Self Driving eClosing: Creating a Client-Driven Transaction Experience
Imagine sitting back in your car and letting something rather than someone else do the driving. This reality is closer than you might think. Uber already has self-driving cars picking up riders in Pittsburgh and San Francisco, plus trained engineers at the wheel to ensure everything goes smoothly. Companies like Google, Chrysler, Tesla, Ford, Toyota and Nissan all currently have self-driving car projects underway – and Self-driving cars are expected to be on the market as early as 2020. For title companies and for Underwriters like me, self-driving cars are a lot like eClosings and online (aka “remote”) eNotarization. These are new technologies that are unfamiliar to most of us and live under a patchwork of new state laws and regulations.
Many states have passed regulations that enable notaries to perform eNotarizations, in which the notary and signer electronically sign and notarize documents in the same room. Some of these states have not enacted regulations required by the state statute, while other states are not currently conducting eNotarization or appointing eNotary. In other states, requirements such as mandatory enrollment, additional training, and specific authority to e-notarize, vary. The lack of uniformity in eNotarization laws – and the burden on the state notary to comply with additional rules– may be why we have not seen widespread adoption of eNotarization in the real estate transaction, despite the benefits of reduced errors and reduction in post-closing and funding times.
Online notarization takes e-notarization a step further by using technology to expand the definition of “in the presence of” the notary to allow notaries to remotely notarize documents by real-time, two way video and audio communications. Montana and Virginia both allow notaries to remotely notarize documents, but Montana notaries may only perform remote notarization within the borders of Montana; the real property must located in Montana; and the signer must be a Montana resident. In 2017, remote notarization gained traction as a number of state legislatures introduced online notary bills:
- Kentucky HB 218 (Introduced 2/7/17). Would allow a notary to perform a notarial act for individuals outside the U.S. using communications technology.
- Kentucky HB 539 (Introduced 2/17/2017) would allow a remote signer to be in any location.
- Maryland SB 747 (Introduced 2/3/17). Would allow an electronic notary to perform a remote notarization.
- Minnesota SF 893 (Introduced 2/13/17). Would allow a notary to perform a notarial act for individuals outside the U.S. using communications technology.
- Missouri H 1118 (Introduced 3/2/17). Would allow electronic notarization by two-way live video and audio conference communication.
- Nebraska LB 388 (Introduced 1/13/17). Would allow remote notarizations through video and audio conference technology.
- Nevada A. 413(Introduced 3/27/17; Signed by Governor 6/9/2017;). Nevada passed A.B. 413, which authorizes a Nevada notary to perform online notarial acts with online acknowledgements subject to regulations to be promulgated by the Nevada Secretary of State. This Act is not effective until July 1, 2018 and the Secretary of State has enacted regulations governing online notarization. Until this time, remote notarization is not insurable in Nevada. Please contact your local underwriter with questions.
- Ohio HB 49 (Signed by Governor on June 30, 2017; effective September 29, 2017). Ohio also enacted online notarization in also enacted online notarization in Sec. 147.542. A notary public, otherwise commissioned and appointed under this chapter, may use an electronic communications device, including a web site application, approved by the secretary of state to satisfy the acknowledgment requirements under sections 147.51 to 147.58 of the Revised Code and to electronically sign as the notary public. A notary public shall not use an electronic communications device to meet these requirements for a notarial act that is a deposition. The Secretary of State must establish standards for approving an electronic communications device that may be used by a notary public. The notary public must also submit a registration form established by the secretary of state to be commissioned as an electronic notary public and the Secretary must establish reasonable fees. Until this time, remote notarization is not insurable in Ohio. Please contact your local underwriter with questions.
- Oklahoma HB 1366 (Introduced 1/11/17). Would allow a notary to perform an electronic notarial act by means of audio-video communication.
- Pennsylvania SB 595 (Introduced 4/17/17) . Appearance defined as being in the notarial officer's physical presence or by means of audio-video communication.
- Texas HB 1217 (Signed by Governor 6/1/2017; Effective 7/1/2018). Texas recently passed House Bill 1217, which permits a person to appear and acknowledge a document by certain two-way video and audio conference technology aka online notarization. The law tasks the Secretary of State to develop standards for online notarization including credential analysis and identity proofing and has an effective date of July 1, 2018. Until this time, remote notarization is not insurable in Nevada. Please contact your local underwriter with questions.
- Washington SB 5081 (Governor Signed 5/10/17). Department of Licensing to adopt rules as to what constitutes personal appearance before a Notary. This law is effective July 1, 2018.
Colorado also introduced an online eNotary bill last session. However, the online notary provision was removed from the final bill, and the Secretary of State commenced a working group with industry partners to develop ideas on how online eNotary could work in Colorado – with anticipation of new legislation next year. California has a similar working group focusing on legislation for 2018. This is an area that will continue to evolve and change, and currently remains rare for the real estate transaction.
While there is a lot of incentive from lenders to make eClose work, locally it is about servicing realtors and consumers, giving them more choices and a streamlined closing experience through our products and services. As the tools and technologies continue to evolve, so does the closing experience itself. For every buyer, seller and real estate professional who has waited through a traditional closing and imagined a simpler process, your wish may be granted sooner than you think.
How? A ‘self-driving’ eClosing may mean a hybrid approach in your state, which enables providers to find unique, consumer-driven solutions for traditional real estate closings. The reality of buyers and sellers using a tablet to choose their own custom closing experience, as an option title companies bring to market, is getting closer. A hybrid eClosing experience is totally feasible today – it is not all or nothing when it comes to eClosing. A good first step is eRecording your documents in counties that will accept them electronically. If you are in a county that does not have eRecording, consider sitting down with the Clerk or Recorder and discuss the advantages of eRecording to residents of the county. In states that allow a hybrid eClosing where some of the documents are signed electronically and some are wet signed, talk to your lenders about what documents they would allow to be signed electronically, and if there are particular vendors they would want you to work with to provide an eClose solution. Talk with your local realtors to learn how a hybrid eClosing might help them improve their customers home-buying experience. If you are in a state that allows eNotarization (i.e. notary is in the same room as the Signer and the notary affixes their signature and seal via electronic means) consider the efficiencies and advantages of becoming an eNotary – and offer this service. If you are in a state that allows a notary to perform online eNotarization, consider how you might incorporate online notarization into your business for U.S. buyers and sellers traveling abroad and parties residing in another state or at some distance from your office.
We know our business better than anyone. Settlement agents can help bring together county clerks/recorders, Secretaries of State, lenders, real estate professionals, eClosing technology vendors and land title associations to work closely with state legislatures to pass laws that enhance the closing experience for everyone; insure the integrity of state land title records; and enable title insurers to underwrite title insurance coverage. This is how Texas, North Carolina, Nevada and many other states are bringing state laws into the modern age of technology for a fully paperless or hybrid eClosing. If you don’t currently have a task force working on eClosing in your state, consider approaching your local land title association about building a coalition with all stakeholders to set up a working group on eClosing. Also, embrace the technology and start to think about how eClosing can make your business better. This way you will be using the technology to drive your eClosing with you as trained engineers at the wheel just to make sure that everything goes smoothly.
Stay tuned for an online eNotary Series that will walk settlement agents through some of the things to consider in a fully paperless online eClosing.