This article first appeared in Real Estate magazine’s special-edition Women in Real Estate issue. View the entire issue here.
Residential real estate sales have continued to flourish during the COVID-19 health pandemic and have been critical to keeping the economy afloat. The National Association of REALTORS® (NAR) applauds real estate professionals for quickly adapting as best as possible to remote work and virtual tour technologies to keep real estate transactions in motion despite limited in-person meetings and home tours in many states. But additional work needs to be done to ensure that real estate brokerage and mortgage systems that support real estate home sales can stay nimble during the social distancing restrictions put in place during the pandemic.
Both homebuyers and sellers have expressed a desire to reduce in-person meetings with settlement service providers and want to have remote digital real estate closing options available even after the pandemic ends. We have the technology to do this, but the laws and business practices need to catch up so that we can provide safe, remote digital real estate closings.
Last summer, NAR conducted research to better understand barriers to adoption of remote digital real estate closing technology. While the use of eSignatures and electronic records has gained widespread adoption for many components of the real estate transaction, the use of remote online notarization (RON) for real estate closing documents by settlement service providers has been slower to catch up.
RON is a type of electronic notarization where the notary and signer are in different physical locations. The authentication and signing process uses two-way, real-time audio-visual technology, which enables the signer and notary to see and hear each other simultaneously. Such technology improves the customer experience, while at the same time provides strong consumer protections. The use of RON is critical to providing fully remote digital real estate transactions since documents such as the mortgage and deed need to be notarized in order for the closing to be completed.
NAR has taken several steps to help advance adoption of remote online notarization of real estate closing documents through legislative reform, education programs and industry initiatives. For example, NAR has urged Congress to pass the SECURE Notarization Act to allow consumers wider access to remote online notarization options by expanding the availability of RON in all states, setting national minimum standards for the use of RON and promoting interstate recognition of RON transactions performed under the laws of another state.
RON legislation has been passed in 29 states, and approximately 20 additional states have issued guidance enabling RON temporarily in response to COVID-19. Unfortunately, state laws vary with respect to the requirements for authorizing notaries to perform RON, authenticating signers, location of signers, content/structure of electronic stamps and seals, and maintenance of notary journal entries for RON transactions. In the absence of a federal legislative solution, NAR has also worked with industry partners to develop model state legislation for states that are considering passing RON laws to reduce inconsistencies in the interim.
In mid-December, NAR also convened an “eClosing roundtable” with other real estate industry trade groups, technology companies and financial institutions to discuss ongoing barriers to adopting RON technology. The group discussed the importance of having uniform state laws governing all key elements of the eClosing process, such as eNotarization, RON, eRecording and settlement, as well as the need to establish and expand consistent “rules” or operational standards that function at the industry level. Participants committed to promoting additional education to dispel myths about barriers to eClosing processes, as well as promoting the use of safe and effective technology to execute eClosings. In addition to providing remote closing options, efforts to advance use of this technology will provide consumers with faster and more efficient and accurate real estate transactions, reduce the risk of errors and loss of documents, and make a positive impact on the environment.
For more information on remote online notarizations and NAR advocacy work, visit www.nar.realtor/remote-notarization.
Sarah Young is the director of Real Estate Services, National Association of REALTORS®.
They didn’t include a single active notary in their round table. This is why RON isn’t going well. You need to include practitioners in the formation of RON standards otherwise, we’ll just keep pushing back.
Thank you for broaching this topic. I am a RON-certified Notary Public, commissioned in Florida, and I am a Florida Real Estate Professional. The debate about RON services is a hot topic among Notaries Public. Some embrace it as an additional revenue stream. Others worry about the secure identification process. The problem is that fraud in real estate transactions is a reality. If a notarization turns out to be fraudulent, there can be many repercussions, including invalidating the sale altogether. Therefore, some notaries worry about their exposure to Errors and Ommissions.
Currently, most of the Remote Online Notarization platforms require that the signers have a Social Security Number and a State ID, such as a Driver’s License. Passports are usually not accepted. The individual needs to have some credit established. Some of the vetting questions will come from the signer’s credit history that likely only the signer will know. The online system takes pictures of the identification. The entire process occurs online, and images of the signers take place. The system captures sample signatures at that time. This process occurs before the signer is allowed to appear before the Notary Public. The system records the entire process, and a copy of the transaction is stored online for a minimum of ten years.
The Notary does not have access to the signer’s credit questions, so the signer is protected. The system records the Notary and the signer in a Zoom-like setting. The Notary will ask to see the identification online and the system compared electronically to what the signer showed previously. This prevents the signers from switching to a different identification during the notarization ceremony. The Notary asks specific questions related to the notarial verbiage. Suppose the Notary is satisfied that the requirements have been satisfied. In that case, the Notary will affix his or her electronic signature and electronic notary seal. The system allows for one person’s signatures to be notarized at one time. Each signer completes a session in a separate session. As you can imagine, it is possible for one signer to be approved but another not if there are problems in answering the vetting questions. This poses a serious problem if there are several signers, but one cannot be notarized remotely.
What I just described is generally how a RON is performed. Some platforms may have different requirements. If the signer failed two attempts, the meeting would be adjourned until the following day. This prevents “forcing” the authorization. This can pose a problem if one has memory impairment and cannot answer a vetting question properly within a short time.
As a Real Estate Professional, I see the value and need for RON service. As a Notary Public, I also see the other side, so to speak, of the RON process. If we can have better education for Notaries Public and Real Estate Professionals, that will go a long way to solve this and related problems.
Disclaimer: I am not a lawyer and cannot provide legal advice. My view expressed above is the result of my own personal experiences. Other individual’s experiences may vary.