Despite the COVID-19 pandemic, real estate closings and loan refinancings are continuing to take place – but not without adapting. There required some immediate, albeit temporary, changes in how such transactions are conducted in Massachusetts. In addition to the complications surrounding open houses, closings, and the filing of documentation in registries of deeds that are closed to the public, the necessity of having a notary public physically present for the signing of documents was yet another hurdle. As a result, virtual notarization laws have been enacted in many states, now including in Massachusetts. This post includes a step-by-step guide to the recent virtual notarization law in Massachusetts that allows real estate practitioners and our clients to conduct real estate closings in real time while simultaneously safely adhering to social distancing standards required by the COVID-19 state of emergency.
In law, there are general rules and exceptions to those rules. In the Commonwealth, conveyance of title to real estate may only be conducted by an attorney duly admitted to practice law in Massachusetts. The attorney is required to be an appointed notary public in accordance with Mass. General Laws, Chapter 222. The general rule is that the notary law requires that a notarial act may be completed only if both the notary and signer are in each other’s “physical presence at a single time and place.” COVID-19 and the requirements of social distancing mandated an exception to this rule. The exception for virtual notarizations was codified in Chapter 71 of the Acts of 2020 (the “Act”). This emergency Act, signed into law on April 27, 2020, allows for electronic video conferencing when notarizing documents. The Act is temporary and remains in effect for the duration of the state of emergency that Governor Baker instituted on March 10, 2020. This Act suspends the general requirement for the signer and the notary to be physically present in the same location, and authorizes the use of electronic video conferencing when notarizing someone’s signature.
Notarizations are required in many different sectors of society including, but not limited to, estate planning, banking, and insurance. The Act provides temporary assistance to address the challenges faced by professionals and the public in these areas. My focus here is to review the application of the Act in the context of the COVID-19 related social distancing challenges faced by real estate lawyers and our clients in Massachusetts.
Virtual notarizations have had an immediate and welcoming benefit to the real estate bar and the clients we serve. Prior to the enactment of this law, many real estate attorneys struggled to maintain social distancing guidelines while attempting to close real estate transactions. Clients, including lenders, borrowers, buyers, and sellers who wanted to close a real estate transaction would likely have to assume the risk of exposure that an in-person closing could create. The Act alleviates the worries involved with face to face real estate closings.
The mechanics of the Act direct each party embarking on the process exactly how to proceed and how to properly maintain documents of such virtual notarizations.
Section 1: This section defines the “Principal” as a person who is signing a document. In the context of a real estate closing, this may be the buyer, seller or borrowers in a transaction involving a mortgage. This section also addresses “satisfactory evidence of identity” which is the type of identification that the principal must provide to the notary. Identification may be the notary public’s personal knowledge of the principal, or it can be a government issued ID with a picture and signature.
Section 2: Notaries appointed pursuant to M.G.L. c. 222 may perform notarial acts using electronic video conferencing in real time. This section also states that the principal may sign individually or in a representative capacity.
Section 3: This section addresses the validity of a notarial act using electronic video conferencing. This section outlines that the notarial act will be valid if the notary observes the principal’s signing of the document, both notary and principal are physically in Massachusetts, and the principal provides satisfactory evidence of identity, a copy of which must be retained by notary for 10 years. In addition, the principal must make acknowledgement or affirmation to the notary, deliver the documents, and, in the case of real estate conveyancing once the notary receives the original documents, the notary must have a second video conference with the principal to verify that the documents received are the same documents that the principal signed during the first video conference. During any video conference, the principal must make two representations. First, they must swear that they are physically in Massachusetts and second the principal must disclose anyone else who may be present and make them viewable on the video. Upon completion of the process outlined above, the notary may stamp and sign the document completing the notarial act.
TIP: The notary has additional responsibilities including to state on the document that it was notarized remotely, and to sign an affidavit stating that the notary complied with the requirements of the Act. In addition, the notary must create an audio and video recording of the performance of the notarial act. Both the affidavit and the videos must be retained for 10 years. If a paralegal is the notary, the supervising attorney shall retain copies, affidavits, and recordings for the 10-year period.
Section 4: Any document executed, acknowledged or notarized pursuant to the Act shall be accepted for all legal purposes, including that it shall be acceptable for recording at any registry of deeds or filing with the registry district of the land court. This section also protects third party mortgagees or purchasers for value against lack of compliance of the notary or principal with some provisions of the Act. Lastly, it confirms that the later repeal of this law will not affect the validity of the notarial act completed while this law was in effect.
Section 5: The signature of any witness who participates in the video conference and whose signature is notarized shall be as valid as if the witness signed in person. In addition, a document that was signed on multiple pages and in different locations in Massachusetts is effective if it otherwise complies with the Act.
Section 6: For any document requiring notarization in the course of closing a transaction involving a mortgage or other conveyance of title to real estate, only a notary who is an attorney licensed to practice law in Massachusetts or a paralegal under the direct supervision of such attorney, shall perform a notarial act using electronic video conferencing. If the notary is a paralegal, any copies of the principal’s identification shall be handled by the supervising attorney. In addition, this section introduces the requirement for the principal to provide a second form of identification when the notary is notarizing any documents pertaining to the conveyance of title to real estate. Lastly, this section codifies the requirement that the closing of a transaction involving a mortgage or other conveyance of title to real estate may only be conducted by an attorney duly admitted to practice law in Massachusetts.
Sections 7 and 8: The Act is a temporary law and will be repealed 3 business days after the termination of Governor Baker’s March 10, 2020 declaration of a state of emergency.
This real time virtual notarization law will assist the citizens of Massachusetts with conducting real estate transactions in a safe and practical manner for the duration of the on-going pandemic.