States passed more than 60 new laws in 2011 addressing a wide range of notarial issues — from commissioning procedures to recordkeeping requirements to penalties for misconduct. The dominant legislative trend — driven by continuing instances of real property fraud and revelations of improper conduct in the “robo-signing” crisis — was a fairly broad move toward protecting the public and increasing accountability and liability for Notary misconduct along with an emphasis on following proper procedures and ethical practices.
A synopsis of significant law changes, and their effective dates, follows:
ALABAMA – In a historic move, Alabama increased the required surety bond for new and renewing Notaries from $10,000 to $25,000 — the highest in the nation — effective January 1. That increases the protection for consumers and the liability exposure for Notaries. Surety bonds protect consumers by reimbursing people who lose money because of a Notary’s misconduct up to the bond’s limit. Notaries with a $10,000 bond in force in 2012 or later do not have to obtain the higher $25,000 bond until they renew their commissions. While the bond protects consumers, it does not protect Notaries, who are required to pay back any settlements to the bonding company.
MICHIGAN - Perhaps the strongest legislative initiative that defined this trend was a package of bills enacted in Michigan in October that gives the state the authority to punish individuals and businesses that deliberately falsify documents and notarizations in real estate transactions. As of January 1, 2012, Notaries who knowingly violate the state Notary law in connection with a real estate scheme can be sentenced to up to four years in prison and a $5,000 fine.
NEVADA - Last July, Nevada made it a felony to execute or notarize a document while making a false representation concerning title to real property. Individual violations can be punishable by up to 5 years in prison and up to $10,000 in fines. A pattern of violations, such as exposed by the “robo-signing” crisis, is punishable by up to 20 years in prison and more than $50,000 in fines. Another new Nevada law also holds employers accountable for their Notary-employees’ misconduct and requires Notaries to keep their seals and journals in a secure location when not in use.
WYOMING - Effective as of last July, Wyoming adopted many of the best practices and ethical standards of the NNA’s Model Notary Act of 2010, including stronger definitions of satisfactory evidence of identity and prohibited acts.
NORTH DAKOTA - North Dakota became the first state to enact much of the Revised Uniform Law On Notarial Acts, model legislation published in 2010 by the National Conference of Commissioners on Uniform State Laws and intended to help states modernize and strengthen their Notary statues. A number of other states, such as Pennsylvania, Georgia, Illinois, Rhode Island and Iowa, plan to consider the measure this year.
The underlying message of these laws is that Notaries are expected to know and follow proper procedures to carry out their public duty of protecting consumers and our essential daily transactions. That expectation places greater emphasis on the need for continuing Notary education, and the need for employers to competently manage Notary-employees according to state laws, rules and sound policies and procedures. For more information about new laws or answers to notarial questions, contact the NNA Hotline.