The notary office and its impact

In the 21st century

 

 

 

A Presentation At The

NACO/NACRC ANNUAL CONFERENCE

 

 

 

 

By Deborah M. Thaw

Executive Director Of The

National Notary Association

Chatsworth, California

 

 

 

Convention Center

Charlotte, North Carolina

Saturday, July 15, 2000

8:00 a.m.

 

 

 

            As most of you know, the National Notary Association has been a primary source for Notary education, service and advocacy since 1957.  We are pleased to be serving the over four million Notaries throughout the United States – 150,000 of whom are NNA members.  I’m also pleased to talk to you this morning about the Notary office and its impact in the 21st Century.

            One of the Louvre Museum’s most treasured artifacts is the statue of a seated Egyptian scribe from the Fifth Dynasty – over 4,000 years old.  The figure sits with spread knees supporting a papyrus sheet over which is poised a stylus in his right hand. 

            The scribe’s eyes’ engage the onlooker across the millennia – or, are the eyes focusing on Pharaoh and the hand poised to write down the god-king’s next word?             

            The “Seated Scribe” of the Louvre may be history’s first artistic representation of a Notary. 

It is also a visual reminder that Notary-like officers existed long before the Roman Empire, when the functionary known as a notarius, a kind of public stenographer continued the custom.

            To understand what the future holds for the Notary office, to assess the challenges it will face, and by extension, what others including the public face, I’d like to share with you the historical timeline by which the Notary office was ultimately defined.

By explaining briefly how the office developed, I hope to show what attributes and characteristics become the most essential – and why.  And, then, how over the recent past, the office languished and developed a perfunctory quality that encouraged its being discredited by those who saw it as an impediment to commerce and law.

            In many regards, this attitude prevails today.  As I review the current trends that Notaries face, I hope to also show that we are, actually, at a fork in the road.  Each trend is so new, so distinct from anything we have known in the past, that there is a unique opportunity for us to craft a direction that enhances and strengthens the Notary office – returns it, if you will, to a strategic place in supporting the integrity of commercial and legal activity. 

It served an important role over the past 2,000-plus years – and can do so for the next.

            For purposes of discussion today, I have narrowed down – or, consolidated all the myriad of activities in the notarial arena to four trends: 

            There’s what I call the civil law initiative.  Several states have already passed laws that create a new classification of Notary to parallel that found in civil law jurisdictions.  In these, the Notary is a lawyer and has greater authority over the document than the existing American Notary, who functions under a common law system.

            Secondly, no current presentation would be complete without addressing the complex, confusing, anxiety-producing subject of the electronic or digital signature phenomena.  Calling this a trend is an understatement.  But more on that later.

            Third, is what I refer to as housekeeping.  Like any discriminating review of a profession or quasi-profession, there are always the administrative issues – the whats, whys and hows. 

            With the technology today and the changes that will be implemented to accommodate it, it’s reasonable to expect that the notarial role and function will be altered.  Beyond the basic principles, Notaries will be expected to acquire certain skills or greater understanding of relative functions – such as digital signatures or say, computer programs.  For this reason, attention will need to be paid to the application procedures that qualify those who want to become Notaries.  Some regulatory issues will need to be reviewed and possibly redefined such as bonding requirements, seals, recordkeeping, fees, and suspension and revocation criteria.

            And finally, there are the ethical considerations.  The Notary’s role in lending integrity to important transactions necessitates sound standards for the performance of notarial acts.     While many occupations pose professional and ethical norms for their practitioners, the need for guidelines is particularly acute because of the Notary’s status as both public and private functionary.  In few offices is anyone more subject to conflicting pressures.  As we move forward, Notaries will require direction to handle issues on which statute or regulation are silent.

Both civil and common law Notaries claim the same ancestor – the notarius of ancient Rome. 

            Ironically, the office of the highly prestigious and professional modern civil law Notary may bear less resemblance to that of the Roman notarius than it does to the office of the U.S. Notary.

            This notarius was not, after all, a discretionary official of any prestige – at least not yet.  He was a stenographer, an underling, serving persons with authority.

            Eventually, these low-level Roman note-takers ceased to be called notarius and the title was later applied to loftier positions including registrars in the courts of provincial governors. 

            It was the private Roman officer known as the tabellio that the modern civil law Notary most resembles.  The tabelliones took their stations in the forum or marketplace where the public applied to them for professional advice and assistance.  They prepared such documents as deeds, wills and transfers of property. 

            In the latter days of Rome’s empire, they increased and were eventually able to deposit and register their acts directly into public archives without a court proceeding.  The title of tabellio was soon applied to private legal professionals who often employed a scribe then known by the generic term of notarius.  The name stuck.

            As the Middle Ages progressed, the legal customs of Rome were adopted into most civil institutions and the office of Notary became more developed where they were registrars at the courts, affixing the court’s seal on deeds in order to render them public and authentic acts.

            By the Renaissance, Notaries were weaned from the imprimatur of the courts and their sealed independent acts were in time given public trust in their own right.

            Now, what about the common law tradition…and us?  Well, before 1279, Notaries were virtually unheard of in England.  Deeds and contracts could be given authenticity with the seal of an important official such as a bishop or mayor.  For the next 300 years or so, the Archbishop of Canterbury appointed Notaries under powers granted by the Pope. 

But, with King Henry the Seventh’s infamous dispute over papal authority, the King took over the powers to appoint Notaries through the Court of Faculties still under the auspice of the Archbishop. 

            This method continues to this day and in conjunction with a parliamentary law enacted in 1801, the profession evolved as it is today and concentrates its activities to a large extent on the preparation and authentication of instruments to be used abroad.

            And indeed, from the Elizabethan Age onward, Britain dispatched notarial documents and countless Notaries themselves – to every corner of the earth to help administer an empire on which the sun never set.

            One of these corners, of course, was the eastern seaboard of the North American continent where the English colonists brought their common law mores, including the custom of the Notary Public.

            The colonists had little use for the services of a Notary.  Their activities were directed toward developing the continent.  Most agreements for the purchase and sale of land were made public in open court.  The buyer and seller met before an official, such as a judge, to advise him of their intention to make an agreement.  The judge would make the agreement official and in full force and effect by simply recording the terms in his court record.

            This, I might add, is pretty much the way it is done in Norway and Sweden, today.

            In any event, during the colonial period Notaries were elected or appointed in the same way as judges.  However, their duties were of a ministerial, or administrative capacity, rather than of a judicial nature.

            The Constitution of the United States left the responsibility for the enactment of Notary laws to the individual states.  Therefore, each state passed Notary laws based on the commercial interests, business needs and customs of its own citizens. 

            But for our purposes today, I want to focus on the real property functions of the Notary.  So, it was that as the states were surveyed and property became valuable, written agreements were needed for the conveyance or buying and selling of land.  Notaries were authorized to take the acknowledgements of deeds, conveyances of land, mortgages and other documents relating to real estate. 

            It became the Notary’s duty to identify the parties, witness their signatures, obtain the parties’ acknowledgment that the agreement be in full force and effect and affix an official seal.

            Over the subsequent years, the functions of the Notary office have been pared down – the original archiving function was passed over to local officials with the 19th century establishment of Public Recording offices.  Any claim to conveyancing or document preparation was ceded to attorneys and any claim to a stenographic function was passed over to court reporters.

            Yet, while these apparent operational functions have been effectively removed from the notarial function, the need for the Notary has remained remarkably alive. 

            Briefly, the Notary performs four important basic functions:

1)      To determine positively that the party to a written agreement is the party they claim to be – they identify the signer.

2)      To obtain the acknowledgment of the party to an agreement that they have signed the agreement and that they are aware of its contents – they corroborate the signer’s willing consent.

3)      To apply and affix a distinguishing mark or seal to ensure that the original agreement cannot be altered.

4)      To ensure that this particular document contains the particular agreement intended to be in full force and effect – they establish document authenticity.

By definition, the Notary is a citizen of high moral character and integrity and an impartial witness appointed to perform notarial acts of a non-legal or ministerial nature.

These characteristics have not changed over the years which brings us to the present and our first developing trend – that of the U.S. civil law Notary.  At this time, I will explain that Louisiana is a unique exception to our predominantly common law system.  As a former colony of France and Spain, Louisiana is the only state which has always had a legal system based on the civil law model which they were authorized to retain when it received statehood in 1812.  For this reason, Louisiana’s Notaries have powers to prepare documents and act in a role similar to the civil law Notaries of other countries.

Although united by principle – that Notaries of both systems are expected to be impartial, require the signer’s appearance and proof of identity and secure the document as authentic – the specifics are rather divided.  The civil law Notary is an attorney-like legal professional who also prepares documents on behalf of both sides in a transaction and ensures that these documents meet the legal requirements of the appropriate jurisdiction.

Needless to say, this dichotomy has resulted in complications when notarized documents are sent between the United States and other countries.  Because U.S. Notaries often do not have the same legal training as their civil law counterparts, many nations view our work with skepticism and are reluctant to accept documents notarized in the United States. 

The idea to bridge this gap by developing a new type of notarial office is beginning to surface.

In 1997, the state of Florida passed a law creating a new office to heighten trust abroad in the integrity of American documents.  Attorneys with five years experience practicing law could apply and take an exam to become “international Notaries” authorized to act in a fashion similar to that of Notaries in civil law countries.

Civil law Notaries are responsible for preparing documents that are legally enforceable and valid

Once the document is signed by the parties and the Notary, the original becomes public property.  It remains in the custody of the Notary, but the property of the state.  They act, to some degree, as the public recording agency.  The Notary then issues under his signature a copy of the document which, for all legal purposes, is the same as the original.

By contrast, the U.S. Notary’s prohibited from offering legal advice or drafting documents for signers unless they are qualified professionals in the appropriate field.

However, making this new notarial office compatible with the existing U.S. legal system is a challenge still being worked out.  According to one Florida practitioner, the United States has never recognized this type of position in its practice of law.  It’s not like a Notary Public at all, it’s more like an intermediary.  It’s really foreign to U.S. practice, where you’re normally representing one side or another.

            And, there are ethical guidelines that make it difficult for attorneys here to represent both sides in a transaction like a civil law Notary.

            The state of Alabama recently followed Florida’s example and passed a law to create its own international Notary program and both states are developing the infrastructure for administering the office including a qualifying exam and other attributes – not the least of which is the requirement that the international Notary maintain a Notary commission as granted by the state.

            The statutory rules for the Florida officer called a civil law Notary are presently more extensive and detailed than those for the new Alabama officer called an Alabama international Notary.  Unlike the new Alabama official, the Florida civil law Notary is given power to perform any act that a Florida common law Notary may perform.  Alabama’s new law specifies that the acts of Alabama International Notaries are for use only in non-U.S. jurisdictions.  The Florida law does not have this prohibition.

            Aside from specialized uses, the international Notary doesn’t have anything that will distinguish his acts.  They do have a Notary seal that identifies them as an international Notary but from the U.S. recording view, the documents you may receive would be accepted like any regular notarized document – they are, after all, commissioned Notaries in their respective state.

            The international Notary, could, in Florida according to Todd Kocourek, special international counsel for the Department of State, assist in the execution of deeds outside the state.  Basically, the civil law Notary includes all powers of the commissioner of deeds.  So, if he were to go to Mexico and the property was in the state of Florida, he could notarize it and the document would be entitled to recordation in Florida.  This would not be possible under the traditional notarial function.

            Even though in civil law jurisdictions the Notary maintains the “protocol” or record consisting of the original public instruments that they have drafted and authenticated, these instruments are the property of the state, although in the custody of the Notary who may issue certified copies for such purposes as recording title. 

I might also add here, that the civil law Notary – and each country has its own variation –  may be required to submit monthly or regular reports to the state regarding notarial activity and collect revenue for the state.  In any case, eventually, the Notary’s original public instruments are surrendered to the permanent custody of the state. 

            For international Notary practitioners here, they, too, will keep a protocol but the standard recordable documents will continue to be filed with the appropriate recording agency.

            Todd told me that one consequence of the creation of the civil law Notary office may help reduce the pressure exerted on Notaries by employers and businesses who want them to perform unauthorized acts.  Very often, attempts to generate documents acceptable to a foreign legal system means a Notary is pushed to act beyond their legal bounds in order to make the document appear acceptable.

            We do not believe that the roles of international Notaries and civil law Notaries will diminish the traditional role of the Notary here.  In fact, the prevailing sentiment is that it will actually establish more common ground as each system is strengthened by the attributes and benefits each provides.

            At our annual conference, we host international delegations.  Several years ago the Notary inspection officer of the Puerto Rico Supreme Court – the court official who reviews notarial documents and protocols in Puerto Rico, told us that  – given the American Notary’s role in many legal transactions, there is a recognition that it is important to safeguard the authority to notarize.

            This cautionary statement is all the more timely now as we struggle with the integration of electronic or digital signatures into our existing systems.

            As I said at the outset – this is hardly a trend, it is a phenomenon!

            With the explosive growth of computer technology and the Internet, how we will accept electronic signatures on commercial and legal documents is now among the most paramount and far-reaching issues of the day.

            With the passage of some form or another of the Uniform Electronic Transactions Act – the UETA – through almost 20 states by now, plus the federal legislation, the questions are multiplying.  In light of this, I feel there is a need to address the potential dangers in establishing rules to implement the law without retaining the essential safeguards that ensure fraud deterrence and consumer protection in high value commercial and legal transactions.

            Very briefly, let me go over the key points of UETA and what is happening legislatively.  UETA was drafted by the National Commissioners on Uniform State Laws.  Like most draft legislation, states are at liberty to adopt all or part of it – or in some cases, add provisions of their own.  Very generally, the act gives electronic contracts and signatures the same legal validity as their paper counterparts.  That is the key and that was the focus and intention.  Also, it describes what an electronic signature is and defines what transactions will be subject to its provisions. 

In some cases, states are enacting electronic transaction laws totally of their own drafting, such as the state of Washington.  Others adopt part of it, like California.  And, as they review and consider the UETA, they add a few other features or determinations which slightly alter the model act.

Then, after the law has passed, it is up to the state administering agency to determine how it will be implemented.  California and Pennsylvania, for instance, are two states that believe they must enact enabling legislation for their Notary statutes before they can permit electronic notarization – although UETA is law there.  This is where our concern begins because states are beginning to set up rules that may be contrary to the best interests of the consumer. 

Remember, legislators and state administrators are not experts in all the fields affected by electronic transactions.  The degree of risk that various industries are willing to accept is different and this is where it is important for the property records industry to determine how they want the risk and security of their business activities to be managed.

            Task Force Notary Sub-Committee Chair Milt Valera discussed this a few days ago, but for those who missed it….and for those who share this sentiment, I would like to repeat the thrust of his remarks.

            First, let me say that there is no question that we support the technologies that simplify or expedite documentary transactions.  But we believe that the intrinsic values in transaction security and trust must be sacrificed to or compromised by speed, convenience and cost.  The integrity of the notarial process serves a very essential quality, that, if overlooked, minimized, or weakened could have repercussions that no legislator or administrator has considered. 

            Integrity has several meanings.  Most people think of its relation to honesty and sincerity, qualities that are important in the Notary profession.  However, integrity also means the condition of being whole, or integral.  If a process is to have integrity, it has to have all the necessary components.

            It is our position, then, that in consideration of any electronic environment, there are certain notarial principles that must continue to exist, regardless of the development of new tools or technology.  And, that the Notary’s participation in this new environment may add a degree of assurance and trust without which the security and integrity of the transaction could irreparably suffer.

            In faceless cyberspace, we can only imagine what freedom we may give to someone seeking to perpetuate a fraud…or forgery!

            As states introduce legislation or draft rules regarding how they will regulate electronic transactions, they must also define electronic notarization. Technological advances, such as PKI-type digital signatures have wonderful advantages particularly those related to the ability to indicate when a document has been altered.  But, the technology cannot address the five essential elements in a manner that ensures the same level of trustworthiness or integrity as that provided by the notarial act.

            First, the notarial process requires personal appearance by the signer.  This requirement is the basis for the entire notarial act and is often a key factor in preventing fraud.

            Of course, it is up to the state legislature to decide what notarial acts require personal appearance.  But, removal of this requirement serves little purpose but to accommodate the signer.

            As we learned the other day, several states have already compromised this aspect of the notarial act by allowing persons owning a digital certificate issued by a licensed certification authority to use that certificate unilaterally in creating “notarized” digital signatures without limit and without the witnessing services of a Notary.

            In fact, at our Conference, Arizona’s electronic transactions liaison, told a group of state officials that in cases, like with counties, where you may want to automate the process, you give someone an electronic signature and they state that they will use it in a notarial form whenever they use it, so it doesn’t require the presence of a Notary.

            He was explaining it within the context of lien releases, but it doesn’t take much to see where this could go later.

            As he explained, the certificate holder – or holder of the digital signature – swears when they were issued the certificate, that when they use it, the executed electronic document will have the same force and affect as having been done in the presence of a Notary.  Now, the Notary is involved in the application procedures when the certificate is issued, and there will be time constraints and restrictions on its use…But, as one title industry executive remarked when he heard this:  “I promise not to speed.”

            The second element is identification of the signer.  The purpose of this requirement is to ensure that the person signing is identified by some form of outside document – or personal knowledge – that he is who he or she claims to be.    While we know that this method is not fail-safe, technology does not provide any better assurance – at least at this point in time. 

            Biometrics is not ready for widespread use and PKI technology is comparable to any other form ID in that, at the time a digital certificate is issued, a person’s identity is checked by an outside entity.  Once the certificate is issued, it is up to the signer to keep it from being used improperly or to report it missing if it is stolen.

            If you think about it, if my driver’s license is stolen, at least I know it’s missing because I don’t have it.  Theoretically, someone could access my computer and use my digital certificate – and I may not know it. 

            I agree that there are some advantages to the digital certificate, such as the password protection, but if we continue to require the transaction-based identification of the signer, we actually take advantage of the strengths of both the technology AND the notarial process.

Next are the elements of willingness and awareness.  A Notary who sees and talks to the signer can sometimes determine when a person who is signing a document is not signing willingly or is not aware of what he or she is doing.  Without personal appearance, a number of situations could take place that weaken the consumer protection provided by the notarial process.

I know there are arguments that some states do not statutorily require Notaries to determine awareness or lack of duress.  However, most people agree that a Notary should not notarize a document for a signer who is falling in and out of consciousness or who appears to be under some sort of physical threat.

            Finally, in the traditional acknowledgment process, the signer acknowledges to the Notary that the signature on the document is his and may indicate in what capacity he is signing.  While a digital certificate could indicate the capacity of the signer, there is no communication by the signer, other than the electronic signature itself, of his intent to sign the document. 

            The reason we require a signer to acknowledge a signature made outside the presence of the Notary is to be certain the signer is aware of what she is doing and is making a conscious and willing act of consent.

            What we face is the difficult task of setting standards for an unknown and untried medium.  Benjamin Wright the author of “The Law of Electronic Commerce” summed it up pretty well when he said.  “The essence of the issue is determining the intent of the signer.  There are many ways to sign an electronic document.  How do you create a record you can show to a court later to prove what the signer thought he was going?”

            Of course, it is here, that the intervention of the Notary between a transaction’s promise and its execution becomes so critical.  Retaining the role of an impartial third party and the signer’s presence would not only continue to serve as a deterrent to fraud but respond to the identification and intent issues. 

            The president of the National Fraud Center compares what is happening now in
e-commerce to the gold rush of 1849.

            Some will find their fortunes and many others will go bust.

            To put it in perspective, it took over 38 years for radio and approximately 13 years for television to reach 50 million users.  By contrast, it has taken less than four years for the Internet to reach the same number.

            And, while we’re talking numbers, the U.S. Postal Service estimates that the growth of identity theft in e-commerce is about 30 to 40 per cent a year. 

            In the Fraud Center Report on Identification and Authentication in PKI Infrastructure, there are some interesting points raised – all of which are tremendously valid.  And, many of which, perhaps the most significant, could be resolved by sound notarial intervention.

            I quote directly from the report:  “Technologically, digital signature algorithms are sound.  While there may be other vulnerabilities associated with the technological side of digital certificates and signatures, a primary point of vulnerability exists at the time the certificate is issued by the certification authority.  Without the appropriate identification and authentication, the trust behind the digital signatures is lost, negating the technology.”

            The threats closely coincide with the potential vulnerabilities and include:

1)      issuance of the certificate to a fictitious individual

2)      issuance of a certificate to a real person using another’s identity       

3)      revocation or suspension of a person’s real certificate

4)      theft of the certificate

Presently, most of the technology is being used in a closed community of users – however, a much different dynamic occurs when a trusted certificate is compromised in the public domain.  And, this is where I see all of us being concerned. 

There is not only an economic impact, but a violation of trust.  For now, the use of trusted certificates has not expanded beyond closed communities – such as bank customers conducting transactions on line, so the true economic impact for successful violations is not known. 

For us, though in the property records industry, it will be an open system and we have to be ready to identify our key concerns, provide workable solutions and ensure the level of system integrity that we require.

            In the Fraud Center report which focuses on a PKI-model, it says that a certification authority meets the need technologically but the identification and authentication phase of the digital certificate issuance is a critical point of potential failure. 

E-commerce, it concludes, needs solutions that offer the same factors of trust found in the “face-to-face” world.  That solution was – and is – found in the Notary office.

            From our point of view, the Notary is a key component in this scenario.  There is no justification for treating the electronic signature any different than a handwritten signature because the process of pushing a button or allowing a fingerprint to be analyzed – outside the presence of a Notary – is no more an indication of a conscious act than writing a signature by hand.

            It is the unique combination of notarial elements that can make electronic signature implementation meet the public’s desire for high levels of document assurance.  It is these elements – personal appearance, identification, assessment of willingness and awareness, and acknowledgment that make the notarial process both complete and worthy of our trust.

The legislators who have passed UETA as well as those charged with its implementation have as many questions as we do.  And while they have the responsibility for establishing the rules and regulations, we all know that the devil is in the details.  And, wouldn’t you know it, they have left the details to us…and anyone else who has a recommendation or a good idea.

This is not an issue colored by conflict and contention.  There are no right or wrong answers which is why there has been such caution in developing electronic transaction guidelines.  The dialogue we present is not an argument based on technology versus tradition but how to make technology work to our best advantage.  How to make it work while retaining the very best characteristics of sound trustworthy traditions.

            As I’ve outlined here so far, the complexity of digital signature technology and its implementation is going to heighten rather than diminish the role of the Notary.  And, it is the logical leap from broad-based legislature initiative to specific rules and regulations that will determine how safe and secure the system is.

            As I said at the outset, these issues are the ones that relate to the whats, whys and hows.

As we discuss the details ourselves, we’re working from the premise that the principles remain the same, only the technology has changed.  Instead of a pen, it’s a computer… or a smart card.  Of course, though, the technology does raise some unique questions like “what is a seal?” but here are our thoughts.

            To address the changes these tools will eventually bring to the Notary profession, we at the National Notary Association are developing a list of items that will need to be addressed in the creation of the electronic Notary.

            These recommendations are guided by the following goals:  ease of administration, comparable treatment of signers, regardless of whether their transactions are paper-based or electronic, and a recognition of the higher costs associated with electronic notarizations.

            At this preliminary stage, we are suggesting a person performing electronic notarizations be commissioned as a traditional Notary.  Mastery of the principles and practices of notarization in relation to pen-and-ink signatures and paper documents provides a solid ethical and experience base for operating with electronic documents and signatures. 

            However, it may be that a Notary should receive additional training before becoming an electronic Notary.  While we also suggest that there be only one commission with one term – in the interest of easier administration – we believe state Notary regulating agencies could consider some form of “proof of mastery” of the technology before authorizing the traditional Notary to obtain a notarial digital signature.

            Because we do not believe that electronic notarizations would be of an intrinsically higher monetary value than transactions using traditional notarization, we do not think the bond requirements would need to be increased.

There is a thought, however, that in order to qualify an individual as an electronic Notary, in addition to proof of some form of technical understanding and competency, that a separate bond might be sought.

            A bond is not liability insurance and does not protect the Notary.  It protects the public by ensuring that the principal – in this case the Notary – is obligated to conform to a certain high level of performance. 

            It is a tangible representation of obligatory performance.  As an example, certification authorities are required to obtain very high bonds – a million dollars or more.  This is not an insurance policy that protects them if their system is breached or there is some other failure.  If there is a loss, the harmed party is paid and the surety company goes back after the certification authority for reimbursement. 

            What it does do is really make the certification authority very vigilant about the systems it maintains to secure its system.  One is a lot more careful about performance if he understands there is a financial penalty associated with the failure to meet that standard. 

            Travel agents and contractors are required to post bonds not for protection of themselves but to ensure their customers that the agents or contractors are being “forced,” if you will – to standards of conduct because we trust them to perform to a certain level.

            In this case, we may want Notaries who work in an electronic environment to be qualified to a higher degree, that is, be bound to act by this “hammer of penalty” if they fail.  Rather than pay, they will make sure they have the required skills and knowledge to perform electronic notarizations to the extent that they will not be exposed to any financial penalty if they don’t.

            Of course, there is the issue of the seal but the general consensus is that the information contained in the seal now would be integrated into the message of the digital certificate and therefore, be considered the official seal. 

            In the realm of recordkeeping, some states are maintaining that in spite of the electronic nature of the transaction, recordbooks should be paperbound.  Concerns have been voiced about the manipulation of electronic journal entries and how, as the case in California, one would record a thumbprint in an electronic journal.

            Finally, there is the issue of fees.  We are struggling with the issue as it points to the conflicts between our goal of providing comparable treatment of the two methods of notarizations and our goal of recognizing that fees charged for notarial services should be high enough to provide Notaries with fair reimbursement for their personal sacrifice of time, effort, expenses, and potential liability.

            The expenses associated with electronic notarization may be substantial since the Notary has to provide a computer and internet hook-up, obtain a digital certificate and get the training needed to perform electronic notarizations properly.

            Already consumer groups are unhappy with the recent federal legislation because while it is an “opt-in” system, that is the individual has the right to choose electronic communications or not, there is the belief that consumers will be enticed by discounts to give up paper-based communications while the fees for insisting on paper records and physical signatures will become too exorbitant for most consumers to comfortably select as a viable option.

            I think that I could safely argue that notarial fees need to be increased across the board.  Almost every state has set its fees at a rate that conflicts with the significance of the act, so that it may be possible, as these issues are raised, that notarial statutes can be amended to more adequately reflect the cost of the service provided.

            Since it is reasonable to expect the notarial role and function to change, the idea of commissioning or licensing Notaries by virtue of instituting higher qualification standards as well as proof of notarial proficiency would be appropriate considerations for the state regulating offices. 

            And finally, there are within and beyond the scope of technology, the ethical considerations.  Recognizing the Notary’s unique situation underscores how necessary standards of conduct and practice become in support of professional responsibility – how to respond consistently to ethical and practical situations while maintaining integrity.

            This has never been more relevant as ethical codes are introduced to show a profession’s promise to the world that its practitioners are trained and trustworthy. 

            In 1998, the National Notary Association published the Notary Public Code of Professional Responsibility to guide Notaries when statutes, regulations and official directives are silent.

            The complete Code is a sizable document about thirty pages in length.  It contains narrative illustrations and explanations of ethical choices as well as extensive legal commentaries and citations to statutory authority.

            The standards of the Code are of two types.  The majority are principles, policies and practices that have proven over the years to be effective in helping Notaries perform their primary function of detecting and deterring fraud; in minimizing fraud, these standards also work to reduce the Notary’s exposure to lawsuits.

            The remainder are standards derived from the conviction that a public office in a democracy must serve all persons equally.  Because the acts of Notaries affect individual rights and property under both civil and criminal law, it is imperative that professional standards for Notaries be widely acknowledged as just, fair and well-developed. 

To that end, the standards of the Code were drafted with input from representatives of occupational fields with a large constituency of Notaries.  Also contributing were state and local officials who regulate the activities of Notaries as well as legal, business and surety experts, and professors from academia.

            The Code is based upon ten widely accepted “Guiding Principles” and are general rules for responsible conduct.

            Each Principle in turn embraces particular “Standards of Professional and Ethical Practice.”  The “Standards of Professional and Ethical Practice” are exemplified by “Illustrations” posing problematic situations that are common or typical for Notaries.  And, for each “Illustration” an “Ethical Imperative” or “Professional Choice” indicates the course of action best exemplifying the pertinent Guiding Principle and Standard of Professional and Ethical Practice.

            The Ethical Imperative identifies an action that, if not taken, would constitute a clear and serious violation of the Notary’s fundamental role as an impartial witnessing official, as defined in the Guiding Principles.

            The Professional Choice identifies an action that, if not taken, would undermine or lessen the Notary’s effectiveness as a fraud-deterring public servant.

            I’d like to take just a moment to read the ten guiding principles.  I think it will help crystallize in all our minds, what the function and responsibility of the Notary is:

1)      The Notary shall, as a government officer and public servant, serve all of the public in an honest, fair and unbiased manner.

2)      The Notary shall act as an impartial witness and not profit or gain from any document or transaction requiring a notarial act, apart from the fee allowed by statute.

3)      The Notary shall require the presence of each signer and oath-taker in order to carefully screen each for identity and willingness, and to observe that each appears aware of the significance of the transaction requiring a notarial act.

4)      The Notary shall not execute a false or incomplete certificate, nor be involved with any document or transaction that is false, deceptive or fraudulent.

5)      The Notary shall give precedence to the rules of law over the dictates or expectations of any person or entity.

6)      The Notary shall act as a ministerial officer and not provide unauthorized advice or services.

7)      The Notary shall affix a seal on every notarized document and not allow this universally recognized symbol of office to be used by another or in an endorsement or promotion.

8)      The Notary shall record every notarial act in a bound journal or other secure recording device and safeguard it as an important public record.

9)      The Notary shall respect the privacy of each signer and not divulge or use personal or proprietary information disclosed during execution of a notarial act for other than an official purpose.

10)   The Notary shall seek instruction on notarization, and keep current on the laws, practices and requirements of the notarial office.

The Code was initiated and developed to serve as tool to guide and educate not only Notaries, but lawmakers, public administrators, private employers and yes, even users of notarial services.

It is a moral imperative for progressive change and a catalyst for improving Notary statutes and conventions in commerce and law.  We believe that widespread implementation of the Code will reduce fraud and litigation.

            And, any Notary’s adherence to the Code brings confidence that he or she is acting in accord with the highest ethical and professional standards.

We are now at a unique crossroads:  The world is growing smaller, we are becoming more global, technology is altering our time-tested traditions and habits…I could go on, but you get the idea.

I have tried to present a picture of how this is affecting the office of Notary Public and the customs and practices by which it is known.

I believe the future of the Notary offers profound opportunities for the office and unimaginable benefits for the public being served.  The seemingly insignificant notarial officer must be an integral part of what is happening here – and throughout the world.  If the states proceed unchecked to dismiss Notary participation – or what I call intervention – in important transactions, if these activities become remote and automated, ours will not be the only loss – the essence of public recording as we know, it may also become consolidated and fall victim to the allure of faster, cheaper, easier, and then the ultimate loss – elimination, along with all the accompanying assurances, security and integrity, that each provided the public.

Technology companies are in love with technology and like the idea that they can sell their product for its cost effectiveness.  The financial community likes the speed.  And the legal community seeks convenience. 

Each has its own motivations.  Tech companies see the opportunity for such exponential growth and the requisite revenues that business models rely on in units as small as ‘clicks.’  The financial community has calculated its risk and determined it’s acceptability.  The legal community, apart from public prosecutors and some others, not only established the rules for electronic commerce, but in further analyzing their work have determined that the ultimate interpretation of the laws can evolve over time by the courts – which only enhances the public’s reliance on their services.

I talked earlier about the civil law Notary.  In civil law countries, they will tell you that the most important notarial function is to prevent litigation:  the Notary legitimizes documents, he conserves documents and he safeguards documents.  Their approach to electronic transactions is not to eliminate the existing tradition but enhance it within the electronic environment.  They are hoping the United States takes the same approach.

The current trends that I have identified are going to truly change the character of the Notary office and have the potential for returning it to a more principal role in preserving public trust.

·        By the states interest in developing civil law Notary practitioners, they are acknowledging the value of the impartial trusted third party.  Though at a more prestigious level, it will ultimately enhance the reputation of the common law Notary – and the obligation to act with greater proficiency and expertise. And, because activity of the civil law Notary will very likely be limited to international transactions, such as Alabama, or broad-based but internationally focused activity like that of Florida, the scope of the traditional Notary can remain unchanged while benefiting from the associated influences of a legal professional.

·        I don’t think more needs to be said regarding the Notary’s part in the digital signature revolution.  The danger of their intervention being eliminated or greatly reduced is real but the threat to the consumer as well as that to fraud deterrence may effectively defeat this movement.

If the Notary’s role in electronic transactions is retained, it will become more strategic.  The technology by its very nature begs many questions that traditional paper-based transactions do not.  The Notary can be a pivotal player in securing document transactions.

·        With the adoption of technology, the Notary will be required to become more knowledgeable, not only about notarial practice, but how to operate in the electronic environment.  More stringent application and qualification procedures will result in notarial officials who can be engaged with greater confidence, whose acts will not be challenged, and on whose assurances we can rely with a high degree of trust.

·        And finally, as the office earns greater recognition through its relationship to the civil law tradition, and greater responsibilities through its intervention in electronic transactions and its more rigorous qualification procedures, it will have earned greater respect by its adherence to standards of conduct and performance that are based on the highest professional and ethical standards of the notarial office.

This, I believe, is the future before us – and the Notary.