§7021 Transferable records

Summary

Treats an electronic loan document tied to real estate like a paper promissory note when it meets certain rules. A transferable record is an electronic record that would count as a note under Article 3 of the Uniform Commercial Code if it were written, that the issuer has agreed is transferable, and that relates to a loan secured by real property. The terms electronic record, electronic signature, and person use the meanings in section 7006. A person has control of a transferable record when the system used to move or show ownership reliably shows that person is the one it was issued or most recently transferred to. The system must make, store, and assign a single authoritative copy that is unique, identifiable, and mostly unchangeable; show who it was issued to or last transferred to; keep that authoritative copy with the person claiming control or their custodian; allow changes that name a new assignee only with that person’s consent; mark copies as not authoritative; and clearly show whether any change is authorized. A person in control is treated as a holder under UCC 1–201(20) and has the same rights and defenses as a holder of an equivalent paper record, including the rights of a holder in due course or a purchaser if the UCC rules in 3–302(a), 9–308, or revised 9–330 are met. Delivery, possession, and endorsement are not required. An obligor has the same rights and defenses as for an equivalent paper record. If someone wants to enforce the record, they must give reasonable proof of control, such as access to the authoritative copy and related business records. UCC references mean the UCC as it applies in the governing jurisdiction.