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By: David Newman
Junior Associate Editor, American Journal of Trial Advocacy
In January 2020, Florida became one of the most recent states to pass a law allowing for remote online notaries.[1] Florida is now one of 22 states that have passed laws allowing for remote online notaries.[2] With the new law, registered remote online notaries can perform fully electronic real estate closings without being in the physical presence of the signing parties.[3] Though electronic real estate closings are not a new development, previous electronic real estate closings still required the notary to be in the same room as the parties who are signing.[4] But with Florida’s new remote notary law, the online notary can be in a completely different location than the signing parties.[5] For example, the online notary could perform an electronic real estate closing with the notary in Florida, the buyer in Alabama, and the seller in Colorado. The potential positive impact of the new law could result in cheaper, more efficient remote closings and possibly fewer days to close on a house.
Overview of the New Law
The new remote online notary law is defined in Part 2 of Chapter 117 of the Florida Statutes. Under the new law, online notaries in the state can perform an online notarization regardless of what state the signing parties are located in at the time of signing.[6] This means that online notaries can perform fully electronic real estate closings online with both parties being outside the state of Florida.[7] The audio-video (AV) technology used by the online notary to perform a fully electronic closing, however, must meet certain minimum requirements.[8] First, the AV technology must be able to “provide sufficient audio clarity and video resolution” that allows the online to notary to be able to communicate with the attending parties and confirm the identities of the attending parties.[9] Second, the transmission of the AV technology “must be reasonably secure from interception, access, or viewing by anyone other than the participants communicating.”[10]
The new law also sets out requirements for the online notaries themselves. In order to become an online notary, current notary publics in the state are required to submit a registration to be an online notary, pay a registration fee, and identify the AV technology the notary intends to use.[11] In addition, online notaries are required to attend a two-hour training course on the “duties, obligations, and technology requirements” of being an online notary.[12] The online notaries are also required to obtain a bond of $25,000 and carry errors and omissions insurance in the amount of at least $25,000.[13]
The new law also establishes a standard procedure for performing an online notarization.[14] First, the online notary must verify the identities of the signing parties.[15] The online notary can verify the parties’ identities through either personal knowledge of the party, government issued ID of the party, or by the party answering a series of knowledge-based questions.[16] Next, the online notary must ensure the AV technology being used is “secure from unauthorized interception.”[17] The online notary must also specify that the notarization is being done online by placing the words “online notary” next to the notary seal.[18]
Potential Positive Impact of the New Law
One potential positive impact of the new online notary law is on real estate closings where parties cannot physically attend. Typically, real estate closings where one, or both, of the parties cannot attend the closing can be done by mail or by using a power of attorney.[19] Closings done by mail require the closing documents to be mailed, usually by overnight mail, to the party that cannot attend the closing.[20] That party then signs the documents in front of their own notary and mails the documents back to the closing agency handling the remainder of the closing.[21] Issues with this method can occur when the documents are not mailed back on time or when the documents are not signed correctly or not fully executed.
Instead of executing the documents by mail, the non-attending party could have the closing documents executed through an agent by using a power of attorney (POA). In this situation, the non-attending party appoints an agent, who could be a family member, spouse, or real estate agent, to sign the closing documents on his behalf. Using a POA can be more efficient than using the mail, but there are additional costs when using a POA because the party has to pay to have the POA drafted and notarized, and the POA has to be recorded along with the deed and/or mortgage, which requires an additional recording fee.[22]
The new remote online notary law can potentially eliminate the costs and inefficiency issues previously involved with parties who are not able to attend closings. Under the new Florida law, remote online notaries can “perform an online notarization as authorized under this part, regardless of whether the principal or any witnesses are physically located in this state at the time of the online notarization.”[23] Having a remote online notary perform the closing for parties that otherwise could not attend the closing in person would eliminate the need for mailing documents or using a POA. The parties could now attend the closing via webcam and sign all of the documents electronically. This will save the parties time and money and eliminate the issues and costs associated with traditional closings where a party cannot attend.[24]
Another potential impact the new online notary law can have is on the scheduling of real estate closings. In Florida in 2019, the median days to fully close on the sale of a single-family home was 84 days.[25] Parties typically want to close on a Friday, which leads to Fridays usually being the busiest days for closing agencies.[26] Friday is the day that most people can get off work or leave work early to attend a closing. But with the new online notary law, people may be able to avoid this if they have the online capabilities to do a remote online closing at work. Potentially, parties who have access to a webcam at work could attend a closing any day of the work week without having to take off or leave work early. This could help closing agencies spread out closings more evenly throughout the work week and free up more days for the parties to attend closings. Which in turn could lead to a shorter average number of days to close on a house.
Because the Florida law is so new, there will likely be some technological issues that arise that the statute has not addressed, particularly with cybersecurity. But, the remote online notary law in Florida certainly has the potential to make a positive impact on real estate closings in the state and also to set an example for other states to follow.
[1] Michael E. Workman, The Law: Online Notarizations Are Allowed in Florida Now, The Ledger (Feb. 5, 2020, 4:08 PM), https://www.theledger.com/news/20200205/law-online-notarizations-are-allowed-in-florida-now.
[2] Joshua C. Prever, How Remote Online Notarizations Can Improve Lending Practices, LAW.COM (Jan. 30, 2020, 10:26 AM), https://www.law.com/dailybusinessreview/2020/01/30/how-remote-online-notarizations-can-improve-lending-practices/?slreturn=20200124160153.
[3] Id.
[4] Id.
[5] Id.
[6] Fla. Stat. Ann. § 117.209(3) (West 2020).
[7] Id.
[8] Fla. Stat. Ann. § 117.209(2) (West 2020).
[9] Fla. Stat. Ann. § 117.295(3)(c)(2) (West 2020).
[10] Fla. Stat. Ann. § 117.295(3)(c)(1) (West 2020).
[11] Fla. Stat. Ann. § 117.225(3)-(5) (West 2020).
[12] Fla. Stat. Ann. § 117.295(6) (West 2020).
[13] Fla. Stat. Ann. § 117.225(6)-(7) (West 2020).
[14] Fla. Stat. Ann. § 117.265 (West 2020).
[15] Fla. Stat. Ann. § 117.265(4) (West 2020).
[16] Id.
[17] Fla. Stat. Ann. § 117.265(6) (West 2020).
[18] Fla. Stat. Ann. § 117.265(7) (West 2020).
[19] Closing Options, Home Closing 101, https://www.homeclosing101.org/closing-options/ (last visited Feb. 25, 2020); Prever, supra note 2.
[20] Closing Options, supra note 19.
[21] Id.
[22] Julia Kagan, Power of Attorney, Investopedia, https://www.investopedia.com/terms/p/powerofattorney.asp (last updated May 5, 2019).
[23] Fla. Stat. Ann. § 117.209(3) (West 2020).
[24] Prever, supra note 2.
[25] Yearly Market Detail – 2019 Single Family Homes Florida, Fla. Realtors, https://archive.floridarealtors.org/ResearchAndStatistics/Florida-Market-Reports/Index.cfm (last updated Feb. 17, 2020).
[26] Sandy Gadow, Why You Should Avoid Fridays — and the 15th — When Closing on a Home, Wash. Post (June 30, 2015, 8:00 AM), https://www.washingtonpost.com/news/where-we-live/wp/2015/06/30/why-you-should-avoid-fridays-and-the-15th-when-closing-on-a-home/.
American Journal of Trial Advocacy 