Article originally published in North Carolina Lawyer Weekly Vol. 23, No. 52 March 7, 2011 nclawyersweekly.com
Johnston County ROD first to offer 100% e-filing capability
By PAUL THARP, Staff Writer
The electronic-filing train has left the station and is coming to a register of deeds near you, says Raleigh attorney Richard Bowlin.
Bowlin operates Electronic Document Logistics, a company he started several years ago that has created software that allows for the electronic creation of documents and solutions for electronic recording of documents in North Carolina counties. EDL is one of several companies that have contracted with county registrars and private entities to provide electronic recording capabilities.
Ozie Stallworth, electronic notarization analyst and director for the N.C. Department of the Secretary of State, said a fourth of state registrars currently employ some form of an e-filing system. He told Lawyers Weekly that an electronic-recording council spent years drafting the standards that are codified under G.S. § 47-16.
“We now have at least twenty-five counties with actual experience e-recording,” Stallworth said. “Among those counties, we have a one-hundred percent success rate. The register of deeds staff in those counties love it, they’ve embraced it, and the customers who use the system love it too.”
Garner attorney Joseph A. Calder used those very words - “I love it.”
“When e-filing was first talked about, I wasn’t particularly interested in having a client e-sign and then have an e-notary affixed. I wanted a system where we could sign the paperwork, scan it and send it in to get filed,” he said.
That is exactly the kind of system that Johnston County adopted, he said. “There is nothing special about the signing or notarizing,” Calder said of Johnston County transactions. “After the deed and deed of trust are signed, I come back to the scanner and scan the documents in with the signatures and notary already affixed.”
He said he saves and e-mails the documents to an e-recording provider. “They copy it onto their system and within a half-hour, I get a confirmation that the documents have been filed.”
Johnston County Registrar Craig Olive said his county is the first in the nation to offer electronic recordings of all real estate documents, including plats.
“It has streamlined the functions of our office,” Olive said. He said his budget for postage is one-tenth of what it was before electronic recording. “We don’t have to mail deeds anymore,” he said.
Haywood County Registrar Sherri Rogers said her county became capable of electronically recording all real estate documents - with the exception of plats - in late 2010. She said staff “verifies all the same things we have to with paper copies of documents.”
In terms of the transition to electronic recording, Rogers said the vendor her county uses has made the process seamless. For instance, she said, in Haywood County, the land mapping and tax offices have to stamp deeds before they can be recorded. “Our vendor has a link where land records and the tax collector can affix an electronic stamp to the deeds and send them back to our office,” she said.
Stallworth said the choice of which vendors to use for the process rests with the counties. “The county registrars select the vendors, who in turn agree to comply with laws and standards implemented by the e-recording council,” he said.
Stallworth said that as the standards were developed, “there was significant concern about whether we would be able to have documents filed in the county register of deeds offices that were going to be relied upon by all the citizenry of North Carolina that would stand up to any legal challenges.”
Some of those concerns, he said, are addressed in a “trusted submitter agreement” between the register of deeds and “anybody who is going to be submitting documents electronically.”
The agreement, Stallworth said, “outlines the parameters of how to submit documents electronically and provides for a secure means through which documents are sent.”
He described the connection between the vendor and the register of deeds as “a secure transmittal portal” through which documents are sent from a participating attorney’s office to the vendor and thence from the vendor to the register of deeds.
“The standards limit the chances that the register of deeds would receive a document electronically that it could not otherwise trust or record,” Stallworth said.
Jeff Wilson, a Johnston County computer analyst, said attorneys need little more than a computer with an Internet connection and a scanner to become e-recording capable.
“There isn’t any involved setup process,” Wilson said. “In terms of security, there is no less security with an electronic document than with a paper document that could be a forgery.”
But West End attorney Michael G. Gorenflo and Raleigh attorney Stephanie Kilpatrick both expressed concerns that electronic recording may make it easier for fraudsters to game the system.
“In the worst-case scenario,” Gorenflo said, “you could have one [register of deeds staffer] handling an e-file while another is handling a transaction for a person who is standing in line.” The person e-filing a document, he said, could be messing up title to the property that is the subject of the deed the person standing in line is waiting to record, or vice versa.
“Essentially what we are now talking about is having gaps,” Gorenflo said.
The larger issue, he added, is the “snowballing effect into less and less professionalism and less accuracy in the real estate attorney’s work.”
Kilpatrick agreed. “This raises the issue of whether we are further minimizing the importance of what happens in real property transactions,” she said. “We have some important consumer interests issues at play. It’s not like we’re talking about people going out and buying a dress.”
Kilpatrick said the issue of e-recording dovetails with the issue of “who should be handling real estate transactions in North Carolina.”
Kilpatrick and Gorenflo both said an e-recording system may benefit large financial institutions and large firms from urban areas that will have an easier means of expanding their footprint into smaller counties.
“We still have a very parochial legal system,” Kilpatrick said. “We don’t allow attorneys from other states to come here to do work without a license. Does this open the door to national licensing, to international licensing?”
Before we rush headlong into it, Kilpatrick said, “Let’s make sure we have our eyes wide open.”
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