Posted on September 04, 2022.

Real estate transactions have come a long way from the days when parties gathered in a conference room on the closing day and executed documents live and in person, but one thing has not changed—any document which is intended to be recorded (including mortgages and various other security documents) needs to be notarized. Until recently in most jurisdictions that meant the signer and notary had to be physically present together, but a recent statutory change in New York permitting Remote Online Notarization (RON) will now allow the parties to be in separate states, or even countries.

While remote electronic notarization predates the COVID-19 pandemic—Virginia being the first state to authorize such practice back in 2011—there is no denying that the pandemic highlighted a major need and pushed states to modernize the way notarization is performed.

New York has recently become the 38th state to enact a permanent RON system. Signed by Governor Kathy Hochul on Feb. 25, 2022, Senate Bill 7780, an update to Senate Bill 1780C, follows New York’s temporary authorization of remote ink notarizations (RIN) by executive order.

Executive Order 202.7 (EO), signed by Governor Andrew Cuomo on March 19, 2020, authorized the temporary use of RINs in response to physical distancing requirements caused by the COVID-19 pandemic. Provided certain conditions were met (including that the videoconference signing was live and the signatory was physically present in New York), the EO authorized notarial acts to be performed remotely using audio-visual technology. Though the EO was extended several times, this temporary authorization of RINs was rescinded in New York effective June 25, 2021, via Executive Order 210.

Subsequent to the recission of the EO, the New York Legislature followed dozens of other states in officially implemented the permanent use of RON. While specific RON requirements vary from state to state, generally, RON differs from RIN in significant ways and makes the remote notarization process more secure.

Notably, RIN requires the document to be printed, signed, and sent to the notary who then prints the document to complete the notarization. This creates a situation where the notary and signer are not interacting with the document at the same time, thus breaking the chain of custody. In contrast, the process of RON is entirely digital and requires the use of a dedicated RON audio-visual conferencing platform that records, stores, and creates an electronic journal entry of the notarization. RON also typically requires more rigorous signer identification processes.

Recognizing the need to develop regulatory framework around the use of RON, New York’s permanent RON law does not become effective until June 20, 2022. As a stop-gap solution, the law allows for the immediate use of RINs, though the requirements have been heightened from those under the EO and include many conditions found in traditional RON laws.

While further directives are expected to develop in the coming months, notably, the law currently requires the following for both RINs and RONs:

The use of live audio-visual conferencing with reasonable security measures (hopefully the regulations will provide guidance on what such measures are).
Confirmation of the identity of the signer by either (a) personal knowledge, (b) presentation of photo identification, credential analysis, and identity proofing, or (c) by oath or affirmation of a credible witness.
A recording of the remote notarization to be retained by the notary for at least 10 years (note that the EO had no specific retention requirement).
The notary’s physical presence in the state of New York, while the signer can be situated anywhere, even outside of the United States, creating much greater flexibility and utility and no longer requiring signatories outside the United States to obtain an Apostille at a United States embassy or consulate.
The notarial certificate must state “this remote notarial act involved the use of communication technology.”
For RINs, the document being notarized must be filed with or relate to a matter before a public official or court, governmental entity, or other entity subject to the jurisdiction of the United States or involve property located in the territorial jurisdiction of the United States or involve a transaction substantially concerned with the United States. For RON, this is only required if the signer is located outside of the United States.
A Certificate of Authenticity, while not required, can be included to ensure county clerks will accept the document for recording.

As of Jan. 31, 2023, the use of RINs will no longer be permitted and only RONs will be allowed. At such time, New York will implement a registration system where notaries will be required to register with the secretary of state and pay a fee in order to be authorized to perform RONs. In the interim, any notary public commissioned by the NYS Department of State can act as a remote notary. It is likely that notaries will be required to adhere to additional standards as the New York Secretary of State is permitted, and expected, to establish regulations on the use of RINs and RONs.

While the implementation of RONs across the United States is widely viewed as a positive update, it does present some uncertainties. For example, what is the consequence of the RON record not being retained for the required period? Would it affect the validity of the underlying document and ultimately the transaction to which it relates? Will other states that have not implemented a RON system or have differing RON requirements recognize documents that include a RON validly performed in another state? While most states appear to have statutes recognizing valid out-of-state notarial acts, some do not. This makes understanding each state’s laws extremely important to avoid rejection from a recording office, especially in a multi-state transaction.

Source: New York Law Journal

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