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NC House Bill 776

Legislation

State: North Carolina
Signed: July 08, 2022

Effective: July 01, 2023
Chapter: 2022-54

Summary

North Carolina enacts permanent remote notarization laws, raises the fees Notaries and Electronic Notaries may charge for performing notarial and electronic notarial acts, and authorizes Notaries to for the first time, charge a travel fee.

Affects

Adds Sections 10B-134.1 through 10B-134.26 to, and repeals Section 10B-188,and amends Sections 10B-2, 10B-10, 10B-20, 10B-25, 10B-31, 10B-60, 10B-101, 10B-102, 10B-105, 10B-106, 10B-117, 10B-200, 20-30, 47-14 of the North Carolina General Statutes.

Changes

Definitions

  1. Defines “communication technology,” communication technology recording,” credential analysis,” “electronic journal,” “identity proofing,” platform,” “remote electronic notarial certificate,” “remote electronic notarization or remote electronic notarial act,” “remote electronic notary public or remote electronic notary,” remotely located principal,” “tamper-evident,” and “third-party vendor.”

Registration to Perform Remote Electronic Notarial Acts

  1. Clarifies that the requirements for registration as an Electronic Notary Public apply also to registration as a Remote Electronic Notary Public.
  2. Authorizes a Notary who has registered with the Secretary of State to perform any of the notarial acts listed in GS 10B-115 as a remote notarization, and clarifies that a Remote Electronic Notary may perform any authorized remote notarial act with respect to electronic documents.

Standards for Remote Electronic Notarial Acts

  1. Requires a Remote Electronic Notary to be physically located in North Carolina when performing a remote electronic notarization.
  2. Provides that a remote electronic notarization performed by a North Carolina Remote Electronic Notary is governed by the laws of North Carolina.
  3. Requires a remotely located principal for whom a remote notarial act is performed to be (a) inside the United States, (b) outside the United States and and physically on the military installation or vessel named in the military orders assigning the member to active duty for more than 120 days, provided the remotely located principal is a member, spouse of a member, or dependent of a member of the Armed Forces of the United States; or (c) outside the United States at a United States Embassy, United States Consulate, or United States Diplomatic Mission.
  4. Provides that the document on which a remote electronic notarial act is performed must include: (a) the Notary's name, state, and county of commissioning exactly as stated on the commission issued by the Secretary of State: (b) the words "Remote Electronic Notary Public Utilizing Communication Technology"; (c) the words "State of North Carolina"; (d) the expiration date of the commission; (e) the Notary's electronic signature; and (f) the completed wording of an acknowledgment, jurat, or verification or proof notarial certificate.
  5. Clarifies that In judicial actions or proceedings, any Notary Public registered with the Secretary of State, whether or not registered as a Remote Electronic Notary, may administer an oath or affirmation to a witness that does not require remote electronic notarization of a record or a notarial certificate and seal when done in person, provided all of the following apply: (a) the Notary is physically located in North Carolina at the time the oath or affirmation is administered to the remotely located witness; (b) communication technology is utilized; and (c) all requirements relating to the identity proofing of the witness are satisfied.
  6. Clarifies that a Notary who administers an oath in judicial actions or proceedings using communication technology shall not be required to select the medium of communication technology or to retain a communication technology recording of the performance of each remote oral oath or affirmation.
  7. Clarifies that unless an oath or affirmation is administered in a judicial action or proceeding, the Remote Electronic Notary must administer the oath or affirmation to the remotely located principal utilizing a licensed platform.
  8. Clarifies that a Remote Electronic Notary must treat as confidential any information gained from a remotely located principal in the course of performing a remote electronic notarization.
  9. Requires a Remote Electronic Notary to do the following prior to the performance of a remote electronic notarial act: (a) inform the participants that North Carolina law requires that a communication technology recording be made of the remote electronic notarization; (b) require the remotely located principal to demonstrate, to the satisfaction of the Remote Electronic Notary, that the remotely located principal is not under duress and is not otherwise being coerced to complete the transaction; (c) verify the identity of the remotely located principal as provided in GS 10B-134.11; (d) ask the remotely located principal if the remotely located principal would like an attorney to participate in the remote notarization, and allow for such if so requested; (e) verbally state what documents are being signed for the notarial record or describe the general nature of the transaction; and (f) verify the location of the remotely located principal via communication technology.
  10. Requires a Remote Electronic Notary to verify the identity of a remotely located principal by (a) personal knowledge; or (b) credential analysis, by a third-party vendor approved by the Secretary, of a current document issued by a federal, state, or federal or state-recognized tribal government agency bearing the photographic image of the individual's face and either the signature or a physical description of the individual, identity proofing by a third-party vendor approved by the Secretary, and comparison, by the Remote Electronic Notary, of the current identification used for credential analysis and the image of the remotely located principal via the communication technology.
  11. Authorizes a Remote Electronic Notary to require the remotely located principal to provide additional information or identification credentials necessary to confirm the identity of the remotely located principal.

Prohibited Acts Relating to Remote Electronic Notarization

  1. Prohibits a Remote Electronic Notary from performing a remote notarial act if: (a) the remotely located principal's identity cannot be verified under GS 10B-134.11; (b) any reason set forth in GS 10B-20 (relating to powers and limitations of a Notary Public); or (c) any reason set forth in GS 10B-134.9 (relating to requirements for remote notarial acts).
  2. Prohibits a Remote Electronic Notary from performing a remote notarial act on any of the following: (a) a self-proved will executed pursuant to Article 4A of Chapter 31 of the General Statutes; (b) a revocable or irrevocable trust or any other document amending the same except for a certification of trust or similar document; (c) a death beneficiary form that requires an acknowledgment; (d) a codicil to a will; (e) any document related to the relinquishment of parental rights under Article 3 of Chapter 48 of the General Statutes; and (f) a mail-in absentee ballot issued under Article 20 of Chapter 163 of the General Statutes.
  3. Clarifies that a remote Notary may perform a remote notarization on any of the prohibited documents mentioned above if the remotely located principal is outside the United States and and physically on the military installation or vessel named in the military orders assigning the member to active duty for more than 120 days, provided the remotely located principal is a member, spouse of a member, or dependent of a member of the Armed Forces of the United States.
  4. Prohibits any remotely notarized power of attorney to be used by the attorney in fact with any other remotely located document to convey title to, or transfer any interest in, a remotely located principal's real property and further provides that a power of attorney executed by a remotely located individual must be recorded in at least one county register of deeds office in North Carolina.
  5. Clarifies that the prohibition against using a remotely notarized power of attorney to convey title to, or transfer any interest in, a remotely located principal's real property does not apply if the remotely located principal is outside the United States and physically on the military installation or vessel named in the military orders assigning the member to active duty for more than 120 days, provided the remotely located principal is a member, spouse of a member, or dependent of a member of the Armed Forces of the United States.
  6. Provides that in addition to the prohibitions and prohibited types of documents mentioned in GS 10B-134.3, a Remote Electronic Notary must refuse to perform a remote electronic notarial act if: (a) the Remote Electronic Notary has reasonable grounds to believe the remotely located principal is acting under duress or is being coerced into completing the transaction: (b) the Remote Electronic Notary becomes aware that the communication technology is not secure; (c) the electronic signature of the remotely located principal cannot be attached to the electronic document for signature; and (d) unless an oath is being administered, the Remote Electronic Notary's electronic notarial certificate and seal cannot be attached to the electronic document using an electronic technology that renders any subsequent change or modification to the document evident.
  7. Prohibits a Remote Electronic Notary who is not a licensed North Carolina attorney from rendering services or advice that constitutes the practice of law in North Carolina.

Communication Technology Recordings and Electronic Journal

  1. Requires each remote electronic notarization to include a communication technology recording.
  2. Clarifies that there is no requirement that the communication technology recording  include any transactions other than the remote electronic notarial act unless the Secretary of State specifies a requirement to also record interactions of those particular transactions.
  3. Requires a Remote Electronic Notary to enter information about the remote electronic notarization in an electronic journal.
  4. Clarifies that the electronic journal is the exclusive property of the Remote Electronic Notary.
  5. Prohibits a Remote Electronic Notary from allowing another person to make entries in the electronic journal.
  6. Authorizes a Remote Electronic Notary to surrender the electronic journal to the Remote Electronic Notary's employer upon termination of employment, but also requires the Remote Electronic Notary to keep and maintain an accurate backup copy of the journal for 10 years after the last remote electronic notarization entered into the electronic journal.
  7. Provides that except when the Remote Electronic Notary surrenders the electronic journal to an employer upon termination of employment, the Remote Electronic Notary shall not surrender or destroy the electronic journal or the communication technology recordings of remote electronic notarial acts except as required by a court order or as allowed under rules adopted by the Secretary of State.
  8. Requires all records of journal entries and communication technology recordings to be securely stored in a repository under the control of the Remote Electronic Notary or with a steward that is a third-party vendor approved by the Secretary of State and duly appointed under the terms of the new law.
  9. Requires a Remote Electronic Notary to take reasonable steps to ensure that the communication technology recordings are secure from unauthorized interception during transmission between participants involved in a remote electronic notarial act.
  10. Requires the communication technology used by the Remote Electronic Notary to employ data protection safeguards consistent with generally accepted information security standards.
  11. Requires, within 10 calendar days of discovering any 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, the Remote Electronic Notary must (a) inform the appropriate law enforcement agency in the case of theft, tampering, or vandalism; and (b) notify the register of deeds in the county of the Remote Electronic Notary's commissioning under GS 10B-10 and the Secretary of State in writing and signed in the official name in which the remote electronic notary was commissioned.
  12. Provides that the notice to report lost data, unauthorized use, loss of use, or compromise of security of the electronic journal or the communication technology recordings of remote electronic notarial acts must indicate whether there was any 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.
  13. Provides that failure of a Remote Electronic Notary to produce within 30 calendar days of the Secretary  of State's request any record required by a rule adopted under the new laws will result in the suspension of the Remote Electronic Notary’s power to act as a Notary under the provisions of Chapter 10B until the Secretary reinstates the Notary's commission.

Communication Technology Requirements

  1. Requires the communication technology used to perform a remote notarial act to comply with the following requirements: (a) host the meeting between the Remote Electronic Notary and the remotely located principal in real time; (b) allow direct interaction between the remotely located principal seeking the Remote Electronic Notary's services and the remote electronic notary so that each can communicate simultaneously by sight and sound through communication technology; (c) include audio with sound clear enough that each participant in the remote electronic notarial act can hear and understand all other participants; (d) have sufficient video quality to allow a clear and unobstructed visual observation of the face of each participant and any identification provided by the remotely located principal for a sufficient time to allow the Remote Electronic Notary to verify the remotely located principal's identity under GS.10B-134.11, and requires the Remote Electronic Notary to determine if the time is sufficient; (e) not include prerecorded video or audio or both; (f) be capable of recording using the communication technology's recording and storage services; and (g) be capable of geolocating the remotely located principal to corroborate the location of the remotely located principal.
  2. Requires a Remote Electronic Notary to take reasonable steps to provide that the communication technology used in a remote electronic notarization is secure from unauthorized interception.
  3. Requires a Remote Electronic Notary to select one or more tamper-evident technologies to perform remote electronic notarial acts with respect to electronic documents, and prohibits a person from requiring a Remote Electronic Notary to perform any remote electronic notarial act using communication technology that the Remote Electronic Notary has not selected.
  4. Requires communication technology to provide automated backup of the communication technology recording.

Platform Licensure and Standards

  1. Requires a Remote Electronic Notary to use only communication technology through a platform licensed by the Secretary of State.
  2. Requires the Secretary of State to review and issue platform licenses to qualified applicants.
  3. Requires an applicant for licensure to complete and submit an application on a form prescribed by the Secretary of State and pay a licensing fee of five thousand dollars ($5,000).
  4. Requires a platform to renew annually its licensure in a manner set by the Secretary of State and pay the $5,000 licensure fee.
  5. Requires the application for licensure to set forth at least all of the following: (a) the name and address of the applicant and its registered agent; (b) the names of all officers or directors directly involved in the operation, management, or control of the platform and all employees who exercise substantial influence or control over the platform; (c) the proposed technology to address identity verification and geolocation requirements and explanations regarding security governance and the designation of a chief security officer or its equivalent; and (d) any other information the Secretary of State may deem necessary.
  6. Requires the Secretary of State to conduct a background investigation on the applicant and persons described in the application for licensure as deemed necessary by the Secretary, which shall include a criminal history record check, to which the applicant and each person described in the application for licensure must consent.
  7. Provides that the Secretary of State shall award a license only to applicants who are of good moral character and who provide a communication technology capable of all of the following: (a) a manner of ensuring that the electronic record presented for remote electronic notarization is the same record electronically signed by the remotely located principal; (b) securely creating and storing, or transmitting securely to be securely stored, the communication technology recording, keeping confidential the questions asked as part of any identity proofing and the means and methods used to generate the credential analysis: (c) a manner of ensuring that real-time communications are secure from unauthorized interception, access, or viewing: (d) reasonable security measures to prevent unauthorized access to the live transmission of the remote electronic notarial act, any communication technology recording of the remote electronic notarial act, the verification methods and credentials used to verify the identity of the remotely located principal, and the electronic documents presented for remote electronic notarization; and (e) Geolocation of the remotely located principal.
  8. Clarifies that no platform license is assignable or transferable without the approval of the Secretary of State.
  9. Requires each platform licensee to collect a five dollar ($5.00) per remote notarial act surcharge and remit the surcharges collected at least monthly to the Secretary in a manner determined by the Secretary of State.
  10. Clarifies that all surcharges collected by a licensed platform and remitted to the Secretary of State shall be placed in a nonreverting agency reserve account to be used by the Secretary in the implementation and enforcement of the new laws.
  11. Requires all licensees and third-party vendors to meet all standards established by the Secretary of State under the new law for the provision of services to Remote Electronic Notaries.
  12. Provides that if the Secretary of State has not adopted rules establishing standards for a service, a licensee or third-party vendor may not furnish that service to a Remote Electronic Notary until the Secretary has determined that the provided service meets security standards generally accepted within the industry for that service.
  13. Authorizes the Secretary of State, in the Secretary's discretion, to do any one or more of the following if a licensee or third-party vendor violates the new laws or the rules adopted by the Secretary: (a) require a licensee or third-party vendor to provide a Remote Electronic Notary with proof that an issue was caused in whole or in part by the licensee or third-party vendor's technology; (b) issue a letter of warning, suspension, or revocation to the licensee or third-party vendor; (c) require the licensee or third-party vendor to provide proof that it has come into compliance to reinstate any license or use of a third-party vendor's services; (d) restrict use of a licensee or third-party vendor's technology by Remote Electronic Notaries until it has come into compliance; (e) assess a civil penalty of not more than $1,000 per violation against any licensee or third-party vendor that violates a provision of the new laws, which civil penalty shall be determined by considering aggravating and mitigating factors presented to the Secretary by the licensee or third-party vendor and Remote Electronic Notaries; and (f) any other appropriate remedy.
  14. Requires a licensee or third-party vendor whose technology is restricted, suspended, or revoked to work with Remote Electronic Notaries using the services of that licensee or third-party vendor to ensure access and, if necessary, ease transition to a different licensee or third-party vendor and may not deny its remote Electronic Notary customers access.
  15. Provides that a licensee or third-party vendor is liable to any person who suffers damages from a remote electronic notarial act if both of the following apply: (a) the damage is proximately caused by a service provided by the licensee or third-party vendor that failed to meet any standard under the new laws; and (b) the person damaged was a party to, or in privity with a party to, the remote electronic notarial act proximately causing the damage.
  16. Provides that a Remote Electronic Notary who exercised reasonable care in selecting and using a licensee or third-party vendor in connection with a remote electronic notarial act shall not be liable for any damages resulting from the licensee's or third-party vendor's failure to comply with the requirements of the new laws, and further provides that any provision in a contract between the Remote Electronic Notary and a licensee or third-party vendor that attempts to waive this immunity shall be null, void, and of no effect.

Notary Fees

  1. Raises the maximum fees that may be charged for a traditional notarial act as follows: (a) for an acknowledgment, jurat, or verification or proof, from $5 to $10 per principal signature; (b) for oaths and affirmations, from $5 to $10 per person.
  2. Provides that the maximum fee for an electronic notarization under GS 10B-118 is raised from $10 to $15.
  3. Provides that the maximum fee for a remote notarization under the new law is $25 per principal signature.
  4. Authorizes a Notary to charge as a travel fee the federal mileage rate per actual mileage traveled if the travel reimbursement is agreed to by the principal in writing prior to the travel.

Other Provisions

  1. Clarifies that any non-material failure of the Remote Electronic Notary to comply with the requirements of the remote electronic notarization does not invalidate the notarial act or the electronic record that was remotely notarized.
  2. Clarifies that an aggrieved person is not prevented from using failures in the remote electronic notarization process, along with other grounds, to challenge the validity or enforceability of the remote electronic notarization based on fraud, forgery, impersonation, duress, incapacity, undue influence, minority, illegality, unconscionability, or another basis not related to the remote electronic notarial act or constructive notice provided by recording of the electronic record.
  3. Clarifies that nothing in the new laws shall be construed to alter or supersede the law as set forth in Chapter 84 of the General Statutes, GS 10B-20(i) through (k), GS 75-1.1, or any opinion or ruling by a North Carolina court of competent jurisdiction or the North Carolina State Bar ruling pertaining to the unauthorized practice of law, including the requirements that a licensed North Carolina attorney shall supervise a residential real estate closing under Authorized Practice Advisory Opinion 2002-1 issued by the North Carolina State Bar and perform all services defined as the practice of law for real property located in North Carolina.
  4. Directs a register of deeds to record a paper copy of an electronic document that is eligible to be recorded if (a) the register of deeds qualifies, as specified in the new law; (b) the execution of the instrument by one or more signers appears to have been proved or acknowledged before an officer with the apparent authority to take proofs and acknowledgments, and if the proof or acknowledgment contains certain information, as specified in the new law; (c) the paper copy of the instrument has a certificate signed under oath or affirmation attesting to certain matters, as specified in the new law; (d) the copy of the document bears evidence of all other required governmental certification or annotation; and (e) except as otherwise provided in this subsection, the document conforms to all other applicable laws and rules that prescribe recordation.
  5. Clarifies that it is the purpose of North Carolina’s Notary statutes to integrate traditional paper, electronic, and remote electronic notarizations.
  6. Clarifies that except as authorized under North Carolina’s remote electronic notarization laws, a Notary must not perform a notarial act when the principal or subscribing witness is not in the Notary's presence at the time the notarial act is performed.
  7. Strikes from GS 10B-10(b1) the 90-day extension from March 9, 2020 to March 1, 2021 for an appointee to a Notary commission to appear before the register of deeds to take the general oath of office.
  8. Extends the temporary emergency remote notarization provisions applicable during the COVID-19 pandemic in GS 10B-25 until June 30, 2023.
  9. Clarifies that an emergency video notarization performed after December 31, 2021 and before the effective date of the new law shall be deemed valid and cured if such act was performed in conformity with GS 10B-200 as it existed on December 31, 2021.
  10. Strikes the provision allowing an identification document presented to a Notary for satisfactory evidence of identity for a temporary emergency remote notarization to be current, or if expired, did not expire prior to March 10, 2020, and now requires the ID to be “current” only.
  11. Extends the temporary emergency video witnessing provisions applicable during the COVID-19 pandemic until June 30, 2023.
  12. Authorizes the Secretary of State to refer such evidence as is available pertaining to violations of Chapter 10B or other criminal acts involving a notarization under Chapter 10B to the proper district attorney, who may, with or without such a referral, institute the appropriate criminal proceedings.
  13. Provides that upon receipt of a referral of a violation of Chapter 10B by the Secretary of State, the district attorney may request that a duly employed attorney of the Secretary prosecute or assist in the prosecution of the criminal proceedings on behalf of the State, and further provides that upon approval of the Secretary, the employee may be appointed as a special prosecutor for the district attorney to prosecute or assist in the prosecution of the criminal proceedings without receiving compensation from the district attorney, and the special prosecutor shall have all the powers and duties prescribed by law for district attorneys and such other powers and duties as are lawfully delegated to the special prosecutor by the district attorney for the prosecution for which appointed.
  14. Authorizes the Secretary of State to appropriate the receipts received under the new laws to fund four new positions: one attorney, one information technology specialist, and two law enforcement positions.
  15. Makes technical, non-substantive changes.

Rules

  1. Directs the Secretary to adopt rules necessary to establish standards, procedures, practices, forms, and records relating to remote electronic notarial acts, including emergency and temporary rulemaking, and at least all of the following: (a) any additional educational requirements for Remote Electronic Notaries; (b) the contents and security of the electronic journal; (c) the security standards, features, qualifications, measures, storage, and any other matter related to communication technology, credential analysis, and identity proofing; (d) the requirements of secure storage of all communication technology recordings, the electronic journal, and any other documentation under the control of the remote Electronic Notary regarding the remote electronic notarial act; and (e) 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.
  2. Authorizes the Secretary to adopt rules establishing, supplementing, or amending third-party vendor guidelines for standards and processes for identity proofing and credential analysis services so that third-party vendors interacting with Remote Electronic Notaries satisfy the security qualifications of establishing the identity of the remotely located principal.
  3. Directs the Secretary of State to adopt rules specifying the content and secure storage of the electronic journal.
  4. Requires the rules adopted by the Secretary of State for electronic journals to comply with all of the following: (a) allow for electronic and paper mediums of the electronic journal; (b) require retention for 10 years after the remote electronic notarization; (c) allow a party involved in a transaction that utilizes remote electronic notarization to require additional information regarding that transaction be included in the electronic journal; (d) authorize a third-party vendor, including a licensed platform, to act as a depository electronic journal; and (e) specify to whom the electronic journal shall be delivered upon resignation, revocation, or expiration of a notary commission or death or adjudication of incompetency of a Remote Electronic Notary.

Effective Dates

  1. The maximum Notary and Electronic Notary fee increase provisions take effect on July 8, 2022.
  2. The fees for remote electronic notarization take effect on July 1, 2023 and any fees charged for emergency video notarizations until June 30, 2023 are a maximum $10 or $15, depending upon whether a paper or electronic document was notarized.
  3. The travel reimbursement provision takes effect on July 8, 2022.
  4. The remote electronic notarization provisions take effect on July 1, 2023.
  5. The temporary and emergency video notarization provisions are effective until June 30, 2023.
  6. The provisions directing a register of deeds to record a paper copy of an electronic record takes effect on July 8, 2022.
  7. The provision authorizing the Secretary of State to appropriate receipts for four positions within the Secretary’s office takes effect on July 8, 2022.

Analysis

North Carolina enacts what can only be described as a one-of-a-kind permanent remote notarization statute. While the new law, most of which takes effect on July 1, 2023 (see Effective Dates, above), is similar to other states’ laws in requiring registration before a Notary can perform remote notarization, the 3-part multi-factor authentication protocol for identifying remotely located principals, and a recording and electronic journal entry of each remote notarization, a couple of provisions of the new law stand out as potentially controversial. The first is that a remote notarization platform provider must be licensed at a yearly cost of $5,000. Setting the fees this high will only discourage platforms from providing remote notarization services to North Carolina Notaries. Second, each platform must assess an additional $5 fee for each remote notarial act performed using the provider’s platform and remit these fees to the Secretary of State each month. This surcharge for a remote notarization is without exception the only such provision of its kind in existence, and will further discourage platforms from becoming licensed by the North Carolina Secretary of State and dampen adoption of remote notarization by the paying public.

In other provisions of the new law, the NNA is pleased that the General Assembly has raised the maximum fees Notaries may charge for notarial acts and electronic notarial acts, effective immediately. The General Assembly is also to be commended for finally allowing Notaries to charge a travel fee that is indexed to the federal mileage rate as long as the party requesting the notarial act agrees in writing in advance of the notarization.

Read House Bill 776.

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