P R O B A T E   &   P R O P E R T Y
January/February 2004
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Technology Property

Technology Property Editor: Gerald J. Hoenig, 8495 Caney Creek Landing, Alpharetta, GA 30005, ghoenig@mindspring.com.

Technology—Property provides information on current technology and microcomputer software of interest in the real property area. The editors of Probate & Property welcome information and suggestions from readers.

Legal Technology at the Cutting Edge—XML and the Law

Why should a computer language be of interest to real estate lawyers? This issue’s column introduces one such language and the important impact it may have on real property practitioners. The language is called XML, which stands for Extensible Markup Language.

XML has the capability of facilitating the electronic filing of documents with local recorder’s offices and with courts. It also has the potential to significantly reduce the time it takes to perform due diligence in a real estate transaction, and its availability may bring about changes in the law relating to the enforceability of contract provisions.

With the development of the Internet and the World Wide Web, markup languages became very important. HTML, or Hypertext Markup Language, became the common language to designate how text and graphics appear on a web page. Parts of a web page are “marked” to instruct the browser software how to display the web page’s content. In the following clause, for example, if the word “no” is to appear bold, it is marked as shown so the browser software will display a bold “no” on the end user’s screen.

“The Borrower shall have nopersonal liability.”

“The Borrower shall have no personal liability.”

The word “no” is tagged with program instructions in angle brackets. The tags available in HTML are limited to instructions controlling the way a web page appears. XML provides a richer environment by permitting the programmer to create additional tagged instructions, and that is the meaning of “Extensible” in the name “XML.”

XML has become a well-established markup language, as evidenced by the many XML books found in the computer section of any major bookstore. The extensible feature can be used for a variety of purposes. For lawyers, XML provides the capability of tagging or identifying elements in a legal document that can be of critical importance.

An organization called LegalXML has been formed and is in the process of adapting XML for use by the legal profession. The impetus behind forming LegalXML was a group of lawyers and court administrators who wanted to promote the electronic filing of pleadings, motions, and other court documents. When documents are received electronically, they must be stored in the court’s document database. For the documents to be useful to the court and the parties to an action, however, the parties and the case have to be identified and the documents indexed. This is accomplished with XML tags.

Although the extensibility of XML is what enables its easy application to legal documents and what provides the necessary indexing automatically, this same attribute of extensibility requires a major effort to establish naming standards for XML tags. That is one of the main functions of LegalXML. If courts in different jurisdictions or different courts in the same jurisdiction create their own XML tags, the end users would need to know which set of XML tags to use for each jurisdiction and court, and XML’s effectiveness for legal purposes would be greatly diminished. That is why the standards setting function is so important.

LegalXML has been absorbed into a large international standards setting organization called the Organization for the Advancement of Structured Information Standards (OASIS). From the organizations represented on its board, as shown in the box on page 51, OASIS appears to have significant industry and governmental support. To get an idea of the current scope of OASIS’s work in the legal area, the current LegalXML committees functioning in OASIS are listed in the box on page 51. This information is available on the OASIS web site, at www.oasis-open.org/home/index.php. Five OASIS LegalXML committees have American Bar Association representatives; the eNotary Committee is chaired and Lawful Intercept Committee co-chaired by ABA representatives.

So how does this affect real estate lawyers? First of all, many real estate lawyers get involved in litigation relating to real property, such as foreclosures, landlord-tenant disputes, and bankruptcies. Some courts already require electronic document filing.

In addition, the same approach used for filing court documents can be used for filing deeds, mortgages, and other documents recordable in the real estate records. As an example, tags would be needed in a deed to identify the grantor, grantee, and the legal description. A standards committee needs to establish uniform tags for each element, so that some jurisdictions do not tag the grantor with “,” while others use ”,” ”,” or some other appropriate word. Perhaps the notary and witnesses, if any, will be required to be identified as well. Most likely, a tag will be required for the date of the deed. If tags were required to identify the type of deed—quitclaim, warranty, limited or special warranty, or other—or any easements, special conditions, or restrictions contained in the deed, these provisions would be easier to identify when doing an electronic search of the official deed records. In addition to providing lawyers and the public with excellent search tools, this system has the potential to make recorders’ offices much more efficient than is possible now, because currently the critical indexing data cannot be extracted automatically from a text document such as a deed or mortgage.

At first blush, using XML to tag document elements appears to create inefficiencies in document drafting, because the person drafting the legal document would have to type in these awkward tags in addition to the standard text. With the document tagged, it would also appear more difficult to read in a normal manner. These problems should be minimal, however. Tools are readily available to add the tags with little effort. If the drafter uses automated templates of the type discussed in the September/October 2003 and May/June 2003 columns, the tags will be added automatically without additional effort by the drafter. As for readability, users will be able to view a document with the tags visible or hidden.

To make XML effective, however, it must be a prerequisite of recording, and electronic execution, notarization, and filing must be all mandatory.

The search capabilities available with this approach to recording will aid in due diligence efforts and create an opportunity to increase due diligence productivity substantially by applying the same approach to documents that are not recorded. For example, large office building or retail property purchases may include several hundred leases to review, or even thousands for large portfolio purchases. Often a client who is considering purchasing a property may request that a review be performed to determine if certain risks exist in any of the leases, such as environmental indemnities by the landlord or options to purchase granted to a tenant. If the lease were tagged to identify indemnities and options to purchase, a report on the entire portfolio of leases could be produced for the client in a much shorter time than the days and weeks it takes using conventional review methods. Using XML tags to identify all indemnities and purchase options in a portfolio of leases is likely to be more accurate than the results produced by lawyers and paralegals reading through hundreds of leases with all of the tedium and fatigue associated with a marathon lease review session.

Some might argue that once a lease reviewer reads a few leases for the project, he or she knows where to look for indemnities and purchase options. That approach, however, might result in provisions being missed if they are placed in unusual places in the lease without a heading to indicate where they are. With XML, the provision would be tagged wherever it is, even if it is artfully drafted into the middle of a lengthy provision on the definition of operating expenses.

That XML will be used in leases in the near future is doubtful, however, because a great deal has to happen before it can be used effectively. Why would anyone rely on an option to purchase being marked with XML tags if there is no downside to not marking the option with tags? The law could be changed to provide that an option to purchase is not effective unless it is tagged as an option with XML tags. This type of approach would not be foreign to the legal community. After all, some states provide that provisions like a waiver of rights are not effective unless the waiver is in bold print in a minimum-size typeface.

One alternative to changing the law could make XML effective in making the due diligence process more efficient. A technology company, Autonomy, claims to have the software to review text documents, identify concepts of any type in any language, and automatically add XML tags to identify the concept in the text document. If this claim can be demonstrated as accurate for identifying significant provisions in legal documents, no changes in the law would be required and documents would not have to be tagged when they are produced, because they would be tagged when the Autonomy software reviews them. Find out more about Autonomy at www.autonomy.com.

Organizations with Representatives on the OASIS Board

  • Office of e-Envoy, UK Cabinet
  • BEA Systems
  • Intel Corporation
  • Sun Microsystems
  • Hewlett Packard
  • Microsoft
  • US Federal Reserve System
LegalXML Committees in OASIS
  • LegalXML Court Filing
  • LegalXML eContracts
  • LegalXML eNotary
  • LegalXML IntJustice
  • LegalXML Lawful Intercept
  • LegalXML Legislative
  • LegalXML ODR
  • LegalXML Transcripts