In 2011, the Commonwealth of Virginia became the first jurisdiction in the United States to authorize online notarization, a modern form of electronic notarization in which the signer appears before the notary by means of real-time, two-way audio-video communication. Va. Code §§ 47.1-2, 47.1-6.1. Building off longstanding and successful use of audio-video teleconferencing technology to permit appearances in court proceedings, Virginia provides that a signer may “appear before” a notary so long as certain heightened forms of identity verification and other standards were observed. The result of Virginia’s innovation is that a signer physically located anywhere in the world can appear before a Virginia notary public. As of this writing, 21 states have passed legislation authorizing their notaries to use online notarization tools in performing notarial acts.
Online notarization strengthens the current paper-based notarial acts in three important respects. First, the authorizing statutes modernize the notary office by requiring stronger qualification (including educational) criteria for those notaries who desire to perform remote online notarial acts. Second, online notarization gives consumers the strongest possible identity validation protections afforded by leveraging multi-factor authentication of signers. Third, online notarization laws generally mandate keeping notarial journals and require retention of the audio-video recording of each signing session. See Andrew MacDougall, The Complete Guide to Remote Online Notarization 23-33 (2019).
The tools, technologies, and other methods used to perform notarial acts have evolved over time and will continue to improve. The benefits of online notarization are available across the vast range of personal and business transactions that can be signed electronically. These range from simple business, motor vehicle, and government forms to complex transactions involving real property, mortgages, and financial services. Online notarization can also now be used with a host of basic estate planning documents such as advanced directives and powers of attorney. With the nascent expansion of e-will laws, online notarization increasingly is becoming available for use in executing wills and trusts.
What Is Online Notarization and Is It Entitled to Interstate Recognition?
Virginia’s Electronic Notaries Act of 2011 establishes the legal framework for the implementation of “online notarization.” The legal framework consists of six principles: (1) expansion of the definition of “personal appearance” of a signer before a notary to include use of audio and visual communications technology as well as traditional physical presence before the notary, (2) the notary must use an electronic signature and digital certificate in performing the online notarial act, (3) the notary must be physically present in the commissioning state when performing online notarizations, (4) the signer may be physically located outside of the notary’s commissioning jurisdiction, (5) in the absence of personal knowledge, the signer’s identity must be confirmed by heightened means including use of multi-factor authentication, and (6) the notary must make and retain a recording of the audio-video online notarization session. For detailed discussion, see Timothy Reiniger, Developments in Information Governance: The Emergence of Online Notarization, 9 Info. L. J. 10-18 (ABA 2018), available at https://bit.ly/2Liys9Z.
Since the Virginia enactment, states passing online notarization legislation now include: Montana (2015), Nevada (2017), Texas (2017), Indiana (2018), Tennessee (2018), Minnesota (2018), Michigan (2018), Vermont (2018), Ohio (2018), North Dakota (2019), South Dakota (2019), Idaho (2019), Kentucky (2019), Utah (2019), Washington (2019), Maryland (2019), Arizona (2019), Iowa (2019), Oklahoma (2019), and Florida (2019, awaiting Governor’s signature). In addition, the following three legislative proposals all incorporate the six key principles of the Virginia legal framework: (1) new amendments to the Revised Uniform Law on Notarial Acts of 2018 (RULONA), approved by the Uniform Law Commission on July 25, 2018; (2) the National Notary Association’s Model Electronic Notary Act of 2017 (MENA) (MENA’s influence is particularly evidenced by a requirement for the notarial certificates to indicate the fact that an online notarization was performed); and (3) model legislation issued jointly by the Mortgage Bankers Association and the American Land Title Association, available at https://bit.ly/2ZN2LZw.
A notary is a public officer whose power emanates from the commission she receives from the State. Timothy Reiniger, Evidentiary Requirements for Electronic Notarization and the Legalization of Certified Electronic Records 9 (Appendix C in George Paul, ed., Foundations of Digital (ABA 2013)). As a public officer, the “choice of law” governing a notary’s acts is necessarily the law of the state whose commission she holds. The statutes of every state include express interstate recognition language for out-of-state notarial acts that are validly performed under the laws of the notary’s commissioning state. See Issues and Trends in State Notary Regulation 12 (National Association of Secretaries of State 2011). And beyond this longstanding statutory regime, over a century ago the United States Supreme Court, in a related context, held that a duly-performed notarial act from outside the United States is entitled to full faith and credit in US state courts. Pierce v. Indseth, 106 U.S. 546, 550 (1882):
[I]f the bill be dishonored, the protest by the notary must be made according to the laws of the place. It sometimes happens that the several parties to a bill, as drawers or indorsers, reside in different countries, and much embarrassment might arise in such cases if the protest was required to conform to the laws of each of the countries.
For the past century courts have repeatedly recognized this principle of interstate recognition of notarial acts, resulting in a regime that is neutral as to the means and manner of notarization. See, e.g., Nicholson v. Eureka Lumber Co., 75 S.E. 730 (N.C. 1912) (court presumes that Texas notary was rightfully appointed to office and acted rightfully in taking acknowledgment).
Online Notarization: How Is It Performed?
With online notarization, the basic requirements of the notarial act and the underlying role of the notary are unchanged. As in a traditional notarization, the notary still performs the core features of the notarial act: confirming satisfactory evidence of the signer’s identity, checking that the signer understands what he is signing, and confirming that the signer is doing so willingly. In addition, each critical action (including document upload, as well as any markup or changes, and including all signature actions) is logged and subsequently embedded within the session record and audit trail. Key document-specific actions in the audit trail are then included in an audit-trail attachment to the completed electronic document itself and are subject to the tamper-evident technology applied to the PDF at the conclusion of the notarial act.
Secure Remote Identification of the Signer
In performing an online notarization, the notary must obtain satisfactory evidence of a party’s identity via a multistep identity verification process. The identity verification process is completed as part of a continuous logged session. First, the signer must successfully complete the knowledge-based authentication (KBA) process by answering four out of five challenge questions in a two-minute period. If the signer fails the KBA process, he is given additional tries, in accordance with any limitations set forth in a state’s regulations, to successfully complete the process. Second, the signer must present a government-issued photo ID. The image of the ID is captured by a secure device camera controlled by the online notarization platform. The captured image is then subjected to credential analysis in accordance with a state’s requirements. Third, after the signer successfully completes credential analysis, the notary compares the signer’s photo ID to the KBA-validated identity and to the signer appearing before the notary in the real-time audio-video session. The notary also reviews the output of the successful credential analysis. If the notary concludes that the notary has satisfactory evidence of the signer’s identity, the notary proceeds with the notarial acts.
Protecting the Signer Against Coercion or Duress
The entire notarial transaction itself is conducted in a real-time audio-video session in which the signer and notary can see and hear each other throughout and can watch each other markup and sign the subject document at the same time, together. The audio-video session is recorded. Also, on a remote notarization platform, just as across a table, the notary engages the signer in conversation and evaluates if the signer is behaving normally. The notary asks if the signer understands what the signer is signing. And the notary will ask, explicitly, if the signer is proceeding of his own free will. He can ask the signer who is in the room, or even to pan the camera around the room if he is concerned about actions of those nearby.
Although many states and courts take it as a “given” that a notary always determines that a signer is accepting the specified obligation freely and without coercion, only a small number of states explicitly require the notary to make this determination. See, e.g., Mississippi Rule 5.1(B). The rest of the states either do not mention such a duty or make such a determination permissive. Michael Closen, To Notarize or Not to Notarize . . . Is Not A Question of Judging Competence or Willingness of Document Signers, 31 J. Marshall L. Rev. 1013, 1030 (1998). See also RULONA § 8 (this determination is permissive). No state provides any specific criteria or guidance by which a notary is to make such a determination, so it can be assumed that notaries’ approaches to this issue vary widely. The key feature of remote online notarization with respect to this issue is that the signer’s demeanor and communication with the notary, and the notary’s determination that it is appropriate to proceed, are captured on the recorded audio-video.
Audio-Video Recording Required to Be Kept
Records of the signer’s identity credentials, transaction information, audit trail, and audio-video recording of the signing session are maintained in secure, encrypted, and backed-up data records. Records required to be maintained by law (such as the notary’s journal and the recording of the audio-video) are maintained for no less than the state-mandated retention period—usually between five and ten years under most current laws. The notary’s location at the time of signing is also confirmed, ensuring that the notary is physically located in the notary’s state of commission when completing the notarization.
Information from the transaction is used to populate the notary’s journal. All records are available to authorized parties for verification of the transaction. Records are available for lawful inspection by regulatory bodies and other authorized persons in accordance with law.
Applications of Online Notarization to Probate and Estate Planning
The federal Electronic Signatures in Global and National Commerce Act (E-SIGN), 15 U.S.C. §7001 et seq., and the parallel state-level Uniform Electronic Transactions Act (UETA) authorize the use of e-signatures, including e-notarization, for records affecting transactions between two or more parties. The UETA has been adopted in the District of Columbia and all states except Illinois, New York, and Washington (each of which has non-uniform, custom laws with similar provisions). As discussed below, E-SIGN and UETA do not address authorization for use of e-signatures with respect to court pleadings, testamentary trusts, and wills. For these instruments, separate laws are necessary to authorize electronic signatures and electronic notarization.
Electronic Real Property Transfer e-Closings
On July 28, 2017, the first online e-closing of a home mortgage refinance occurred, when a husband and wife who were physically located in Illinois electronically signed documents, which were notarized, to complete a transaction in Chicago, Illinois. This online e-closing builds on the first public recording of an online deed in the United States, which took place on June 6, 2013, and involved the sale of a property in Alexandria, Virginia, signers in France, and an online notary in Richmond, Virginia. See Phillip Marson & Timothy Reiniger, The Deed is Done, 10 Digital Evidence & Electronic Signature & L. Rev. 144 (2013).
Powers of Attorney for Finances
Authorization of electronic financial powers of attorney are gaining national traction with the enactment of the Uniform Power of Attorney Act in 26 states. Except for New Hampshire, all these enactments give evidential benefits to an electronic power of attorney in which the agent’s appointment is acknowledged before a notary.
Electronic advance directives are authorized in California, Nevada, and Texas. See Cal. Prob. Code § 4673; Nev. Rev. Stat. § 133.088(1); Tex. Health & Safety Code § 116.011. Express authorization for electronic notarization of these documents is provided in California and Texas. In the current legislative session, electronic advance directive authorization is being considered in Illinois. Ill. S.B. 182 (2019).
Living Trusts and e-Wills
In 2017 Nevada enacted the first online e-will and e-trust law in the United States. Nev. Rev. Stat. §§ 133.300 to 133. Joined with the online notarization law, this law amends Nevada’s existing e-will law to authorize the use of audio-video conference technology by testators, settlors, witnesses, and notaries in the creation of self-proving wills and trusts. The new position of a qualified custodian is created to function as the record-keeper of the electronic will and trusts. Recognition is also given to paper printouts for admission in probate court as authoritative originals of e-wills and e-trusts. Id. § 136.185.
Arizona and Indiana have also enacted e-will and e-trust authorization but without including use of online notarization. In the current legislative session, both Florida and Texas are considering e-will and e-trust bills that include express authorization for the use of online notarization similar to that contained in the Nevada law. Fla. S.B. 548 (2019); Tex. H.B. 3848 (2019) 340.
Probate and estate practitioners would be well-advised to explore how leveraging the emerging use of online notarization throughout the country can assist their practices. Experience in Virginia and other states has shown that giving (1) notaries the capability of performing notarial acts in the online environment and (2) signers the ability to e-file and e-record are highly valued by the business community, consumers, and government. And an advantage is a substantial deterrent to attempts at notarial fraud with respect to documents notarized in this manner because of the inherent security requirements of online notarizations.
The online notarial act is legally both portable and durable. It can be performed for any signer across virtually any type of document and transaction; and, once completed, it is valid anywhere and remains valid across time, regardless of where the signer moves, where the document is taken, or whether the notarization is performed by audio-video means.