On February 28, 2022, the website for New York Secretary of State was updated to show a notification approving the use of remote online notarization (RON) for real estate transactions in the state:
Since that day, confusion has swirled on how and when mortgage lenders, banks, title companies, and real estate law firms can take advantage of RON. To level set, RON is approved and eligible for mortgage and real estate closings in New York.
Why the initial RON confusion?
There are several explanations. First, companies involved in the lending process still have to approve new technology within their businesses. State law is the minimum standard. Once state law allows new capabilities, it is still up to settlement service providers, such as title underwriters and attorneys, to accept and implement that change. Some title insurance companies have not approved RON for closings on the policies they insure. As those decisions are socialized in the market, many lenders, attorneys and real estate agents only heard business partners say “RON is not allowed on this” without any further detail as to why. The fact is that RON is allowed under state law but may not be approved by a particular provider in the lending process.
Second, during COVID-19’s emergency policies, many of the technology-based solutions were temporarily effective, but not permanently approved. As a result, uncertainty about how easily temporary approvals can be removed or eliminated causes many companies to wait on adopting or using RON solutions. The fact that the NY SoS site was unexpectedly updated with the approval language caused some to worry it was not given the full force of New York law.
The fact that RON is now allowed in New York is just another reason lenders, real estate law firms and real estate offices can feel comfortable adopting digital technology for their businesses going forward.
What do the latest RON changes mean?
As stated above, some title insurance companies have their own rules that can be more restrictive than New York state law. These are typically called overlays. Some title underwriters do not immediately accept title policies from New York properties closed using RON technology.
Similar to title providers, some service providers – such as real estate offices and law firms – have not yet selected a RON platform and as a result do not have the capability.
What should you do?
Get prepared. Begin the process of asking your business partners when they are prepared to go live with RON. Advocate for updating business processes to meet state law and prepare for the future. We believe other states will follow suit. For example, the Commonwealth of Massachusetts is currently considering its own RON law. Align go-live expectations with your key partners and stakeholders. For real estate attorneys, this is likely title underwriters and referral sources. For lenders, this is your referral sources and real estate closing firms. Sign up with Stavvy to see RON in action and have your office ready for the first order.
The Bottom Line
RON is effective and legal for mortgage closings in New York.
Jeremy Potter - Chief Evangelist, Stavvy