Stewart Title Guaranty Company
1980 Post Oak Boulevard, Suite 710
Houston, Texas 77056
JAMES L. GOSDIN
James L. Gosdin is Senior Vice-President and Senior Underwriting Counsel for Stewart Title Guaranty Company. Jim received his Bachelor's Degree from the University of Texas and his Juris Doctorate with honors from the University of Texas School of Law.
A Stewart associate since 1976, Jim underwrites title insurance transactions throughout the United States, reinsurance transactions, and international title insurance transactions for the company. Jim is Board Certified by the Texas Board of Legal Specialization in farm, ranch, commercial, and residential real estate. Jim is a member of the American Land Title Association Forms Committee and is chair of the ALTA Liaison Committee with the National Association of Insurance Commissioners. Jim is also the chair of the Texas Land Title Association Legislative Study Committee and a member of the ALTA State Legislative and Regulatory Action Committee. He is a member of the American Bar Association, the Texas Bar Association and the Houston Bar Association. Jim also is a member of the Texas Title Standards joint Editorial Board. Jim was named the 1998-1999 Title Person of the Year by TLTA.
In 1995, Jim wrote the ABA publication, Title Insurance: A Comprehensive Overview.The 2000 Revision of Title Insurance: A Comprehensive Overview became available in July, through ABA Book Publishing:
American Bar Association
Publications Planning & Marketing
750 North Lake Shore Drive
Chicago, Illinois 60611
Fax: (312) 988-6030
Virtual Underwriter: www.vuwriter.com
Title Insurance: A Comprehensive Overview, Second Edition
UETA ARRIVES IN TEXAS
James L. Gosdin
1. WHAT HAS HAPPENED
The first paperless refinance occurred in Orem, Utah on June 29, 2000.  It involved Stewart Title and used iLumin Corporation's "Online Signing Room,"™ a virtual, internet-based site where documents are securely posted, edited, and signed.
The first paperless purchase money transaction later occurred in Weston, Florida on July 24, 2000, where Jose Ignacio Arroyo used eOriginal's™ Public Key Infrastructure and Trusted Custodial Utility and Attorneys Title. The title insurance policy was issued electronically and the loan was transferred electronically to Fannie Mae. The acknowledgment (which had no notary seal) to the mortgage (recorded in Book 30700, Page 1001) recited that "This document has been notarized electronically pursuant to Florida Statutes." The affidavit recorded at Book 30700 Page 1012, stated that "The undersigned Borrower(s) agree(s) that this document will be created electronically, executed electronically, delivered to the lender electronically, stored in electronic form, and that the electronic record so created and executed will be considered the original, pursuant to The Florida Uniform Electronic Transactions Act."
Section 28.2221 of the Florida Statutes provides that "No later than January 1, 2002, the county recorder in each county shall provide a current index of documents recorded in the official records of the county for the period beginning no later than January 1, 1990, on a publicly available Internet website which shall also contain a document requisition point for obtaining images or copies of the documents reflected in the index and which has the capability of electronically providing the index data to a central statewide search site...By January 1, 2006, each county recorder shall provide for electronic retrieval, at a minimum, of images of documents referenced as the index required to be maintained on the county's official records website by this section."
An example of an internet site providing access to real property records is Broward County. Available at http://www.broward.org/cri03300.htm, this site states that it "contains the index to documents recorded into the Official Records of Broward County, Florida between January 1, 1978 and the present and actual images of documents recorded since August 1998."
Digitized images of documents are being filed on a widespread basis in San Bernardino and Orange Counties, California.
Scanned original documents are being electronically filed in Arizona. Electronic filings of scanned documents contribute more than 20% of real property filings in Maricopa County. Existing Arizona legislation also authorizes electronic filings, pursuant to use of specialized "electronic notaries," once regulations are adopted.
Recently, the first Virginia electronic real estate transaction and filing occurred in Wise County, Virginia.
The first fully electronic mortgage in New York was filed for record on March 29, 2001, in Monroe County, New York, using eOriginal and Stewart Title Insurance Company.
"The technology is there, but it's not there for everybody in the food chain to take advantage of the process," says Seth Werner, CEO of loan technology firm Mortgage.com. "Before it's the rule rather than the exception, it's going to be a few years." "Werner said most county recorders and secondary mortgage market participants are not ready to handle the receipt and storage of digital documents. But in a few years, he said, other companies will start to catch up to the curve." Subsequently, it was announced that Mortgage.com planned to "wind down lending operations and sell off assets" and its web site was shut down.
2. WHEN DOES AN ELECTRONIC SIGNATURE EXIST.
A digital image or copy of a physical signature is not an electronic signature. This distinction has been clearly drawn by the Arizona Secretary of State's Office, which stated:
"A common misconception about digital signatures is that it is an image or copy of a physical signature. Or some digital representation of one. Not so! A digital image of a signature is not a digital signature...
"A digital image is a reproduction of the paper document just as a paper copy would be. In many cases the copy is not as important as the original document because the original is the "legal" form of the document. In order for a digital image to be "original", it must meet the same tests as any original document. A digital signature can wrap the digital image or collection of data so that any change to the document cancels the signature just as cutting and pasting invalidates a paper document after it is signed...
"Simply pasting the image of a signature onto an email would not be, by statute, a valid signature...
"Another common misconception is that any use of Public Key Infrastructure (PKI) technology is considered digital signature use. Using PKI does identify who the party is but that is not the same as them formally signing something. So it is confusing to describe every PKI use as a digital signature use. Vendors commonly use the terms interchangeably...
"Conversely, there is often a distinction made between digital signatures and electronic signatures. This is again a distinction around the use of PKI. The term "digital signature" is generally used to describe PKI based signatures while "electronic signature" is generally used to describe any type of... electronic signatures."
3. FEDERAL E-SIGN LEGISLATION.
The Electronic Signatures in Global and National Commerce Act ("E-SIGN")  was passed by Congress on June 16, 2000, and signed by President Clinton on June 30, 2000. Title I, which relates to electronic records and signatures, generally became effective October 1, 2000. Title II, which relates to transferable records (promissory notes secured by real property), became effective September 28, 2000.
Key provisions of FEDERAL E-SIGN:
a. It applies to "any transaction in or affecting interstate or foreign commerce."  UETA Commentary states that "The term (transaction) includes all interactions between people for business, commercial, including specifically consumer, or governmental purposes. However, the term does not include unilateral or non-transactional actions."
b. A "signature, contract or other record... may not be denied legal effect, validity or enforceability because it is in electronic form."
c. A "contract... may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation."
d. E-SIGN does not "limit, alter, or otherwise affect any requirement imposed by a statute, regulation, or rule of law relating to the rights and obligations of persons, under such statute, regulation, or rule of law"....  E-SIGN does not affect substantive rights or other substantive law.
e. Consumer disclosures required by law or regulation may be made by an electronic record if (1) the consumer affirmatively consents to use and has not withdrawn consent; (2) the consumer is given a prior clear and conspicuous statement of any right to a paper record or right to withdraw consent, whether the consent applies only to the particular transaction or to other categories of records, the procedures to withdraw consent, and how to obtain a paper record and any fee for the paper record, if the consumer withdraws consent; (3) the consumer has been provided with a statement of hardware and software requirements for access and retention of the electronic records and consents electronically in a manner that reasonably demonstrates the consumer can access the electronic information; (4) after the consent, if hardware or software requirements change, the consumer is provided with the requirements for access to the electronic records and the right to withdraw without fees and the consumer consents electronically. This provision of E-SIGN is viewed as more pro-consumer than the provisions of UETA, and has been incorporated in some state enactments of UETA.
f. Failure of the consumer to provide consent electronically to the consumer disclosure in a manner that demonstrates that the consumer can access information in the electronic form that will be used to provide the information does not affect the validity, effectiveness or enforceability of any contract executed by the consumer.
g. An oral communication or a recording of an oral communication does not qualify as an electronic record.
h Statutory, regulatory, or other legal requirements for retention of contracts or records can be satisfied by electronic records that accurately reflect the information and remain accessible for the period required by statute or regulation in a form capable of being accurately reproduced. If statute, regulation, or other rule of law requires that a contract or record be provided, available or retained in its original form, the statute or regulation is satisfied by the electronic record.
i. If statute, regulation or other rule of law requires that a contract or other record be in writing, the legal effect, validity and enforceability of an electronic record may be denied if the electronic record is not capable of being retained and accurately reproduced for later reference by all parties who are entitled to retain the contract or other record.
j. If a statute, regulation, or other rule of law requires a signature or record to be notarized, acknowledged or verified under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with other information required to be included by other law is attached to or logically associated with the signature or record. 
k. A contract or other record may not be denied legal effect solely because its creation involved the action of electronic agents, if the action of the electronic agent is legally attributable to the person who is to be bound. An electronic agent is a computer program or electronic or automated means used independently to initiate an action, or respond to electronic records or performances without review or action by an individual at the time of the action or response. The provisions of Section 14 of UETA suggest more explicit and binding effect of electronic agents, despite lack of knowledge of the electronic agent or action.
l. This law (E-SIGN) applies to the business of insurance.
m. An insurance agent or broker acting under direction of a party that enters a contract by electronic record or signature is not liable for any deficiency in the electronic procedures if the agent or broker did not engage in negligent, reckless, or intentional tortious conduct, the agent or broker was not involved indevelopment or establishment of the electronic procedures, and the agent or broker did not deviate from the procedures.
n. A state statute, regulation, or other rule of law may modify, limit or supersede Section 101 of E-SIGN (15 U.S.C. Section 7001) only if one of the two following requirements is met: (1) The state law is the Uniform Electronic Transactions Act ("UETA") as approved and recommended by the National Conference of Commissioners on Uniform State Laws ("NCCUSL") in 1999. Any exception to the scope of UETA adopted by the state shall be preempted to the extent the exception is inconsistent with E-SIGN or accords greater legal status or legal effect to specific technology or technical specifications for electronic records or electronic signatures. (2) The state statute, regulation, or rule of law specifies alternative procedures or requirements for use or acceptance (or both) of electronic records or electronic signatures to establish the legal effect, validity and enforceability of the contracts or records and (a) the alternative procedures and requirements are consistent with E-SIGN; and (b) the alternative procedures or requirements do not require or accord greater legal status or effect to specific technology or technical specifications for creating, storing, generating, receiving, communicating, or authenticating electronic records or electronic signatures; and (c) if enacted or adopted after June 30, 2000, makes specific reference to E-SIGN. State statutes, regulations, or other rules of law on procurement by a state, agency or instrumentality may apply special rules for specific technologies. Generally, state laws, such as digital signature laws in Utah giving special recognition to particular technologies, are preempted.
o. Exceptions to the application of E-SIGN are statutes, regulations, or other rules of law relating to: (1) creation and execution of wills, codicils and testamentary trusts; (2) adoption, divorce or other matters of family law; (3) the UCC other than Sections 1-107 (waiver or renunciation of a claim or right after breach) and 1-206 (statute of frauds for kinds of personal property not otherwise covered), and Articles 2 (sales) and 2A (leases); (4) court orders or notices or official court documents; (5) notices of cancellation of utility services; (6) notices of default, acceleration, repossession, foreclosure or eviction, or right to cure under an agreement secured by or rental agreement for a primary residence of an individual; (7) cancellation of health insurance or life insurance (excluding annuities); (8) recall of a product or material failure of a product that risks endangering health or safety; or (9) documents required to accompany or relating to handling of hazardous materials, pesticides or other toxic or dangerous materials. The exceptions to application of E-SIGN are more extensive than the exceptions in UETA; consequently, some states have incorporated some or all of these federal exceptions in order to provide more favorable consumer protections.
p. E-SIGN does not limit or supersede requirements of Federal or State regulatory agencies that records be filed with the agency or organization in accordance with specified standards and formats. " State regulatory agency" is not defined by E-SIGN, but it appears that this term is intended to include county clerks, county recorders, and similar officials. Most have concluded that this provision of E-SIGN means that state filing and recording requirements for real property instruments have not been preempted.
q. Federal and State regulatory agencies may not adopt new regulations, orders or guidances unless the regulation, order or guidance is consistent with Section 101 of E-SIGN, and the methods required to carry out the regulation, order or guidance are substantially equivalent to the requirements for records that are not electronic records, and will not impose unreasonable costs on the acceptance and use of electronic records. However, Federal and State regulatory agencies may specify performance standards to assure accuracy, record integrity, and accessibility of records that are required to be retained.
r. A Federal or State regulatory agency may not impose or reimpose a requirement that a record be in a tangible printed or paper form. However, a Federal or State regulator agency may require retention of a record in a tangible printed or paper form if (1) there is a compelling governmental interest relating to law enforcement of national security, and (2) imposing the requirement is essential to attaining such interest.
s. Under E-SIGN, a "consumer" is an individual, or the individual's legal representative, who obtains through a transaction, products or services used primarily for personal, family or household purposes.
t. Under E-SIGN, an "electronic record" is a contract or other record created, generated, sent, communicated, received, or stored by electronic means.
u. Under E-SIGN, an "electronic signature" is an electronic sound, symbol or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.
v. Under E-SIGN, a "transaction" is an action relating to conduct of business, consumer, or commercial affairs between two or more persons, including the sale, lease, exchange, or other disposition of any interest in real or personal property.
w. E-SIGN is effective October 1, 2000 except (1) record retention requirements shall be effective March 1, 2001; (2) if the federal or state regulatory agency has initiated but not completed rulemaking relating to performance standards on March 1, 2001, then the requirements of this law are effective June 1, 2001; and (3) the provisions relating to transferable records (Title II of E-SIGN) are effective September 28, 2000.
x. A "transferable record" under E-SIGN is an electronic record that (1) would be a note under Article 3 of the UCC if it were in writing; (2) the issuer of the electronic record has agreed is a transferable record; and (3) that relates to a loan secured by real property. A transferable record may be executed by using an electronic signature.
y. A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.
z. A person is deemed to have control of a transferable record if (1) the record is created, stored, and assigned in such a manner that a single authoritative copy of the transferable record exists which is unique, identifiable and unalterable (except as hereafter provided); (2) the authoritative copy must identify the person asserting control as the person to which the transferable record was issued, or if the authoritative copy indicates that the transferable record has been transferred, and the person to which the transferable record was most recently transferred; (3) the authoritative copy must be communicated to and maintained by the person asserting control or its designated custodian; (4) copies or revisions that add or change an identifiable assignee of the authoritative copy can be made only with the consent of the person asserting control; (5) each copy of an authoritative copy and any copy of a copy must be readily identifiable as a copy that is not an authoritative copy; and (6) any version of an authoritative copy must be readily identifiable as authorized or unauthorized.
aa. A person having control of a transferable record is a holder, as defined in section 1-201(20) of the UCC, of the transferable record, and, if applicable statutory requirements are met, has the rights and defenses of a holder in due course.
4. UETA ADOPTION.
UETA was adopted in 1999 by the National Conference of Commissioners on Uniform State Laws. UETA has now been adopted in 39 jurisdictions, including Texas; however, the enacted version in several states has included modifications. Those states, which have enacted UETA (in some form), are:
District of Columbia
The optional provisions of UETA authorize governmental agencies, including county recorders, to accept electronic filings of electronic documents. Those provisions have been revised in a number of the bills, and some states did not include provisions authorizing such electronic filings with county recorders; those states include California, Delaware, Kansas, Nebraska, North Carolina, and Ohio.
5. TEXAS UNIFORM ELECTRONIC TRANSACTIONS ACT (UETA)
Senate Bill 393 is effective January 1, 2002. This legislation includes the substantive provisions of UETA, but also contains several non-substantive changes in wording of UETA, and additionally includes:
a. A modified optional UETA provision, which allows each state agency to determine whether, and the extent to which, the agency will send, accept, create, generate, communicate, store, process, use, and rely upon electronic records and electronic signatures. The Department of Information Resources and Texas State Library and Archives Commission may specify the manner and format of the electronic records, and the type of electronic signatures, the manner and format of electronic signatures, control processes and procedures, and other required attributes. A state agency is not synonymous with government agency; a state agency is more restrictive and should not include political subdivisions such as counties.
b. An optional UETA provision, which provides that the Department of Information Resources may encourage and promote consistency and interoperability with similar requirements adopted by othergovernmental agencies of Texas, other states, the federal government, and nongovernmental persons interacting with governmental agencies of Texas.
c. A provision required by E-SIGN if the state law is not UETA, as approved and recommended by the NCCUSL in 1999. The provision states that the Texas legislation modifies, limits, or supersedes E-SIGN as authorized by Section 102 of E-SIGN.
d. Section 2 of S.B. 393 amends Section 191.009(a), Local Government Code, to provide that an instrument electronically filed with and recorded by the County Clerk is an electronic record, as defined by Section 43.002(7), Business & Commerce Code.
e. Section 3 of S.B. 393 amends Section 195.002, Local Government Code, to authorize a county clerk to accept an electronic record, as defined in Section 43.002(5), Business and Commerce Code, if the filing and recording comply with the rules adopted by the State Library and Archives Commission.
f. Section 4 of S.B. 393 adopts a new Section 195.009, Local Government Code. This section sates that an instrument is deemed filed (and generally constitutes constructive notice) when it is received by the county clerk, unless rejected by the next business day.
g. Section 5 of S.B. 393 repeals Sections 2.108 and 2A.110, Business and Commerce Code, which relate to digital signatures.
h. Section 6 of S.B. 393, which recognizes continued applicability of Sections 101(c) and 103(b) of E-SIGN. Section 101(c) concerns consumer disclosures and requires affirmative consent by the consumer to providing or making available any required information by electronic means. The consumer also must receive a required clear and conspicuous statement before consenting and must receive a notice of any change of hardware or software requirements to access or retain the electronic records. Section 103(b) provides that Section 101 of E-SIGN (authorizing use of electronic records and electronic signatures) does not apply to (a) court orders, notices, or official court documents, (b) any notice of cancellation or termination of utility services (including water, heat, and power), (c) notice of default, acceleration, repossession, foreclosure, or eviction, or right to cure, under a credit agreement secured by, or a verbal agreement for, a primary residence of an individual, (d) cancellation or termination of health insurance or life insurance benefits (excluding annuities), (e) recall of a product or material failure of a product that risks endangering health or safety, or (f) any document required to accompany transportation or handling of hazardous materials, pesticides or other toxic or hazardous materials.
A regulatory agency of Texas may, with respect to matters within its jurisdiction, exempt a specific category or type of record from the requirements relating to consumer consent under Section 101(c), E-SIGN, if a Federal regulatory agency exempts the category or type of record from the requirements or exceptions.
An amendment to the bill added Section 43.019, Business and Commerce code, to provide that the Chapter does not authorize any activity prohibited by the Penal Code.
i. Section 7 of S.B. 393 provides that it does not modify, limit or supersede Chapter 15, Civil Practice and Remedies Code (venue) or Section 35.531, Business and Commerce Code (law applicable to contracts made over the internet).
Key provisions of Texas Uniform Electronic Transactions Act ("UETA"):
a. A contract, record or signature may not be denied legal effect solely because it is in electronic form and a contract may not be denied legal effect because an electronic record was used in its formation.
b. An "electronic record" is a record created, generated, sent, communicated, received or stored by electronic means.
c.An "electronic signature" is an electronic sound, symbol or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. UETA Commentary states that "Whether any particular record is "signed" is a question of fact... No specific technology need be used in order to create a valid signature. One's voice on an answering machine may suffice if the requisite intention is present. Similarly, including one's name as part of an electronic mail communication also may suffice, as may the firm name on a facsimile. It also may be shown that the requisite intent was not present and accordingly the symbol, sound or process did not amount to a signature. One may use a digital signature with the requisite intention, or one may use the private key solely as an access device with no intention to sign, or otherwise accomplish a legally binding act. In any case the critical element is the intention to execute or adopt the sound or symbol or process for the purpose of signing the related record... The term 'authentication,' used in other laws, often has a narrower meaning and purpose than an electronic signature as used in this Act. However, an authentication under any of those other laws constitutes an electronic signature under this Act... This definition includes as an electronic signature the standard webpage click through process... A digital signature using public key encryption technology would qualify as an electronic signature, as would the mere inclusion of one's name as a part of an e-mail message - so long as in each case the signer executed or adopted the symbol with the intent to sign." This should be a ripe area for risk assumption in transactions.
d. A "security procedure" is a procedure used to verify that an electronic signature, record or performance is that of a specific person, or to detect changes or errors in the information. It may include a procedure that requires use of algorithms or other codes, identifying words or numbers or encryption, callback or other acknowledgment procedures. A security procedure may be applied to verify (1) an electronic signature, (2) identity of the sender, and (3) informational integrity of the electronic record. These matters reflect some of the risks associated with electronic transactions.
e. Texas UETA does not apply to (1) a law relating to wills, codicils, or testamentary trusts; (2) UCC except sales or leases, waivers or renunciations under a breach of contract, or statute of frauds applicable to personal property. A number of provisions of the UCC already address electronic transactions. UETA Commentary states that "Additional exclusions under subparagraph (b)(4) should be limited to laws which govern electronic records and signatures which may be used in transactions as defined in Section 2(16). Records used unilaterally, or which do not relate to business, commercial (including consumer), or governmental affairs are not governed by this Act in any event, and exclusion of laws relating to such records may create unintended inferences about whether other records and signatures are governed by this Act." The Drafting Committee of UETA determined that exclusion of trusts (other than testamentary trusts), powers of attorney, real estate transactions (as to which recording may still need to be done by paper), and consumer protection statutes was unwarranted. E-SIGN allows non-uniform state law to pre-empt E-SIGN only if they are consistent with the provisions of Title I and Title II of E-SIGN. Presumably, inclusion of inconsistent provisions would not affect the validity of the remainder of the state law, although a general or specific severability provision in state law should assure validity of the remainder of law.
f. The act applies only to transactions if the parties agree to conduct a transaction by electronic means, as determined by the context and surrounding circumstances, including the parties' conduct. UETA Commentary stated as examples where parties may have agreed to conduct transactions electronically: "Auto maker and supplier enter into a Trading Partner Agreement setting forth the terms, conditions and methods for the conduct between them electronically.... Joe gives out his business card with his business e-mail address. It may be reasonable, under the circumstances, for a recipient of the card to infer that Joe has agreed to communicate electronically for business purposes. However, in the absence of additional facts, it would not necessarily be reasonable to infer Joe's agreement to communicate electronically for purposes outside the scope of the business indicated by use of the business card.... Sally may have several e-mail addresses - home, main office, office of a non-profit organization on whose board Sally sits. In each case, it may be reasonable to infer that Sally is willing to communicate electronically with respect to business related to the business/purpose associated with the respective e-mail addresses. However, depending on the circumstances, it may not be reasonable to communicate with Sally for purposes other than those related to the purpose for which she maintained a particular e-mail account." UETA Commentary states that an agreement in the fine print of a written contract consenting to receive all notices electronically may not evidence intent to use electronic means. "Buyer executes a standard form contract in which an agreement to receive all notices electronically is set forth on page 3 in the midst of other fine print. Buyer has never communicated with Seller electronically, and has not provided any other information in the contract to suggest a willingness to deal electronically. Not only is it unlikely that any but the most formalistic of agreements may be found, but nothing in this Act prevents courts from policing such form contracts under common law doctrines relating to contract formation, unconscionability and the like." A person who agrees to conduct a transaction by electronic means may refuse to conduct other transactions by electronic means. This right may not be waived by agreement. Cautious parties will include a conspicuous provision associated with the signature expressly evidencing the parties' intent to enter a legally binding agreement by an electronic signature to the electronic instrument.
g. If a law requires written notice of information and the parties have agreed to conduct the transaction by electronic means, the requirement is satisfied if the information is in an electronic record capable of retention by recipient at the time of receipt. An electronic record is not capable of retention if the sender or its system inhibits the ability of the recipient to print or store the electronic record. In such case the electronic record is not enforceable against the recipient. 
h. If a record must be posted displayed or formatted in a certain manner, or sent communicated or transmitted by a specific method, then those requirements must be met. However a requirement to send a record by first-class mail may be varied by agreement to the extent permitted by other law. 
i. The record or signature is attributable to a person if it is the act of the person. An act of a person may be shown in any manner, including efficacy of any security procedure applied to determine the person to whom the electronic signature is attributable. The effect of an electronic record or electronic signature must be determined by the context and surrounding circumstances. UETA Commentary states that "In the context of attribution of records, normally the content of the record will provide the necessary information for a finding of attribution. It is also possible that an established course of dealing between the parties may result in a finding of attribution. Just as with a paper record, evidence of forgery or counterfeiting may be introduced to rebut the evidence of attribution.... In certain processes, a technical or technological security procedure may be the best way to convince a trier of fact that a particular electronic record or signature was that of a particular person. In certain circumstances, the use of a security procedure to establish that the record and related signature came from the person's business might be necessary to overcome a claim that a hacker intervened."
j. If a change or error occurs in an electronic record in a transmission between the parties to a transaction, (1) if the parties agreed to use a security procedure to detect changes or errors and one party conformed to the procedure and the other did not, and (2) if the nonconforming party would have detected the change or error had that party also conformed, then the conforming party may avoid the effect of the changed or erroneous electronic record.
k.In an automated transaction, an individual may avoid the effect of an error by the individual if the electronic agent did not provide an opportunity to prevent the correction and the individual takes specified prompt action. 
l. In other cases, a change or error has the effect provided by other law, including the law of mistake, and the parties' contract, if any. 
m. Texas UETA allows an electronic acknowledgment or verification if the electronic signature of the notary, and all other required information, is attached or logically associated with the signature or records.
n. In any proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form. 
o. A contract may be formed by interaction of electronic agents. UETA Commentary states that "While this Act proceeds on the paradigm that an electronic agent is capable of performing only within the technical strictures of its preset programming, it is conceivable that, within the useful life of this Act, electronic agents may be created with the ability to act autonomously, and not just automatically. That is, through developments in artificial intelligence, a computer may be able to 'learn through experience, modify the instructions in their own programs, and even devise new instructions." While artificial intelligence may seem remote, when considering electronic agents, current computing power is already impressive: Celera Data Center data center is capable of 1.3 terraflops (a terraflop is a trillion calculations per second); ASCI White in its final stages of installation for DOE's accelerated strategic computing initiative (for simulation of nuclear warhead explosions) will have a capability of 12.3 terraflops. In three decades, the power of computers may be daunting: "By 2030, we are likely to be able to build machines, in quantity, a million times a powerful as the personal computers of today."
p. Texas UETA has requirements similar to those in E-SIGN for transferable records. Under Texas UETA transferable records include a note under negotiable instruments law, whether or not secured by real property, or a document under the Documents of Title Law. The issuer must expressly agree that the electronic record is a transferable record. The borrower may accomplish this by specifically agreeing in the electronic record that it will qualify as a transferable record. UETA Commentary states that "However, conversion of a paper note issued as such would not be possible because the issuer would not be the issuer, in such case, of an electronic record. The purpose of such a restriction is to assure that transferable records can only be created at the time of the issuance by the obligor. The possibility that a paper note might be converted to an electronic record and then intentionally destroyed, and the effect of such action, was not intended to be covered by Section 16 [of UETA]." The control requirements may be satisfied by use of a trusted third party. UETA Commentary says, "For example, a borrower signs an electronic record which would be a promissory note or document if it were paper. The borrower specifically agrees in the electronic record that it will qualify as a transferable record under this section. The lender implements a newly developed technological system, which dates, encrypts, and stores all the electronic information in the transferable record in a manner which lender can demonstrate reliably establishes lender as the person to which the transferable record was issued. In the alternative, the lender may contract with a third party to act as a registry for all such transferable records, retaining records establishing the party to whom the PRIOR TEXASrecord was issued and all subsequent transfers of the record."
q. UETA Commentary states that Sections 17-19 of UETA (relating to governmental records) are optional provisions for each state. UETA provides a baseline. Of paramount importance is that whatever systems and rules are adopted be compatible with the systems of other governmental agencies and with common systems in the private sector. The authority in Section 19 of UETA to send and receive electronic records and signatures in dealing with non-governmental persons is permissive and not obligatory.
6. ELECTRONIC REAL PROPERTY FILING AND RECORDING LAW
Pre-existing Texas law, enacted effective September 1, 1999, allows electronic filing of instruments with the county clerk.
a. A county clerk may accept instruments by electronic filing and record the instruments electronically if the filing and recording comply with rules adopted by the Texas State Library and Archives Commission.