Not Quite Ready for Prime Time
By Jeffrey Lang
Vice President, Old Republic National Title Insurance Company
National Underwriting Counsel
In the digital age, people do more and more things without ever leaving the comfort of their homes. With the adoption of various state and federal laws, real estate mortgages, as well as other documents, can be prepared, reviewed, signed and even recorded electronically almost entirely without the need for any of the participants to be in the same room or even the same state. A notary's acknowledgement is currently the one major exception.
A notary's acknowledgement is a formal declaration that the person signing the document is truly who they claim to be and the signature was made of the person's own free will. All state laws require notaries to physically watch a signor execute the documents. Until recently, this meant either those signing the documents or those notarizing the documents had to travel so the two were in the same room when the documents were signed. Now, however, with new technology and changing state laws, signatures may be notarized remotely in both Virginia and Montana via a webcam connection.
Although remote notarizations will undoubtedly become commonplace in the very near future, as of the date of this article, only Virginia and Montana recognize the validity of such acknowledgements. Additionally, and perhaps more importantly, other than Virginia, no state currently recognizes the validity of a remote notarization performed by a notary who is not in the same state as those signing the documents.
Caution is the watchword here. State, federal and bankruptcy courts have invalidated mortgages and other documents due to defective notarizations. When that happens, the lender's lien position is not only jeopardized but the enforceability of the mortgage itself is put at risk. Despite these dangers, various mortgage companies and notary service providers are promoting nationwide eClosing services that include remote notarizations performed across state lines by Virginia notaries. Their justification is the U.S. Constitution's Full Faith and Credit Clause requirement that each state respect the "public acts, records, and judicial proceedings of every other state." Since Virginia specifically authorizes the extraterritorial use of remote notaries, the argument is that states outside of Virginia are constitutionally obligated to accept their validity.
While this position seems compelling, it ignores the Constitution's Tenth Amendment guarantees of the rights of states to protect the interests of their own citizens. To be clear, although in-state remote notarizations need to be closely scrutinized for compliance with that state's laws and regulations, the primary concern is with remote notarizations performed when the notary and the signor are in different states. Until state laws are enacted that recognize the validity of an extraterritorially performed remote notarization or the U.S. Supreme Court decides the issue, red flags are raised whenever a notarization occurs in one state while the documents are being signed in a different state. This is especially true in the case of Virginia notarizations, as remotely performed acknowledgements are indistinguishable from those done in person.
To date, remote notarizations are only valid in Virginia and Montana. However, the laws and regulations in other states are changing rapidly. Always check with an Old Republic Title underwriter before allowing a document to be notarized remotely in any state or if the remote notarization has occurred across state lines.
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