Report Title:

Electronic Recording; Bureau of Conveyances

 

Description:

Requires the department of land and natural resources to perform a feasibility study on the impact electronic recording may have on the bureau of conveyances and the public, and report its findings to the legislature prior to 2009 regular session. (SD1)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

2302

TWENTY-FOURTH LEGISLATURE, 2008

H.D. 2

STATE OF HAWAII

S.D. 1

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO REAL PROPERTY.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that electronic communications make it possible to conduct transactions in new forms.  Some of the earliest transactions governed by law are real estate transactions.  Deeds, mortgages, and leases were memorialized by words on paper with manual signatures.  However, technology has advanced and electronic communications are increasingly replacing paper documents.  The law of real property will need to transition to accommodate this change.  The efficiency of real estate markets makes this imminently necessary.

     The Uniform Electronic Transactions Act, as codified under section 489E-5, Hawaii Revised Statutes, adjusted statute of fraud provisions to enable electronic records and signatures for the memorializing of a multitude of transactions, including basic real estate transactions.  The widespread enactment of the Uniform Electronic Transactions Act and the federal Electronic Signatures in Global and National Commerce Act made it possible to treat sales contracts, mortgage instruments, and promissory notes that are memorialized in electronic form, and with electronic signatures, equal to the same paper documents that have manual signatures.  However, real estate documents must be recorded on public record to be effective.

     In 2007, the legislature adopted S.C.R. No. 226 (2007) that established a joint senate-house investigative committee on the bureau of conveyances to ensure that the bureau of conveyances serves the public at its most optimal level and required the committee to submit its findings and recommendations prior to the convening of the 2008 regular session.  One of the findings in the committee's draft report indicated grave concerns that the bureau of conveyances fails to exert the appropriate oversight with respect to its computer system's installation, maintenance, and upgrading as well as subsequent installations and maintenance of computer servers and software.  The committee indicated concerns that the bureau's lack of computer system oversight and management could ultimately affect the integrity of the bureau's operations, resulting in potentially enormous security ramifications.

     In light of this finding, it appears that the electronic filing of documents at the bureau of conveyances may be premature, especially when security and management concerns with respect to the existing computer system at the bureau have not yet been addressed.  Furthermore, more information is needed, including the cost, feasibility, and impact of procuring and implementing an electronic filing system, before enacting legislation that will allow the registrar of the bureau of conveyances to accept electronic documents with electronic signatures for recording.

     The purpose of this Act is to require the department of land and natural resources to conduct a feasibility study on the implementation and impact an electronic filing system may have at the bureau of conveyances and on its operations.

     SECTION 2.  The department of land and natural resources shall conduct a feasibility study that shall include the following:

     (1)  An assessment of the current electronic record keeping system at the bureau of conveyances, including any problems or deficiencies with respect to the system's maintenance and security;

     (2)  A determination of how a new electronic filing system at the bureau of conveyances will be implemented at the bureau of conveyances;

     (3)  A determination of the impact that electronic filing of documents will have on the operations of the bureau of conveyances and to the public that the bureau of conveyances serves, including but not limited to:

         (A)  The impact on the employees of the bureau of conveyances;

         (B)  The impact on the title, real estate, and legal industries;

         (C)  The impact on the record keeping, archiving, and adjudication of bureau documents; and

         (D)  The impact on fees for filing, retrieving, and printing recorded documents of the bureau;

     (4)  A cost analysis of the installation and maintenance of a new electronic filing system;

     (5)  An established timeframe for selecting, installing, and implementing a new electronic filing system, including employee training, changes in any applicable administrative rules or procedures at the bureau, and public awareness and training regarding the new electronic filing system;

     (6)  An investigation of other electronic filing systems in other jurisdictions, and the impact and cost that the electronic filing system has on the jurisdiction; and

     (7)  A response to the concerns raised with respect to the current computer system at the bureau of conveyances in the joint senate-house investigative committee report as well as any similar concerns in the respective reports of the attorney general and state ethics commission on the bureau of conveyances, if released during this time.

     (b)  The department of land and natural resources shall submit a written report to the legislature of its findings and recommendations, including any proposed legislation, no later than twenty days prior to the convening of the 2009 regular session.

     SECTION 3.  This Act shall take effect on July 1, 2050.