In a decision approved for publication, New Jersey’s Appellate Division held on February 11, 2019 that county registers or clerks may not “charge a ‘convenience fee’ for the electronic filing of documents concerning real property.”  See New Jersey Land Title Ass’n v. Rone, 2019 WL 508858 (N.J. Super. Ct. App. Div. Feb. 11, 2019).  N.J.S.A. 46:26-1 states that the fees “for entering, filing, recording, registering, indexing, copying and certifying copies of all deeds and instruments [affecting real property] . . . shall be the fees prescribed and fixed by” N.J.S.A. 22A:4-4.1.  N.J.S.A. 22A:4-4.1 enumerates fees for the recording of different documents, but does not include a fee for accepting electronic filings.

In 2016, the Essex Register began charging a $3.00 convenience fee for “the electronic filing of documents for recordation with the Essex County Register of Deeds & Mortgages.”  The New Jersey Land Title Association (the “Association”) then brought this action seeking to enjoin the Essex Register from charging the fee and to return all fees it collected.  In 2017, the trial court granted the Essex Register’s motion for summary judgment and denied the Association’s motion, dismissing the action with prejudice.  The trial court held that the Government Electronic Payment Acceptance Act (the “GEPAA”) and other regulations authorized this fee.  See N.J.S.A. 40A:5-43; N.J.A.C. 15:3-9.3.

On appeal, the Appellate Division reversed.  First, it found that N.J.S.A. 46:26-1 and N.J.S.A. 22A:4-4.1 set forth the only fees that can be charged for the recording of electronically-submitted documents to county clerks or registers, and neither statute allows for this fee.  “In short, neither N.J.S.A. 46:26-1 nor N.J.S.A. 22A:4-4.1 allow a register or clerk to charge a surcharge or convenience fee for accepting an electronically-filed document. . . . If a fee is not listed in N.J.S.A. 22A:4-4.1, it cannot be charged.”  Second, the Court rejected the Essex Register’s argument that the GEPAA authorizes this fee.  The GEPAA allows local government units to set processing fees for payments made via credit card or other electronic fund transfers.  See N.J.S.A. 40A:5-45.  The $3.00 convenience fee is not a charge for electronic payments, but for the electronic submission of documents.  “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 $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.”

Third, the Court found that the regulations of N.J.A.C. 15:3-9.1 to -9.3 also do not allow for this charge.  N.J.A.C. 15:3-9.3 requires only that all county recorders begin accepting documents electronically by May 1, 2017.  The Court further found that “the only additional fees that can be collected [under these regulations] are processing fees related to accepting electronic payment.”  Fourth, the Court found that the Essex Register is not 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. Accordingly, a filer would not reasonably expect to have to make a payment beyond those statutory fees.”  Finally, the Court stated that “[i]f 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.”  Based on these holdings, the Court remanded the case for further proceedings on the Association’s claim of disgorgement of fees collected.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Dylan Goetsch at dgoetsch@riker.com.