When you buy or sell real estate in California, a title insurance representative gets in line at the county recorder’s office and gets all the legal documents approved and stamped. You may be lucky and be among the first in line, at 8AM, or be last in line, so you won’t officially be a buyer or seller till late in the day. Now there is a strong move toward remote notarization.
Remote notarization is allowed in 43 states, up from 22 at the outset of the pandemic. Some of the remaining states, including California, have reservations.
Real-estate closings can now take place remotely in most states, a shift that accelerated as much of life moved online during the pandemic. Mortgage lenders are pushing the remaining states to come on board, too, though lawmakers have reservations. During a remote closing, homebuyers videoconference with lenders, lawyers and notaries who verify identities. Documents are signed electronically.
Forty-three states allow remote closings, and seven remaining states—including California, Connecticut, Georgia, Mississippi and South Carolina—haven’t passed such legislation. In a slowing housing market, mortgage lenders say they are prioritizing new tech-enabled processes, including virtual closings. “It’s really not a technology limitation; we’ve got all the tech now where you can do a fully digital close. It’s really the legal innovation that needs to happen,” said Brian Woodring, chief information officer of Detroit-based Rocket Mortgage LLC.
California lawmakers have been working to hammer out legislation that would allow remote online notarization. A bill was passed by the state Assembly this year but sticking points remain that are stalling its progress in the state Senate. Assemblymember Frank Bigelow, a Republican who opposed the bill earlier this year, said some notary and real-estate organizations had voiced concerns about several provisions, including one that would subject out-of-state notaries to strict California regulations when performing notarizations for residents of the state.
The California Association of Realtors and the California Land Title Association wrote in a letter to members of the California State Assembly that the provision about out-of-state notaries ran “afoul of the long-standing doctrine of interstate recognition” as defined in the U.S. Constitution. Additionally, other groups opposed a provision in the bill they believed made it too easy for anyone to sue an online notarization platform. “There have been several attempts to come up with some compromise in language that would appease both sides, but right now we’re in a holding pattern until we can come up with something,” said Assemblymember Reggie Jones-Sawyer, a Democrat who introduced the bill.
At the federal level, the House in late July passed the Secure Notarization Act, which would allow notaries nationwide to perform remote online notarizations. The bill now moves on to the Senate.
