Electronic Signature & Records Association
110 Horizon Drive Suite 210
Raleigh, NC 27615
Protecting Electronic Signature
Electronic Will Legislation – Support Uniform Statute
Electronically executed wills, codicils and testamentary trusts are excluded from UETA and do not have protection under most state laws. In 2017, several bills were introduced in state legislatures to support electronic execution and witnessing of testamentary documents. ESRA Public Policy Committee members have reviewed model legislation and have indicated support for those that are consistent with ESRA policy principles.
Enactment of legislation enabling the electronic execution of wills, to the extent such legislation is consistent with ESRA principles.
IRS e-Signature Policy – Ensure Reasonable Standards
In December 2016 the IRS Chief Counsel released Advice 201650019, which ruled on the issue of whether electronic signatures could be used on Form 2878 – Power of Attorney. In recommending that electronic signatures should not be accepted on the form, the chief counsel further recommended that “an electronic signature should only be accepted by the Service when there are published guidance or IRM provisions that specifically authorize use of an electronic signature for the specific form involved.” While the advice states that it remains a business decision whether to accept use of electronic signatures on any specific form,” it recommends that “in those cases dealing with high-risk documents, taxpayers should either be required to sign by non-electronic means or the Service should institute heightened authentication, security procedures, and electronic signing processes to protect the Service against the risk of disavowal by the taxpayer.” In the meantime, work on Revenue Procedure governing electronic signatures has been underway for some time, but the subject matter now falls under Identity Assurance, a directorship that was formed in response to a GAO directive last year. While the draft Rev. Proc. has not been released for public comment, there is a high likelihood that it will call for 100% IRS oversight of electronic signatures on all forms, possibly threatening transaction workflows that do not currently include the IRS as a direct participant.
Internal Revenue Bulletin 2017-5 summarized temporary regulations and stated that the Treasury Department and the IRS have determined that valid electronically signed withholding certificates may be accepted by a withholding agent if the withholding certificates reasonably demonstrate to the withholding agent that they have been electronically signed by the recipient identified on the form or a person authorized by the recipient to sign the form (by, for example, a signature block that includes a time and date stamp and a statement that the certificate has been electronically signed and the name of the person authorized to sign the form). If the withholding certificate contains only a typed name in the signature line and no other information regarding the method of signature, a withholding agent cannot treat the withholding certificate as validly signed. There is much confusion about what is meant by “signature block”, and whether and how indicia of electronic signing are to be implemented in compliance with the temporary regulation.
Inform key influencers of the existence and value of 3rd party-initiated electronic signatures and records. Seek broader allowance for electronic means of signing and storing forms, short of specifying procedures for every form individually.
Federal Home Loan Banks: Accept E-Signed Loans As Collateral
FHLBank currently requires ALL original documents related to the note to be retained and to contain a “wet” signature. We understand that many members are using or exploring the use of digital record retention systems and electronic signatures to execute loan documents, and we agree the practices are generally accepted as legally binding. However, our concern relates to the transferability of the loan, specifically our ability to liquidate the asset, if needed, and the marketability of the loan to prospective buyers. Education, outreach and “moral-suasion” to move the FHLBs toward ultimately releasing a policy of eSignature acceptance.
Phase 1: FHLB influencers and decision makers understand the value of eSignatures and express their support for developing a new policy to define their for support and acceptance. Phase 2: FHLBs actually develop and release said policy.
Federal Reserve Banks: Accept Of E-Signed Commercial Loans As Collateral
The 12 Federal Reserve banks lend to other banks by taking loans as collateral. Some FRBs will not accept electronically executed loans as collateral; others will only accept consumer loans, taking the position that commercial loans carry additional risk under UCC. In the past year, counsel for some of the FRBs have developed their own questionnaires to determine whether an electronic loan can be collateralized. Lack of clarity in the FRBs’ policies toward electronic chattel paper means smaller lenders are less likely to adopt electronic processes for these kinds of transactions.
Drive a single, clear policy across all 12 Federal Reserve Banks, accepting pledges of electronically signed credit agreements under conditions that are transparent and reasonable.
Perhaps help draft a standard questionnaire or other assessment tool that could be used by all FRBs.
Potential to set up a campaign of affected parties to send clear message of the harm currently being caused.
Expanding Online Notarization
E-Notary/Ron: Uniform Rules, Universal Acceptance
Current laws (UETA and ESIGN) permit the use of electronic notarization in every state. However, there is little agreement among the states on whether and how these foundational laws provide sufficient legal authority and direction to enable a state to permit electronic notarization or to acknowledge electronic notarizations from within or outside their jurisdictions.
ESRA has established its support for electronically enabled notarial acts, and it has promoted adoption of new technological means of performing the notarial function, as long as such means are aligned with ESRA’s policy principles. The issue of physical presence in the performance of a notarial act has become a pivotal question, and many states are considering new legislation to either explicitly permit — or explicitly prohibit — a notary public to witness a signature from a remote location. While states like Virginia and Nevada have already enacted laws to permit so-called remote notary, others have expressed opposition and have even refused to acknowledge the validity of such acts. Bills and model legislation have been introduced that are not uniform in their definitions of personal presence or their interpretations of current model e-commerce statutes such as UETA, URPERA and RULONA. Some organizations are seeking a rapid adoption of their model laws, while the uniform law commission is considering developing its own draft, which would take 1-2 years to produce.
Universal acknowledgment of the validity of electronically-enabled notarization within and between states, and consistent, accurate information made available to notaries public by their notary administrators, including a clarification that electronically-enabled notarization is permitted and supported. Promote a set of principles that should guide notary law and policy regarding remote notarial acts; influencers and decision-makers would use these principles in developing consistent rules or laws.
Acceptance of Vehicle Titling
E-Odometer: Ensure Reasonable Federal Standards
MAP-21 (S.1449 2012) requires NHTSA to explore secure protocols for the use of e-odometer. AAMVA is supporting NHTSA by submitting a Report of Considerations. In 2016 ESRA provided substantive comments to the proposed rules issued under MAPS-21. Presuming NHTSA adopts the considerations, states would no longer be required to petition to NHTSA for a waiver to allow e-odometer disclosure. Finding an e-odometer solution that is compliant with TIMA will remove this expense and time intensive hurdle. A solution will necessarily clarify NHTSA’s opinion of a secure process, a secure printing process, a process that ensures the odometer disclosure stays “married” to the vehicle title, all while inhibiting odometer fraud.
Technology and vendor neutral eOdometer solutions that are financially viable for states to adopt. Obtaining federal authorization for eOdometer is integral to modernizing vehicle salvage processing and is a subset of e-Titles, the ultimate goal.
Vehicle Titling Agencies (VTL): Acceptance Of E-Signed Power Of Attorney
Vehicle Titling Agency (VTL) in each state requires the title to include an odometer statement disclosed by the transferor/seller to comply with the federal odometer disclosure requirement established by The Truth in Mileage Act (TIMA). TIMA is also referred to as “The Rule.” The Rule requires the seller whose name is on the title to provide an odometer disclosure to the buyer at the time of the sale. They buyer must sign the title acknowledging the mileage disclosure.
A POA may accommodate a transaction on behalf of the seller, and commonly occurs when the physical title is held by a lienholder. A state may not issue a title unless the existing title with the completed odometer disclosure statement also is presented with the POA.
From the insurance company perspective, the time involved in using a courier to deliver these paper documents can be reduced by implementing an electronic POA. An ePOA, properly signed and received by an insurer, would permit the insurer to issue a check for the insured’s equity interest in the vehicle, sooner.
While the odometer requirements are challenging, navigating the various states requirements for general POA forms and states specific forms adds another level. And, some states also require a notarized copy. Eventually, ePOAs may phase-out as eOdometers and eTitles gain acceptance.
Note: This project encompasses vehicles that have been titled at least once and does not involve dealer-to-dealer transfers.
Technology neutral and vendor neutral ePOA solutions must be offered that are financially viable for states to adopt. States participating in pilot programs and becoming familiar with ePOA is an important precursor for eOdodmeter.