An update from Deeds.com on the fast-moving evolution of remote online notarization and the standards supporting it.
If you transfer or accept a piece of real estate, notarization of the deed will likely occur. For your deed to be recorded, it is notarized first. Recording puts the world on notice of the conveyance, by updating the county’s public land records.
Today, with so much documentation first going (first) digital and (now) remote, can real estate deeds be notarized from afar? In most states they can. The signers and the notaries can sign and notarize a document digitally (eSigning and eNotarizing it); and notaries are now taking it all one step further: performing their work without the need for in-person appearances by signers.
Doesn’t Notarization Have to Be In-Person, By Definition?
Traditionally, that’s been the case. But technology is pressing changes in property law — especially since the 2020 pandemic closed offices and complicated in-person business.
To be specific, a number of states are now getting on board with remote online notarization (RON). States that use RON allow their notaries to use audio-video tools, including webcams, to officiate and record the remote signing — in-state and sometimes interstate, too. Interest in RON was greatly accelerated by state governors’ stay-at-home rules, because once offices closed, states without RON suddenly found themselves lagging behind. So, 2020 was a milestone year for the RON trend.
Lawmakers in Nearly All States are Developing or Have Already Implemented RON.
This includes Maryland, Washington, and Wisconsin. Arizona’s governor issued an Executive Order to speed up the state law that to enable signers and notaries to meet virtually, so its RON legislation is now in full effect. New Jersey’s legislature enacted a remote online notarization law in April 2020. Alaska’s RON law was enacted in April as well. Nebraska and Iowa have sped up adoption through those states’ emergency rules. RON bills were also recently introduced by legislators in Colorado, Louisiana, Massachusetts, and Mississippi. And at last, South Carolina has a bill in the works to enable and standardize RON.
States are implementing remote data security standards from the Mortgage Industry Standards Maintenance Organization, which are intended “for broad use across the entire residential mortgage industry.” Moreover, mortgage specialists can now refer to guidance from Fannie Mae and Freddie Mac for RON use in 42 states. Both entities direct the remote online notary public to use:
- Multi-factor identity verification, a government photo ID with a signature, and credential analysis.
- Tamper-sealed documents — meaning the remote online notary would attach the e-Signature and seal to the RON certificate with a method that automatically flags any future alterations to the notarized document.
- Ample system security.
- A secure electronic journal, which holds audio-visual evidence of identity.
- A backup of the files.
- Storage for seven years or as directed by state law.
The hope for many in the property technology (“proptech”) field is that closing on homes can be done electronically from start to finish. Given that federal standards are already in the works, states that have resisted the trend are now satisfied that the notary component can be done safely, and are moving forward with policy-making.
What About the RON Holdouts?
Oregon and a handful of other states have been RON holdouts. Let’s face it: switching to online methods isn’t exactly easy for a process focused for so many generations on in-person witnessing. The transition to RON wasn’t immediately universal, and there is plenty of concern about this new way of working.
Significantly, California is still not allowing RON. How do people in the state handle the need for remote services when offices are closed? Some essential services (UPS and FedEx) provide notaries. Or people call on mobile notaries. Some attorneys recommend the use of out-of-state notary. RON can be done from Nevada, Florida, Virginia or elsewhere for Californians, insofar as the remote online notarization is valid in the state in which the notarization occurs. In contrast, some RON-enabling states — Maryland and Utah are two examples — require the remote notary and the signer to be in the same state when notarization occurs.
Potential legislative change in California could arrive through new notary provisions. A bill was introduced to permit RON during a state of emergency, but it died. As California did not issue emergency authorization for RON, the California Lawyers Association has pressed the Secretary of State for action on the matter. In the long term, AB 2424 could make RON permanently available in California. We shall see.
The Mortgage Bankers Association and the American Land Title Association (in a collaboration called MBA-ALTA) have created model legislation for states to follow. Several states have temporary versions of RON, or provisions that do not comport with MBA-ALTA standards. And even where states have enacted laws to support robust RON provisions, in-person notarization is still available and some lenders expect it to be used. Applying RON to a real estate transaction, notaries and title companies must review and follow their state RON provisions, and the rules put in place by the underwriters and lenders as well.
Is your state updating its notary laws? Check with the American Society of Notaries, which keeps tabs on new and pending legislation.
What Will a Uniform, Nationwide RON Standard Look Like?
As noted above, MBA-ALTA model legislation is available as a guide for states. The associations note that it’s essential to label the RON as an online notarization, differentiating it clearly from an in-person event. As ALTA explains, to be consistent with MBA-ALTA rules, a state RON law would “require disclosure of the fact of remote online notarization in the notarial certificate.”
Signers should have the choice to opt for RON or conventional notarization, according to MBA-ALTA, and the associations also insist that limits on the technology or brands not be adopted by federal law. The idea is to support fair competition in the marketplace for RON and eClosing platform vendors, and to allow innovation.
Of course, there are minimum security standards in the MBA-ALTA model, including:
- Several forms of identity verification required, including photo ID, proofing and credential analysis.
- Storage of an audio/video recording to show the act of notarization.
- Conformity to already existing laws covering electronic recording.
The MBA-ALTA model was designed to promote interstate RON standards, and to align government agencies with other entities and affirm best practices in real estate documentation.
Nationwide RON Implementation Is Now in Sight.
It looks like the next step will be a nationally uniform law authorizing RON. The Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020 would set national standards for both eNotarizations and RON. If enacted, it will enable notaries throughout the United States to perform RON for customers who opt in. It will mandate fraud-resistant technology to prevent deed fraud. The Secure Act has widespread, bipartisan support.
Not only does this developing legal story point to more consumer convenience; it also stands to make the U.S. real estate market much more accessible to interstate and international buyers, for whom a physical trip to the closing is currently a major hurdle.
Buying a house from outside the United States. Making an international real estate sale? Review the Deeds.com guide to international real estate transactions.
Would you by a home completely online? A growing number of people believe that the gains in transparency would be as important as the security measures. One thing is certain: new generations of real estate buyers will have digital options that were unthinkable just a few years ago.