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Monday
Jun102019

Remote Online Notarization coming to Florida

Gov. Desantis signed HB 409/SB 548 into law last week. While most lawyers call it the "E-Wills" law, we real estate attorneys call it the "Hallelujah! Law." 

As of January 1, 2020, a document requiring notariziation will no longer require that the notary and the signer be physically in the presence of each other. Instead, they will be able to communicate via two-way audio/video communication (like Skype, FaceTime, Google Hangouts, etc.). During the videoconference, the notary and the signer will be able to see the documents that require notarization. No longer will closing agents need to engage local mobile notaries to print out reams of paper, drive to meet with a customer, execute and notarize documents, scan them back to the closing agent, then ship them back to the closing agent who will then ship them to the parties, including the lender. The amount of carbon emissions and paper that will be reduced is inconceivable. Hallelujah! 

In remote online notarization, signers will connect with a notary through an online service provider, usually using their smartphone or tablet. The signers will then verify their identity several ways: by holding up the front and back of their government-issued picture identification to the camera which reads and verifies the data, answering knowledge-based questions that only the signer would know (i.e. "Which one was your address in 1999?" A, B, C, or D), and -- with some services -- facial recognition. Once the signers' identity is confirmed, the notary will ask them a few questions that are recorded as part of the signing ceremony. The signer will then electronically sign the document(s) on the screen much like documents are currently signed via Docusign, DotLoop, Form Simplicity, SignNOW, and other electronic signing platforms. The notary will then place their electronic notary seal on the document as well as their signature. This will seal and secure the document against any further changes or tampering. Further, the video of the signing ceremony will be retained by the notary's platform for at least five years.

The document, if it's a deed or mortgage, can then be electronically recorded in the official records without requiring printing of paper hard copies. The notary, signer, and the lender, REALTOR, or other parties to the transaction, can receive electronic copies of the fully executed and notarized documents immediately. 

Florida requires two witnesses on deeds to be valid. This can be accomplished in one of two ways. The witnesses can be present either with the notary or with the signer. However, the witnesses cannot be "present" by way of a separate videoconference feed from a third location where they are not physically in the presence of either the notary or the signers. 

For real estate investors, this means that obtaining an emergency signature of a shaky seller on a deed or memorandum of contract will be much easier, since a notary will be as close as a smartphone or tablet.

For estate planning attorneys, this means that disabled or mobility-challenged clients will no longer have to travel to an office to execute wills, trusts, and other estate planning documents. 

For other industries -- such as banks -- that rely upon notaries, the ability to consolidate this function in a call center and provide it via Internet on call at any time, will reduce the expense of maintaining and regulating notaries in-house a locations and branches all over the country.

For lenders, this will greatly reduce the time it takes to receive executed documents after closing, potentially saving billions each year on warehouse lending interest for mortgage lenders.

For title insurance agencies, this means that the costs of closing can be reduced by avoiding the need to pay outside mobile notaries, opting instead to handle the closing remotely from their desks.

As an aside: To become a notary in Florida, one must be a resident of Florida, and their powers as a notary are only active so long as they are inside Florida's geographic boundaries. However, Florida also has the concept of Commissioners of Deeds in its Statutes. Commissioners are appointed by the governor as notaries who are empowered to notarize deeds and other documents as if they are notaries who are citizens of and physically present inside Florida's geographical boundaries. However, a requirement to be a commissioner is that the person does not reside inside nor is present inside the United States. This is means that the governor can appoint an unlimited number of Commissioners of Deeds who reside outside the US (i.e. in Canada, the Phillippines, India...) who will have the authority to notarize documents affecting Florida property or Florida residents. For this reason, we fully expect that -- as time progresses -- a lot of the closing/signing ceremony could be outsourced by large title insurance underwriters and agencies to offshore call centers full of commissioners of deeds. The large title insurance underwriters they often already obtain the title search and other closing file processing activities offshore with cheaper labor, so this wouldn't be unprecedented. 

Now that the governor has signed the bills into law, the Secretary of State will work with industry partners to make rules and regulations to implement the law.

Florida will be one of 17 states that allow remote online notarization as of January 1, 2020. The trend started with Virginia only seven years ago. This year, at least 11 states passed legislation to allow it in their state as well, and at least one other state (SC) considered it. With states such as Texas, Florida, Nevada, Virginia, and Tennessee now accepting remote online notarization, a tipping point has been reached. It is conceivable that, within the next two years, it will be legal and accepted in every state in the Union.