Advancing the Acceptance of Remote Digital Real Estate Closings

Published in RISMedia

This article first appeared in Real Estate magazine's special-edition Women in Real Estate issue. View the entire issue here.

Residential real estate sales have continued to flourish during the COVID-19 health pandemic and have been critical to keeping the economy afloat. The National Association of REALTORS® (NAR) applauds real estate professionals for quickly adapting as best as possible to remote work and virtual tour technologies to keep real estate transactions in motion despite limited in-person meetings and home tours in many states. But additional work needs to be done to ensure that real estate brokerage and mortgage systems that support real estate home sales can stay nimble during the social distancing restrictions put in place during the pandemic.

Both homebuyers and sellers have expressed a desire to reduce in-person meetings with settlement service providers and want to have remote digital real estate closing options available even after the pandemic ends. We have the technology to do this, but the laws and business practices need to catch up so that we can provide safe, remote digital real estate closings.

Last summer, NAR conducted research to better understand barriers to adoption of remote digital real estate closing technology. While the use of eSignatures and electronic records has gained widespread adoption for many components of the real estate transaction, the use of remote online notarization (RON) for real estate closing documents by settlement service providers has been slower to catch up.

RON is a type of electronic notarization where the notary and signer are in different physical locations. The authentication and signing process uses two-way, real-time audio-visual technology, which enables the signer and notary to see and hear each other simultaneously. Such technology improves the customer experience, while at the same time provides strong consumer protections. The use of RON is critical to providing fully remote digital real estate transactions since documents such as the mortgage and deed need to be notarized in order for the closing to be completed.

NAR has taken several steps to help advance adoption of remote online notarization of real estate closing documents through legislative reform, education programs and industry initiatives. For example, NAR has urged Congress to pass the SECURE Notarization Act to allow consumers wider access to remote online notarization options by expanding the availability of RON in all states, setting national minimum standards for the use of RON and promoting interstate recognition of RON transactions performed under the laws of another state.

RON legislation has been passed in 29 states, and approximately 20 additional states have issued guidance enabling RON temporarily in response to COVID-19. Unfortunately, state laws vary with respect to the requirements for authorizing notaries to perform RON, authenticating signers, location of signers, content/structure of electronic stamps and seals, and maintenance of notary journal entries for RON transactions. In the absence of a federal legislative solution, NAR has also worked with industry partners to develop model state legislation for states that are considering passing RON laws to reduce inconsistencies in the interim.

In mid-December, NAR also convened an "eClosing roundtable" with other real estate industry trade groups, technology companies and financial institutions to discuss ongoing barriers to adopting RON technology. The group discussed the importance of having uniform state laws governing all key elements of the eClosing process, such as eNotarization, RON, eRecording and settlement, as well as the need to establish and expand consistent "rules" or operational standards that function at the industry level. Participants committed to promoting additional education to dispel myths about barriers to eClosing processes, as well as promoting the use of safe and effective technology to execute eClosings. In addition to providing remote closing options, efforts to advance use of this technology will provide consumers with faster and more efficient and accurate real estate transactions, reduce the risk of errors and loss of documents, and make a positive impact on the environment. 

For more information on remote online notarizations and NAR advocacy work, visit www.nar.realtor/remote-notarization

Sarah Young is the director of Real Estate Services, National Association of REALTORS®.

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