New Colorado Law Bolsters Record Keeping, Education

May 18, 2009

COLORADO — The Centennial State has long required records to be kept for some notarial acts, but a new state law expands that mandate to include all notarizations, joining a growing national trend toward stronger recordkeeping and accountability.

Senate Bill 111, which goes into effect on July 1, is the third piece of legislation enacted this year that creates or expands Notary recordkeeping requirements in part to combat the epidemic of mortgage fraud, a scourge that has hit Colorado hard. Colorado currently has the 10th highest incidence of mortgage fraud in the country, according to the latest report from the Mortgage Asset Research Institute, and the state has ranked in the top 10 four out of the last five years. Illinois and Montana are the other states to recently pass recordkeeping laws.

Previous Colorado law required Notaries to keep a record only for acknowledgments related to real estate titles. Now, all notarial acts — including jurats and copy certifications — require some kind of record. For self-employed Notaries, such as Signing Agents, that means maintaining a journal. For Notaries who work for businesses, the employer may keep documents or electronic records related to notarizations that contain all the information that would be included in a journal entry. However, there is nothing in the law that prohibits Notary-employees from maintaining a journal that reflects their work-related notarizations, and it is always considered a best practice to keep a record of all notarizations.

In addition, SB 111 expressly prohibits an employer from preventing a Notary-employee from maintaining a journal in the regular course of employment. This requirement was one of the elements retained from the old Notary law. A journal entry protects the public and the Notary in the event that a document is lost, falsified or contested. It further deters fraud by discouraging individuals who will not want to sign a journal or leave other potentially incriminating information in it.

The law also lays the groundwork for mandatory Notary education by authorizing the Secretary of State to create a training program. Observers expect a mandatory education rule ultimately will be issued.