Time for a National Notarization Standard!

We learned a few good things during the pandemic. For me, right after teaching us that it makes sense to let people work from home, at least part of the time, and that “Breaking Bad” is one of the best shows of all time to binge watch, is that modernizing the notarization process by permitting notaries to remotely certify that documents are properly signed and witnessed is a great idea whose time has come. In fact, during the pandemic, virtually every state in the nation allowed some form of remote notarization.

Nevertheless, luddites remain. Just the other day, the IRS got an earful of complaints about its proposal to allow spouses to alter retirement benefits remotely, even though the proposal put forward by the IRS is more stringent than the one that was permitted during the pandemic. In addition, there are still a handful of states that don’t even allow any form of remote notarization.

This lack of uniformity makes absolutely no sense. It is a classic example of opposing change for its own sake even if it means forgoing obvious benefits. It’s time for Congress to pass a law, similar to one already passed by the House earlier this year (H.R.1059 – 118th Congress (2023-2024): SECURE Notarization Act of 2023 | Congress.gov | Library of Congress) and establish a uniform national standard for electronic notarization. Here’s why this is important.

First, while all but a handful of states now have some form of remote notarization, they don’t all use the same approach. For instance, some states use a strict Remote Online Notarization (RON) standard in which the person in need of notarization logs into an online platform and the notaries’ stamp is replaced with a unique electronic identifier. This allows the notary to confirm the authenticity of the signature in real time. In contrast, some states allow notaries to simply confirm a person’s identification over a Zoom link, stamp the document in need of notarization, and send the notarized document to the necessary parties. This is called Remote Ink Notarization (RIN). Both methods typically require the transaction to be recorded and stored.

This lack of uniformity raises questions as to the validity of transactions that take place in different states with different standards. For instance, there are some title insurance companies that won’t recognize documents notarized using the RIN technique. This shouldn’t surprise anyone who has dealt with title insurers before, who, if they had it their way, would still have mortgage documents signed in blood, sealed in wax and delivered by carrier pigeons.

Not only are title insurers uneasy about remote notarization, but so are some advocates for the elderly. For instance, one of the arguments against the IRS’s proposal is that it would make it easier for spouses to be manipulated into giving up benefits to which they should be entitled. I heard similar concerns when New York was working on its legislation codifying remote notarization. However, to date I have not seen any evidence that electronic notarization is more susceptible to being misused by fraudsters than the traditional notarization system. On the contrary, a system that mandates videotaping of notarizations is most likely more protective of consumers than the traditional system.

In addition, remote notarization actually helps people of modest means, such as that member who has to take a bus to a branch and hope that a notary is on duty, or the disabled person for whom physically getting to the credit union or bank is a hassle. Now both of these members can simply turn on the computer at the scheduled time and get the needed documents notarized.

All this goes to explain why I believe that H.R 1059 is a deceptively important bill that Congress can pass this year. The bill, which has already passed the House, would establish a national standard for remote notarization and preempt competing state laws to the extent that they would prevent properly notarized documents from being recognized in legal transactions. The bill includes a remote, online RON standard under which the notary would simultaneously certify documents using a unique, electronic identifier. This is good news for businesses and consumers and should help assuage the concerns of those who feel that the use of electronics facilitates shenanigans.

Humor me, there is actually something to be learned from the baseball season. Many baseball traditionalists feared that the game would be ruined by requiring that pitchers throw the ball, and that hitters swing at a ball within a certain amount of time. Instead of ruining the game, it is now better than ever. I can now watch an entire game without grabbing another cup of coffee that keeps me up until two in the morning. Similarly, remote notarization shouldn’t be feared. It is nothing more or less than the next logical step in the integration of technology into a more efficient banking and legal system. It is a subtle change that will make a big difference.

Henry Meier is the former General Counsel of the New York Credit Union Association, where he authored the popular New York State of Mind blog. He now provides legal advice to credit unions on a broad range of legal, regulatory and legislative issues. He can be reached at (518) 223-5126 or via email at henrymeieresq@outlook.com.