Say Hello to RON (and Goodbye to Mailaway Closings)
By Michael Rothman, Esq., The Fund’s Legal Education Manager
Every real estate professional involved in a transaction with an out-of-town seller can relate to the dread of opening a FedEx envelope supposedly containing the fully executed deed, only to find that the seller signed in the wrong place, there are no witnesses, and the notary’s commission expired last month. Or, of the seller traveling abroad who missed her appointment at the local embassy, only to be told that the next available appointment won’t be for three weeks. Thankfully, with the advent of RON, the stressful days of “mailaway closings” may soon be a thing of the past.
On January 1, 2020, Florida will join a growing number of states to adopt Remote Online Notarization (RON). At its heart, the RON law will allow an existing Florida notary to register as an online notary and, using the necessary technology, remotely notarize most legal documents. The notary must take a required course on the duties and obligations of an online notary, obtain required insurance and bond coverage, and sign-up with a technology provider. The technology providers are called “RON Service Providers” (RSP). While there are many technical and legal requirements imposed on the remote online notary and on the RSP, for buyers and sellers it will be an experience not too dissimilar to using DocuSign and Facetiming over their computer, smartphone or iPad.
Proponents of RON recognize that the digitization of real estate transactions is already taking place. Contracts are regularly signed electronically via DocuSign. Loan applications are taken over the internet. Deeds are being electronically recorded. The time-honored tradition of the parties physically appearing before a notary public with their photo ID now serves as a drag on a process that’s increasingly geared for accuracy, speed and convenience. No longer requiring the signing party and witnesses to the signing to be physically in the same room with the notary - let alone in the same city or country - is a game changer and in many ways moves the closing process firmly into the 21st century.
The new Florida law requires (in situations where the notary does not personally know the signer) that the identity of the signer must be confirmed through a three-step process:
- “remote presentation” of the signer’s government-issued ID via audio-video communication
- “credential analysis” of such ID
- “identity proofing” each signer by way of “knowledge-based authentication” (KBA). Consumers are already familiar with this process, as many online companies require them to answer KBA questions to enter a website, e.g. of the following, which address have you never lived at?
Once the signer’s credentials are confirmed, the documents can be signed, witnessed and notarized. The notarial act will be videotaped through the RON technology. Additionally, the online notary must keep a secure electronic journal of all online notarizations performed. The journal and the electronic recording must be maintained by the notary, likely through the RSP, for at least 10 years.
The use of remote online notarization is ideal for sellers (and buyers) who cannot attend closing. Consider:
- a New York seller on a business trip in Atlanta can have his deed witnessed by colleagues in Atlanta and notarized by a Florida remote online notary
- an American student studying in Paris can have his deed notarized in a matter of minutes instead of worrying about getting to the U.S. Embassy in Paris and shipping the papers back
- a client will no longer have to be trusted to locate a local notary public (many banks will no longer notarize deeds) and procure witnesses or follow detailed instructions on where to sign and how to return the originals
Certain issues do remain, including the ability to authenticate the credentials of non-U.S. citizens lacking a credit history with the big American credit reporting agencies. It also remains to be seen to what extent the major national mortgage lenders will adopt and encourage the signing of notes and mortgages electronically. The expectation remains that as more and more Florida notaries become online notaries, national lenders will encourage the use of RON in Florida. Ultimately, however, and as with any new technology, it will be preference of the consumer that will decide its success in Florida since the use of RON cannot be mandated by the lender or closing agent.
As a member of Florida Realtors, you should be aware of this new option for the signing of documents by sellers or buyers who can’t attend the closing in person ... for whatever reason. It does not work for every situation, so you need to confirm whether RON is an option for a given closing. You would do this by first asking the lender and the closing agent. The buyer or seller will also need to be consulted as to whether this is a viable option for them.
Knowledge is power, so real estate agents are urged to learn more about how RON can assist their clients and reduce or altogether remove the stress and delays involved with out-of-town sellers and buyers.