Where's My Jetpack?

After reading a sheaf of end-of-year and what-will-happen-in-2011 articles in January, I got to thinking about what we don’t have in 2011. No jetpacks or flying cars, no phasers, and no teleportation (which would make commuting so much easier!) so apparently the Jetsons and Star Trek were a bit off. When I started practice in the late 1980's, I similarly hoped that, by now, 20 years later, there might be a few new cool devices that would make real estate, and real estate lawyering, easier.

For one thing, it would be nice . . . for everyone except appraisers . . . if you could just hold up a little device to a property, and it would read off the market value, like a geiger counter. (Just think of the couple standing at the curb, looking anxiously as the realtor holds up the little device, muttering, "Honey, I don't think it's clicking loud enough, are you sure?")

Then again, if you have an iPhone and Zillow.com, you can get part way there, for residential properties, in 2011. And with CoStar, you can get much of this information for commercial properties. (Note: I have no stocks or other interests in these companies; I just think their technologies are slick.) So the technology is coming along, though it’s not as simple to use as one might hope.

Other innovations seem a bit harder to achieve. A decade ago we were all talking about electronic title and mortgage recording. What real estate professional can possibly help feeling some wistful attraction to the idea of "paperless" deals? (Or to the Torrens system of public land title registration, which yields public records that are organized by the piece of land rather than by the grantee’s and the grantor’s names?) But electronic title and mortgage recording has proved to be both practically and politically impossible to date. There are valid electronic paperless signatures for most contracts (as of 2000 or so); but not widely acceptable valid paperless notarial seals, nor do recorders’ offices generally accept anything other than "wet ink" signed documents with live notarial acknowledgements. Even with the highly uniform paperwork resulting from a decade of securitization, most deals are still documented in big piles of paper. Local property records still often are not very searchable, or not at all searchable, by automated means. (And, unfortunately, many recorders’ offices’ staff opposes any changes that might result in fewer jobs.)

Perhaps more disturbing, in some parts of the industry, we decided not to improve the process by automation, but to short-cut it, with paper transfers that may have ignored basic rules of real estate conveyancing. Thus the problems with MERS. Congress may fix this, retroactively; but it would have been nice if the laws requiring recording unbroken chains of perfected title were maintained –- or changed -- in the first place.

And to be fair to robots, let's be clear that the "robolawyer" scandals this year were not bad acts committed by robots, but rather, reports of humans who were alleged to be acting well below robotic standards. Real robots (properly programmed) would unquestioningly set lending and documentation policies in accordance with law. They would also follow the lending and documentation policies they were given like . . . well, like robots. Maybe we should see if C3PO is available instead.

I still have high hopes for improving our transactional systems with modern practices. Just as the Internet has brought some increased transparency to prices, the examinations and clean-up going on now in mortgage processing give us the opportunity to bring in new, better methods that are more efficient and yield richer data. I had expected to see by now more standardization of legal documents. Unfortunately, though there seem to have been many attempts in that direction, particularly in certain financial institutions, many of the documents generated that way are lacking and create problems when enforcing them. Worse, the quality of the writing is not any more clear; unfortunately, writing in plain English still appears beyond the grasp of many of the proponents of such documents.

If legal terms and property data were more formatted and widely re-usable, wouldn't we spend less time dickering over differing lease "going-dark" clauses, or differing "material adverse change" lender conditions, that actually mean pretty much the same thing? Think of the lawyer time & cost saved, if we were able to do deals with only the overhead of negotiating the bits of the deal that actually affect the value and were business-critical. Let's renew our resolve to simplify forms, eliminate superfluous terms, and make sure that the efforts we put into negotiating and structuring real property deals in this next decade are focussed on things that add to value.