Paper-Out Procedure Becomes Law

The old song “I’m Just a Bill” from School House Rock comes to mind when describing the process to push a bill.  When legislation is introduced, it is assigned to a committee, at which time it is up to the Chairman as to whether it will be allowed to be presented before his/her committee. Unfortunately, less than 8% of bills, on average, actually pass.  In this session, the percentage was even less. Bills that go to committee and make it on the agenda for discussion, amendment, and passage are then placed on the calendar for floor debate. If the bill passes floor debate it is sent to the opposite house for the same procedure.  (Oftentimes, there are companion bills having the same thing happening in both houses.) If both houses do not agree, the bill is sent to conference for further discussion and amendment.  Once (if) both sides come to an agreement, the conference report is filed, and the bill is put back on the calendar for a floor vote in both houses.  Upon complete passage, the bill is sent to the Governor where it could face a veto action, but usually gets signed into law.

Of the 2,623 bills introduced during the 2021 Regular Session, there were approximately 38 bills that affected or related to real property that were tracked by the LTAMS Legislative Committee. Of those 38 bills, 4 were written by and introduced at the request of the Association. Of those 4, only one – after being sent to conference – made it out of its assigned committees, through both chambers, and was signed into law by the governor last week.

The lucky bill, sponsored by Senator Tyler McCaughn, was SB 2638. The bill amends the Revised Mississippi Law on Notarial Acts (the “e-Notary Law”), which goes into effect July 1, 2021. Its purpose is to create a “paper out procedure” for documents that are signed and notarized electronically in the physical presence of a notary public.

While the e-Notary Law allows in-person electronic notarizations on electronic documents, it did not take into consideration the fact that only 30 of Mississippi’s 82 counties have the capability to accept electronic documents for recording. As of February 1, 2021, those 30 counties that have e-recording capability include: Adams, Calhoun, Carroll, Choctaw, DeSoto, Forrest, George, Hancock, Harrison, Hinds, Itawamba, Jackson, Jones, Lafayette, Lee, Madison, Monroe, Neshoba, Panola, Pearl River, Pontotoc, Prentiss, Rankin, Scott, Tallahatchie, Tishomingo, Union, Washington, Wayne, and Winston.

Until all of Mississippi’s 82 counties have the capability of accepting electronic documents for e-recording, a law is necessary to ensure that documents notarized under the new e-Notary Law can be recorded in all 82 counties. For those 62 counties that can currently only record paper documents, Senate Bill 2638 would create “papering-out” process by which the electronic document can be printed, certified, and then submitted for recording in physical form.

Generally, the “papering out” process involves:

1. An attorney or custodian of the electronic document (notary) must supervise the printing of the electronic document to be recorded. This printout must be the entire document, including any notarizations applied to the document by an electronic or remote notary.
2. The attorney or custodian would then attach his or her own “certificate” stating that the printout is a true and correct copy of an electronic document printed under supervision.
3. The paper document with the new “Certification” is then submitted for recording.

Currently, some ten states currently have laws in effect that allow for the papering-out of real estate documents: Florida, Idaho, Kentucky, Minnesota, Montana, North Dakota, Ohio, Oklahoma, Tennessee, and Texas. In addition to these 10 states, three additional states have passed papering-out laws that will go into effect in 2020: Iowa (effective date of July 1, 2020), Maryland, and Washington (both with an effective date of October 1, 2020). More states are expected to follow suit.

Of the 38 tracked bills, the only other two bills signed into law during the 2021 Regular Session were SB 2626 (a bill that amends the MS Business Corporation Act to allow corporations to hold annual or special shareholder meetings remotely) and HB 953 (a bill that regulates managing agents of and requires financial reviews by Homeowners’ associations).