Ohio Approves Electronic Notarization Legislation

On December 13, 2018, Ohio’s Legislature passed Substitute Senate Bill 263, the Notary Public Modernization Act, after the Senate approved the House’s amendments. The legislation, which is pending the governor’s signature, will take effect one year from enactment. Read the full text at http://bit.ly/2QAdRQG.

The law addresses several issues regarding notary publics, including those involving electronic and online notarization. It also includes benefits for those engaged in electronic real estate transactions.

The law's online notarization provisions bring Ohio in step with advancing legislation in the majority of states and mimic other legislation vetted by the banking and title insurance industries. A large portion of the law deals with centralizing all notary commissions with the secretary of state. Those duties were previously distributed among dozens of county offices and bar associations. Lastly, the law harmonizes electronic notarization with Ohio’s other electronic signature laws.

The process for remote electronic notarization will generally follow current industry practices, including visual verification of both the person and credentials, as well as an oral administration of the oath or statements of acknowledgement. What’s new are electronic signatures and the ability to use a secure, quality, audio-visual connection.

While current laws don't preclude recording electronically signed documents, it’s important to overcome the resistance of county officials by making it as clear and easy as possible for them to accept digital documents. This will facilitate adoption and help make handling electronically executed documents the norm.

To that end, as chair of the Ohio Land Title Association's (OLTA) Government Affairs Committee, I proposed amending the bill to include a "papering out" process for offices that don’t yet permit electronic documents to transfer real property. Even for counties with electronic recording, some of the offices for auditors and engineers aren’t set up for processing electronically submitted transactions. The law passed without this amendment, so addressing the issue will likely need to be done by amendment as part of the budget legislation or through the secretary of state’s rule making powers encompassed by the new law.

The “papering out” process would require county offices involved in approving real estate transactions to accept a copy of an electronically executed document that contains an attached form certifying the authenticity of the document. A suggested form is included in the proposed amendment and generally mimics the certification made by the submitter during electronic recording. The submitter certifies that the copy of the electronic original document is "true, exact, complete and unaltered."

This process differs from that suggested in the Mortgage Bankers Association (MBA) and the American Land Title Association’s (ALTA) model legislation for remote online notarization. The MBA/ALTA model would require that title agents have a notary public on staff (and likely on location) who also must have access to the electronic original, or that the notary performing a remote notarization could certify the records. By contrast, the OLTA proposal doesn’t limit the person certifying the document to the notary performing the electronic notarization or to any other notary at all. OLTA’s proposal also avoids the potential conflict with the new law’s provision that prohibits a notary from certifying a document as an original or a true copy of another record (Sec. 147.141(5)).

County-level resistance is expected to be based on the lack of an original signature, despite the fact that a wet-ink signature is not required on real estate documents under Ohio law. Also, having a wet-ink signature on the certification would require the remote notary to mail the original certified documents to the title agent. That would wipe out any efficiencies gained by electronic notarization.

OLTA’s proposal also accounts for the potential need for a title agent to access an original electronic document later. This is useful if the document is lost in transit or needs to be recorded in multiple jurisdictions, and provides for additional certifications as needed at any time. Requiring that certification be made only by the notary who performed the closing would be more time-consuming and probably cost more.

In response, the Ohio Recorders’ Association prepared an amendment that was considered by the House. It proposed merely accepting a copy of the electronic document as long as it bears a notary execution that’s consistent with online notarization. There are signs the industry may prefer OLTA’s proposal, though.

Manley Deas Kochalski, LLC is pleased the Ohio Legislature approved the bill so Ohio can join the ever-growing number of states adopting similar legislation.