Fidelity National Financial - Fraud Insights - REMOTE online notarization (RON)

Oregon has joined a growing list of states that have implemented remote online notarization (RON). On June 15, 2021, Senate Bill 765 was signed into law by Governor Kate Brown making remote online notarization permanent in Oregon.

With RON, parties to real estate transactions may have the option to sign documents without being physically present with the notary. Until the passage of Senate Bill 765, Oregon law required a document signer to be in the same room as the notary, and documents notarized by RON notaries from other states were not valid in Oregon.

RIN and IPEN — What RON Is Not

RON and RIN

Unlike RON, RIN (remote ink-signed notarization) refers to a process whereby a signer receives the paper document in advance of signing. The paper document is ink-signed while the signer and notary communicate with one another in real-time using Zoom, Teams, Facetime, GoToMeeting, or similar video-chat or video-conference applications. The signer then mails or delivers the ink-signed original paper document to the notary for signature and stamping.

While some states have emergency orders authorizing the use of RIN, Oregon notaries may not perform RIN, and RIN documents are not acceptable for use in Oregon. Remember, RIN is not RON.

RON and IPEN

Electronic notarization refers to in-person electronic notarization (IPEN) and should not be confused with RON. IPEN has been legal and acceptable in Oregon for several years. With IPEN, the signer must be physically present in the same room with the notary.

All the elements of a traditional notarization apply to IPEN — except the signer executes a digital document using an electronic signature and the notary signs and stamps the document using digital technology. The terms IPEN and electronic notarization do not apply to RON.

RON — Overview and Practical Considerations

Overview

With RON, the signer is not required to be physically present with the notary. RON is performed completely online with the notary and signer in separate locations. The signer appears in person before the notary using secure online audio-video technology.

The signer interacts with the notary in real-time and signs the documents using a digital signature. A digital signature is a more secure form of electronic signature, using encryption and other technology that inextricably link the signature to the document.

In every remote online notarization, or RON, certain basic elements must be present:

The notary is located in the state where the notary has been certified to perform remote notarizations.
The signer is not physically present with the notary.
The signer has reliable internet access.
The signer uses a laptop or desktop computer with a camera and microphone.
The notary uses an approved secure online platform.
The signer and notary see, hear, and understand each other.
The signer's identity is verified through the RON platform using security measures including personal-identity-challenge questions and credential analysis of government-issued identification.
The platform provides for secure tamper-evident document upload and transfer.
The document includes a statement that the notarial act involved the use of communication technology.
The audio-video RON conference is recorded and associated with the notary's electronic/digital journal.

Practical Considerations — Is RON an option for your client?

Equipment and internet access

Does your client have reliable access to the internet?
Does your client have a laptop or desktop computer with a camera and microphone? [Tablets and smartphones cannot be used with currently-available RON platforms.]
Is your client comfortable with the electronic signing process and capable of using the required technology?

Current photo ID

Does your client have current government-issued identification such as a driver license or state-issued identification card, United States passport, or an officially recognized passport of a foreign country?

Identity verification

Can your client complete the required knowledge-based authentication (KBA) process?
Before a signer is connected to the audio-video session with the notary public, KBA is used to verify the signer's identity. A series of questions is developed through the platform relating to the signer's credit, banking, and residence history in the United States. These questions must be answered accurately by the signer to proceed with the RON session.
RON may not be an option if your client is neither a U.S. citizen nor a permanent resident of the United States, or if your client does not have several years of credit activity in the United States because there may be insufficient data from which the RON platform can formulate KBA questions.

Which party is asking to use RON?

Seller: If a Seller seeks to use RON for signing the deed and other required title documents, most title companies will require the buyer to consent to the use of RON, and will notify buyer's lender the deed will be executed with RON.
Buyer: For a Buyer, the question whether RON is an option depends on the several variables.

Is the Buyer paying cash?
If so, RON is not necessary as there are no notarized documents. The title company may arrange for the buyer to sign closing documents electronically.
Have the Buyer and Seller agreed to carryback financing? Has the seller agreed to accept a note secured by trust deed? Or, are the parties entering into a land sale contract?
With seller's consent, RON may be available for buyer to sign a land sale contract or a trust deed securing the carryback note. The latter situation requires seller to determine how to handle execution and delivery of the promissory note.
Is the Buyer obtaining a loan from a private lender?
A private lender may agree to accept a trust deed notarized using RON. The lender will determine how to handle execution and delivery of the promissory note.
Is the Buyer obtaining a loan from a bank or other institutional lender?
Most institutional lenders and banks do not accept RON for loan documents. Very few institutional lenders and banks have a fully-digital closing process in which the notarized documents are signed using RON and the note is signed using a digital signature and stored electronically using a secure digital storage and note holding system.
Is there a solution if lender will not accept RON for loan documents? Possibly. Buyer's lender may allow an attorney in fact to execute loan documents on buyer's behalf using traditional signing and notarization methods. The lender may accept a power of attorney signed by the buyer and notarized using RON.

Takeaway for real estate licensees — Early notice is key

Is your client:

In quarantine or ill as a result of the pandemic or other condition?
Unable or unwilling to meet with an escrow officer or notary public because of COVID-related risk concerns?
In a foreign country and unable to obtain notary services from a U.S. consular office, embassy, military officer or other acceptable U.S. notary services?
In a foreign country and unable to obtain notary and apostille or authentication services from a foreign notary and official government office? Unable to attend a signing appointment at the title company or with a mobile notary for any other reason?

To avoid closing delays, notify the title company if any of these issues come to your attention. Begin a discussion of signing options right away to determine whether RON is an option.

In addition to the variables discussed above, keep in mind each title company has its own requirements for closing and insuring transactions using RON documents. Not all RON platforms and providers are acceptable to every title company, even if they are listed at the Oregon Secretary of State's website.

Discourage your clients from scheduling their own RON signing appointments directly with a RON provider. Documents signed and notarized using RON, such as a power of attorney or a deed, may not be accepted by the title company unless the RON signing was set up through the title company.

Do not assume RON is acceptable in all states. Always check with the title company to confirm whether RON may be used for documents recorded in other states. Statutes and rules vary.

CONCLUSION

Remote online notarization (RON) provides a secure and safe process for remote execution of documents before a notary public. If traditional notary methods cannot be used, contact the title company early to determine whether RON is an option for your client.

Reprinted with permission from:
Patricia Ihnat, Vice-Chairperson, Oregon Real Estate Board,
and the Oregon Real Estate News-Journal (September 2021 edition)