During the pandemic, New York's notary laws were exposed for what they were—an archaic hold-over that permitted only in-person notarization of paper documents with ink signatures. New York, the world's commercial capital, had ignored 20 years of technological advances and fallen behind the other 38 states that authorized secure notarization of electronic documents (e-notarization) and allowed notaries to remotely "meet" and accurately identify signers online. New York notarial law, which was also virtually unregulated, had stagnated while an epidemic of paper deed fraud raged.

The necessity of remote notarization became clear during the lockdown. The Governor's Executive Order 202.7 allowed the use of Zoom to enable remote notarization of client ink-signatures on paper documents (commonly called RIN, short for Remote Ink Notarization). Without the ability to have electronic documents notarized by New York notaries, lawyers used out-of-state notarial companies to notarize electronic documents using online identification procedures (commonly called RON, short for Remote Online Notarization). Authenticated copies were then "papered-out" and could be recorded in New York or easily apostilled for recordation in other countries. RON turned out to be not only startlingly convenient, but also, when done properly, substantially more protective against fraud than traditional in-person notarization of paper documents. Tamper-evident electronic document technology protected against post-signing alteration, and online identification procedures and the audio-visual recording of the signing prevented forgery.

The Legislature responded to this need, delivering to the Governor NY State Senate Bill S1780C (nysenate.gov) on Dec. 10, 2021, a bill authorizing remote online notarization of electronic documents. The sponsors of S.1780-c/A.399-b had the right idea, but, unfortunately, that bill had flaws. Three committees of the New York City Bar Association identified these issues in a report submitted to the Governor after the bill was passed by both houses. The bill omitted any authorization of remote wet-ink notarization or RIN, missed some important anti-fraud protections found in other states' notarial laws and did not authorize notaries to "paper-out" documents for filing and recordation.

As a result, Governor Hochul approved the RON law on Dec. 22, 2021, but only on condition that the Legislature adopt remedial chapter amendments, including authorization of RIN. The chapter amendments requested by the Governor were introduced by the sponsors of the original bill, Assemblywoman Rozic and Senator Skoufis and others, in mid-January. After passage by both Houses, S.7780, containing those chapter amendments, was delivered to the Governor on Feb. 25, 2022, and signed, becoming New York's Remote Notary Law.

New York finally has a technologically advanced notary law with robust anti-fraud protections for remote notarization equal to or better than those of every other state. Effective immediately, New York notaries can notarize both paper and electronic documents remotely, using secure online digital technology.

The use of a chapter amendment to modify the original law, however, creates confusion. The Remote Notary Law contains two different versions of new Executive Law §135-c. The version in Subdivision 1 became effective immediately but it will be repealed and replaced on Jan. 31, 2023, with a different §135-c in Subdivision 2. This substitution of a different law has inadvertent and undesirable consequences. Notably, RIN is not included in §2, and not all of the anti-fraud protections of §1 are in §2. During the rule-making period before Jan. 31, 2023, the Secretary of State and Governor's office should consider how to preserve the improvements to New York notary law accomplished by §1.

The Secretary of State now has responsibility for regulating notarization. The Remote Notary Law puts the Secretary in charge of promulgating regulations for remote and electronic notarization and authorizes the Secretary to suspend or remove from office a notary who violates the Remote Notary Law. (Sub. 7, §1). These regulations should establish standards for security measures to prevent unauthorized access to communication technology, and methods to verify the identity of a signer, i.e., credential analysis and identity proofing. (Sub. 6, §1). The regulations should cover the backup and retention of recordings of remote notarizations and confirmations of document integrity. (Subs. (2)(e), (f), §1).

The law also makes signers liable for the damages resulting from violations of §1. (Sub. 5). This gives some teeth to the requirements for remote notarization, although a signer participating in a fraud would be liable in any event. This civil liability—which should, but does not, extend to notaries—falls short of making notarial misconduct a crime.

By Jan. 31, 2023, the Secretary must develop a registry of electronic notaries, i.e., notaries authorized to use an electronic signature to notarize an electronic record. (Sub. 2, §2). The registry will identify the notary's equipment and electronic signature. Rules setting standards, procedures, practices forms and records relating to the notary's electronic signature should be in effect by then. Since §1 sunsets on Jan. 31, 2023, there is an open question of what will happen to any regulations the Secretary of State may have adopted under §1.

The new procedure for Remote Ink Notarization, RIN, addresses fundamental weaknesses in the process that was allowed under the Executive Order. The Executive Order did not require online identity proofing or credential analysis of the signer, had weak protections against document alteration and did not require recording of the notarization. RIN under the Executive Order was a welcome solution to the enforced social distancing of the period, but incorporated—or even magnified—the risk of fraud inherent in New York's lax notary law.

Section 1, containing new Executive Law §135-c, is a comprehensive and well-drafted remote notarization law based on model remote notarization laws. It authorizes any notary qualified under the Executive Law to perform a remote notarization using communication technology if all conditions set forth in subdivision 2 of Executive Law §135-c are met. No qualifications other than licensure as a notary are specified, but a notary who has been suspended presumably would not be "qualified." Section 1 is not limited to RIN and allows e-notarization of electronic documents as well.

The language required in notarial certificates for remote notarizations is new. Notaries can certify the authenticity of electronic records and "paper out" the certified electronic documents on a specified form that county clerks and recorders are required to accept for recordation. (Subs. 9, 12, §1; subs 5(d), 6(d), §2).

Significantly, New York notaries situated in New York can now notarize signatures of persons not physically in the state. They can even notarize signatures by persons outside the United States provided there is a U.S. nexus. (Sub. 2(h), §1; sub. 4(a), §2).

The fee for remote notarizations until Jan. 31, 2023, cannot exceed $5 (Sub. 10, §1). This rate may well not be sufficient to induce notaries to invest in required technology or undertake the time-consuming verification of a signer's identity.

Section 1 satisfies the three basic anti-fraud requirements of notary law. First, notaries must use a reliable method to confirm the signer's identity and keep a journal recording how the signer's identity was confirmed. Second, notaries must use reasonable means to ensure the integrity and identity of signed and notarized documents. Third, notaries can refuse to perform a notarial act if not satisfied that a signer is competent to sign a record or is not signing knowingly and voluntarily. Most important, notaries must make, retain, and back up a videorecording of the notarization for 10 years. (Sub. 2(d), §1; Sub. 2(b), §2). This is vital to deter forgery, fraud and notarial negligence. The notary's journal of remote notarizations, which records the date and time, signer, technology used, notarial services provided, and the identification credential used, must be retained for five years after the notary leaves office. (Sub. 2(i), §1).

Identification of the Signer: Notaries can verify the identity of signers by three means: personal knowledge of the signer; remote presentation of a credential and identity proofing; and oath or affirmation of a credible witness who personally knows the signer. If the notary does not know the signer, the burden is on the signer to prove their identity.

The signer can prove identity in two different ways. The first is a three-step process, which begins when the signer presents an approved ID containing a photograph, signature and credential security features, such as physical characteristics (e.g., height and eye color) or a holographic image. The second and third steps address the risk that the proffered credential is fake or altered (a risk not addressed by the former executive order). The notary must subject the credential to analysis by an online process that uses public or proprietary databases to confirm that the credential is not fraudulent or modified. As part of this "credential analysis" the notary must compare the signer's photograph to the signer's appearance on the database. Finally, the notary uses "identity proofing" to assure the notary that the signer is the person reflected in the credential. To do this, the notary uses personal information about the signer available from public and proprietary data sources. The most common form of identity proofing uses personal questions based on credit bureau databases that only the signer can answer quickly. In the future, other methods might be available such as retinal and electronic fingerprint scans. Pending regulations that define "identity proofing" further, commercially available processes and those used in other jurisdictions should comply.

The other way for signers to prove their identity is for a "credible witness" who knows the signer to provide an oath or affirmation as to their identity. If the credible witness is not personally known to the notary, the witness must be subjected to electronic credential analysis and identity proofing. This "credible witness" method will likely be most useful for transactional and estate planning matters, where a lawyer knows both the notary and the signer and can easily provide the required oath or affirmation. This method could be useful as well when a signer is not able to prove their identity online (e.g., they have no credit history) but knows a credible witness, such as a minister, community leader or public official. (Sub. 2(d), §1)

Document Integrity and Signing as a Voluntary Act: Section 1 calls attention to the notary's duty to do more than just identify the signer and watch them sign a piece of paper. Fraud can occur, even without identity theft, if a different document is substituted, or the signer is not aware of what is being signed, or is signing under duress or is mentally impaired. Formerly, notaries were not legally required to be attuned to these fraud issues or make any record relating to them. Now they can refuse to perform a remote notarial act if not satisfied that the signer is competent and has the capacity to sign a record knowingly and voluntarily. They are also required to be able to confirm that the record being notarized is the same, unaltered record that the signer signed. The recordation of the notarization incentivizes the notary to attend to these issues.

Notarization via videoconferencing poses a significant risk of post-signing alteration of an ink-signed paper document. This is not the case with an electronic document signed with tamper-evident technology, which would reveal any post-signature alternation. Reasonable assurance of the integrity of even paper documents is possible, however, using technology and the recording of the notarization. The notary and signer can leaf through pages of the document and hold them to the camera, record the signer initialing each page, have the notary show each page they have received, and have the notary compare to document received beforehand to the one mailed to the notary for re-notarization. Before standard practice is set by guidance from the Secretary, notaries can find guidance from such organizations as the National Notary Association on best practices for remote notarization.

Journal and Recording: Consistent with best notarial practice and the notary laws of many states, New York notaries performing remote notarizations will be required to maintain a log of notarial acts. This requirement should be extended to in-person notarization as well, a recommendation of the 2019 New York Grand Jury Report that studied deed fraud.

More significant is the new requirement that notaries using videoconferencing record the notarial act and securely retain the recording for 10 years. Video records support each of the three functions of notarization: assuring the identity of the signer, the voluntary nature of the signature and the integrity of the signed paper document. Not only does it show the actual signer, revealing any imposter, but recording actually deters impersonation and fraud; no fraudster wants their fraud recorded. The recording also can confirm the notary's determination that the signing was the knowing, intended and voluntary act of a competent signer and the proper performance of all other notarial requirements. Finally, the notary can use the recorded page-counting and initialing to identify the document being signed, enabling the recording to establish the integrity of a remotely notarized paper document.

Section 1, which allows RIN, sunsets on Jan. 31, 2023, when §2 takes effect. After that date, only e-notarization of electronic documents and remote e-notarization or RON will be permitted. It is unclear why New Yorkers should be deprived of the convenience of RIN, absent a finding by the Secretary of State of unreliability. It is also unclear what becomes of the Secretary's disciplinary authority, the mandate for notaries to keep a journal of remote notarizations and the requirement that notaries attend to the voluntary and knowing act of the remote signer, all provided by §1.

Section 2 applies to "electronic notarial acts," which involve only electronic records. Like §1, it deals with identification of the remote signer, and contemplates that the Secretary will issue regulations for the communication technology used in an electronic notarization. The signal transmission must be secure from interception, permit live real-time communication, and permit communication with and identification of the signer. Critically, under §2 the Secretary must recognize at least two processes of fraud detection technology for authenticating the identity of a "remotely located individual" not personally known to the notary. (sub. 2, §2). This is an improvement over §1, but until the Secretary issues regulations recognizing new technologies, §1's two means of identification (credential analysis and identity proofing) are the only acceptable and available ones.

Section 2, however, does not permit §1's alternative identification option—the oath or affirmation of a credible witness. This lack in §2 and the automatic repeal of §1 after Jan. 31, 2023, will limit the use of remote notarization to signers who either know a notary personally or have a sufficient credential and credit history to permit the use of credential analysis and identity proofing.

Under §2, notaries will not be able to perform an electronic notarial act until they register with the Secretary of State under a yet-to-be-developed system. The registration process for electronic notaries will have the limited purpose of identifying them and the technology they use and their signature. The Secretary of State will have the authority to adopt rules setting standards relating to the notary's electronic signature. Such registration enhances the protections of §1.

After Jan. 31, 2023, the Secretary will be able to set new rates for electronic notarizations, and, we hope, will set a rate adequate to attract investment in notarial technology and training.

Section 2 has no provision for suspension or revocation of the electronic notarial registration for misconduct nor, unlike §1, any provision for liability by a signer who violates the section.

The Remote Notary Law contains a great many needed improvements to New York's antiquated notary law. It reforms New York notary law immediately by enacting a new Executive Law §135-c authorizing remote online notarization of both paper and electronic documents until Jan. 31, 2023. But it then provides for a different §135-c limited to remote online e-notarization to become effective thereafter. This unusual structure merits some re-thinking.

The initial §135-c (§1 of the Remote Notary Law) is a major improvement of existing law: It grants the Secretary broad regulatory authority; it clearly requires use of both credential analysis and identity proofing for all remote notarizations; it alternatively permits identification of the signer by oath or affirmation of a credible witness; it requires the notary to attend to the integrity of the notarized document and its identity to the signed document; it requires the notary to attend to the knowing and voluntary action of the signer; it requires the notary to maintain a journal of remote notarizations; it requires an audio-visual recording of the notarization to be made and maintained; it authorizes a notary to certify that a paper copy of an electronic record is true and accurate and requires clerks to record such paper copies; it permits remote notarization of both paper and electronic documents; and it permits notarizations for persons outside New York.

The version of §135-c (§2 of the Remote Notary Law) that will replace the initial version on Jan. 31, 2023, makes the further improvements of requiring the Secretary of State to maintain a registry of electronic notaries; allowing the Secretary of State to set and modify the rates that notaries may charge for electronic notarizations; and permitting the Secretary of State to issue regulations, as technology evolves, for new means of identification besides identity proofing and credential analysis. These further improvements should supplement the improvements of §1, without repealing §1.

Ideally, this structural issue should be fixed before §1 sunsets. Perhaps, at the same time, New York's law governing in-person notarization of paper documents, which is not affected by the Remote Notary Law, could be reformed to include the anti-fraud protections now governing electronic notarization so that our citizens are protected against the rampant deed fraud currently facilitated by poor notarial practices. A. Piombino, Notary Public Handbook: A Guide for New York (4th ed. 2011) (East Coast Publishing) (e.g., over 80% of New York notaries fail to confirm a signer's identity).

Dorothy Heyl is general counsel of Prima Capital Advisors. Alan Kolod is a partner at Moses & Singer. They are chairs of the New York City Bar Association Real Property Law Committee and Commercial Law & Uniform State Law Committee, respectively, signatories to the report to the Governor identified in the Article. The views expressed in this article are those of the authors and not necessarily of the New York City Bar Association.

Reprinted with permission from the “March 30, 2022 edition of the New York Law Journal, Legaltech News© 2022 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com