From property search through document negotiation, just about every aspect of a modern commercial real estate deal, including hotels, is now conducted electronically and online. However, the closing itself has remained a paper process in an increasingly digital world. The good news is that change is coming—with the recent passage of HB 409, Florida joined 21 other states in enabling its notaries to perform fully online notarizations. The rapid expansion of remote online notarization is increasingly making fully online, digital closings a reality.
Online closings are fast and convenient and allow all documents to be signed and notarized from each party’s home or office or while on the road. They dramatically reduce post-closing processing times, speeding up final fund transfers and document recordation. Online closings could soon be a normal part of every developer’s workstream.
How does a remote online closing work?
In an online closing, documents are prepared and uploaded to an online remote notarization platform. Signers log on, review the documents, and, when ready, connect with an online notary. Signers electronically sign and the notary electronically notarizes each document as required. As a security measure, each completed document is then “tamper sealed.”
To deter identity fraud, each signer’s identity is validated to a much higher standard using knowledge-based authentication and software-based analysis of the client’s photo ID. Records of the transaction are maintained in encrypted data records. In addition, the audio-video session is recorded.
Where are online closings available?
The key feature of remote notarization is that while the notary must be commissioned and physically located in one of the states which authorizes its notaries to use online tools, the property, funding partners, and other participants can be in other states. Also, the signers may be located anywhere at the time they sign, including in another state or abroad, so long as they can connect online. This feature of online closings finally brings them into line with normal online transactions with which all of us are now familiar.
Florida, Virginia, Texas, Utah, Arizona, Minnesota, Tennessee, and numerous other states—22 in total so far—have enacted laws authorizing their notaries to use remote online notarization. Legislation is expected in a number of other states in the coming year. Since a notary can notarize a document for use in other states, the list of states where online notarization can be used is expanding rapidly.
In the residential real property context, underwriters are ensuring online closings in nearly three-quarters of the country. Underwriters are increasingly rolling out guidance for use in commercial closings as well. As long as the property’s county accepts eRecording of deeds and other recordable instruments and the underwriter has approved online closings, hoteliers will be ready to move their closings online.
Check with one of the leading national remote notarization platforms to see if a state is already on the list and to ensure that an online notarization platform has been approved by the underwriter.
What about cost?
Online closings simply require a webcam-enabled computer or mobile device and an internet connection. The per-transaction notarial cost is about the same as a mobile notary: roughly $100 to $150, depending on the complexity of the transaction.
Will I still close using traditional paper notarization?
There are times when hoteliers will still close transactions using traditional notarization. For example, the property may be in a county which does not yet record electronic records.
Even in those cases, hoteliers can still benefit from partially-online closings, called “hybrid” closings, where many key documents are signed online, while a subset of documents (such as the Note and Mortgage Deed) are ink-signed in front of a traditional notary.