Window to the Law: Remote Online Notarization Laws 2020

Hello. I’m Katie Johnson, NAR’s General Counsel and Chief Member Experience Officer. The COVID-19 pandemic has dramatically changed the way we interact and transact on a daily basis. All businesses are being forced to reimagine the way they service customers, and real estate is no exception. Consumers want to continue to buy and sell property in a way that is safe and convenient. That means electronic closing are here to stay.

A major obstacle for achieving a fully electronic closing has been the notarization requirement. In this video, I’ll provide background on why notarization is required and how it is secure online. Now is the time for you to understand how to utilize remote online notarization in your real estate transactions.

So why is notarization even required? Purchasing a home is the greatest investment that most people will make in their lives and notarization is a proven method for ensuring the integrity of this important transaction. A notary acts as an impartial witness who confirms that the parties are who they say they are, that they know what they are signing, and that they are not being forced to sign anything against their free will. While the concept of notarization may be ancient, it continues to have the contemporary effect of preventing fraud.

So how does remote online notarization work? The process generally begins uploading documents to a notarization platform where the notary authenticates the signer's identity. Authentication requirements vary by state but may include use of biometrics, two-factor authentication, and requiring the signer to correctly answer questions drawn from the individual's credit report.

Once the authentication is complete, the notary guides the signer through the execution of the documents and electronically notarizes them. The entire process is recorded and stored in the notary's electronic journal.

Since the COVID-19 pandemic hit, 38 states have enacted emergency orders authorizing the use of Remote Online Notarization for real estate transactions. Most state laws have security and encryption requirements to ensure data privacy. Check your state laws to understand what is required in your state.

NAR has long-advocated for federal legislation in this area and actively supports the “SECURE Act” of 2020. This Act would enable every notary in the country to perform remote online notarizations and would require tamper-evident technology as well as multi-factor authentication in electronic notarizations. The SECURE Act would complement existing state laws by allowing states the flexibility to implement their own notary standards.

Here’s the rub: even in states where remote online notarization is legally permitted, not all title companies, lenders, or county recorders are accepting documents executed via remote online notarization. You can help by understanding how this notarization technology works and by encouraging your counterparts in the real estate settlement services to do the same.

While we all hope that the pandemic soon subsides, it’s clear that the convenience of electronic closings is here to stay. To better serve your clients, take time now to understand how remote online notarization works in your state and learn more about the tools that enable it.

Thank you for watching this episode of Window to the Law.