From NNA: eNotarization, Webcam Notarization, Online Closings And eClosings: What’s The Difference?
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Updated 9-13-17. Ohio has become the latest state to authorize webcam notarization, closely following measures enacted in Texas and Nevada. They join Virginia, Montana and Florida as the only states to permit the practice in any form.
Between the Federal Housing Administration expanding its electronic signature program and more states adopting webcam notarization, the impact of technology on Notaries has become a hot topic in social media communities. But there also is a lot of confusion about electronic notarizations and webcam notarizations. Here are basic definitions of these terms to help clarify the differences between terms and processes.
Any time you make a purchase with a credit card and are asked to sign a digital pad, or type your PIN to get money out of your bank’s ATM machine, you’re using an electronic signature or eSignature. Anytime you make a purchase on the internet and click the “submit order” button, you are electronically signing a purchase agreement. Electronic signatures have become commonplace in the retail world, and they also are becoming commonplace in larger transactions, such as making an offer on a home purchase. eSignatures can be made in a number of different ways, but they are considered as legally valid as a signature on a paper document (often called a “wet” signature).
Electronic notarization, or eNotarization, is essentially the same as a paper notarization except the document being notarized is in digital form, and the Notary signs with an electronic signature. Depending upon state law, the information in the Notary’s seal may be placed on the electronic document as a graphic image or other available means. But all other elements of a traditional, paper notarization remain, including the requirement for the signer to physically appear before the Notary.
Many people confuse eNotarization with webcam notarization, believing they are the same. They are not.
Webcam notarizations make use of video and audio technology on the internet to allow signers to personally appear before and communicate with the Notary at the time of the notarization. With traditional notarizations, the signer is in the Notary’s physical presence.
To date, only six states have enacted laws permitting the use of webcam technology for notarial acts.
In 2011, Virginia became the first. Montana followed suit in 2015. However, both states limit the circumstances under which webcam notarizations can be performed.
In 2015, Florida also authorized webcam notarizations, but limits the practice to certain law enforcement and correctional officers who are permitted to administer oaths and affirmations.
So far this year, Texas, Nevada and Ohio have passed laws authorizing online notarizations.
However a number of states — including California, New Jersey, Oklahoma, Oregon, Rhode Island and Wisconsin — have issued public statements that notarizations using online communication are prohibited and signers are still required to physically appear before Notaries.
An eClosing or electronic closing is a mortgage closing in which all the documents remain in digital form. They are signed, notarized and returned to the title company or lender in digital form, and nothing is printed out. An eClosing can be conducted with the borrowers and Notary in each other’s physical presence or online using video-audio technology.
An online closing is an electronic closing that is conducted online without the borrower and Notary being in each other’s physical presence. The personal appearance requirement for the notarization is satisfied via the internet using webcam technology.
iClose is a web-based closing system offered by one settlement services provider. With this system, the borrower physically appears before a Notary to sign a limited power of attorney (LPOA) in paper form. The LPOA allows a representative of the title company or lender to sign the borrower’s mortgage documents. Typically, the borrower will then log onto the iClose system to review and approve the loan documents using an electronic signature. The title company or lender representative signs all paper documents in the closing package, including the Mortgage or Deed of Trust, and a title company or lender Notary notarizes the representative’s signature.
Michael Lewis is Managing Editor at the National Notary Association.