North Carolina now allows fully-electronic, paperless real estate closings.
my son was in grade school and received letters in cursive writing from
my mother, he asked me to read them to him because he could not.
Schools no longer teach cursive, or only teach it in a very limited
way. To this day, my son has a hard time signing his name to
documents such as his application to Boy Scouts. It turns out this
all may not matter.
On May 5, 2017, North State Bank conducted the first fully-electronic
mortgage closing in North Carolina. The event, which took a full
year to plan, was so momentous that the North Carolina Secretary of
State and North State Bank’s president attended to witness the event,
and a representative of Investors Title Insurance Company, which
provided the title insurance, monitored the closing. The borrowers
and the eNotary were present at a bank branch in Hickory while the
closing attorney participated by video teleconference from his office in
Charlotte. The borrowers signed everything through a digital pad,
and the eNotary attached a digital representation of the notary seal
Here is a summary of the legal underpinnings that allowed this to happen.
On August 2, 2000, the North Carolina General Assembly adopted the Uniform Electronic Transactions Act.
Among many provisions, this Act allows the use of an electronic
signature, which is “an electronic sound, symbol, or process attached
to, or logically associated with, a record and executed or adopted by a
person with the intent to sign the record.” The definition is very
broad and allows a lot of flexibility in adopting and using electronic
The Act, however, specifically disallows
electronic signatures in a number of situations such as the signing of
wills and trusts, notices to cancel utility services, notices of default
preceding foreclosures or evictions, and documents accompanying the
transportation or handling of hazardous, toxic, or dangerous materials.2 Electronic signatures can only be used if all parties to the transaction consent to their use.
Besides the need for electronic signatures,
there must be a way to notarize documents electronically. On
September 13, 2005, the North Carolina General Assembly adopted the Electronic Notary Public Act.
An eNotary must be a licensed North Carolina notary, take an additional
three-hour training class, and register his or her certification to
perform electronic notarial acts with the North Carolina Secretary of
State. An eNotary is empowered to affix to an electronic document
an electronic signature and seal containing all of the information on a
regular notarial seal when the Secretary of State has approved the
eNotary’s electronic information. Significantly, the person
signing must still be in the presence of the eNotary; there is no way
for the eNotary to participate in a signing through teleconferencing.
In addition to authorizing electronic signatures, the Uniform Electronic Transactions Act
also allows for transactions to occur using solely “electronic
records,” meaning a record not on paper. This is the final piece
of the puzzle to allow for a total electronic transaction. There
are, however, some limitations. For consumer transactions that
require information to be provided in writing under applicable laws ‒
home mortgages, for example ‒ the information can be provided
electronically only if, among many requirements, the consumer has
affirmatively consented to an electronic transaction; and the consumer
has received a notice of his or her right to receive records on paper,
to withdraw consent, and to receive records in paper form. In
addition, the consumer must be notified of the hardware and software
requirements for access to, and retention of, the electronic
records. Finally, if a transaction is occurring solely by
electronic means, such as digitally signing on a website only, when the
law requires information to be provided in writing, the consumer still
must receive the documents in paper form.
As you can see, this is an evolving area of
commerce and law. There will still be a slow process of development
until we are more fully completing transactions with no paper, but we
are moving that direction. At Marshall, Roth & Gregory, P.C.,
we subscribe to an electronic signature service provider, and find that
our clients enjoy its ease of use. In addition, we will have an
eNotary available by October 2017. So . . . in conclusion, I am
1 For more information about the first all electronic closing, see the May 2017 issue of the Investors Title newsletter NC Connection.
2 This list is not comprehensive.
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