Daily Development for
Monday, October 19, 1998

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

This DD is by Dale Whitman, normally of BYU Law School but now visiting at Missouri, Columbia Law School (the *other* Missouri Law School). I get credit only for recognizing expertise when I see it and persuading Dale to share. Pat

This is the second of two installments prepared by Dale Whitman on the impact of computer technology on future real estate practice. This installment deals with the future of the public land records system.
* * *

The advent of highly reliable digital signatures, the impending acceptability of electronic conveyances under the Uniform Electronic Transactions Act, and the wide-spread availability of cheap computing power, all suggest that it is time to rethink our present land records system, which has been in place with only minor improvements since 1620. In brief form, here are the elements that might characterize a modern computer-based system of land recording.

1. Conveyancing documents could and usually would be recorded as digital text (e.g., as word processor files) rather than as paper printouts. Pages containing graphical information would be recorded as digitally- scanned images.

2. Documents would be submitted for recording by e- mail.

3. Digital signatures, rather than hand-written signatures, would be used. (See below for more detail.)

4. Standard forms for most common documents (e.g. deeds, releases, the FNMA/FHLMC mortgage forms, etc.) would be agreed upon by the state bar, real estate commission, attorney general, title industry, and other affected groups. These forms would be recorded once as "masters," and would then be incorporated by reference into individual documents, saving the need of continually re-recording their full text in each transaction. Only non-standard documents will have their full text recorded.

5. Documents would be made "self-indexing" by requiring the party submitting them for recordation to complete a set of "header" information, including such items as:

(a) the full name and T.I.N. of each party.


(b) the digital signature of each party (see below)

(c) the standard form number, if the document is on a standard form.


(d) the form of cotenancy if here are multiple grantees


(e) the parcel indentifier number (see below)


(f) the date of the document's execution With this information already supplied by the submitter, the document would be indexed automatically by computer with no human intervention.

6. Each submitted document would be error-checked by computer before recording. If an error were identified, the document would be immediately returned (via e-mail) to the submitter with an explanation of the error. If no errors were identified, the document would be immediately recorded in the official records, and a confirmation would immediately be e-mailed to the submitter.

7. All land parcels in the jurisdiction would have their boundaries digitized and would be assigned parcel identifier numbers (PINs). Legal descriptions in conveyances would need only to recite the PIN. County officials would continually update PINs to account for subdivisions and combining of parcels, corrections in surveys, and other changes.

8. Searches of the records could be accomplished entirely by computer, since the full text of each document (and not merely its indexing information) would be stored in digital form. Searches could be done remotely via dial-up modems or the world-wide web.

9. Searchers would not be limited by the traditional grantor and grantee indexes. A search could be made on any field in the standard header, include parcel PIN, parties' names, type of document, or date. In additional, full text searches (such as now occur on Lexis or Westlaw) would be possible.

Signatures on electronic conveyances would be required by law to employ public key infrastructure (PKI) technology. In a PKI system (a few of which are already in place), a certification authority (CA) issues to each individual applicant a digital ID consisting of two "keys." (A key is simply a long string of letters and numbers that is uniquely related to the person receiving the ID.) One key, termed the "public key," is widely disseminated to the public and may be looked up for anyone holding such a key. The other key, termed the "private key," is known only to the CA and the individual holder, and must be kept secure.

When an individual signs a document, he or she uses the private key. It is transmitted in encrypted (coded) form along with the document. The recipient then obtains the signer's public key and compares the two keys using a computer algorithm. The computer verifies that the two keys match, and hence that the signer is indeed the same individual to whom the public key was issued. All of this occurs in a matter of milliseconds, and is an extremely reliable way to authenticate the signer's identity.

County recorders would perform this verification process on each conveyance submitted for recordation. Since the digital ID is extremely difficult to forge or to tamper with, the recording of forged documents would be virtually impossible.

An additional feature of a PKI system is that the signer's digital signature can be uniquely tied to the document being signed. This is done by the drafter's running the document through a "hashing" process to produce a "hash code" that is uniquely emblematic of that individual document. The hash code can then be transmitted with the digital signature, so that the recipient can be certain that the document received is the precisely the same document that was originally signed with the digital signature. Thus, unauthorized modification or tampering with the document becomes virtually impossible. County recorders would perform this verification on each document received.

Of course, there are many potential barriers to this sort of "next generation" recording system. While computer hardware is relatively cheap, the initial cost of implementing software would be substantial. Recorders are not always known for progressive attitudes; they may resist adopting a system that will eventually cause them to reduce the size of their staffs very substantially. Standards will be necessary so that recording systems in a given state will be consistent with each other. (Indeed, when a system such as described above is implemented fully, there is little or no reason to operate it at the county level; it could as easily be state-wide.) New methods of collecting recording fees and transfer taxes will have to be devised. Careful attention will have to be given to backup and archiving of recorded documents.

Nonetheless, the remarkable efficiencies that can be achieved with a fully digital recording system will drive the pressure for its adoption. Some of its elements are already in place in some areas of the nation, and all of the technology is now available. It is not too soon to begin design and legal implementation.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.