California Expands Electronic Recording Authority
The use of electronic means to record documents is becoming more and more common throughout the United States. This is due in great part to the Electronic Signatures in Global and National Commerce Act of 2000 (E-SIGN Act), a federal law that facilitates the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically. Since its passage, the National Conference of Commissioners on Uniform State Laws ("ULC") has passed proposed state regulations like the
Uniform Electronic Transactions Act and the Uniform Real Property Electronic Recording Act to create functional rules for states to follow to implement and facilitate electronic recordings.
California has been slow to implement electronic recordings and has not implemented the rules promulgated by the ULC relative to electronic recordings. Instead, California state law has set specific standards with the intent to ensure that a county's electronic recording delivery system meets specified security standards. Further, all persons with a secure access role are required to undergo fingerprint criminal history checks. Existing law limited the parties authorized to do electronic records to title insurers, underwritten title companies, institutional lenders, and governmental entities. California law also limited the types of documents that could be notarized electronically to instruments of reconveyance, substitutions of trustee and assignments of deed of trust.
Assembly Bill 2143, signed into law on September 16, 2016, will, after January 1, 2017, allow additional persons and entities to deliver electronic records to the county recorders for recording. The new law also expands the types of electronic records that may be delivered to a county recorder for recording. Now, persons who submit a certificate of insurance evidencing an amount of general liability coverage of at least one million dollars will be allowed to submit electronic records for recording. The new law also removes the limitation on the types of documents that can be electronically notarized. Instead, the new law allows electronic notarization of any recordable document as long as that electronic record is consistent with California Government Code Section 27201(a).
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Case of the Month
Schellinger Brothers, et al. v. James F. Cotter
This case involves the attempted acquisition of a 21-acre parcel in Sebastopol for the purpose of subdivisions. The parties entered into a sales contract in 1998. Consummation of the contract was conditioned upon the buyer obtaining approval for their subdivision map and a lot line adjustment from the city of Sebastopol. Due to numerous issues with permitting, many stemming from proceedings under the California Environmental Quality Act, the subdivision map had still not been approved by 2005. The lot line adjustment was also still outstanding due to the seller's refusal to sign it though it had been completed in 1999 at the cost of the buyer. At that time the seller decided things were taking too long and wrote the buyers a letter stating that he considered the agreement cancelled due to the untimely completion.
The reality was that the seller had commissioned an appraisal and found out that the property had doubled in value since 1998. The appraisal also suggested that, if developed as proposed by the buyer, the property would be worth triple the value he would be receiving as a result of the 1998 purchase agreement. At that time, behind the back of the buyer, he attempted to negotiate the sale of the property to a third party. The buyer thus sued for enforcement of the contract. After a protracted trial in 2011, the court gave the buyer 2 years to obtain the necessary subdivision map. Based thereon, the buyer continued on in earnest to try and get the approvals necessary without success.
At some point the seller stopped paying property taxes on the property. The buyer assumed the responsibility to do so because payment was necessary to obtain approval of both the lot line adjustment and the subdivision map. Then, in 2012, while still under contract, the seller took inappropriate action on the property in an attempt to ameliorate flooding and drainage problems occasioned by significant rains. Without obtaining the appropriate permits, the seller hired a landscape contractor who dug a ditch on the property. Upon discovery of the ditch, the city determined that it would ground to halt the map approval process because of both its illegal nature and the fact that it jeopardized sensitive wetland area. The city therefore ordered a 5-year monitoring period and required significant restoration on the property as a result of the destroyed habitat.
Thereafter, in violation of the purchase agreement, and while the subdivision map and new lot line adjustments were pending, the seller attempted to meet with the city attorney and manager for the purpose of discussing an offer to donate the property to the city. Based upon all these facts, the trial court found that the seller had breached his contract to sell the property to the buyer and found the seller liable for consequential damages in the amount of $2,855,431.77.
The seller appealed, claiming that there was not enough evidence to establish a breach on his part. The appellate court affirmed the trial court's ruling that seller's failure to sign the lot line adjustment, refusal to pay property taxes, and actions relative to the trench were all breaches of the contract. The appellate court also agreed with the trial court that the seller had breached the implied duty of good faith, and instead acted in bad faith in attempting to sell the property to a third party and gift it to the city, in contravention of the purchase agreement.
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Beware of Risks Associated with Violating the Do Not Call Rules
The National Do Not Call Registry opened back in June of 2003. Administered by the Federal Trade Commission (FTC), it was created to comply with the Do-Not-Call Implementation Act of 2003 (Public Law No. 108-10, was H.R. 395 of the 108th Congress, and codified at 15 U.S.C. ยง 6101 et. seq.) The law was an offshoot of a broader law known as the Telephone Consumer Protection Act of 1991.
The National Do Not Call Registry is intended to give U.S. consumers an opportunity to limit the telemarketing calls they receive. To register by telephone (US), consumers may call 1-888-382-1222; or they may register via the web at the DoNotCall.gov registration page. The law has resulted in fewer calls to consumers on the list but has not resulted in an elimination of unwanted calls. Nevertheless, i
llegal robocalling and exceptions to the law still result in unwanted calls to most people on the list.
The FTC, as the regulator of the laws, has sued
hundreds of companies and individuals for placing unwanted calls, and has obtained over a billion dollars in judgments against violators. This is a result of the fact that telemarketers who violate the National Do Not Call Registry or place an illegal robocall can be fined up to $16,000 per call.
Violators of the Do Not Call List also risk being sued by the consumers they are calling. This is because the Telephone Consumer Protection Act of 1991 gives consumers a private right of action against telemarketers who illegally call them more than once within any 12-month period. The private right of action allows the consumer the ability to sue for an injunction and monetary damages.
One such action has currently been filed against a title company in California. The complaint, intended to result in a class action lawsuit, was filed by Brock Meintel in September of this year in the U.S. District Court for the Central District of California against Nations Title Company of California. The complaint alleges that, beginning in June of 2016, the plaintiff received calls from the defendant title company soliciting its services despite his number being on the National Do No Call Registry. The complaint requests a jury trial and seeks statutory and punitive damages against the title company. Whether the title company wins, loses or settles the case, money is going to have to be expended on attorneys to defend the case.
This should be a warning to all businesses to take care in the use of telephonic marketing and to follow the guidelines set out in the Do Not Call Registry or risk the regulatory and statutory consequences.
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Upcoming Speaking Engagements
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For October, Jennifer will be speaking at California Escrow Association's 61st Annual Conference in Anaheim, California on Saturday, October 22.
For details about this event feel free to contact our office.
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STAY CONNECTED
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