The Function of a Notary Public in Real Estate
The general purpose of a notary public in the realm of real estate is to ensure, among other things, that the person seeking the notary’s signature is indeed the person that he or she claims to be, that such person is cognizant of the nature of the documents being notarized, and that the subject documents are executed at the notary public’s direction, in the notary’s presence, and with the specific intent of having the documents notarized by the parties executing them .
In addition, a notary public must be satisfied that the execution of the subject documents is free of duress.
Who Can Be a Notary for Real Estate Documents?
Not everyone is suitable to notarize real estate documents. Not only must a potential notary fit within the parameters of their state’s definition of notarial acts, but they also have to qualify to be a notary public. Several criteria go into deciding whether a person qualifies to be a public notary, and should be thoroughly examined before proceeding to apply. No one wants to go through the process of training for an exam they will fail, or spend time filling out complicated forms only to find out they don’t qualify after all. The first qualification is that a potential notary public applicant needs to pass an exam with a certain level of accuracy. This is a no-brainer; a qualified applicant needs to have a minimum level of competency to carry out their duties. However, how likely is it that a potential applicant would be unable to pass such an exam? Quite low, which is why the passing rates on notary public exams tend to be so high. In other words, most people who are qualified to be notaries public will be able to pass their state’s exam. This leads to the next criteria for consideration.
The requirements for a potential notary public often include obtaining a surety bond. The purpose of the bond—like any other bonding situation—is to offer assurance that the bonded individual will be able to fulfill their duties as a notary public by compensating any party negatively affected by the bonded employee’s mistakes. Essentially, if an employee or agent of your company is bonded and you allow them to handle any company funds, you are protected. So say you let an employee handle the transfer of money, and it turns out they embezzled funds; the bond you’ve selected will pay for the amount the employee stole. This is exactly how the public notary bond works. It’s not a badge of quality, but a preventative measure against the risk that is present in every business transaction, real estate or otherwise. Every notary public must obtain a bond through a surety service. In order to make claims under a bond, the entity or individual wanting the claim made must have been negatively impacted by the failure of the notary public to perform his or her duty. While official government entities, banks, and other corporate entities can obtain bonds from surety companies directly, individuals like real estate agents, escrow officers, and insurance agents can obtain their notary bonds through their state’s Department of Insurance. A surety bond is a requirement for every state, and the amount of the bond varies from state to state. Most of the time, the bond offered is between $10,000 and $25,000.
Bonding ensures the notary public’s trustworthiness, and is a good measurement for deciding who might be a better candidate for your company’s notary needs, especially if you need someone with experience. If several applicants have similar qualifications, bonds can help in making the decision as to whose services you choose.
Papers That Often Demand Notarization in Real Estate
There are a number of different kinds of real estate documents that need to carry the signature of a notary public. These include: When you think about purchases of real estate property, such as land or homes, purchase agreements and deeds are what’s most likely to come to mind. Any kind of transfer of ownership of property needs a notarized signature, and providing such an official stamp prevents fraud from taking place during the sale process. English often does not have the most fluid terminology available, but contracted parties will engage in discussions that result in the closing and transfer of real estate. This ensures that the documents that contain this information are valid and protected from potential allegations of any issues that could result in legal disputes.
Mortgage documents certainly have some legal terminology written into them, including descriptions of the purchase agreement from person to person, but they also often include financial language that is less easily understood. Naturally, a mortgage agreement comes with an entire course’s worth of the financial landscape for the individual entering the deal, and a notary public can verify that the documentation being held is legitimate. In this way, a notary helps in basic paperwork issues and costs itself nothing for those involved.
Selecting a Notary for Your Real Estate Transactions
In choosing the right notary for your real estate related needs there are a number of factors that you should consider. Not limiting this list to only these criteria, I am simply attempting to provide you with some thoughts and experiences that I have to share. To be sure, experience is always important. The more experienced a notary professional is, the more confident you can feel about his or her ability to assist you in your real estate related matters. Naturally, the cost of the notary professional for assisting you with your real estate related needs is a factor as well. Licensing and reputation are also important. Always be clear on who is signing the notarized documents and how that person is positioned in the company. In the past two years involving primarily real estate transactions, I have been to houses and commercial buildings owned by title companies where the person in charge at the business had no idea that he or she would be the one to sign the documents and notarize our signatures that particular day. Knowing where you stand with someone in terms of loyalty, trust, and respect, is always a good thing to explore prior to signing the documents. This will help you determine if the notary professional is in fact going to look out for your best interests, or the best interests of the client that the notary professional is really working for.
The Notarization Process for Real Estate
While the exact process for notarizing real estate documents may differ across states, standard notarization requirements are generally followed. Individuals should expect to provide a valid form of identification when meeting with the notary. The notary may ask for more specific information regarding the property, including the complete legal description. This may include information from local property tax and appraisal notices.
If the individual has prepared the documents ahead of time, he or she may submit them to the notary for review. Some forms of notarization may require individuals to sign the document in front of the notary , while others may permit the notarization to occur after the fact. Individuals should ask about their personal requirements for notarization and whether or not they need to sign the document in front of the notary upon arrival. It may be prudent to have a witness present and gather all necessary paperwork at the time of notarization to avoid having to schedule an additional appointment.
The notary will typically include a seal on the document that includes two lines of type: the name of the state where the notarization is being taken place, and the name of the county where the notarization is being conducted. The notary is required to immediately complete the document and notate any details in his or her journal. This journal may be available for review by the client if requested.
Common Errors Associated with Notarizing Real Estate Papers
Purchasing or selling real estate is one of the largest transactions most people will be involved with in their life. When receiving the purchase price for their property, many people fail to properly complete their closing statement. Others mistakenly believe it is acceptable to notarize a document without the principal being present. While not common, these mistakes can be incredibly costly.
Mistake: Incorrectly completing a closing statement
The mistakes here are usually caused by the parties assuming that the other will review the statement before closing. Upon reviewing the final statement, it is often too late to fix mistakes. It is critically important that the buyer and seller receive a final closing statement from their respective closing agents and brokers so that they can identify any errors before they have to sign an affidavit stating that it is correct.
Mistake: Failing to be properly identified
Many people incorrectly believe they can notarize documents on behalf of their parent or grandparent by possessing a power of attorney (POA). The issue is usually that the POA was not recorded with the local property appraiser as a deed restriction. Since people have often relied upon a POA in an effort to save money, they are surprised to learn it has no effect on the transaction. What they will learn is that their parent or grandparent must return to the recording office to sign the deed to make the sale valid and legally binding.
Mistake: Choosing an unqualified notary
When someone decides to notarize their real estate document, they may choose someone they know, such as a real estate agent or banker. However, these notaries may lack experience. It is a good idea to ask a potential notary about their experience. If they are unfamiliar with notarizing real estate documents, you should consider another, more experienced, notary. Your closing company may have a list of recommended or required notaries.
Questions and Answers Regarding Notarizing Real Estate Papers
It’s not unusual for first-time home buyers to know next to nothing about the role of a notary in real estate transactions. Likewise, first-time investors, or anyone involved in a real estate closing, may have misgivings about what a notary can legally do, and what they cannot do.
Fortunately, there are only a few requirements a notary must meet in order to legally notarize, and only a handful of things a notary is legally prohibited from doing:
Notaries Public cannot:
Notaries Public can:
As noted earlier, a notary public simply authenticates the signatures of the people who sign various real estate documents that relate to the transaction, such as quitclaim deeds or leases. A witness is someone who is neutral (this is important) and verifies that the person in front of him or her is actually who he or she claims to be.
It’s crucial to keep in mind that only certain individuals are legally empowered to notarize real estate documents .
The following individuals can legally notarize real estate documents:
The following individuals cannot legally notarize real estate documents:
To be clear, persons specifically prohibited by law from notarizing are not allowed to notarize real estate documents, and should never attempt to do so.
For example, you should not ask your spouse to notarize your quitclaim deed, because the law (IC 3-2-10-6) prohibits spouses from notarizing the documents of their spouses (Verbesy, 2018).
There are also certain groups of people who are not permitted to notarize real estate documents in the state of Indiana under specific circumstances. For example:
Because this list contains examples and not only individuals who can legally notarize real estate documents, it’s important to obtain full assurance that you are working with a licensed professional who is qualified to perform notary duties.
This is why the Texas Secretary of State’s office has information online that allows you to look up notaries public in the state of Texas. In most states, this information can be found on your state’s secretary of state website.