Record Maintenance Important For Enforcement of Electronic Transactions
A Florida Appellate Court recently applied the Uniform Electronic Transaction Act (F.S. 668.50) to confirm a bank’s right to initiate foreclosure proceedings. In Rivera v. Wells Fargo Bank, N.A., et. al, 2016 WL 1579076 (Fla. 4th DCA, April 20, 2016), the Court, upon de novo review, concluded that, based on the UETA, Wells Fargo had been authorized by Fannie Mae, the note holder, to pursue the foreclosure. Wells Fargo became the note holder and therefore had the same rights as a holder of an equivalent record or writing under the UCC. Wells Fargo had proven that Fannie Mae had controlled the electronic note and that Wells Fargo was Fannie Mae’s designated custodian.
Electronic transactions are governed by the federal E-Sign Act, 15 USC 7001, et.seq. The E-Sign Act provides that signatures, contracts and other records relating to transactions affecting interstate or foreign commerce may not be denied legal effect, validity or enforceability simply because it is in electronic form. The Act allows states to adopt laws regarding the use of E-records and signatures. Many states, including Florida, have adopted the UETA.
F.S. 668.50 is somewhat cumbersome, but subsection 16, upon which the Rivera Court relied, deals with the issue of “transferrable records”:
(a) “Transferrable Record” means electronic record means that:
- Could be a note under Chapter 673 if the electronic record were in writing.
- The issuer of the electronic record expressly has agreed is a transferrable record.
(b) 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.
In Rivera, the court applied the statute and found that the note was a transferrable record because Fannie Mae had control of the note, only one authorized copy of the note existed and Fannie Mae properly designated Wells Fargo as custodian.
Electronic documents, signatures and transactions are an ever larger part of every day commerce. The Rivera case illustrates 2 important points. 1) Courts are willing to enforce e-transactions, and 2) it is very important to establish and maintain the necessary systems to preserve electronic records in order to assure proper evidence and enforceability of e-transactions.