This past Monday, May 4, 2020, Governor Cooper signed Senate Bill 704, enacted as Session Law 2020-3, which is designed to aid North Carolinians in response to the Coronavirus disease. Of particular interest to Real Estate Agents is the portion of the bill found in Part IV entitled “Emergency Video Notarization.” Currently, when a real estate document requires notarization, that means the homebuyer must be “physically present” in front of the notary in order for the notarization to take place. Here at Black, Slaughter & Black, P.A. we are experienced with our attorneys utilizing a variety of methods to close transactions, including video conferencing, but even in those closings, we still have a notary physically present. Since the first outbreak of the Coronavirus, and the restrictions regarding social distancing that followed, many agents and homebuyers have been requesting fully remote closings, and have been seeking additional alternatives to “in-person” closings in order to allow homebuyers to fully stay home and perform the closing from there. While the Emergency Video Notarization provision in the Bill does provide an alternative to the physical presence requirement for notaries, it does not provide a long-term alternative to in-person closings and is in fact still very limited in its ability to provide a fully remote closing.
The primary aspect to understand about this portion of the bill is that the video notary provisions are designed for limited, emergency situations. Video notarization is not going to change all closings and will likely only be used in situations where the buyers are quarantined and absolutely unable to leave their homes. Even in those situations, the Bill still provides that the original documents will likely need to be overnighted or otherwise physically delivered to the notary for notarization, which, in turn, may cause a delay in the documents being recorded. Additionally, these provisions are set to automatically expire at 12:01 AM on the morning of August 1, 2020. Below is a breakdown of the elements the bill requires in order for the closing attorney to be able to perform a video notarization.
- Video Conference Technology
In order to perform the video notarization, the person signing the document (the “principal”) and the notary must use video conference technology that provides clear quality, real-time video and audio that allows direct interaction between the notary and the principal. The Notarization may not be based off a prerecorded video.
- Physical Presence
The requirement of physical presence is not eliminated—this provision of the Bill essentially states that the requirement is satisfied if: 1) the notary is physically present in North Carolina at the time of notarization; 2) the principal verifies that they are also present in North Carolina, and identifies in which county they are located; and 3) the principal and the notary have live interaction through video conference technology.
The requirement that the principal provide evidence of their identity is still present under the emergency video notarization provisions. The identification element is satisfied if the notary has personal knowledge of the person signing. However, if the notary does not know the person, the notary must see some form of currently valid identification (not expired) issued by a federal or state agency, that contains a photograph, a physical description of the person being identified and a copy of the person’s signature (ideally a driver’s license). Additionally, the notary must have the ability to record or “screen-shot” the person’s face as well as the evidence of their identification.
- Signing process
This is the portion of the Bill that will likely cause the most issues in terms of closing real estate transactions. If an original, wet-signed document is required, then the person signing will have to sign the document in front of the notary using the video conferencing technology. Once the document has been signed, they will need to overnight, or otherwise get the signed document to the notary so that the notary stamp can be applied to the document. The practical effect of this requirement is that Deeds of Trust, which have to be an original wet-signed document because they are recorded at the Register of Deeds, will have to be sent to the notary and then the notary/closing attorney will apply the stamp and record the document. Depending on when the closing occurs, and whether or not the document can get delivered to the notary/closing attorney, this will likely mean that the document will not be recorded on the same day of the closing, which in turn means a delay in the delivery of keys and the disbursement of funds.
In short, the ideal situation in which this Emergency Video Notarization will apply is where the homebuyer is truly stuck at home due to quarantine and has absolutely no way of leaving their home, but the closing can no longer be delayed for whatever reason. In this situation, a video notarization could take place, but all parties should go into it with a full understanding of its limitations and the fact that it could likely mean a delay in recording. To review all of the requirements found in the Emergency Video Notarization provision of Senate Bill 704, check out Part IV of the Bill found at https://www.ncleg.gov/Sessions/2019/Bills/Senate/PDF/S704v5.pdf.
All of our closing attorneys already have video conferencing technology and have experience in adapting closings to fit a variety of situations. For assistance with any real estate closings or to discuss remote and video closing options, the attorneys in the Greensboro, Charlotte, Coastal or Triangle offices of Black, Slaughter & Black, P.A. can help you determine the best way to close your real estate transactions.