eRecording.
URPERA was designed to help state administrative agencies meet the demands of the public for quick identification of title ownership, and many states found that URPERA complemented UETA, acting as an extension of that law’s effectiveness.
With the adoption of URPERA, county clerks, recorders, and register of deeds’ all over the U.S. have made eRecording available to customers, providing a secure, faster, and more convenient way to record documents electronically.