Remote notarization is here to stay – Lexology
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Nearly all states without a remote online notarization (RON) law acted to adopt some form of remote notarization in response to the coronavirus disease 2019 (COVID-19) pandemic. Many of these states have now enacted permanent RON laws, or remote ink notarization (RIN) laws, while others ended their state of emergency without permanent adoption in place.
As of the date of this publication, 36 states have enacted RON laws, some of which include provisions also enabling RIN: Alaska, Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho, Illinois (effective July 1, 2022), Indiana, Iowa, Kansas (effective January 1, 2022), Kentucky, Louisiana (effective February 1, 2022), Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey (effective October 20, 2021), New Mexico (effective January 1, 2022), North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Vermont (requires regulations to become effective), Virginia, Washington, West Virginia, Wisconsin and Wyoming.
Additionally, two states have enacted standalone RIN laws: Alabama and South Dakota.
With respect to recent changes in Illinois, it is unclear whether the state supports any form of remote notarization. In June 2020, when the Illinois legislature adopted SB2135 approving the governor's executive orders enabling remote notarization, the bill incorporated remote notarization into the state's Electronic Commerce Security Act (ECSA) and made remote notarization effective for the duration of the COVID-19 emergency. However, on June 25, 2021, the Illinois legislature enacted SB2176 which repealed the ECSA in its entirety and replaced it with the Uniform Electronic Transactions Act (UETA). The Illinois UETA does not include any provisions enabling remote notarization. Now that the ECSA has been repealed and the last executive order permitting remote notarization expired without renewal or extension, the status of remote notarization in the state is unclear – although the Secretary of State still appears to support remote notarization as formerly permitted under the ECSA. This status will be clarified once SB2664 becomes effective in July 2022, enabling RON in the state.
Of the remaining 12 states, California and South Carolina never adopted any form of remote notarization during the COVID-19 pandemic. The remote notarization orders of Delaware, New York and New Hampshire lapsed or were terminated in June, apparently without renewal. The other seven states have continued their pandemic temporary adoption of remote notary through at least the end of this month – Connecticut, Georgia, Maine, Massachusetts, Mississippi, North Carolina and Rhode Island.
We are also starting to see case law supporting remote notarization. In Ryerson v. Ryerson, 2021 N.Y. Slip. Op. 21172, the Supreme Court of New York held that a notary acting under the state's temporary COVID-19 law enabling remote notarization acted in a sufficiently timely manner when executing the notarial certificate of acknowledgment within four days of the parties' execution of a separation agreement before the notary using Zoom technology. The parties also complied with some of the terms of the separation agreement before the defendant brought the pending motion seeking that the agreement be declared void because the parties failed to send a signed version of it to the remote notary using fax or email promptly after signing, as required by NY Executive Order No. 202.7.
The parties met together at the marital residence and jointly conducted the Zoom audio-video conference with the notary, presented the notary with their driver's licenses and verbally confirmed they were in New York state. Additionally, the notary required each party to verbally confirm at that time that each party was comfortable signing the agreement, after which the notary watched each party sign the agreement on the Zoom video feed. Each party also verbally confirmed they signed it. However, the plaintiff then stated she did not have a document scanner or fax machine at the marital residence. While still on the Zoom conference, the notary instructed the plaintiff to mail the signed agreement back to him. The notary received the signed agreement by mail approximately four days thereafter and completed the notarial certificate of acknowledgment.
The court found no indication in New York notarial law or case law of any time limitation on the notary's execution of a certificate of acknowledgment. It determined that all requirements of the acknowledgement were met and the delay of delivery in this case was not sufficient to render the acknowledgment ineffective as a matter of law. The case appears to stand for the proposition that minor failures to strictly comply with remote notarization processes may not render the notarized document void so long as the underlying purposes of the notarial act are fulfilled.
To stay current on the status of remote notarization in the wake of COVID-19, see our alert, Coronavirus: Federal and state governments work quickly to enable remote online notarization to meet global crisis, which is updated monthly with recent developments.
(This alert contains information which is current as of July 27, 2021. We are actively monitoring state and federal activities in this rapidly changing area and will update this alert on a periodic basis. Please contact the authors of this alert for the most current information.)
As more businesses are forced to work remotely due to the coronavirus disease 2019 (COVID-19) crisis, several federal and state governments are moving quickly to enable fully electronic processes to keep businesses operating.
On May 13, 2021, Senate Bill 1625, the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2021 (the SECURE Notarization Act), was introduced as bipartisan legislation to authorize and establish minimum standards for electronic and remote notarizations that occur in or affect interstate commerce. (A prior version of the SECURE Notarization Act was introduced in 2020, but was never voted on). If the SECURE Notarization Act becomes law in its current form, it would authorize every notary in the US to perform remote online notarizations (RON) using audio-visual communications and tamper-evident technology in connection with interstate transactions. [updated June 10, 2021].
Until adoption of the SECURE Notarization Act or similar federal legislation takes place, some federal agencies are implementing relief on a case-by-case basis. On June 3, 2020, the Internal Revenue Service issued Notice 2020-42 allowing retirement plan participants or beneficiaries during the year 2020 to meet the witnessing requirements for certain participant elections through use of remote notarization, including the spousal consent required under § 417 of the Internal Revenue Code. Under existing regulations, some participant elections must be witnessed in the “physical presence” of a plan representative or a notary public. Notice 2020-42 allows the “physical presence” requirement to be satisfied, in the case of a notary public, by an electronic system that uses remote notarization via live audio-video technology so long as that system otherwise satisfies the requirements of participant elections under 26 CFR § 1.401(a)-21(d)(6) and is consistent with state law requirements that apply to the notary public. [updated July 31, 2020].
Currently, 34 states have enacted some form of permanent remote online notarization (RON) law: Alaska, Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming [updated July 15, 2021].
UPDATE – The Governor of New Jersey signed A4250 on July 22, 2021 adopting RON in the state effective October 21, 2021. Other provisions of the bill become effective July 22, 2022 [updated July 23, 2021].
UPDATE – On January 23, 2021, the Governor of Illinois signed SB2664 adopting RON in the state effective the later of January 1, 2022 of the adoption of regulations by the Secretary of State. Other provisions of the bill become effective July 1, 2022 [updated July 26, 2021].
The basic components of each state’s RON law are to:
The state RON laws are very detailed and vary with respect to, among other things, authentication, journaling and retention periods.
In states that have yet to enact RON or otherwise make their RON law effective, emergency short-term measures are being issued. The below chart reviews each state and any RON law and/or emergency order enacted in such state supporting any form of remote notarization:
Moreover, Fannie Mae has issued updated guidance to lenders on addressing mortgage origination issues during the COVID-19 event, including authorizing lenders to sell loans with remotely notarized loan documents in certain designates states and under specified conditions. Fannie Mae also issued on April 14, 2020 guidance on “Remote-ink notarizations” authorized by emergency order and updated such guidance for loans issued on or after July 1, 2021 [updated June 10, 2021], and on July 1, 2020 issued a COVID-19 FAQ providing updated information on states enacting remote online notarization or other remote notarization implementations during the COVID-19 pandemic [updated July 24, 2020].
Freddie Mac issued its own guidance to sellers on the impact of COVID-19 on borrowers and the mortgage origination process which includes guidance related to acceptable uses of remote online notarizations, and has issued a COVID-19 FAQ. On August 27, 2020 Freddie Mac updated its guidance to modify the requirements for maintenance of the RON recording to the longer of 10 years or the time period specified in the RON laws of the state of the notary’s commission [updated September 5, 2020]. Freddie Mac also issued guidance on remote ink notarizations which mirrors the Fannie Mae guidance, except it adds a requirement for multi-factor authentication. [updated June 10, 2021].
All of the above guidance has been regularly updated by Fannie and Freddie at the above-provided hyperlinks [updated November 5, 2020].
Additionally, on April 21, 2020, MISMO, a mortgage industry standards organization, announced a new remote online notarization certification program for RON providers and mortgage industry participants. The cost to obtain certification is $5,000 [updated April 28, 2020]. MISMO also developed and released Remote Online Notarization standards to promote consistency across mortgage industry practices [updated July 24, 2020]. The MISMO RON standards support model legislation developed by the Mortgage Bankers Association (MBA) and the American Land Title Association (ALTA) [updated November 5, 2020].
Further, Fidelity National Title Insurance Company, Chicago Title Insurance Company, Alamo Title Insurance, National Title Insurance of New York and Commonwealth Land Title Insurance Company released a bulletin on March 18, 2020 titled “Emergency Exemptions to Remote Online Notarization Procedures” that allows RON to be available, provided certain requirements are met, as an option for properties located in all states and the District of Columbia with a proposed policy amount of $1 million or less (and for higher amounts on a case-by-case basis). This emergency exemption was available through April 30, 2020.
Additionally, on March 27, 2020, the Veterans Benefits Administration issued Circular 26-20-10 (updated on April 27, 2020 by change 1 [updated July 24, 2020]), making VA loans for which electronic notarization was used as a part of an eClosing, including IPEN and RON, eligible for guaranty provided that the notarization is valid and effective under applicable law and regulations.
The Department of Housing and Urban Development has applauded the efforts of the states and other agencies to adopt and implement IPEN and RON during the COVID-19 crisis and, on March 27, 2020 requested the Conference of State Bank Supervisors to “secure additional flexibilities, wherever possible, to facilitate the full functioning of the real estate mortgage market within the confines of the President’s directives to avoid public interactions whenever possible.”
On May 13, 2020, the Consumer Financial Protection Bureau (CFPB) published a compliance aid titled “Open-End (not Home-Secured) Rules FAQs related to the COVID-19 Pandemic” that, in part, addresses engaging with consumers electronically during COVID-19. Specifically, the CFPB states that creditors may be able to expedite consumer communication by using electronic means to deliver required disclosures so long as the creditor complies with ESIGN’s consumer consent provisions. The CFPB notes that ESIGN does not allow a consumer to provide oral consent, but that “creditors could obtain a consumer’s email address over the phone and contact the consumer through the provided email address to obtain consent by, for example, providing a hyperlink through which a consumer might agree to electronic disclosure.”
Other notarial acts are also being made available on a remote basis using audio-visual communication technology, such as the swearing-in of witnesses (see Supreme Court of Florida Administrative Order No. AOSC20-16), and the general conduct of court proceedings (see Pennsylvania Supreme Court Order dated March 16, 2020).
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