UPDATED: E-Signatures and Remote Online Notarization
E-Signatures and Remote Online Notarization:
The Uniform Electronic Transactions Act (“UETA”) proposed by the Uniform Law Commission (“ULC”) in 1999 presented ways for states to effectuate electronic signatures with the same legal validity of wet ink signatures. At the federal level, the Electronic Signatures in Global and National Commerce Act (“E-SIGN”), was passed by Congress in 2000, authorizing the use of electronic signatures and notarizations for transactions between two or more parties in all jurisdictions where federal laws apply. UETA has been adopted by the District of Columbia, Guam, Puerto Rico, and every state except Illinois and New York. While the remaining two states, New York and Illinois, have implemented their own statues addressing electronic signatures, Washington enacted UETA effective as of June 11, 20201. These two states have enacted their respective comparable electronic signature legislation in lieu of adopting UETA.
Once the legal basis for electronic signatures was established, states began addressing the need to notarize electronic documents and remote online notarization. Today, electronic notarization is legally authorized in all states by E-SIGN and/or UETA. However, as of October 2020, only 29 states have laws that enable their notaries to conduct remote notarizations. The states that have implemented Remote Online Notarization (“RON”) statutes include: Alaska, Arizona2, Colorado3, Florida, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota4, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. On March 5, 2020, Wisconsin enacted the Revised Uniform Law on Notarial Acts and became the twenty-third state to authorize notaries to perform remote online notarizations. On October 29, 2020, Pennsylvania became the twenty-ninth state to enact remote online notarizations or House Bill No. 2370 (Act 97)5. Now Pennsylvania notaries can begin to conduct RONs once they notify the Pennsylvania Department of State (DOS)6 of their intention to do so and identify the communication technology that they intend to use (which must conform to any standards that the DOS may establish).
In the 29 states that have already adopted RON statutes, documents executed and notarized remotely and electronically are valid and binding. Among the 29 states, some states, including the two Ballard states of Nevada and Minnesota, provide that the notary need not be physically located in the state of execution of the applicable party. We have notaries certified to perform RON in our Nevada office and Minnesota office who have successfully completed RON. However, some states like Maryland and Utah require the notary is physically located for RON in the state of execution.
Besides the aforementioned 29 states, nearly every state legislature has submitted a RON bill for consideration. In response to the COVID-19 emergency, the State of New York issued an Executive Order No. 202.7 stating that “any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology” provided that certain conditions7 are met89. This directive was originally effective through June 5, 202010 and has now been extended to March 16, 2021 by Executive Oder 202.711. According to the updated guidance issued by the New York Secretary of State, New York allows signatories to sign using electronic signatures in accordance with the New York Electronic Signatures and Records Act, provided that the notary witnesses the electronic signature.
In addition, the governor of Georgia issued an Executive Order 04.09.20.01 to suspend the purported requirement under Georgia law that notarial acts and witnessing must be executed in-person until April 8, 202112. The State Bar of Georgia suggests re-executing of certain legal documents such as a will, a trust instrument, or a power of attorney after COVID-19 when feasible13.
Also, Arkansas issued Executive Order 20-1214 on March 30, 2020, suspending in-person witnessing and signature requirements for notarization. This Order automatically expires when the state of emergency is terminated15.
The State of Delaware also issued the Eleventh Modification of the Declaration of a State of Emergency, authorizing notarial acts “by utilizing audio-visual technology (remote notarization),” provided that certain conditions are met16. The Executive Order also permits the notarization performed by a licensed Delaware attorney who is in good standing with the Supreme Court of Delaware. Subsequently, the Delaware Department of State issued a guidance stating that “there is currently nothing in Delaware statutes that prohibits an individual or business from using a remote notary from states who permit remote notarization. At this time, Delaware does not permit remote notarizations by Delaware notaries,17” but it also provides that the general public can use Notarize.com, NotaryCam, or any other provider that they may research and choose. The states with temporary authorization to perform RONs or expand their existing RONs are Alabama, Colorado, Connecticut, Delaware, Georgia, Illinois, Iowa, Maryland, New Hampshire, New York, Pennsylvania, Vermont, Washington18, Wisconsin and Wyoming. For more information regarding rules for each of these states, please refer to the below links to third-party resources.
In addition, on March 18, 2020, Senator Kevin Kramer, R-N.D., and Senator Mark Warner, D-Va., introduced legislation that would allow immediate nationwide use of RON in response to the COVID-19 outbreak. The Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020 (“SECURE”) would authorize every notary in the United State to perform RONs, requires tamper-evident technology in electronic notarizations and provides fraud prevention through use of multifactor authentication19. Under Senate rules, the bill would most likely be referred to the Senate Banking Committee, which must approve the bill before sending it to the Senate floor. As of March 23, 2020, House Representative Guy Reschenthaler, R-PA-14, also introduced a new bill to the House, H.R. 6364, to authorize and establish minimum standards for electronic and remote notarizations. Along with these efforts, national trade associations such as American Land Title Association (“ALTA”) and Mortgage Bankers Association (“MBA”) are pushing for a federal RON provision to be attached to COVID-19 stimulus bill(s). At this time, we are monitoring the future developments of the bills closely.
In response to the current development over the RON, Fannie Mae and Freddie Mac have issued guidance to address several policy areas to support mortgage originations, including power of attorney and acceptance of RON. The guidance links are listed below20.
Among title insurance companies, some appear more willing than others to provide a gap insurance for title for the time between closing and recording, regardless of whether the recording offices are open or accepting electronic filings. We have heard reports of First American Title Insurance Company and Old Republic Title Company willing to provide such gap coverage, but the situation is fluid and changing daily. First American Title Insurance Company indicated that it has implemented an internal approval process to evaluate the facts of each transaction to see if and under what terms the company can provide title insurance.
Chicago Title Insurance Company, Fidelity National Title Insurance Company and Commonwealth Land Title Insurance Company issued a statement on March 13, 2020 that they will not close a transaction if the appropriate recording offices are closed. However, per the statement, if a recording office is closed to the public, but retains the ability to complete recording of documents electronically, then they will insure title as long as an appropriate title search is performed and applicable tax information is available prior to closing.
Currently, over 2,000 recording jurisdictions accept a scanned image of a paper security instrument or electronically prepared security instrument for recordation. However, whether or not a recording office will accept electronic recording (“e-recording21”) varies by jurisdiction. For example, every county in Colorado, Delaware, Hawaii and Iowa accepts e-recordings; whereas only three counties in West Virginia and 20 of 67 counties in Alabama offer e-recording. Currently, Vermont is the only state where e-recording is not accepted anywhere.
Despite the willingness of title insurers’ to provide gap coverage and the availability of e-recording in many jurisdictions of the U.S., it must be noted that in order to e-record a document, the recording office must be “open” with the ability to complete recording even if closed to public access. Amid the COVID-19 crisis, we are noticing many jurisdictions, including the New York County Clerk, with complete closure and inability to record electronically or physically. As of March 20, 2020, we learned that the clerk’s office in the City of Philadelphia is still able to accept electronic recordings and the recorders were deemed essential services which enable them to continue processing the recordings. For more information regarding current status by jurisdiction, please refer to the below table22 and the below links to third-party resources. Also, ALTA has started monitoring the status of recording offices nationwide. The main ALTA site for Covid-19 can be found at https://www.alta.org/business-tools/coronavirus.cfm .
For more information, please refer to the links below.
1: Washington was one state that did not enact the UETA before June 11, 2020, because it had its own digital signature statute that was law before E-SIGN was passed. Now, in Washington, if a law requires a signature on record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts (e.g., a Notary Public), together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record.
2: Arizona’s original RON law was scheduled to take effect July 1, 2020, but by the Governor Doug Ducey’s Executive Order 2020-26, the timeline is accelerated as to April 10, 2020. https://azgovernor.gov/governor/news/2020/04/governor-ducey-signs-executive-order-establishing-virtual-notary-services; see also https://azgovernor.gov/sites/default/files/eo_2020-26.pdf
3: On March 27, 2020, the physical presence requirement for notarizations in Colorado has been suspended under its Executive Order D 2020 019. The Executive Order was extended multiple times by Executive Order D 2020 030, D 2020 047, and D 2020 087, on May 29, 2020 until June 29, 2020. On June 26, 2020, the Executive Order was extended until December 31, 2020 under a new law SB 20-096.
4:South Dakota has enacted RON laws, but South Dakota limits RON to notarizing paper documents only. At this time, the governor of South Dakota does not have a plan to sign an executive order allowing any temporary enactment regarding RON.
6: To properly conduct a RON under Act 97, a notary must:
- have personal knowledge of the identity of the remotely located individual, have satisfactory evidence of the identity of the remotely located individual by oath or affirmation from a credible witness appearing before the notary, or be able to reasonably identify the remotely located individual by at least two different types of "identity proofing" processes or services (as defined below)
- be able to reasonably identify a record before him/her as the same record 1) in which the remotely located individual made the statement, or 2) on which the remotely located individual executed his or her signature, and
- create, or have created by a third party on his/her behalf, an audiovisual recording of the performance of the notarial act, including all interactions between the notary and the remotely located individual
Additional requirements apply if the remotely located individual is located in a foreign country.
7: The conditions are as following: (1) the person seeking the Notary’s services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after; (2) the video conference must allow for direct interaction between the person and the Notary (e.g. no pre-recorded videos of the person signing); (3) the person must affirmatively represent that he or she is physically situated in the State of New York; (4) the person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed; (5) the Notary may notarize the transmitted copy of the document and transmit the same back to the person; and (6) the Notary may repeat the notarization of the original signed document as of the date of execution, provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.
8: On March 25, 2020, the New York Department of State issued a guidance providing that when performing RON, the notary should indicate on the document that the notarization was made pursuant to Executive Order No. 202.7 and keep a notary log of each remote notarization. (However, not following these two recommendations will not invalidate the act or be cause for discipline). Also, the guidance states that when the notary and signatory are in different counties, the notary should indicate on the document the county in which each person in located.
9: On March 31, 2020, the New York Department of State issued an additional guidance clarifying that the notaries must “print and sign the document, in ink,” and “may not use an electronic signature to officiate the document,” when performing RON. Any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology provided that the following conditions are met:
- The person seeking the Notary's services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
- The video conference must allow for direct interaction between the person and the Notary (e.g. no pre-recorded videos of the person signing);
- The person must affirmatively represent that he or she is physically situated in the State of New York;
- The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
- The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and
- The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.
10: This effective date was extended by Executive Order 202.14, further extended by Executive Order 202.18, and further extended by Executive Order 202.28 until June 5, 2020. https://www.governor.ny.gov/news/no-20218-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency; see also https://www.nationalnotary.org/knowledge-center/news/law-updates/ny-governor-executive-order-202-7-2020 and https://www.governor.ny.gov/news/no-20228-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency
11: See https://www.governor.ny.gov/news/no-2027-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency and https://www.dos.ny.gov/licensing/notary/notary.html
12: The Executive Order 04.09.20.01 provides that “If the Public Health State of Emergency declared in Executive Order 03.14.20.01 is renewed, this Order shall carry forward with the Public Health State of Emergency until such state of emergency is terminated or ceases to be renewed by the Governor.” On November 30, Governor Kemp issued Executive Order 11.30.20.01, which extends the Public Health State of Emergency in Georgia. This Order extends the State of Emergency through April 8, 2021. See https://www.gasupreme.us/wp-content/uploads/2021/03/12th-SJEO_as-issued.pdf
13: The State Bar of Georgia lists general practices guidance for Remote Online Notarization under Executive Order 04.09.20.01 which can be found at https://www.gabar.org/COVID-19_remote_notarization.cfm
15: Arkansan’s Executive Order requires the following conditions are met for remote notarization:
- Remote notarization through audio/video conference is available if notary is a licensed attorney, licensed Arkansas title agent, supervised by a licensed attorney or licensed Arkansas title agent, or employed by a financial institution registered with the Arkansas State Bank Department.
- The signer and notary must be physically present in Arkansas.
- The notary must visually see the signing.
- The notary must validate the identity of the signer.
16: See https://governor.delaware.gov/health-soe/eleventh-state-of-emergency/
17: See https://notary.delaware.gov/covid-19-coronavirus/
18: On March 24, 2020, Governor Inslee issued Proclamation 20-27. This changes the effective date for SB 5641 from October 1, 2020 to March 27, 2020. The Remote Online Notary authority is temporary and will only be good through January 8, 2021, unless extended. Below are some of the changes contained the Bill 5641:
- Allowing an electronic records Notary Public to perform a notarial act using communication technology for a remotely located individual if he or she is able to identify the individual through personal knowledge, the oath or affirmation of a credible witness, or using at least two different types of identity proofing.
- Allowing an electronic records Notary Public to perform a notarial act using communication technology for a remotely located individual if the electronic records Notary Public is able reasonably to confirm that a record before the electronic records Notary Public is the same record in which the remotely located individual made a statement or on which the individual executed a signature.
- Allowing an electronic records Notary Public to perform a notarial act using communication technology for a remotely located individual if the electronic records Notary Public, or a person acting on behalf of the electronic records Notary Public, creates an audiovisual recording of the performance of the notarial act.
- Allowing an electronic records Notary Public to perform a notarial act using communication technology for a remotely located individual outside the United States if the record: (a) is to be filed with or relates to a matter before a public official or court, governmental entity, or other entity subject to the jurisdiction of the United States or (b) involves property located in the territorial jurisdiction of the United States or involves a transaction substantially connected with the United States; and the act of making the statement or signing the record is not prohibited by the foreign state in which the remotely located individual is located.
See also http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Senate%20Passed%20Legislature/5641.PL.pdf?q=20200316111307
19: For more information regarding the proposed SECURE Act, please refer to the following link to third-party resource: https://www.housingwire.com/wp-content/uploads/2020/03/The-SECURE-Notarization-Act_How-Is-My-State-Impacted.pdf
21: E-recording process works as a submitter electronically prepares, uploads, and submits documents; the county receives the documents electronically for processing and reviews the documents; and after review and approval, documents are processed, stamped, officially recorded with the county, and put on public record.
22: Simplifile. Available at https://go.simplifile.com/en/covid-19-county-recording-status-and-faq. Status as of March 19, 2020.