Companies are implementing new technology to deliver efficiencies and make closings more transparent. These advances have the potential to improve the customer experience and understanding at the closing table.

Many of the changes revolve around remote online notarizations (RON), which involves the use of audio-visual technology and electronic methods to conduct a notarization. Currently seven states–Virginia, Texas, Nevada, Indiana, Tennessee, Minnesota and Vermont–have passed legislation permitting state notaries to perform remote-notarization nationwide. On May 22, Vermont governor Phil Scott signed a bill that will allow for (RON) beginning July 1, 2019. Montana has legislation that restricts remote notarial acts to citizens and transactions in the state.

“Advances in technology have the potential to improve the consumer experience and understanding at the closing table,” said Michelle Korsmo, ALTA’s chief executive officer. “ALTA members share the goal of helping ensure consumers have a more efficient and streamlined closing process. As the closing experience continues to evolve, we must remember that purchasing a home is the largest investment most Americans will make in their lifetime. Homebuyers navigating their real estate transaction will continue to rely on real estate attorneys and settlement agents as important resources that provide information and guidance throughout the process.”

Vermont’s legislation says RON will not be allowed until the secretary of state has adopted rules and prescribed standards. However, the secretary of state has indicated it does not plan to promulgate any regulations for a year. The bill says the rules may:

Prescribe standards for remote online notarization, including standards for credential analysis, the process through which a third person affirms the identity of an individual, the methods for communicating through a secure communication link, the means by which the remote notarization is certified, and the form of notice to be appended disclosing the fact that the notarization was completed remotely on any document acknowledged through remote online notarization.

Momentum to allow for these types of closings continues as RON bills have been introduced to legislative sessions in 14 other states and the District of Columbia. In December 2018, ALTA and the Mortgage Bankers Association (MBA) collaborated to develop model legislation that provides the framework for states to adopt an online remote notarization process. You can access the model bill and more information about RON at www.alta.org/advocacy/online-notarization.cfm. 

ALTA does not endorse online notarization, but wants to ensure any legislation that is passed is safe for consumers, that the transaction can be insurable and is technology neutral. Several states have already started considering online notary legislation and more are expected to do so over the next year. If adopted, the model legislation would create legal certainty across the country from a uniform and consistent framework that is based on a common set of core principles.

The model law is based largely on the 2017 statute enacted in Texas that was emulated in Nevada. These laws gave RONs the same legal recognition as in-person ones. The Texas law was the result of robust debate and negotiation of various perspectives on this issue, including policy makers, state and national industry and consumer groups.

Additionally, the model bill is like the Texas and Nevada statutes in three other ways:

• First, to protect against fraud, it requires the secretary of state to promulgate rules to implement data standards and requirements related to credential analysis, consumer identification, data retention, privacy, security and other items. In fact, the Mortgage Standards Maintenance Organization (MISMO), has already convened a working group to produce suggested standards for secretaries of state, to which the National Association of Secretaries of State has been invited to participate.

• Second, the model incorporates the principle of consumer optionality. No consumer would be forced to choose to close their loan using remote online means.

• Third, the model bill does not embrace technology standards specific to any one proprietary system. In other words, no single company would possess a monopoly on the state’s approved technology.

While nearly all states have laws recognizing and providing for acceptance of documents notarized by notaries in other states, it is not yet clear whether those laws apply to remotely-notarized documents. Driven by the legal and practical confusion resulting from varying approaches to modernizing notarial law, the Uniform Law Commission has begun drafting an amendment to their Uniform Notarial Act, which will provide model language for states to use to codify that audio-visual appearance before a notary is permissible and the signer can be in a different state than the notary. It’s been reported that the amendment is on track to be considered by the full commission in July 2018.

“One of the primary concerns that arise from the evolving trend of electronic documents is ensuring that the documents are validly executed and in a recordable format,” said ALTA president Steve Day NTP. “We must work through the legal and insurability issues regarding remote electronic notarization because protecting the integrity of the land records upon which our industry relies is imperative. To ensure that the title insurance and settlement industry is able to protect the property rights of consumers, we need to have a records system based on legally executed and enforceable documents.”

Jeremy Yohe is vice president of communications for the American Land Title Association, Washington, D.C.