E-Closings: The Good & The Bad
For all my realtor friends out there: Do you have a client who travels all the time? How about a buyer or seller who is on vacation on the scheduled date of closing? Many title agencies utilize mobile notaries, powers of attorney, and mail away closings to combat the issue of absent clients. These tools all have their issues, though. Extended travel time of the documents in mail-away and mobile notary closings can lead to delayed funding. And with all these variations, your client just does not get the real and exceptional closing experience offered in-office. So, let’s talk about E-closings!
However, as of July 1, 2019, Tennessee’s Online Notary Public Act has gone into effect, allowing for Remote Online Notarization (RON) of electronic documents. This new act makes E-closings a viable and exceptional alternative to other mobile closings. RON allows a buyer or seller to electronically sign closing documents. RON also allows for those documents to be electronically notarized via video conference. Here’s what you need to know about E-Closings: The Good & The Bad.
The state of Tennessee requires the following:
1. that RON be completed by an authorized online notary public,
2. that the notarization be performed via two-way audio, and
3. video communication, and that the online notary public keep a secure electronic record of the notarization.
Online notaries public must work through a third-party vendor who specializes in RON. These vendors provide technological support for the notarization. This must include complying with the state guidelines. Third party vendors may have their own set of requirements, as well. Examples of these requirements are the signor using a laptop computer, rather than a phone or other smaller electronic device, to participate in the notarization. Title agents may also have specific requirements for RON dictated by their underwriters.
E-Closings promote efficiency and are environmentally friendly. Clients can close from anywhere in the United States. Buyers and sellers can close from the comfort of their own home if they choose, while still receiving a personal and individualized closing from the closing agent. With an E-Closing, you have the opportunity to provide a technologically advanced closing experience with NO giant stacks of paper changing hands.
The Bad (Potentially)
A potential drawback to E-Closings is that many lenders are not yet accepting electronically signed buyer documents. Many lenders prefer wet signatures on documents such as the Note and Uniform Residential Loan Application. Until RON becomes more mainstream, E-Closings may not be an option for transactions involving a lender. Always verify with your title agency and lender that an E-Closing is a viable option for your closing.
What an E-Closing Looks Like
Before the closing, your title agent will provide the closing documents and a copy of the client’s photo ID to the third-party vendor. At closing, the buyer or seller, the online notary public, and the closing agent all participate in a video conference through the third-party vendor’s online platform. The documents are visible on screen, and the closing agent is able to explain the documents to the buyer or seller as they are being electronically signed. The online notary public affixes an electronic notary stamp in each applicable area and delivers the documents electronically to the closing agent.
If you would like to learn more about e-closings and all of the services offered by Oak Lane Law & Title, check us out at www.oaklanelaw.com. And, if you haven’t already, follow us on social media! We hang out on Facebook, Instagram, Twitter and Linkedin. And as always, we would love to work with you as your TN outsourced in-house counsel or go-to title agency. Check out our subscription legal services by clicking HERE. Check out our title agency services by clicking HERE. We would love the opportunity to help you build your business and close your deals!