On March 13, 2020, the Missouri governor entered Missouri Executive Order 20-08[1], which authorized remote notary in the state of Missouri. The state of Kansas followed on March 22, 2020 and entered Kansas Executive Order 20-20[2], authorizing remote notary in the state of Kansas. With the entry of these orders, many real estate professionals have questions about what this means for real estate transactions and how remote notary will work for real estate transactions.
Uniform Electronic Transactions Act and the History of Remote or Digital Notarization
First, it is important to note that remote notarization is not new and has been around for several years in other states. Prior to coronavirus, twenty-three states had laws in place to allow for remote online notarization. These states are Arizona, Florida, Idaho, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Dakota1, Tennessee, Texas, Utah, Vermont, Virginia, Washington, and Wisconsin.
The origins of remote notary trace back to the Uniform Electronic Transactions Act (“UTEA”). The UTEA is a model law or law that is drafted by one of the uniform law commissions – a group of lawyers and scholars who are appointed to discuss and draft a law with the hopes that it will be adopted by each of the states as a uniform law across the country. The states are not required to adopt proposed uniform laws, but usually many states will adopt these provisions. As of this article forty-seven states, plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, have adopted the UTEA. This law allows for signing documents using electronic signature programs, such as DotLoop or Docusign. Moreover, the law also allows for digital notarizations, or for notaries to e-sign and seal notarized documents, as long as they are still physically present with the parties signing the document.
In 2000, the federal government passed the Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”), which approved electronic signatures for documents.[3] The E-SIGN Act applies to transactions involving multi-state residents or interstate commerce, and does not preempt state laws in states that have adopted the UTEA without amendment. An important note about the E-SIGN Act is that for commercial transactions, the parties can consent to use e-signatures by there actions; however, unlike under the UTEA, in consumer transactions under the E-Sign Act, parties must affirmatively consent to utilize electronic signatures. Moreover, the E-SIGN Act does not apply to Wills, codicils, and trusts; Adoption paperwork; Divorce decrees; Certain areas of the Uniform Commercial Code; Court orders and notices; Official court documents, including briefs and pleadings; Notices of the termination of utility services; Notices of default, foreclosure, repossession, or eviction; The cancellation of insurance benefits; Product recalls or notices of material failures; Documentation accompanying the transportation of hazardous materials.[4]
The Origins of Online Remote Notary Companies
The first state to approve remote online notaries was Virginia in 2012.[5] Because of this, many online remote notary companies are located in the state of Virginia. One such example is Notarize.com. In 2017, Notarize.com participated in what is considered to be the first completely online mortgage transaction. In that transaction, an Illinois resident electronically signed the closing documents, including all of the mortgage documents, in Illinois with a Notarize.com notary located in Virginia.[6] The documents were then electronically shared with the lender in Michigan. Since then Notarize.com has closed over 1,000 electronic closings using remote notaries.[7] In 2019, Notarize.com began notarizing wills and other estate planning documents under laws in Nevada and Indiana that allow for remote witnessing of wills, and the Uniform Law Commission has proposed a uniform law that would expand the remote execution of estate planning documents to other states and territories.[8]
What does Remote Online Notarization Look Like?
Other than taking place online, having a document notarized online looks very similar to having a document physically notarized. The person signing the document will be required to provide a valid form of identification to the notary. This is often done by uploading a scanned copy of the identification in advance to the remote notary platform.
This article was cross-posted on the Mid American Association of Real Estate Investor’s Blog at http://www.marei.org/remote-notary-signed-into-law-in-missouri-kansas/. The article has been edited since it’s original posting.
[1] https://www.sos.mo.gov/library/reference/orders/2020/eo8
[2] https://governor.kansas.gov/wp-content/uploads/2020/04/EO-20-20-Executed.pdf
[3] 15 U.S. Code § 7001, et. seq.
[4] Note: Other laws, rules or regulations may apply to these transactions. For example, Kansas and Missouri courts allow attorneys to e-sign and e-file pleadings with the Court.
[5] Virginia Code § 47.1-1
[6] Friedman, Robyn A. “Mortgage Closings Just Took a Big Step Into the Digital Age.” The Wall Street Journal, 9 Aug. 2017, www.wsj.com/articles/mortgage-closings-just-took-a-big-step-into-the-digitalage-1502287181.
[7] https://www.notarize.com/blog/lessons-learned-closing-one-thousand-mortgage-transactions-online; see also https://www.washingtonpost.com/realestate/say-goodbye-to-all-that-paperwork-digital-mortgages-have-arrived/2019/01/16/7a60d538-fcb7-11e8-83c0-b06139e540e5_story.html.
[8] https://www.nytimes.com/2019/10/18/your-money/electronic-wills-online.html
