In New Jersey Land Title Association v. Rone, ___ N.J. Super. ___ (App. Div. 2019), the Appellate Division addressed whether a county register or clerk has the authority to charge a “convenience fee” for the electronic filing of documents regarding real property. The Appellate Division held that under New Jersey law such fees are not authorized.
Filing Fees for Real Property
The New Jersey Legislature has established fees that a county recording officer can charge. N.J.S.A. 46:26-1states:
The fees of the county recording officers and other officers for entering, filing, recording, registering, indexing, copying and certifying copies of all deeds and instruments of the nature or description set forth in section [46:26A-2] of this title, shall be the fees prescribed and fixed by the title Fees and Costs.
Section 4-4.1 of Title 22A sets forth a list of fees that can be charged by clerks or registers for filing documents affecting real property. More specifically, N.J.S.A. 22A:4-4.1provides that for any document filed, the register or clerk, “shall charge” $30 for the first page, $10 for each additional page, and $10 for each “rider, insertion, addition, or any map, plat or sketch.” The statute lists additional charges for other filings and services, such as preparing and transmitting an abstract of title or entering marginal notations.It does not authorize a fee for accepting an electronically-filed document.
Facts of New Jersey Land Title Association v. Rone
In 2006, the Essex Register began accepting electronically-filed documents. To file a document electronically, the filer connects to an internet portal and sends a scanned copy of the document to be recorded. The filer must either have an escrow account or a bank account so that the filing fee can be withdrawn as an electronic transfer.
When the Essex Register began accepting documents electronically, the Register did not charge a separate or additional fee for such a filing. However, in 2016 the Essex County Board of Freeholders passed an ordinance allowing the Essex Register to charge “a surcharge or convenience fee of $3.00 . . . to offset the cost of electronic receipt transactions with respect to the electronic filing of documents for recordation with the Essex County Register of Deeds & Mortgages paid for by credit card, debit card, automatic clearing house (‘ACH’) or electronic funds transfer.” The Essex Register maintains that the $3 fee is designed to offset some of the additional costs incurred in accepting electronically-filed documents.
In May 2016, the New Jersey Land Title Association (“Association”) filed a complaint in lieu of prerogative writs against the Essex Register. The Association sought two forms of relief:
(1) to enjoin the Essex Register from charging the convenience fee; and
(2) to compel the Essex Register to disgorge and return all “wrongfully charged ‘convenience fee[s].'”
The trial court sided with the Essex Register, holding that the convenience fee was authorized by the Government Electronic Payment Acceptance Act (GEPAA), N.J.S.A. 40A:5-43 to -47, and its regulations, N.J.A.C. 5:30-9.1 to -9.11. The court also reasoned that the convenience fee was consistent with the rules regarding electronically-submitted documents affecting real property (N.J.A.C.15:3-9.1 to -9.13). The Association then appealed.
Court’s Decision in New Jersey Land Title Association v. Rone
The Appellate Division reversed. “The Legislature has prescribed the fees a county register or clerk may charge for the filing of documents, and a convenience fee is not one of the legislatively authorized fees,” the court held. “Accordingly, we hold that a county register or clerk cannot impose such a fee.”
After reviewing the statutes that could potentially justify fees for the recording of electronically-submitted documents to county clerks or registers, the Appellate Division concluded that N.J.S.A.46:26-1 and N.J.S.A.22A:4-4 set forth the only authorized fees. The court explained:
[T]he Legislature has explicitly addressed both the fees to be charged to the public and the source of funding from which registers of deeds are to draw if they seek to upgrade or modernize their services. Accordingly, the Legislature has comprehensively preempted the field of filing fees for documents affecting real property. The fees in N.J.S.A.22A:4-4.1 are, therefore, the comprehensive fees authorized by the Legislature for county registers and clerks to perform their services as the county recording officer. If a fee is not listed in N.J.S.A.22A:4-4.1, it cannot be charged.
The Appellate Division rejected the Essex Register’s argument that the GEPAA, which authorizes local government units to impose processing fees for payments made via credit card or other electronic fund transfers, could justify the fee. “The Essex Register is charging the $3 convenience fee to offset the cost of maintaining a web-based system to accept electronically-filed documents,” the court wrote. “The $3 fee is not being used to offset processing charges or discount fees for the use of a card payment system or electronic funds transfer system.” The appeals court also concluded that N.J.A.C.15:3-9.1 to 9.3, which mandates that all county recorders accept documents electronically, could not serve as the basis for the fee, citing that “the only additional fees that can be collected [under these regulations] are processing fees related to accepting electronic payment.”
Next, the Appellate Division rejected the argument that the Essex Register is entitled to collect the fee under the doctrine of quantum meruit. “[T]he Legislature has established a uniform schedule of fees to be charged by county registers or clerks for the filing of documents affecting real property,” the court explained. “Accordingly, a filer would not reasonably expect to have to make a payment beyond those statutory fees.”
Finally, the court stated that county registers should seek financial relief from the Legislature and not the courts. “If county registers or clerks believe their offices are incurring costs that are not covered by the fees set forth in Title 22A, their recourse is to petition the Legislature to provide some means to address those costs, by allowing the collection of an additional fee or in some other manner,” it noted.
Key Takeaway for New Jersey Local Governments
As the Appellate Division’s decision in New Jersey Land Title Association v. Ronehighlights, local government units must ensure that the fees they charge are authorized under New Jersey law. While counties, municipalities and other public entities are often given some leeway in setting fees, they must generally have a statutory basis.
For more information about the court’s decision in New Jersey Land Title Association v. Rone, or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.