Remote Online Notarizations
Prepared by Sviatlana Liashchyna, Legal and Regulatory Compliance Attorney for LOGS Legal Network
The national health emergency order and subsequent state emergency and “stay at home” orders have forced businesses to implement remote work strategies. In response, federal and state governments have implemented laws to allow for various electronic processes, including remote notarizations.
Before the COVID19 pandemic, only 23 states allowed remote notarizations. Since the Pandemic emerged, most states have adopted emergency laws or issued executive orders allowing or expanding existing laws to allow remote notarizations. This article provides an overview of the legal framework related to remote online notarization and highlights several business and risk considerations when using remotely notarized documents.
What is the legal framework for remote notarizations?
The ESIGN Act, the Uniform Electronic Transactions Act (UETA) and the Uniform Real Property Electronic Recording Act (URPERA) provide the legal foundation for remote notarizations in the real estate and finance industries.
UETA was adopted by all states except NY, IL and WA and those states enacted comparable electronic signature laws. The UETA provides the electronic signatures the same legal validity of wet ink signatures. UETA requires all notary information required on the seal or required on the notarial certificate be “attached” to or “logically associated” with his/her electronic signature or record. Technically, this allows the notary to type in their certificate information; however, questions remain as to whether these requirements comply with state notarization laws.
E-SIGN is a federal law that establishes equal legal status between electronic transactions and signatures and those involving paper and “wet ink” signature. E-SIGN also states the requirements for notarization and acknowledgment of a “record” (electronic document) will be satisfied if the electronic signature of the notary and all other required information are attached to, or logically associated, with the signature or record.
URPERA further clarified the authority of recording officials to receive, record and retrieve electronic land records and information. To date, only a handful of states have adopted URPERA.
The state-specific laws authorizing electronic notarizations include two major rules: (i) they authorize notaries to electronically notarize electronic records signed in the presence of the notary, and (ii) they recognize a notarial act performed in compliance with the laws of one state will be recognized as valid in another state, even if the notarial act does not comply with the laws of the second state.
In response to the COVID-19 health crisis, Senate introduced the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020 to permit immediate nationwide use of remote notarizations. The Act (S.3533) will authorize any notary in the United States to perform remote notarizations, requires the use of technology in electronic notarization to reveal any alterations to the document or electronic notarial certificate, and provides fraud prevention mechanisms through use of multifactor authentication.
The House introduced another Bill, H.R. 6364, establishing minimum standards for electronic and remote notarizations. Both proposed legislations are under committee review.
Is there a difference between electronic and remote notarizations?
Yes. Electronic notarization is a process where a notary may sign documents electronically and use an electronic seal to certify it. Remote notarizations allow the notary to use audio/video communication technology to verify signer’s identity and witness the signing process as if the signer were in the physical presence of the notary.
Electronic notarization is legally authorized in all states by E-SIGN and/or UETA; however, using electronic notarization has been limited by restrictions related to the acceptability of electronically signed documents by various state entities and as of March, 2020, only 23 states' laws allow remote notarizations. The COVID-19 health emergency has prompted many states without laws permitting remote notarizations to quickly issue executive orders to permit their use.
What are the key provisions of remote notarization laws?
Although the Remote Online Notarization laws vary from state to state, the basic components of each include:
Establish what constitutes “personal appearance,” for Remote Online Notarization (‘RON’) . Typically, the law provides that use of audio/video technologies is authorized.
Describe how to reliably establish the signer’s identity. Although many states rely on traditional methods of identification such as a government-issued ID or personal knowledge, for remote notarizations many states permit the use of a knowledge-based authentication program to digitally authenticate identity.
Indicate the location of the parties. Typically, the notary and signer, although connecting remotely, need to be physically located within the same state. However, sometimes, documents can be notarized for signers in other states or even outside the US.
Define what records of the completed transaction shall be retained and how long. Most states require the Notary create a recording of the notarial act and retain this recording for a specific period (which varies from at least three years up to the entire Notary’s commission with the state).
What are the business and risk considerations of remote notarizations?
Different state requirements. Any business accepting remotely notarized documents or allowing employees to complete remote notarizations needs to know and understand state law requirements, have policies, procedures and controls in place to ensure remote notarizations comply with the laws and ensure notaries are properly trained.
Notary registration. The registration requirements for notaries differ from state to state. In some states, notaries completing remote notarizations need to file separate application, pay separate registration fees, and maintain a separate registration. Notaries, and businesses engaging their services, will need to confirm proper registration.
Technology. Remote notarizations require use of special communication tools that allow video/audio exchange, recording and security. Businesses allowing employees to perform remote notarization must vet the appropriate technologies assisted by an IT department and ensure the notaries have access to these programs. Additionally, businesses or notaries may elect to use special remote notarization software solutions. The providers of these solutions also must be vetted following standard due diligence protocols and service level agreements should contain appropriate liability clauses.
Notary journal and record retention. Businesses permitting remote notarizations will need to identify the format of notarized documents, how the documents will be used, and how copies of recorded sessions will be stored. While the primary considerations for storage include server capacity and ensuring proper security of stored recordings; businesses also need to ensure the secure transmission of e-signed or e-notarized documents.
Notary seal. The National Association of Secretaries of State has established requirements applicable to the notary’s use of electronic signatures. If remote notarization laws allow for the notary’s electronic signature, the notary signatures must comply with these criteria:
Other. Additional considerations that may arise related to remote notarizations include:
While there is much to consider, remote notarizations present a great opportunity for businesses to further flexibility, efficiency, resilience, and digital transformation.
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