July 02, 2022

North Carolina House Passes RON Authorization

BY Mike McGregor - Director of Regulatory and Compliance

Remote Online Notarization is one step closer to permanent use in North Carolina. 

On July 1, the North Carolina House voted 104-2 to approve the conference report to House Bill 776, which permanently authorizes remote electronic notarization when the remote signer is located within the United States.

The legislation sits on the desk of Governor Ray Cooper for his signature. If the governor does not sign the bill within 10 days of receiving the bill, the bill becomes law. The law becomes effective July 1, 2023. 

At Stavvy, we've been keeping an eye on remote online notarization in North Carolina for years - and we've put together a primer of what you need to know about this bill. 

What Does the N.C. RON Bill Mean?

A notary public who is located in the state of North Carolina and registered with the Secretary of State may perform remote electronic notarization for a remotely located principal located within the U.S -- as well as military personnel located on a military base or vessel.

However, a remote electronic notary can only use a communication technology platform licensed by the North Carolina Secretary of State. 

What are the Communication Technology Platform Requirements?

It's important to note that, per this bill, RON transactions can only be performed by a "communication technology platform" that has passed specifications laid out in the bill. 

The communication technology must:

  • allow real-time interaction between the remotely located principal that includes audio with clear sound and video quality allowing unobstructed visual observation of each participant's face and identification

  • be capable of recording the interaction and be capable of geolocating the remotely located principal

  • provide automated backup of the communication technology recording

  • employ data protection safeguards consistent with generally accepted information security standards 

Remote Electronic Notary Registration

Before performing remote online notarizations, a notary shall register with the N.C, Secretary of State.  In the registration, a remote electronic notary shall select one or more tamper-evident technologies to perform remote electronic notarial acts with respect to electronic documents. 

Remote Online Notarization Requirements

Prior to performing a remote electronic notarization, the notary shall:

  • Inform the participants that North Carolina law requires that a communication technology recording will be made of the remote electronic notarization
  • Verify the identity of the remotely located principal through personal knowledge or all of the following: credential analysis with government-issued id with picture and signature, identity proofing by a 3rd party vendor
  • Ask the remotely located principal if they would like an attorney to participate in the remote online notarization, and provide for an attorney if requested
  • Ask the remotely located principal to verbally state what documents are being signed for the notarial record or describe the nature of the transaction
  • Make reasonable accommodations for remotely located principals with vision, hearing, or speech impairments
  • Verify the location of the principal using geolocation via communication technology.  

In performing a remote online notarization, the following shall be attached to, or logically associated with the electronic document. These components must be immediately perceptible and reproducible in the electronic record to which the notary’s electronic signature is attached: 

  • The notary’s name, state, and county of commissioning
  • The words “Electronic Notary Public” or “Remote Electronic Notary Public Utilizing Communication Technology.” 
  • The words “State of North Carolina”
  • The expiration date of the commission
  • The notary’s electronic signature

Video Retention/Journal Retention Requirements

Electronic remote notaries must maintain an electronic journal with information about notarization. The notary or a third-party vendor, including a licensed platform,  must retain the journal for 10 years. In addition, the electronic remote notaries must retain or engage a third-party vendor to retain recordings of remote online notarizations for a minimum of 10 years. 

Enforcement/Liability

Any non-material failure of the remote electronic notary to comply with the requirements of remote electronic notarization does not invalidate the notarial act or the electronic record. 

The N.C. Secretary of State is authorized to require a licensee or third party to provide proof that an issue was caused by the licensee or third-party vendor’s technology.  The Secretary may issue a letter of warning, suspension or revocation of the licensee or third-party vendor’s services.  The Secretary may also ban remote online notaries from using the licensee or third-party’s technology until it comes into compliance. The Secretary may assess a maximum civil penalty of $1,000 per violation. 

If the licensee's technology platform or third-party vendor is the proximate cause of damages the technology platform or third party may be liable for damages. 

A remote electronic notary shall use only a communication technology platform licensed by the North Carolina Secretary of State. Communication technology platforms must complete and submit an application along with a licensing fee of $5,000 to the Secretary of State. 

Attorney Supervision Real Estate Closing Preserved

This law does not alter or supersede the law requiring that a licensed North Carolina attorney supervise a residential real estate closing. 

Emergency Video Notarization 

Until June 30, 2023, the state's emergency video notarization remains permissible. A notary who has personal knowledge of a principal may rely on video conference technology to verify the principal’s identity.  If a notary does not have personal knowledge of a principal, satisfactory evidence is satisfied if the individual provides a federal, or state identification bearing a photographic impact of the principal, a principal’s signature, and a physical description of the principal. 

County Recorder Acceptance of Paper Documents

If the county recorder does not have an electronic recording system or it is not operational, the county recorder shall record a paper copy of the electronic document. 

Additional Regulations

The N.C. Secretary of State shall adopt rules to establish standards, procedures, practices, forms and records relating to remote electronic notarial acts, including:

  • Any additional educational requirements for remote electronic notaries
  • The contents and security of the electronic journal
  • The security standards, features, qualifications, measures, storage, and any other matter related to communication technology, credential analysis, and identity proofing
  • The requirements of secure storage of all communication technology records, the electronic journal, and any other documentation under the control of the remote electronic notary regarding the remote electronic notarial act
  • Any necessary actions upon notification of permanent loss of data, unauthorized use, loss of use, or compromise of security of the electronic journal or the communication technology recordings of remote electronic notarial acts

How to Apply As a Communication Technology Platform

  • To become licensed, a communication technology platform must complete and submit an application along with a licensing fee of $5,000 to the N.C. Secretary of State. 
  • Before approving and issuing a platform license, the Secretary of State shall conduct a background investigation on the applicant.
  • Renewal of the platform license shall occur annually and require a payment of $5,000. 

At Stavvy, we'll continue to keep an eye on the details of this law's implementation -- as well as RON laws in other states -- to bring you more information. Download our free eBook on competing RON transactions.

 

Download the How to perform RON closings eBook graphic

Mike McGregor - Director of Regulatory and Compliance

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