Notary Public Training: More Than Just a Title

Transcription

1 Notary Public Training: More Than Just a Title March 10, :00 a.m.- 12:00 p.m. CST Presented by: Terri D. Thomas, J.D. (tthomas@ksbankers.com) The information contained in this material and the accompanying presentation is designed for reference use only. It is presented with the understanding that Terri Thomas is not rendering specific legal advice, and use of the same does not create an attorneyclient relationship. If specific legal advice or other expert assistance is required, the user should contact a competent professional. 1

2 Presented by: Terri D. Thomas currently serves as the Legal Department Director of the Kansas Bankers Association. In this role, she provides legal and compliance information to Kansas banks. Prior to assuming this position, she was Of Counsel with the law firm of Spencer, Fane, Britt & Browne. Specifically, she was the point person for "Bankers Choice," a financial institution consulting division of the firm, providing on-sight training and fixed-fee legal assistance to financial institutions in Kansas and Missouri. Prior to joining the firm, Terri was employed in the banking industry for over twenty-three years in various capacities. Most notably, she served for fourteen years as in-house legal counsel and trust officer for Bank of America and its Kansas predecessors, as well as serving as a trust department manager. Receiving her Bachelor of Arts degree from Kansas State University in 1985, Terri continued her education at Washburn University School of Law and obtained her Juris Doctor in S h e h a s served as an adjunct professor at Washburn University School of Law in Topeka, Kansas and the University of Kansas School of Law in Lawrence, Kansas, and is a frequent seminar presenter for banking associations. 2

3 I. The Role of the Notary- A notary public is a position "appointed" by the state. When appointed, a notary is expected to: a. Serve with integrity b. Serve the public c. Serve as an impartial witness d. Perform the following primary functions: 1. Acknowledgments 2. Oaths or Jurats 3. Signature Attestations 4. Certifications of Copies *Note: The powers and procedures used are determined by state law, which can vary from state-to-state. A link to each state s official notary website can be found on pages 19 through 24. In 2010, a uniform law was proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) called the Revised Uniform Law on Notarial Acts. However, as of 2015, only Oregon, North Dakota, Iowa, West Virginia and Pennsylvania had adopted the law. II. Term of Office- The term of appointment depends upon the state (see the official state website listings on pages 19-24). Most states require the notary public to apply for renewal of the commission. If a bond has been posted, the bond must normally be renewed as well. III. Jurisdiction: A notary can typically act anywhere within the geographical boundaries of the state providing the appointment. A notary cannot use the notary powers in a state other than the state providing the appointment. 3

4 IV. Qualifications: (see information for your particular state for details)- All states require the notary to be an adult (usually 18 or older) and a resident. Some will permit non-residents to have notary powers in association with a job that is located within the state. Usually, the power granted to non-residents with a job in the state can only use the notary powers while working for the employer. V. Other Requirements a. Complete and file an application; b. Pay a fee; c. Post a bond, if required, which can range from $1,000 to $15,000; d. Obtain either an embosser seal or ink stamp (even if state doesn't require an official "seal"); e. Maintain a journal (required in some states, highly recommended in others); f. Complete mandatory training or testing (required in some states); g. Take an oath of office, where notary affirms that notary will follow state law (not bank s policy). VI. Responsibilities- A notary should serve anyone making a lawful and reasonable request. Notaries are considered ministerial public officials, who follow simple rules using limited discretion. VII. Disqualifying Interests (a/k/a reasons that a notary should not use the notary powers)- a. Cannot notarize his or her own signature; 4

5 b. Should not notarize if there is a direct financial or beneficial interest; c. Should not notarize when notary is the grantor, grantee, trustor, trustee, mortgagor, mortgagee, vendor, vendee, lessor, lessee or beneficiary in a transaction; d. Should not notarize for relatives; court could find that notary was not an "impartial witness"; e. The notary should use good judgment about when the power is going to be used in a transaction that would appear to be improper. VIII. Agency exception: It is usually permissible for a notary to notarize documents of a principal if the notary is acting in the capacity of agent, employee, insurer, attorney, escrow agent or lender. IX. Notary v. employee: Notaries are commissioned to perform notarization according to state laws, even when state law conflicts with the requirements of the employer. What does this mean? The notary may be placed in a position to perform a transaction that is contradictory to the employer's instructions. The notary's legal responsibilities under the law take precedence over the notary's duty as an employee of the employer. A good example of this potential liability can be seen in the following comments from specific state notary books: From Kansas- 5

6 From North Dakota- X. Notarization does not in and of itself: a. Determine incapacity, that s up to the Courts; b. Determine truthfulness of the document or any statement in the document; c. Legalize or validate the document; d. Protect or create rights in property. XI. Notarization does: a. Create a public record; b. Detects/deters perjury or fraud by providing for an objective third party to witness the transaction or representation. XII. Notarization Steps: a. Screen the signer a/k/a make sure the signer is who he/she says he/she is (see below for details on how to "screen"). This is typically done by taking identification, using a credible 6

7 witness or through personal knowledge. However, some states (such as California) are prohibiting the use of personal knowledge as a basis of identifying the signer ; b. Complete the proper notary wording on the prescribed notarial form (proper wording is determined by state law/regulation); c. Affix stamp with commission expiration in proper location on the document (if stamp is used by state); d. Complete the journal entry on the transaction or keep a copy of the document notarized, if required by state law. XIII. Screening the Signer- A notary should screen the signer by completing the following requirements: a. Signer must appear in person; Take a look at the following official title page to a previous version of the Kansas Notary Public handbook. Notice the watermark? It clearly stresses the importance of the signer appearing in person: 7

8 b. Notary must determine the willingness of the signer to sign the document (undue influence). The notary should ask him/herself: Is the party who is signing the document doing so under his/her own free will? Is someone clearly coercing the signer? If it is clear that the party signing the document is not acting of his/her own free will, then the notary should decline to provide the notarization; c. Must determine the signer's awareness (not capacity). For instance, if the party requesting the notary is in a nearunconscious state or is clearly under the influence of alcohol, the notary should decline to provide the notarization; d. Must not notarize if aware of legal incapacity. If the bank has received notification that a guardian or conservator has been appointed by a court for the signer, notarization should be declined; e. Must determine the signer's identity by: 1. Personal knowledge (not permitted in some states); 2. Proper identification; 3. Sworn word of "credible witness" (not used often). 4. "Credible witness" is determined by the witness swearing or affirming: A. Signer is the person named in the document; B. Signer is personally known; C. Witness does not have a financial interest/conflict. XIV. The Journal a. In many states, a journal is required by law for all transactions; some states only require it for transactions that are not publicly recorded. In other states, while not required, maintaining a journal is highly recommended; b. Journal belongs to notary, not employer; c. Journal Content: 1. Month, day and year of notarization; 2. The type of notarization; 3. The type of document; 8

9 4. The name and address of the signer; 5. The identification used; 6. The notary fee (if applicable); 7. The signature of the signer. d. Depending upon the state, the journal must be surrendered to "appointing body" when notary dies or otherwise resigns commission. XV. Name Change/Address Change- to be reported to appointing state or county within a specified number of days (see official state links listed on pages 20-25). XVI. Notarial Certificate and Seal a. Sets out the notarial task performed; b. The stamp alone means nothing; c. The wording of the certificate can be on the document or an attachment (however some states, such as Virginia, do require the subject s signature be on the same page as the notarial certificate); d. The choice of certificate needed for a document should be determined by the issuing party, receiving party or an attorney. A non-attorney notary should never determine the proper wording required, however a notary can rely on preestablished working authorized by state law for the act being performed (see state specific info for this); e. Seal should contain a commission number (if issued); f. Seal should be legible (some states require a minimum of 8pt type); g. The certificate should not contain a statement which the notary knows is not true. A notary must use caution when the certificate has been prepared by a third party and contains representations that the notary has no way of confirming, or inaccuracies that the notary knows are false; h. The notary is responsible for the content of the certificate, not 9

10 the contents of the document being notarized. The certificate should be in the English language, regardless of the language used in the document itself (states are not consistent on whether the document itself must be in the English language in order to be notarized). XVII. Notarial Acts a. Acknowledgement- confirming that signer signed on a specific date. Signer confirms that the document was signed by the signer, not necessarily in the presence of the notary; Sample Signature Acknowledgement: State of ) County of ) This instrument was acknowledged before me on (date) by (name of person). (Seal) (Signature of Notary Public) b. Oath or Jurat (verification upon oath or affirmation to compel truthfulness)- must be sworn to and signed in presence of notary; Sample Oath or Affirmation (Jurat): State of County of Signed and sworn to (or affirmed) before me on (date) by (name of person). Signature of Notary Public (Stamp/Seal) Title 10

11 c. Signature attestations (witnessing a signature)- always signed in presence of notary; Sample attestation: d. Certification of copies- allowed only in some states. Confirms that a copy is accurate reproduction. Notary must supervise or witness the making of the copy. Can not do naturalization certificate, recordable documents (deeds) or vital records. Sample certification of copy: e. Protests- certification that payment for negotiable instrument has not been made and the instrument has been dishonored (rarely used due to the collection process in place). XVIII. Witnessing a "Mark"- when the signer can not sign his/her name in full, he/she may be permitted to make a mark in accordance with state law. Generally, the procedures are similar to the following: 11

12 a. Follow the "screening the signer" steps; b. Two witnesses recommended; c. 1 witness prints maker's name; d. Signer makes mark; e. Notary provides signature attestation of signer s mark as well as witnesses signatures; f. Both witnesses sign document and journal as well as the signer using his/her mark. g. Some states have adopted notarial procedures for those who are physically unable to sign legal documents (such as a power of attorney designation). XIX. Notarial Liability- a notary is liable for intentional and unintentional misconduct and can have unlimited financial liability, and can be criminally fined and imprisoned for intentional misconduct. Some states have laws that will hold the employer liable for a notary's misconduct if the notary was using the notary powers on behalf of the employer and the employer approved of the act of misconduct. XX. Notary Bond- Bonding is required by some states as a protection for third parties for errors made by the notary. The bond does not protect the notary. In fact, if the notary acts wrongfully, the bonding company may seek subrogation (can file suit) against the notary to recover payments made under the bond to the third party damaged by the notary. An errors and omissions policy should be purchased by the notary if the notary wants to protect him/herself financially. XXI. To avoid liability, a notary must: a. Use reasonable care; b. Obey laws and regulations; c. Exercise prudence and common sense; d. Avoid the unauthorized practice of law. 12

13 XXII. Main reasons for successful lawsuits against notaries: a. Failure to require the personal appearance of the signer; b. Failure to positively ID the signer; c. Failure to safeguard the seal (Most states require the notary to immediately report if the seal has been lost or stolen); d. Failure to complete and accurately keep a journal record (when required by the state). XXIII. Most common errors: a. Failure to attach seal; b. Neglecting to list an expiration date of appointment; c. Failing to sign the notarial statement; d. Omitting names and dates in notarial certificate; e. Failure to properly administer oath (especially when a will is involved); f. Use caution with the term notario publico. The term is barred for use by non-attorney notaries in some states. XXIV. Notary v. Signature Guarantee (including STAMP Medallion Guarantee Program) a. Notary is not the same as a signature guarantee. The signature guarantee creates additional liabilities. b. The signature guarantee makes representations and warranties to any party who relies on the guaranty. The representations and warranties arise under the Uniform Commercial Code, Article 8 (at UCC 8-306), which generally states the following: Effect of guaranteeing signature, indorsement or instruction. (a) A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing: (1) The signature was genuine; (2) the signer was an appropriate person to indorse, or if the signature is by an 13

14 agent, the agent had actual authority to act on behalf of the appropriate person; and (3) the signer had legal capacity to sign. (b) A person who guarantees a signature of the originator of an instruction warrants that at the time of signing: (1) The signature was genuine; (2) the signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty; and (3) the signer had legal capacity to sign. (c) A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under subsection (b) and also warrants that at the time the instruction is presented to the issuer: (1) The person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and (2) the transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions and claims other than those specified in the instruction. (d) A guarantor under subsections (a) and (b) or a special guarantor under subsection (c) does not otherwise warrant the rightfulness of the transfer. (e) A person who guarantees an indorsement of a security certificate makes the warranties of a signature guarantor under subsection (a) and also warrants the rightfulness of the transfer in all respects. (f) A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under subsection (c) and also warrants the rightfulness of the transfer in all respects. (g) An issuer may not require a special guaranty of signature, a guaranty of indorsement or a guaranty of instruction as a condition to registration of transfer. (h) The warranties under this section are made to a person taking or dealing with the security in reliance on the guaranty, and the guarantor is liable to the person for loss resulting from their breach. An indorser or originator of an instruction whose signature, indorsement or instruction has been guaranteed is liable to a guarantor for any loss suffered by the guarantor as a result of breach of the warranties of the guarantor. c. The result? A bank employee using a signature guarantee stamp on a security certificate is expected to review any legal documents that are submitted to support the validity of the signature guarantee. If the employee-guarantor doesn t, the employee (perhaps individually) will be on liable for any 14

15 mistakes made in identifying who has the legal authority to sign the document for which the signature guarantee was provided. d. The STAMP Signature Guarantee (Medallion Signature Stamp) is to be used only for securities transactions. It should not be used for non-securities purposes. e. Recently, STAMP has announced a new program for guaranteeing signatures for non-securities transactions. This is called the Signature Validation Program. A financial institution wishing to participate in this program should review the details found at XXV. Electronic Notarization- Recently, many states have taken step to adopt some form of electronic notarization procedures, some with stand-alone laws, and some recognizing it more generically as part of the Uniform Electronic Transactions Act (which has been adopted by all of the states, except Illinois, New York and Washington). The states which have adopted specific procedures usually require the notary to register with the state or county as an electronic notary. Once registered, the notary is issued an electronic seal. When the notary is presented with an electronic version of a document or some other on-line form the notary administers the appropriate oath or takes an acknowledgement no differently than the notary would handle any other notarial act. The document is then signed with a digital signature (such as with a stylus on a touchpad, similar to the devices used by merchants for credit card transactions, or possibly even typing a name in the box). The notary, in turn, digitally signs the document in the same manner (using the digital signature that was issued by the state/county). After the electronic notary has been applied, the document can be saved to a computer file or e- mailed, just like any other electronic document. 15

16 It is important to remember, that even with electronic notarization, the same dos and don ts apply. The notary is still responsible for requiring the signer to appear in person, and to confirm the signer s identity, that the signer is not the victim of undue influence, and the signer is aware of the act of signing. XXVI. Certifications and Apostilles (for International Documents)- An apostille is used by foreign governments to assess the authenticity of an official signature. It is only recognized by countries who have signed the 1961 Hague Convention (67 countries). For those countries who are not signatories, the Department of State attaches a certification. When a Secretary/Department of State certifies a document with an apostille, the department verifies that the person who signed the document is a state official (or approved notary) and the state government has given "full faith and credit" to the official's seal and signature. A certification performs the same duty as an apostille; however, its appearance and places of use are different. Although the documents serve the same purpose, substituting one for the other will delay the use of documents. It is essential that the Secretary/Department of State as to where the documents are to be used. The following is a sample of an Apostille: 16

17 XXVII. Most common application rejection problems: a. Seal/stamp sample too faint, or not compliant with state law requirements; b. Seal/stamp/signature missing from application; c. Applicant has felony convictions, misdemeanors or unpaid judgments; d. Only part of the required paperwork was submitted; e. Applicant fails to submit original paperwork; f. Bond information is missing (when required); g. Bond has expired; h. Oath of office is incomplete, or incorrect; i. Oath of office wasn't administered by an authorized officer; j. Failing to submit the required fee with the application. 17

18 Notary Public State Law Links (as of October 2014): Alabama State Website: Alaska State Website: Arizona State Website: Arkansas State Website: California State Website: Colorado State Website: Connecticut State Website: Delaware State Website: 20

19 District of Columbia Website: notary public Florida State Website: Georgia State Website: Hawaii State Website: Idaho State Website: Illinois State Website: Indiana State Website: Iowa State Website: 21

20 Kansas State Website: Kentucky State Website: Louisiana State Website: Maryland State Website: Maine State Website: Massachusetts State Website: Michigan State Website: Minnesota State Website: Mississippi State Website: 22

21 Missouri State Website: Montana State Website: Nebraska State Website: Nevada State Website: New Hampshire State Website: New Jersey State Website: New Mexico State Website: New York State Website: 23

22 North Carolina State Website: North Dakota State Website: Ohio State Website: Oklahoma State Website: Oregon State Website: Pennsylvania State Website: Rhode Island State Website: South Carolina State Website: South Dakota State Website: for individuals/notary public/default.aspx 24

23 Tennessee State Website: Texas State Website: Utah State Website: Vermont State Website: records/statutory filings/notaries public.aspx Virginia State Website: documents/notary commissions/ Washington State Website: West Virginia State Website: Wisconsin State Website: Wyoming State Website: 25