NC House Bill 1432

Legislation

State: North Carolina
Signed: July 06, 2006

Effective: October 01, 2006
Chapter: 2006-59

Summary

Amends and corrects changes to North Carolina's Notary laws enacted by Senate Bill 671 of 2005.

Affects

Amends Sections 10B-3, 10B-5(b), 10B-7(b), 10B-10(c), 10B-11(b), 10B-20(a), 10B-20(b), 10B-29(c), 10B-20(g), 10B-20(l), 10B-20(m), 10B-20(o), 10B-22, 10B-23, 10B-31, 10B-36, 10B-37, 10B-40, 10B-41, 10B-42, 10B-43, 10B-60, 10B-106(d), 47-14, 47-37.1, 47-38, 47-41.01, 47-41.02, 47-41.2 of; and adds new Sections 10B-42.1, 10B-67, 10B-68, 10B-69, 10B-99 to the North Carolina General Stattues.

Changes

Definitions

Redefines “acknowledgment” to allow either signing in the Notary’s presence or indicating to the Notary that a signature is one’s own.
Redefines “attest” or “attestation” simply as the completion of a certificate by a Notary after notarizing.
Redefines “credible witness” so that the Notary must believe the witness is not a party or beneficiary of the transaction and is honest and reliable. The witness must be personally known to the Notary.
Redefines “jurat” simply as a Notary’s certificate evidencing the administration of an oath or affirmation. Also, the new law strikes “jurat” from the authorized list of notarial acts.
Redefines “principal” to mean an acknowledger, or a person whose signature is confirmed by verification or proof, or the maker of an oath or affirmation.
Redefines “verification” or “proof” so that the subscribing witness is not a party to or beneficiary of the transaction and must be personally known to the Notary or identified through satisfactory evidence.
Expands the definition of “verification” or “proof” to permit a nonsubscribing witness to verify or prove the signature of a principal or subscribing witness by swearing or affirming that the nonsubscribing witness recognizes the signature of the principal or subscribing witness, and that the signature is genuine, and provides both a certificate and the elements to be included in a certificate for a verification or proof by nonsubscribing witness.

Notary Commission

Exempts a Notary continuously commissioned in North Carolina since July 10, 1991 and who has never been disciplined by the Secretary of State from taking the required examination upon recommissioning.

Standards for Notarial Acts

Clarifies that a Notary is not disqualified from performing a notarial act if the Notary is named solely as trustee in a deed of trust, the drafter of a document, the person to whom a registered document should be mailed or sent after recording, or the attorney for a party to the document so long as the Notary is not a party to the document individually or in a representative capacity.
Clarifies that a Notary is under no obligation to verify the signing capacity of a principal who purports to be signing in a representative or fiduciary capacity but this capacity may be identified in the notarial certificate.

Certificate of Notarial Act; Notary Seal

Emphasizes that in executing a notarial certificate, a Notary certifies all elements of the notarial act were performed lawfully, whether stated or not in the certificate.
Emphasizes that in executing a notarial certificate, a Notary certifies that the Notary was lawfully commissioned, the Notary’s commission is valid and in force, the notarial act was performed within the bounds of the Notary’s jurisdiction, the notarial act was performed in accordance with Chapter 10B of the General Statutes, and that the certificate was signed by the Notary, whether or not stated in the certificate.
Removes the requirement that a certificate for an acknowledgment, verification, or proof must state that the Notary identified the signer through personal knowledge or satisfactory evidence. (Note: a Notary still must identify all document signers, but the certificate itself no long must say so.)
Removes the requirement that a certificate for an oath or affirmation must identify the state and county in which the oath or affirmation occurred.
States that any form of acknowledgment or probate authorized under Chapter 47 of the General Statutes is deemed to be in compliance with the requirements of the law for notarial certificates.
States that the name of the principal may be omitted in a notarial certificate if the name of the principal is located near the jurat, and the principal who so appeared before the Notary is clear from the record.
Clarifies that a notarial act must be evidenced by the legible appearance of the Notary’s name, as shown on the commission, typed near the signature or elsewhere in the certificate, or from the Notary’s seal.
Clarifies that the Notary’s commission expiration date may appear in the Notary’s seal or elsewhere in the notarial certificate.
Removes the requirement that a Notary must inform the register of deeds and the Secretary of State if the official seal is damaged or rendered incapable of affixing a legible image. (Note: the Notary still must notify the proper authorities if the seal is lost or stolen.)
Removes the requirement that the seal be kept in a secure location accessible only to the Notary and the prohibition against another person using or possessing the seal.
Stipulates that a register of deeds may not refuse to accept a record because a notarial seal does not satisfy the requirements of G.S. 10B-37.
Stipulates that Notaries commissioned on or after October 1, 2006 shall not use a circular seal that is less than 1½ inches nor more than 2 inches in diameter. (Note: Notaries may use a circular or rectangular seal.)
Prohibits alterations to any information within the seal as embossed or stamped.
Provides that that official seal may contain the permanently imprinted, handwritten, or typed commission expiration date.
States that a Notary seal or stamp that does not comply with the statutory provisions shall not affect the sufficiency, validity, or enforceability of the notarial certificate, but also emphasizes that a noncompliant seal shall constitute a violation of the Notary’s duties.

Prohibited Acts

Prohibits a Notary from performing a notarial act if any credible witness who identifies a signer is not personally known to the Notary.
Clarifies that while a Notary shall not notarize a signature without completing a notarial certificate, the Notary may administer an oath or affirmation without a completing a jurat.
Stipulates that a Notary shall not sign a paper document using a facsimile stamp or an electronic or other printing method.
Emphasizes that a notarization may not be performed if the person whose signature was notarized appears in the judgment of the Notary to be “incompetent” or “lacking in understanding of the nature and consequences of the transaction” or “acting involuntarily, under duress or undue influence.”

Other Changes

States that it is a Class 1 misdemeanor to perform a notarial act if the Notary’s commission has been restricted. (Note: This is in addition to current statute that states it is a Class 1 misdemeanor to perform a notarial act if the commission has expired or been suspended.)
Clarifies that an erroneous commission expiration date entered into a notarial certificate shall not affect the sufficiency, validity, or enforceability of the notarial certificate or the document if the Notary is lawfully commissioned at the time the Notary performs the notarization.
Clarifies that “technical defects, errors, or omissions” in a notarial certificate shall not affect the sufficiency, validity, or enforceability of the notarial certificate or document.
Clarifies that a notarial certificate form issued by a state agency prior to October 1, 2006 is a valid certificate provided the certificate complied with the law at the time it was issued.
States that the courts shall grant a presumption of regularity to a notarial certificate executed in substantial compliance with the law in the absence of fraud on the part of the Notary or evidence of a knowing and deliberate violation of the Notary laws by a Notary.
States that a notarial act performed prior to October 1, 2006, is valid if the act complied with the law on or before December 1, 2005.
Makes various allowances for other forms of acknowledgment and probate made before, on, or after December 1, 2005.
Makes numerous other minor changes.

Analysis

The background for this mammoth revision to North Carolina’s Notary laws begins with the enactment of Senate Bill 671 in the prior legislative session. Senate Bill 671 included major sections of the Model Notary Act of 2002, including provisions on electronic notarization. Because SB 671 was largely “ramrodded” through the North Carolina General Assembly by Secretary of State Elaine Marshall, its enactment surprised certain groups who felt they had had no input in its drafting. As a result, a number of attorneys now object to many of the detailed statutory requirements, procedures and certificate wording enacted by SB 671 as contrary to longtime industry forms and customs. Due to their objections, much of the offending language bas been removed or modified by HB 1432 to streamline document handling – though a dangerous precedent may have been set in the new procedure for a “nonsubscribing witness,” which allows a notarization to be based on mere recognition of a signature.

Fortunately, much of the substance of Senate Bill 671 was not lost and even certain sections were strengthened. Very significantly, apart from one minor change, House Bill 1432 did not touch the electronic notarization provisions of Senate Bill 671. Many of the new changes are simple clarifications and corrections (one provision in Senate Bill 671 was erroneously duplicated).

A section in House Bill 1432 tasks the North Carolina General Statutes Commission with studying whether more changes to the Notary laws of North Carolina are needed and reporting back to the General Assembly its findings in either the 2007 or 2009 legislative sessions.
The effective date is October 1, 2006 except for the new exemption from the Notary examination, which takes effect July 1, 2006.

Read the bill text.