Eagerly anticipated by attorneys, title agents, and real estate professionals throughout New Jersey, Governor Murphy finally put pen to paper to pass the Temporary Remote Notarization Law, allowing notaries to use audio-visual technology to perform notarial acts. With the passing of this bill, New Jersey joins nearly two dozen other states that have authorized some form of remote or electronic notarization, giving further momentum to this technological trend.
Terminology
Due to the recency of this technological development, different entities have been using different terminology.
- Remote Online Notarization (RON) – the usage of audio-video technology to allow a signer to sign documents electronically, and for a notary public to witness and digitally impress their seal. The document would be electronically tamper-sealed and stored electronically. This is a paperless process.
- Remote Ink-signed Notarization (RIN) – terminology used by the American Land Title Association to describe a process where a signer signs a paper document in the presence of a notary public using audio-video technology. The ink-signed documents are then sealed and mailed to the notary public, who would add their signature and seal (with wet-ink).
- Audio/Video Notarization (AVN) – terminology used by Fidelity National to describe a wet-ink process similar to RIN.
History of ‘Remote Online Notarization’
Remote online notarization (RON) is part of a series of developments that have incrementally digitized the closing process since 1999. California was the first of 47 states to adopt the Uniform Electronic Transactions Act (UETA), for universal acceptance of digital signatures and electronic documents. This gave way to the ability to e-record documents. According to the American Land Title Association, “over 85 percent of the U.S. population resides in jurisdictions that e-record.”
In 2011, Virginia was the first state to enact RON, to allow notaries to witness and notarize signatures using audio-video technology, without the signor being physically present before the notary. Since then, over twenty states have passed some form of Remote Notarization bill, most recently New Jersey.
What to keep in mind
While the passage of the remote notarization bill is a significant step in the transformation of how real estate is transacted, there are still some barriers to its widespread usage.
- This is a temporary measure, and remote notarization will once again be unrecognized as soon as the State of Emergency in NJ is lifted.
- The law stipulates that the acknowledgment (the part where the notary signs and stamps), “shall indicate that the notarial act was performed using communication technology,” meaning lenders will need to be on board with changing their standard documents or must be comfortable with title closers and attorneys with amending the acknowledgment to comply with the law.
- County clerks and registers will need to allow for the indexing and recording of remotely-notarized documents.
- Title insurance companies and underwriters have specific requirements for the insurability of transactions involving remotely-notarized instruments – more on this below.
What industry leaders are saying
The state office for Westcor Land Title Insurance Company issued a bulletin on April 15th, 2020, indicating that they, “will insure any transaction utilizing RON technology,” from an approved Westcor provider, including Notarize, Notary Cam, Pavaso, among others.
Fidelity National issued their bulletin on April 16th and is broader in terms of accepted technology, but any remote notarization transactions over $1,000,000 will be considered on a case-by-case basis.
On April 16th, 2020, Fannie Mae and Freddie Mac issued guidance to allow and encourage both RON and RIN.
What’s next for Remote Notarization?
As the legal, title, and real estate industry leaders provide further guidance regarding this major development, remote notarization will certainly be utilized for many transactions and documents. Its widespread adoption will be contingent on mortgage originators and investors making the appropriate policy and document amendments to comply with the statute, and for title agents and title closers to become comfortable with the liabilities of notarizing documents in this manner.
Looking to the future – there is strong reason to believe that New Jersey will permanently authorize remote notarization, and will expand its usage beyond Remote Ink-signed Notarization to recognize digital signatures and notarizations. Using other states as models, New Jersey will likely roll out an additional ‘e-Notary’ certification to establish the validity of a notary’s digital seal. The Secure Notarization Act currently introduced in the US Congress, if passed, will further consolidate regulation and establish consistency across the United States.
In conclusion
The introduction of remote notarization, albeit temporarily, in New Jersey is a much-needed respite in the current COVID-19 crisis. Innovative legal, title, and real estate professionals will recognize that remote notarization has been a developing industry trend far older than COVID-19, and will begin preparing and adapting for the future of real estate transactions.
References from the American Land Title Association:
Fannie, Freddie Issue Guidance on Temporary Flexibilities for Closings