Amanda Farrell - 1 week ago
Why Do Real Estate Documents Need a Notary?
Buying a home is an important milestone for many people. In the United States, it’s a pathway to stability and key to building generational wealth. Specially trained notaries called Loan Signing Agents or Notary Signing Agents help homebuyers complete their purchases by guiding them through real estate documents that must be signed and notarized.
These documents are critical in transferring the title rights to the property from one owner to another. Notaries play a vital role in real estate transactions. Here’s a breakdown of why a notary is needed, who can notarize real estate documents, and what can happen if the paperwork isn’t completed correctly.
The Role of a Notary
In general, notaries are public officials commissioned by their state’s governor to:
- Act as an impartial witness to a transaction
- Verify a signer’s identity
- Administer oaths
- Take acknowledgments of legal documents, including real property deeds
- Perform other certification duties outlined by their state’s laws
Some critical loan documents signed and notarized during a real estate closing are recorded in the land records system. These legal documents are sometimes referred to as recording instruments. Before recording, a notary stamp is required on some of these documents to assure validity.
Unfortunately, some criminals attempt to steal real property by falsifying and recording fake deeds. These crooks either convince an unscrupulous notary to participate or forge an unsuspecting notary’s seal to deceive the recording jurisdiction. The process of notarizing a document helps to deter fraud, business identity theft, and other crimes.
While the recording jurisdiction doesn’t take any steps to verify the credibility of a real estate document, other requirements must be met to avoid rejection. Professionals involved in the real estate transaction, including the notary, must execute these documents carefully to guarantee the new owner’s property rights. Otherwise, any misstep can lead to legal trouble.
Who can notarize real estate documents?
Each state establishes rules for real estate transactions. Some states require an attorney to be present, restrict the notary fee amount, require additional licenses, or limit who can handle certain types of loan products.
So, the professional at the closing may change based on the location of the property. Buyers and sellers will work with one of the following:
- Title or Closing Agent – Some states require additional credentials like a title insurance license or closing agent license to notarize real estate documents.
- Real Estate Attorneys – Other states require a bar-admitted attorney to be present or involved in the closing of real property.
- Notary Signing Agents/Loan Signing Agents – To prefer loan signings, commissioned notaries must submit annual background checks, pass a Signing Professionals Workgroup exam, and increase their E&O insurance. Title companies, lenders, and real estate attorneys often contract with these professionals so borrowers and sellers can close at times and places most convenient for them.
In Texas, there is a restriction on a specific loan product called a Home Equity Line of Credit (HELOC), requiring the closing to occur at the permanent physical address of a lender, attorney, or title company. As a result, title companies and real estate law firms in Texas cannot hire a mobile or remote notary for this type of loan signing.
📰 Related Reading: Real Estate Professionals Every Notary Signing Agent Should Know
What real estate documents are notarized?
Not all the documents found in a real estate closing package require notarization. Most of the ones found in a typical loan purchase are forms and disclaimers that only need a borrower’s signature to show receipt of the document.
Documents that require notarization include:
- Deed of Trust or Mortgage
- Power of Attorney
✒️ Loan Signing Tip: The promissory note is another important lender document. This form is an IOU to the bank and a promise to pay back the loan. The borrower must sign it, but doesn’t it require a notary seal.
When presenting closing documents, non-attorney notaries must avoid unauthorized practice of law. You may not be able to answer some of the signer’s questions, which can be frustrating. Be sure to know where to find the contact information of the lender or title company so the borrower or seller can get clarification.
📰 Related Reading: 7 Tips for Your First Loan Signing
How long does it take to sign real estate documents?
From accepting a buyer’s offer to finalizing the sale, the closing process can take anywhere from a week to 60 days. Depending on how complicated the transaction is, signing and notarizing documents can take as little as five minutes to several hours.
Some of the factors that affect how much or the type of paperwork include:
- Buyer vs. Seller – Buyers and sellers will have different closing packages to read and sign. The seller’s documents include signing the deed, closing statement, and a few other documents, so the process is usually shorter for them. Buyers can anticipate signing a promissory note, deed of trust or mortgage, and the closing disclosure.
- Sale vs. refinance – requires different forms that you won’t find in a new sale, like the Right to Cancel Form.
- Financed vs. cash purchases – Financed transactions will have considerable paperwork for the borrower to sign. These forms usually help establish the lender’s right to foreclose on the property should the borrower default on the loan. Cash purchases, on the other hand, involve far less paperwork.
Some loan signings can take longer if the signer hasn’t had the chance to review the documents before closing. Notaries should consider these factors when planning their appointments.
What happens if a real estate document isn’t executed correctly?
The real estate documents that are signed, notarized and recorded establish absolute ownership and lien rights to a property. Notary signing agents and other professionals take great care to complete the process according to their state’s laws. If these documents aren’t executed correctly, it can lead to delays, cancellations, and financial liability.
If the deed or other instruments aren’t properly notarized and meet all the recording requirements, the recorder will likely reject the document.
Fixing the mistake of a notary costs a title company or real estate attorney time and money, and the notary signing agent is likely to lose a client. Worst case scenario is that the notary may be sued for negligence, loss their commission, and face financial ruin.
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