Notary Definition

What Is a Notary?

A notary is a state-appointed official who serves as an impartial witness to verify the identities and validate the signatures of parties who sign legal documents.

What Does a Notary Do?

notary

The notary or notary public plays the role of an impartial witness in the signing of many legal contracts, agreements, deeds, and other documents that are recorded at the state and county level.

The state empowers the notary to act as its stand-in when contracts are signed by two or more parties. The notary is tasked with verifying the authenticity of the signatures and the identities of each party.

In other words, a notary guarantees that the signatures on a document are legitimate and not made under duress.

Under federal law, a notary has four primary duties[1]:

  • Take acknowledgments.
  • Administer oaths or affirmations.
  • Witness or attest to a signature.
  • Certify copies of essential documents.

When the notary verifies that the contract is being signed by the correct parties with valid signatures, the notary adds their seal to the document as evidence of this verification. Once the notary has added their seal, the document is said to be “notarized” and judged authentic. Therefore, notarized documents carry the full weight of the law.

Note that some states may add (or remove) some duties and privileges accorded to a notary. For example, a Florida notary public may also solemnize marriage and identify vehicles[2]. Meanwhile, in Oklahoma, a notary public may also act as a financial middleman, even collect due property taxes[3].

Note that the state notary laws where notarization is carried out supersede those where the documents have come from[4].

BY THE NUMBERS: Nearly 9,000 notary publics are currently employed in the United States. Of this number, 70% are women and 25% are men.

Source: Zippia.com

Why Is a Notary Important in Real Estate?

Notaries are important in closing or finalizing the sale of property. The deed transferring property from one party to another cannot be finalized and recorded unless the documents have been stamped with a notary’s seal.

At the closing of a real estate transaction, the notary checks the identities of parties and certifies their signatures on all documents.

In some states, notaries may guide a buyer and seller in reviewing the terms and conditions of a purchase contract[5].

A notary public who mediates in real estate transactions is called a notary signing agent, or NSA.

Notary Public vs. Notary Signing Agent: What’s the Difference?

All notary signing agents are notary publics, but not all notary publics are notary signing agents. Simply put, notary publics witness the signing of real estate documents and confirm the identities of the participating parties.

Notary signing agents guide either buyer or seller through a real estate transaction, particularly in processing loan applications (such as a mortgage)[6]. Notary signing agents make sure that parties sign the documents correctly to avoid errors or delays in processing the paperwork. They may also undertake additional instructions from a title company to the lender to expedite the loan process.

Most notary signing agents are independent contractors, which means they can earn income from fees by notarizing real estate transactions on top of regular notary work.

What Documents Are Notarized in Real Estate?

notary mortgage

Notaries make the process of purchasing property and owning a home easier, smoother, and more secure. In addition, they can help parties avoid errors and prevent fraud.

After all parties sign the documents and the notary verifies the identities and signatures, they will also sign the documents and place a seal of approval.

Closing Documents

Here are the documents that need to be notarized at closing[7]:

1. Deed

The deed serves as proof of property ownership. The document transfers the property’s title from the seller to the buyer. It indicates whether the buyer has chosen to take the title individually, in trust, or joint tenancy.

The signed deed is recorded and made public by the county recorder of deeds. This act adds the new buyer to the chain of title or the property’s history of ownership.

2. Affidavit of Title or Seller’s Affidavit

This document is a notarized statement by the seller. It confirms the seller’s property ownership and includes all details about any known title defects that may lead to boundary line disputes, property liens, and other issues.

3. Loan Documents

When real estate is being purchased with a loan, the loan instrument must also be signed by a notary and recorded as a lien against the property. The type of loan document may differ depending on what type of financing is involved and what state the property is in (see mortgage, deed of trust, and land contract). However, as a general rule, any loan that collateralizes the subject property will need to be signed by the borrower with a notary signature.

4. Transfer Tax Declarations

The buyer and seller sign transfer tax declarations to disclose the purchase price and calculate tax. This applies to jurisdictions that impose real property transfer taxes. Some states require a notary signature on the transfer tax declarations while others do not.

Mortgage Documents

As mentioned above, some common mortgage documents need to be notarized as well, such as[8]:

1. Mortgage Note

This document is proof that the buyer owes the lender and must repay the loan in full. It protects the lender and secures the property as collateral until the debt is paid.

The mortgage note includes information on the amount the buyer owes, the interest rate, the repayment term, the dates when payments must be made, and what happens if the buyer fails to fulfill their obligations. To record a mortgage, the notary must verify the original document, which must be signed by all parties involved.

2. Deed of Trust

In some states, a deed of trust is used in place of a mortgage. This document shows that the lender and homebuyer have agreed to put up the property as collateral for the loan. Signatories include the borrower, the lender, and a trustee.

Recorded in the county recorder’s office, the deed of trust states that the lender will hold the legal title to the property until the borrower fully pays the loan.

3. Subordination Agreement

When a property is secured by more than one loan, a subordination agreement shows the priority of debt repayment. In the event that the borrower defaults on their payments and the lenders liquidate the property, It establishes that one party’s claim or interest ranks above another. The agreement requires notarization and is signed by the lender and the borrower.

A subordination agreement is often needed when there are two mortgages on a home, and the homeowner is looking to refinance the first mortgage.

4. Signature Affidavit

This document certifies that the signature provided is true and correct.

5. Affidavit of Owner Occupancy

The occupancy affidavit confirms that the borrower will use the property as their primary residence.

How to Become a Notary Public or Notary Signing Agent

To be a notary public, a person must meet specific requirements, which vary by state. However, one consistent requirement is that the aspiring notary is at least 18 years old and a legal citizen of the United States. Some states require applicants to complete a training course and pass tests[9].

A person must first be commissioned as a notary public before they can start the NSA certification process. After that, applicants will have to pass a licensing exam, clear a background check, and undergo additional training and screening as mandated by the state[10].

To diversify their income sources and improve their earning potential, many real estate agents choose to become NSAs. However, to avoid conflicts of interest, they only manage transactions and notarize documents for deals in which they will not receive fees as real estate agents.

The costs of notary fees differ depending on the state or location. A person may expect to pay between $10 to $15 for hiring a notary public to witness the signing of legal documents. Notary signing agents charge anywhere between $75 to $200 for a loan signing job[11].

Takeaways

  • A notary or notary public is a public official empowered by the state to act as a neutral witness to the signing of documents.
  • When a notary verifies that the documents are executed with valid signatures from the correct people, the notary will stamp the documents with their seal. This seal indicates that the notary has verified the authenticity of the signatures, which can be enforced in court.
  • Notary signing agents are specialized notaries that mediate in real estate transactions.

Sources

  1. Theoharis, M. (2018.) How to Become a Notary Public – Responsibilities & Requirements. Money Crashers. Retrieved from https://www.moneycrashers.com/become-notary-public-responsibilities-requirements/
  2. Office of the Governor of Florida. (n.d.) Duties of a Notary Public. Retrieved from https://www.flgov.com/wp-content/uploads/notary/ref_manual11-22.pdf
  3. Oklahoma Judicial Process Servers. (n.d.) Real estate purchase: the role of the notary in 5 points. Retrieved from: https://oklahomajudicialprocessservers.com/real-estate-purchase-the-role-of-the-notary-in-5-points/
  4. Mason, C. (n.d.) Notarizing Out-of-State Documents: What You Should Know. Superior Notary Services. Retrieved from https://www.superiornotaryservices.com/blog/notarizing-out-of-state-documents/
  5. Wills, M. (2021.) What is a Notary Public Loan Signing Agent? Loan Signing System. Retrieved from https://www.loansigningsystem.com/blog/what-is-a-loan-signing-agent
  6. National Notary Association. (n.d.) What is a Notary Signing Agent? Retrieved from https://www.nationalnotary.org/knowledge-center/signing-agent-resources/what-is-a-notary-signing-agent
  7. O’Connell, A. (n.d.) Home Buyers: What Documents to Expect at Your Close of Escrow. Nolo. Retrieved from https://www.nolo.com/legal-encyclopedia/home-buyers-what-documents-expect-your-close-escrow.html
  8. Smith, E. (n.d.) What Documents Need to Be Notarized When Applying for a Loan? The Nest. Retrieved from https://budgeting.thenest.com/documents-need-notarized-applying-loan-24184.htm
  9. Lopez, L. (2018.) How to Become a Notary Public: A Simple, 5-Step Plan. Notarize. Retrieved from https://www.notarize.com/blog/how-to-become-a-notary
  10. Tiberio, M. (n.d.) Thinking of Becoming a Notary Signing Agent? American Association of Notaries. Retrieved from https://www.notarypublicstamps.com/members/news/1247
  11. Jen, K. (n.d.) How much does a notary public cost? Thervo. Retrieved from https://thervo.com/costs/notary-public-cost

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