Massachusetts Looks To Electronic Signatures for Conveyance of Real Estate

electronic conveyance of title

A Path to Electronic Notary Acknowledgements

The next generation of home buyers has descended upon the real estate market, millennials who have grown up in the world of digital commerce are now entering the home ownership market. As this new market continues to grow, the conveyancing industry in Massachusetts is now facing increased pressure to find ways to abandon the paper trail and instead find ways to embrace and utilize safely electronic communications for real estate acknowledgements and closings.

What is the legal standing?

The legal basis for this technological transition that has title companies and other conveyance professionals concerned, has actually been in place since a 2004 ruling that was the cornerstone of the adoption of MGL c.110G, the Massachusetts Uniform Electronic Transactions Act. Since the decision in 2004, registries of deeds in the commonwealth have had to comply with the electronic recording systems. However, some uncertainly still remains, particularly regarding acknowledgements.  But real estate is a very litigious business with a lot of money transacting, in many instances, with principles with little understanding of the law.  Every aspect of the real estate transaction is ripe for litigious action, from the listing agreement, to the property inspection to the title search to the closing documents. Last year Richard P. Howard, Jr, a frequent contributor to REBA News, and who has served as register of the Middlesex north district Registry of deeds since 1995, wrote in about electronic acknowledgement statutes in other jurisdictions in “Remote electronic acknowledgments,” published in the March 2017 edition of REBA News. In the article, he explains the reason that registries of deeds throughout Massachusetts should record documents electronically acknowledged outside of Massachusetts, but not record those electronically acknowledgement within Massachusetts. His basis for that opinion was that Massachusetts law requires a notary to affix a stamp to an acknowledgement, and that our law provides no electronic equivalent of that notary stamp. He states:
“With the demand for electronic acknowledgements looming but not yet fully upon us, now is the time to amend our notary statute to accommodate new technological practices. The starting point for such an amendment should be a shared understanding of the purpose of an acknowledgement, particularly with regard to real estate documents.”

Why is the registry so important?

In colonial Massachusetts, the purpose of the registry was to provide the public with a record of who owned what property. This was enacted as a means to curtail under the table or secret sales that created uncertainty in real estate transactions. The purpose of this requirement that a deed was to be acknowledged by a legal entity before recording was set in place to curtail fraud, in the case of a forged signature or an actual signature later denied by its author. Although these precedents were conceived in the seventeenth century, the rationale for these rules persist today and registries of deeds continue to perform the core function of creating public real estate ownership records, only now they are using new technology to perform the same functions. The Primary core function of an acknowledgement of deed is to assure the public that the individual who signature is on the document is who he or she says they are. In Massachusetts the task is handled by a notary who personally witnesses this person putting his signature to the document after positively identifying the person through verified documentation. The notary then attests to his role in the verification by signing the acknowledgement, printing his name, the expiration date of his notary commission, and then affixing his notary stamp to the document. MGLc.222, s.8 requires a notary stamp to include “the notary public’s name exactly as indicated on the commission; the words ‘notary public’ and ‘Commonwealth of Massachusetts’ or ‘Massachusetts’; the expiration date of the commission in the following words: ‘My commission expires _____’; and a facsimile seal of the commonwealth.”
digital signature in real estate

Digital signature are commonly used by real estate agents in the field

Precedent in Electronic Signatures

Electronic acknowledgement statutes have already been adopted in several states although some states have created a duality in the industry by separating the offices with one for regular notaries and another separate office for electronic notaries. Other states are requiring notaries to invest in expensive, sophisticated technology that encrypts the electronic document being acknowledged so it is tamper proof.  These practices – a dual commission system and requiring sophisticated software of electronic notaries – exceed anything now required or expected of notaries in Massachusetts, however, the pressure from millennial home buyers is causing them to make the needed changes.

The transition taking place is affecting the registry in many ways. As the number of walk-in customers continues to decrease, and the requests for electronic recording increases the need for recording terminals increases proportionately as does the need to reduce the number of public access computers. A big plus for the move is that it takes the registry less time to process electronically recorded documents than the ones who walk-in, resulting in reduced wait times for recording.

Liability vs Convenience

The growth of electronic recording no doubt increases the registries utility and reliability, but there are still additional features that would improve on the system. For example, now when a customer clicks “send to the registry” for an electronic recording, the document package is immediately sent and the submitter has no ability to recall it in case of an error. The submitter now has to call the registry asking that the package they just transmitted be rejected due to a late-discovered error. A newer system might include a “are you sure” option and even a virtual queue allowing customers to review documents before sending them. While any concerns over electronic documents has not suppressed the growth of electronic recording, real estate professionals agree that providing customers with more detailed information would help ease any lingering concerns.

The future of these technological changes is for the most part in the hands of registry users. As more and more real estate attorneys, lenders, real estate brokers and homeowners migrate to fully electronic closings, the volume of electronic real estate recordings will continue to rise, and the amount of walk-in documents and snail mail deliveries will decline even more.

Changes in Real Estate Law

These changes are coming quickly,  We have recently seen a battle in Massachusetts where text messages appear to be binding in a real estate contract. Still there are those in the real estate industry must keep in mind that not everyone who owns real estate has a smart phone, wants a smart phone or is even comfortable with using one for complex financial transactions.     So, for those of you who want to “see ink on paper” walk-in recordings, and walk-in customer service, will always be an important part of the mission of the registry of deeds. For the next home buying generation who is pushing us all into the next era of communications, Massachusetts is ready to do business!

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