§7021 Transferable Records

Summary

Sets rules for electronic loan records that can be treated like paper promissory notes. It defines "transferable record" as an electronic loan document that would count as a note under UCC Article 3 if it were on paper, that the issuer agreed is transferable, and that relates to a loan secured by real property. It says "electronic record," "electronic signature," and "person" have the meanings in section 7006. A person has control of a transferable record when the system used to track it clearly shows that person is the one issued or last transferred the record. The system must keep one main, identifiable copy that is basically unchangeable except in allowed ways; show who the current controller is; be kept by the controller or their custodian; make clear which copies are not the main copy; and show whether changes are authorized. A controller is treated as the holder and has the same rights and defenses as a holder under the UCC, including, if the rules in sections 3–302(a), 9–308, or revised 9–330 are met, the rights of a holder in due course or purchaser. Delivery, possession, and endorsement are not needed. The borrower (obligor) keeps the same rights and defenses as under equivalent paper records. If someone wants to enforce the record and the other person asks, the enforcer must give reasonable proof of control, such as access to the main copy and related business records. References to the UCC mean the UCC as it applies in the law that governs the record.