Modernizing the Register of Deeds in Dane County, Wisconsin

INTRODUCTION

Property registration systems have been studied extensively, as countries have attempted to find ways to make property markets work better.  The United Nations Economic Commission of Europe (1996, p.9), observed:

ìA system for recording land ownership, land values, land use and other land-related data is an indispensable tool for a market economy to work properly, as well as for sustainable management of land resources. All industrialized nations with a market economy maintain some sort of land register system that fulfils the above requirements.î

Most analyses of registration systems, however, look at them either from the point of view of the users to calculate transaction costs in order to make changes in the procedures of registration and thereby make land markets more dynamic, or from the perspective of the requirements of a market economy (See Burns et. al., 2003) to make institutional recommendations in countries moving toward a market economy.  Such a focus on system creation and organization is useful in exploring options for the design of such systems.

However, once established, land registries perform more or less well.  How to evaluate this performance once the offices and system are established is important for improving that performance over time.  As Adlington (2002, p.2) observed,

ìÖdespite the significant resources being invested by the donor community for modernizing land administration infrastructure, there is little systematic discussion of the key elements of such a system and of what constitutes effectiveness within particular socio-economic, cultural and temporal contexts.î

The International Federation of Surveyors (FIG) addressed this performance monitoring question in a paper on benchmarking cadastral systems, with the objective of making comparisons across systems (See Steudler and Kaufmann, 2003).  Such an approach is difficult to use, however, because of the different institutional and legal contexts in which registration/cadastre systems function.  A more useful approach for monitoring performance is to develop indicators of performance of a single system over time.  As part of the policy to shift the Land Registry in the United Kingdom to an independent executive agency, specific indicators were established to show government whether the new Land Registry was meeting goals of gradually improving efficiency and effectiveness (HM Land Registry Executive Agency, 1996).  John Manthorpe prepared an analysis of these performance indicators (Manthorpe, 2000). 

With the growing interest around the world in making property registries self financing, client oriented and efficient, this U.K. approach could prove useful.  Even more useful would be a set of indicators which could be applied to a single registration office, and not the entire system as in the U.K.  In order to test out this notion, we have taken the Dane County Register of Deeds as a case study to explore the question whether meaningful and useful performance indicators can be developed in a non-UK context.

These indicators are then used to analyze the costs and benefits of the introduction of Information and Communication Technologies into the operations of the Register of Deeds.  The second question is whether there has been a simple shift from people related expenses to technology expenses, or has technology introduction generated some net benefits?

BACKGROUND

Dane County, Wisconsin, is the location of the State Capital, the largest campus of the University of Wisconsin System, the Madison metropolitan area, and numerous businesses.  The population is approximately 458,000 people (Dane County, Wisconsin, 2005).  In 2004 there were approximately 180,000 properties (land parcels and condominium units) in the County of which approximately 174,000 are housing units.  There were 2,887 farms in Dane County in 2002, containing a total of 415,310 acres of cropland.  In 2004 there were 39 sales[i] of agricultural land continuing in agricultural use, averaging 83.6 acres per sale at an average price of $6,765 per acre.  There were 38 sales of agricultural land diverted to other uses averaging 58.7 acres per sale, with an average price of $23,839 per acre (Wisconsin Agricultural Statistics Service, 2005). 

The total value of real estate in the County was approximately $36 billion in 2004, up by 11% from 2003, an indicator both of the large asset base of the County and of the rapidly rising property values in the region.  In 2004 the total value of properties that changed ownership was approximately $350 billion[ii].  Documents that describe property transactions are recorded at the Dane County Register of Deeds (ROD), which is the authoritative source of information about real property transactions.

The property market in Dane County is most active for residential parcels or condominium units.  Table 1 shows the number of residential sales and median prices for 2000 through 2004 as tabulated from listings by realtors working in the county, and linked with the South West Wisconsin Realtor Association.  Condominium sales have been increasing more rapidly than houses, and the median prices have been increasing rapidly for both types of residences.

Table 1:  Residential Sales in Dane County 2000-2004

YEAR		SALES						MEDIAN PRICE
		Houses-Number	%	Condos-Number	%	Total-Number	%	Houses	Condos
2000		4375	82.1%	956	17.9%	5331	100.0%	$154,400	$124,400
2001		4902	81.4%	1120	18.6%	6022	100.0%	$163,335	$136,000
2002		5261	81.3%	1212	18.7%	6473	100.0%	$178,000	$144,900
2003		5620	79.8%	1427	20.2%	7047	100.0%	$189,900	$158,900
2004		5775	75.6%	1868	24.4%	7643	100.0%	$210,000	$162,700
Source:  South West Wisconsin Multiple Listing Service Corporation

NOTE:  This information is based in whole or in part on data supplied to the South Central Wisconsin MLS Corporation by realtors.  The SCWMLS does not guarantee and is not responsible for its accuracy.  Data maintained by the SCWMLS does not reflect all real estate activity in the market.

Returning to the Register of Deeds, over the six year period 1999-2004, there have been an average of 17,087 deeds recorded yearly (See Table 2), including sales (which represented about 98% of all deeds recorded), intra family transfers, and other types of transfers.  Most of these deed transactions reflect sales of urban properties. 

Sales deeds, however, are just one type of transaction.  Mortgage related transactions are quite numerous.  An average of almost 70% of all documents recorded over the past 6 years have been mortgages or satisfactions of mortgages, with the year 2003 experiencing a very high number of such documents recorded. 

There were nearly 150,000 real estate related documents recorded in the ROD in 2004, but over 236,000 documents recorded in 2003óshowing that there are large variations year to year. 

Using the estimate of 180,000 real estate units in the County, the ìturnoverî rate is close to 75%-80% of the total number of properties each year on the average, and in some years the rate is over 100%, depending on the rate of mortgage interest, and the desire of property owners to re-finance when interest rates drop as they did in 2002-2003.

The ROD charges a fee of $11 for the first page of a document that is submitted for recording, plus $2 for each additional page.  This fee is set for all 72 RODís of the State. 

Table 2: NUMBER OF DOCUMENTS BY TYPE RECORDED AT DANE COUNTY ROD--1999-2004
	1999	2000	2001	2002	2003	2004	TOTAL 1999-2004	Average Yearly Number-1999-2004	PERCENT 99-04
DEEDS	16,263	14,941	16,071	17,274	18,856	19,117	102,522	17,087	10.8%
MORTGAGES	40,985	32,035	53,529	72,442	85,441	54,136	338,568	56,428	35.6%
LAND CONTRACTS	325	238	204	239	195	193	1,394	232	0.1%
SATISFACTIONS	41,235	25,945	44,969	71,290	87,002	46,708	317,149	52,858	33.3%
PLATS	62	48	41	42	60	45	298	50	0.0%
CONDO PLATS	68	83	97	91	130	137	606	101	0.1%
CONDO DEC	95	102	124	117	153	164	755	126	0.1%
CERTIFIED SURVEY	383	352	369	353	323	330	2,110	352	0.2%
MISC DOCS	21,889	21,919	30,367	39,131	43,699	27,702	184,707	30,785	19.4%
HT 110	622	547	638	664	664	609	3,744	624	0.4%
REAL ESTATE TOTAL	121,927	96,210	146,409	201,643	236,523	149,141	951,853	158,642	100.0%

Source:  Dane County Register of Deeds, 2005

ìSatisfactionsî are mortgage satisfactions.  "Plats" are mainly subdivision survey plans with a few assessor's, cemetery and transportation project plats included.  ìCondo platsî are condominium plats which is a map showing the locations of units and their dimensions, and common areas of condominium type buildings.  ìCondo decî are condominium declarations, which are documents which set up the governance of condomiums.  ìCert surveyî refers to certified survey maps.  ìMisc. docsî includes affidavits, agreements, judgments, lis pendens, restrictions, resolutions, power of attorney, federal tax liens, etc.  ìHT 110î is the form used for the termination of decedent's property interest.

Other revenues for the Dane County ROD come from document copying, and of growing importance are the revenues from fees charged for access by various types of clients to the digital information maintained by the ROD.  The ROD also has a ìvital recordsî section, where it maintains records of births, deaths and marriages which occur within the County.  About 7% of the fees generated by the ROD come from the copies provided to the public of birth, death and marriage certificates.

Since the Register of Deeds is an institution of fundamental importance for the operation of property markets and the management of $36 billion in assets in the County, how well this institution functions is of interest.   We use the following indicators of ROD management to try and evaluate it.

For a properly functioning ROD, we would expect:

 1.      The number of recorded documents by one staff person should increase over time, showing improving ROD staff productivity;

2.      The total cost per document recorded should decrease over time, showing increasing ROD economic efficiency

3.      The surplus of revenues over costs should increase over time, showing that the ROD is meeting client needs and is operating efficiently.

4.      The increased availability of property information from the ROD should lead to a reduction in fees charged the participants in property transactions by private companies for verifying title.

STAFF PRODUCTIVITY

Table 3 shows the staffing levels and the number of real estate documents they recorded by year.  With only the addition of two full time staff people since 1990-03 period, the ROD handled almost double the number of documents on the average in the 2001-04 period.  The average number of documents recorded increased by nearly 92%.  The general trend in real estate activity is upward but there are also significant peaks and valleys.  Dane County ROD has been able to "ride the storms" of periods of heavy recording (most frequently due to refinancing of mortgages, due to dropping interest rates).

The average number of documents recorded per staff member increased over 71% from the four year average of 1990-93 in comparison with the four year average 2001-04. 

Although some of this increase in staff productivity came from an increase in the use of short term employees in recent years, much of the increased productivity comes from important investments made in the intervening period in information and communication technology (see Land Information Bulletin (1998), for a description of these investments.  

In the 1980ís the ROD had already invested in an in-house mainframe software program that produced microfiche images of recorded documents and microfiche indexes for retrieval of those documents.  By 1995, the switch to a client-server PC-based system with document imaging was well under way, financed by a $300,000 grant.  The office transformation continued with the acquisition of 26 workstations, two scanners, one 88-platter jukebox, three laser printers, a 12-megabyte file server, a database server, an image server, a print server, and a modem.

In 2000, the ROD offered ìLaredo,î an online system providing access to its index and images.    In 2001, the ROD upgraded its imaging and indexing systems resulting in increased speeds of indexing, scanning and access.  In 2003 the ROD recorded the first document electronically, and  now accepts digital filing of mortgages, assignments of mortgage, satisfactions of mortgages and subordination agreements from eight major lending institutions.

Table 3:  Register of Deeds Staffing and Work Load by Year

YEAR	STAFF	No. of Real Estate Documents Recorded (1)	No. of Documents Recorded per Staff Person
1990	16.5	61,044	3,700
1991	16.5	72,173	4,374
1992	16.5	115,621	7,007
1993	16.5	133,066	8,065
1994	17.8	94,953	5,334
1995	18	75,223	4,179
1996	18	94,745	5,264
1997	17.5	98,346	5,620
1998	17.5	147,754	8,443
1999	18.5	121,927	6,591
2000	18.5	96,210	5,201
2001	18.5	146,409	7,914
2002	18.5	201,643	10,900
2003	18.5	236,523	12,785
2004	18.5	149,141	8,062
90-93 avg.	16.5	95,476	5,786
01-04 avg.	18.5	183,429	9,915
% Change	+12%	+92%	+71%

(1)     Staff are cross-trained such that real estate staff help with customer service in Vital Records and Vital Records staff can help with indexing in the Real Estate section.  Vital Records documents received by the Register of Deeds are not included in this table, nor are documents relating to personal property.  The number of copies of vital records produced for clients ranged between 11,800 and 13,100 the past four years.

Source:  Dane County Register of Deeds, 2005

Figure 1:  Documents Recorded Per REGISTER OF DEEDS Staff Person by Year

Figure1 shows the overall trend toward increasing numbers of documents recorded per staff person, but also that there appears to be a five year cycle of increasing and then decreasing numbers of documents recorded.

COST OF RECORDING EACH DOCUMENT

The staff levels have remained relatively constant since 1990, increasing by just two persons in 15 years.  The year-to-year variation in the number of documents recorded is partly absorbed by the increased reserve capacity of the technology installed in the mid 1990ís, and also through the hiring of short term staff when the work load increases, and dismissing of such staff when the work load drops. 

Have the investments in ICT and flexible staffing simply shifted the costs from permanent staff to investments in technology, an exchange of machines for people? 

Table 4 shows the costs of Register of Deeds operation, including capital investments, by year.  A major capital investment of $300,000 was made in 1994, and was amortized over five years, and shown in the ìProjectsî column for 1994-98.  The REGISTER OF DEEDS retains some of its revenues, up to $17,000 per year, for its own investments in capital improvements.

Table 4:  Total Operating Costs of the REGISTER OF DEEDS by Year

YEAR	PERSONAL SERVICES	SUPPLIES	REPAIR	PROJECTS	OTHER	TOTAL EXPENSES
1990	$468,681	$41,526	$11,358	$60,071	$14,262	$595,898
1991	$529,729	$52,010	$10,592	$2,974	$9,821	$605,126
1992	$653,499	$93,863	$9,661	$1,616	$1,135	$759,774
1993	$749,889	$97,960	$19,680