Illinois Emergency Authorization of Remote Notarization
On the afternoon of March 26, 2020, the Governor's office filed Executive Order 2020-14 to authorize remote notarization in Illinois, which set forth some foundational elements, but otherwise authorized the Secretary of State to issue more details through published guidance.
More specifically, the Governor's Executive Order 2020-14 (EO 2020-14) and related Secretary of State's "Guidance for Remote Notaries and Consumers" (Guidance) authorizes remote notarization in Illinois where "Both the notary and the customer must be physically present in the State of Illinois at the time the remote notarization is performed" (see Guidance, Requirements Paragraph No. 2). This temporary authorization is applicable during the period of time of the Governor's Disaster Proclamation, which is extended through May 30, 2020. (note: Executive Order 2020-18 allows for overnight mailing of documents in addition to facsimile and electronic mail, and was extended by "Part 1" of Executive Order 2020-33)
During the shortened Illinois legislative session in the second to last week of May, the prior emergency regulations enacted by the state regarding remote notarization were temporarily codified as part of a larger legislative package in Senate Bill 2135. Click here and see pages 11-14 of the enrolled version to be signed by the Governor this week.
Not only are pages 11-14 of the enrolled version of Senate Bill 2135 intended to temporarily codify the emergency regulations "effective March 26, 2020 and ending 30 days after expiration of the Governor's emergency declaration regarding COVID-19," the legislative language also addresses some additional areas of concern to the industry, such as validating actions that "substantially comply" (see page 12, line 23) or are impacted by "technology issues" (see page 14, line 16).
Please keep in mind that the title underwriters, agents, and financial institutions you work with will need to be in agreement on the technology being used and related security compliance procedures.
Questions & Clarifications Regarding Illinois Executive Order 2020-14:
- Does the emergency authorization apply to only an Illinois commissioned notary and Illinois notarial acts? Yes. "Both the notary and the customer must be physically present in the State of Illinois at the time the remote notarization is performed" (see Guidance, Requirements Paragraph No. 2); ""Notary" means a person who is authorized to perform notarial acts such as taking an acknowledgment, administering an oath or affirmation, taking a verification upon oath or affirmation, and witnessing or attesting a signature as provided in 6-101 of the Illinois Notary Pubic Act." (see Guidance, Definitions) (additional note: no reference is made in EO 2020-14 or Guidance to the recognition of out of state electronic or remote notarizations consistent with paragraph 2 of Section 20 of the Illinois Conveyances Act, 765 ILCS 5)
- Can a County Recorder reject a document because it has been electronically or remotely notarized? No. "Any documents remotely notarized during the term of Executive Order 2020-14, shall be deemed valid and treated as if the document had been notarized via in-person transaction." (see Guidance, Requirements Paragraph No. 8)
- Can a County Recorder reject a certified paper copy of an electronically signed or notarized document because it is a copy? No. "A paper or tangible copy of an electronic document that a notary public has certified to be a true and correct copy satisfies requirements of law that the signatures and attestations contained in the document are original and authentic." (see Guidance, Requirements Paragraph No. 9)
- Can standards be set by a financial institution or underwriter beyond those set forth in Executive Order 2020-14 and related guidance? Yes. "Executive Order 2020-14 does not prohibit Illinois notaries from utilizing the electronic or remote notarization platforms available that meet industry standards and each of the requirements provided by the Governor’s Executive Order." (see Guidance, Requirements Paragraph No. 6)
- What remote online platforms can be used? Without making endorsements, please note that commonly approved vendors in Illinois include DocVerify, Nexsys, Notarize, NotaryCam, and Pavaso, while others being discussed for purposes of more immediately utilizing the remote notarization executive order have included Zoom Pro and Microsoft Teams live; at a minimum, Section 2(b) of EO 2020-14 and paragraph 3 of the Guidance Requirements confirm the need for audio-visual communication to be recorded; however, all three fundamental aspects of security immediately below should likely be considered when choosing a platform.
Based on initial feedback for those looking to implement this temporary authorization, a few fundamental aspects of security appear to dominate the conversations:
- How are audio-visual recordings created and stored on the platform you are seeking to utilize?
- What methods are being used to identify individuals and witnesses in the audio-visual recording?
- What tamper-evident assurances are being provided regarding signed documents?
A shared understanding of these fundamental security aspects may help title underwriters, agents, and financial institutions looking to implement remote online notarizations and closings pursuant to the Governor's and Secretary of State's temporary authorization. Also understanding standards set forth by the Mortgage Industry Standards Maintenance Organization (MISMO) will be important to the acceptance of remote closings and related loans being considered during this emergency period.
Another important aspect for any remote closings and related loans being considered during this emergency period is their acceptance by Fannie Mae and Freddie Mac. Fannie and Freddie have published eClosing vendor lists over the past few years and recognized remote online notarizations (see e.g. Fannie June 2019 guidance); however, on March 31, 2020, Fannie Mae and Freddie Mac issued updated guidance in response to activities during the emergency COVID-19 period, which included standards for the approval of remote online notarizations.
In summary of Fannie and Freddie's March 31st guidance update, Illinois authorized remote online notarizations will be recognized if they meet some additional standards not present in the Governor's Executive Order 2020-14 or Secretary of State's Guidance . Below are a highlight of these additional requirements, which tend to revolve around the topics of identity proofing, recordings/storage, and tamper-evidencing:
Pursuant to Attachment C to Bulletin 2020-8, "...a remote Electronic notarization process is permitted in the following States [which includes Illinois], subject to the requirements in Bulletin 2020-8," which requires:
- At least two-factor identity authentication, including using a government-issued photo ID that has a signature, credential analysis and identity-proofing;
- Tamper-sealed notarized documents and system security sufficient to:(A) prevent interference with the authenticity, integrity and security of the notarial ceremony or corruption or loss of the recording of the same, and (B) protect the communication technology, electronic record and backup record from unauthorized use;
- The remote online notary must keep a secure electronic journal of the notarial act, including evidence of identity of the principal (a video and audio conference can be the basis for satisfactory evidence of identification) and maintain a backup of the electronic record; and
- Recording of the notarial ceremony with storage for the minimum period required by applicable laws or if no period is specified in the applicable law, for seven years
In addition, Mortgages closed using the Remote Online Notarization process must meet the following requirements: (click here and scroll to "Remote Online Notarization" regarding Section 1401.16)
On April 10th, Freddie further clarified its position regarding remote notarization:
Q6: [NEW 04.10.20] Does Freddie Mac permit loan closings in which the notary public a) witnesses the borrower wet-ink signing of loan documents remotely (via Zoom, Skype, etc.) and b) receives the borrower’s signed documents via FedEx/UPS/USPS to complete the notarization?
Freddie Mac does not restrict Sellers from using this process as long as the notary that is licensed in that state is comfortable notarizing documents signed through such process, consistent with applicable state law, and the title insurance company provides title insurance on such loans without any caveats/restrictions. If the process is only enabled pursuant to a temporary executive order of a state’s governor, the process would not be acceptable upon expiration of that Executive order.
Note: This process should not be confused with Remote Online Notarization, as Remote Online Notarization is electronic notarization of electronically signed documents using two-way secure audio/video live connection in compliance with applicable state laws and Freddie Mac minimum standards published in Guide Bulletin 2020-8.
"Lenders may sell loans with remotely notarized loan documents in the states listed in the table below, on the following terms and conditions [which includes Illinois]," including that "The system used for the remote notarization must meet the following minimum standards [mirroring Freddie Bulletin 2020-08 requirements regarding the system used for the remote notarization]"
Due to COVID-19, these guidance updates also allow the use of powers of attorney to execute loan and closing documents for loans with applications dates on or before May 17, 2020; click here for more information and links from the American Land Title Association.
Illinois County Emergency Office Closures During COVID-19 Emergency
Another issue essential to the industry during the COVID-19 outbreak, is access to county offices for the processing of recordings, title searches, tax payments, and other fundamental real estate transactions.
In addition to these best practices, PRIA further recommended information that may be useful to request, which the Illinois Land Title Association will otherwise encourage county offices to provide.
- Status of office operations (i.e. whether processing recordings, having specific drop-off times/locations, or using new abbreviated hours);
- Documents being processed (i.e. paper and/or electronic recordings as well as in-person, mail, or drop-off documents);
- Website capabilities (i.e. what search platforms are available, how far back a search is possible, and print options); and
- Acceptance of remote online notarization
ILTA Guidance for Remote Online Notarization Following COVID-19 Emergency Period
Keys to Remote Online Notary Legislation:
- Disclosure of the online notarization in the notarial certificate;
- Multi-factor authentication;
- Audio-visual recording;
- Nexus to the State of Illinois; and
- Authorizing paper copies for filing in counties that do not allow electronic recordings.
Other Important Drafting Considerations:
- Consideration of Illinois statutes other than the Illinois Notary Public Act, 5 ILCS 312, that may need corresponding changes, such as the Electronic Commerce Security Act, 5 ILCS 175, the Uniform Recognition of Acknowledgments Act, 765 ILCS 30, the Uniform Real Property Electronic Recording Act, 765 ILCS 33;
- Data privacy provisions that are consistent with other aspects of already comprehensive Illinois privacy laws, including duties regarding data breaches;
- Avoiding unnecessary barriers to obtaining a remote online notary registration;
- As much uniformity as possible with other states utilizing models from national groups (e.g. Texas and Nevada); and
- Allowing more detailed aspects to be addressed through administrative rules.
As the Notarization Task Force legislation is drafted and works through the legislature in partnership with the Secretary of State, hybrid digital closings may still be utilized in Illinois as noted in the American Land Title Association's closer look at digital closings or click here for more news and resources from the American Land Title Association.
Illinois Notarization Task Force
In 2017, the Illinois General Assembly created the Notarization Task Force on Best Practices and Verification Standards to Implement Electronic Notarization through Public Act 100-440 (Sen. Holmes D-42, Aurora; Rep. Kifowit D-84, Aurora). As noted in the title, the task force is authorized to review and report on national standards and best practices in relation to electronic notarization, including security concerns and fraud prevention. The task force is required to meet no less than five times before December 31, 2019 for their report due by June 30, 2020, and the Illinois Land Title Association is participating in the task force discussions. A final report is expected to be issued in December 2019, click here for the final task force report draft.
On March 14, 2019, the Secretary of State's office release a request for information from "qualified vendors for the purchase of Electronic Notary Technology," and clarified that "This is a preliminary fact-finding process for the purpose of obtaining information of new and innovative services and/or products."
Beyond potential vendor information, of particular importance to the task force is the development of laws in other states such as Texas and Nevada.
Remote Online Notarization Models
A lingering issue for remote online notary laws already in effect or currently being drafted is the need to clarify how to handle county recorders' offices when they do not allow electronic recordings, which can be addressed with "papering-out" provisions in remote online notary laws.
As these and other states have developed their state laws, the American Land Title Association (ALTA) coordinated with the Mortgage Bankers Association (MBA) to develop model legislation and other guidance.