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NC Senate Bill 552

Legislation

State: North Carolina
Signed: June 23, 2023

Effective: July 01, 2024
Chapter: 2023-57

Summary
Senate Bill 552 amends last year’s remote electronic notarization bill before it took effect, makes Notary seal changes, and requires all Notaries to keep a journal of notarial acts, among other changes.
Affects
Amends Sections 10B-5, 10B-10, 10B-20, 10B-25, 10B-31, 10B-36, 10B-50, 10B-51, 10B-54, 10B-55, 10B-60, 10B-101, 10B-102, 10B-105, 10B-106, 10B-107, 10B-117, 10B-126, 10B-127, 10B-128, 10B-134.1, 10B-134.3, 10B-134.5, 10B-134.7, 10B-134.9,10B-134.11, 10B-134.13, 10B-134.15, 10B-134.17, 10B-134.19, 10B-134.21, 10B-134.23, 10B-134.25, and 10B-200 of, and adds Sections 10B-4, 10B-38 to, the North Carolina General Statutes.
Changes

Definitions

  1. Clarifies that “‘electronic notarial act’ and ‘electronic notarization’“ means an official act by an Electronic Notary Public that involves electronic documents. documents and the personal appearance of the principal.
  2. Repeals the definition of “‘remote Electronic Notary public’ and ‘remote Electronic Notary.’“
  3. Defines “remote electronic notarial act.”
  4. Clarifies that an Electronic Notary Public is a Notary who has the capability of performing electronic and remote electronic notarial acts.
  5. Clarifies that “communication technology” is an electronic device, process, or system that allows an Electronic Notary and a remotely located principal to communicate with each other simultaneously by sight and sound using audiovisual technology and that makes reasonable accommodations for remotely located principals with vision, hearing, or speech impairments.
  6. Defines “custodial services” to mean services approved by the Secretary and selected by the Notary to provide long-term storage of the electronic journal and communications technology recordings.
  7. Defines “custodian” to mean the person providing the custodial services, and further clarifies that the custodian may but need not be the same as the depository.
  8. Defines “depository” to mean the person or platform providing the depository services.
  9. Defines “depository services” to mean storage services provided by the platform of the electronic journal entries and communications technology recordings as they are entered.
  10. Clarifies that the term “platform” means the online platform utilizing the communication technology, credential analysis, and identity proofing and including communication technology recordings, geolocation, electronic journals, and depository services in order to perform the remote electronic notarial act.
  11. Defines “geolocation” to mean identification of the geographical location of a remotely located principal or device used by a remotely located principal through digital information processed via the internet.
  12. Strikes the definition of the term “Remote Electronic Notary Public” or “Remote Notary.
  13. Clarifies that a Notary who performs remote electronic notarizations is not called a “Remote” Electronic Notary but rather an Electronic Notary.
  14. Clarifies that a Notary who seeks to register to perform remote electronic notarizations undergoes Electronic Notary registration, not remote Electronic Notary registration.
  15. Defines “self-attestation” to mean a remotely located principal’s written, verbal, or electronic declaration and confirmation of that remotely located principal’s geographical location at the time of the remote electronic notarial act given under penalty of perjury.
  16. Clarifies that these provisions take effect July 1, 2024.

Electronic Notary Registration

  1. Clarifies that a Notary must register the capability of performing electronic or remote electronic notarizations in accordance with rules adopted by the Secretary of State before performing electronic or remote electronic notarial acts.
  2. Clarifies that registration as an Electronic Notary includes authorization to perform remote electronic notarial acts if the Electronic Notary complies with all requirements and the rules related to remote electronic notarial acts.
  3. Provides that before performing electronic notarial acts, an Electronic Notary must register the capability to notarize electronically by notifying the Secretary of State of all technology the Electronic Notary will use to create an electronic signature and also all licensed platforms, if any, that the Electronic Notary will use to perform remote electronic notarizations.
  4. Authorizes a Notary to renew an Electronic Notary Registration at the same time that the Notary applies for recommissioning.
  5. Provides that within 10 business days after the changes involving a licensed platform, the Notary shall electronically transmit to the Secretary of State a notice of the change of information signed with the Notary’s official electronic signature. in the official name in which the Electronic Notary was commissioned.
  6. Clarifies that these provisions take effect July 1, 2023.

Electronic Notary Course

  1. Extends the length of the mandatory course to become an Electronic Notary from 3 to 4 hours.
  2. Clarifies that a Notary who wants to perform remote electronic notarial acts must undergo the same training course and pass the same examination as an Electronic Notary.
  3. Clarifies that the course and the basis for the examination must be notarial laws, procedures, technology, and ethics as they pertain to electronic and remote notarization.
  4. Clarifies that these provisions take effect July 1, 2024.

Security Measures

  1. Clarifies if a Notary’s electronic signature or seal has been compromised the Notary must, within 10 days, (a) Inform the appropriate law enforcement agency in the case of theft or vandalism and (b) Notify the appropriate register of deeds and the Secretary of State in writing and signed in the official name in which he or she was commissioned.
  2. Provides that the failure of an Electronic Notary to produce within the time period set out in the Department’s request any record required by a rule adopted under G.S. 10B-126 shall result in the suspension of the Electronic Notary’s power to act as a notary until the Secretary of State reinstates the Notary’s commission.
  3. Provides that upon resignation, revocation, or expiration of an Electronic Notary commission, or death of the Notary, all notarial records required by statute or rule shall be delivered to an approved custodian selected by the Notary.
  4. Provides if an Electronic Notary contracts with an approved provider of an electronic seal and electronic signature or licensed platform for a device used to create electronic signatures or for electronic notarization or remote electronic notarization services, and the contract either expires or is changed during the Electronic Notary’s term of office, the Notary must cease performing electronic and remote electronic notarizations until: (a) A new contract is executed or a new device is duly issued or registered to the notary; and (b) An electronically signed notice is sent to the Secretary that shall include the starting and expiration dates of any new registration or contract term and any other new information at variance with information in the most recently executed electronic registration form.
  5. Provides that upon compliance with G.S. 10-B-127, when an Electronic Notary’s commission expires or is resigned or revoked, or when the Electronic Notary dies, the Notary or the Notary’s representative must notify the Secretary of State within 45 days.
  6. 5. Clarifies that these provisions take effect July 1, 2024.

Remote Electronic Notarial Act Procedures

  1. Clarifies that in performing an electronic or remote electronic notarial act, the words “Electronic Notary Public” or “Electronic Notary Public Utilizing Communication Technology” must be attached to, or logically associated with, the electronic document by the Electronic Notary, all of which must be immediately perceptible and reproducible in the electronic record to which the Notary’s electronic signature is attached.
  2. Prohibits an Electronic Notary from performing a remote electronic notarization if the notarial act would be a verification or proof.
  3. Strikes a death beneficiary form that requires an acknowledgment from the types of documents that cannot be performed with a remote electronic notarization.
  4. Requires the communication technology used for a remote electronic notarization to have sufficient video quality to allow a clear and unobstructed visual observation of the face of each participant and the document presented by the remotely located principal during credential analysis for a sufficient time to allow the remote Electronic Notary to verify the remotely located principal’s identity under G.S. 10B-134.11.
  5. Requires that before performing a remote electronic notarial act the remotely located principal does not appear in the judgment of the Electronic Notary to be incompetent, lacking in understanding of the nature and consequences of the transaction requiring the notarial act, or acting involuntarily, under duress, or undue influence.
  6. Provides that if the remotely located principal is a member of the Armed Forces of the United States, or the spouse or dependent of the member, as described in G.S. 10B-134.1(10)b., the Electronic Notary may rely on that remotely located principal’s written, verbal, or electronic declaration and confirmation under penalty of perjury as to remotely located principal’s location and military or familial status.
  7. Requires the location of the remotely located individual to be verified by geolocation via communication technology or by self-attestation.
  8. Requires an Electronic Notary to refuse to perform a remote electronic notarial act if the Electronic Notary has reasonable grounds to believe the remotely located principal appears in the judgment of the Electronic Notary to be incompetent, lacking in understanding of the nature and consequences of the transaction requiring the notarial act, or acting involuntarily, under duress, or undue influence.
  9. Requires an Electronic Notary to refuse to perform a remote electronic notarial act if unless an oath that is not associated with a document is being administered, the Electronic Notary’s electronic notarial certificate and seal cannot be attached to the electronic document using an electronic technology that renders any subsequent change or modification to the document evident.
  10. Provides that an aggrieved person is not prevented from using failures in the remote electronic notarization process, along with other grounds, to challenge the validity or enforceability of the remote electronic notarization based on incompetence or another basis not related to the remote electronic notarial act or constructive notice provided by recording of the electronic record.
  11. Requires the Secretary of State to adopt a rule authorizing a third-party vendor, including a licensed platform, to act as a depository or custodian of electronic journals.
  12. Authorizes an Electronic Notary to surrender the electronic journal to the Electronic Notary’s employer upon termination of employment if the electronic journal consists of remote electronic notarizations made in the conduct of the employer’s business, but the Electronic Notary shall also keep and maintain an accurate backup copy of the journal for 10 years after the last remote electronic notarization entered into the electronic journal.
  13. Requires all records of journal entries and communication technology recordings to be securely stored in a depository under the control of the Electronic Notary or with a duly appointed custodian that is a third-party vendor approved by the Secretary of State.
  14. Provides that the failure of an Electronic Notary to produce within the time period set out in the Secretary of State’s request any record required by a rule shall result in the suspension of the Electronic Notary’s power to act as a Notary until the Secretary reinstates the Notary’s commission.
  15. Requires the Secretary of State to adopt rules regarding depository and custodial services.
  16. Clarifies that all licensees and third-party vendors must meet all standards established by the Secretary of State for the provision of services to Electronic Notaries in North Carolina for remote electronic notarization services.
  17. Authorizes the Secretary of State, in the Secretary’s discretion, to require a licensee or third-party vendor who violates a statute or rule to provide an Electronic Notary with proof that a remote electronic notarization issue was caused in whole or in part by the licensee or third-party vendor’s technology.
  18. Authorizes the Secretary of State to adopt rules necessary to administer and enforce Chapter 10B in order to achieve the purposes of the act.
  19. Clarifies that the Secretary of State must adopt rules necessary to establish standards, procedures, practices, forms, and records relating to remote electronic notarial acts to implement this Part, including any additional educational requirements for Electronic Notaries regarding remote electronic notarizations.
  20. Clarifies that these provisions take effect July 1, 2024.

Notary Seal

  1. be a Notary, unless the purchaser presents a Notary commission issued by the Secretary of State and one of the following applies: (a) In the case of a purchaser appearing in person, the vendor or manufacturer identifies this individual as the person named in the commission, through either personal knowledge or satisfactory evidence of identity. (b) In the case of a purchaser ordering a seal by mail or delivery service, the vendor or manufacturer confirms the Notary’s standing as a commissioned Notary as established by rules issued by the Secretary, which may include the establishment of an internet site or other means maintained by the Secretary for this purpose.
  2. Clarifies this provision is effective July 1, 2023.

Journal and Confidentiality of Records

  1. Requires Notaries to maintain a journal of all notarial acts performed in a manner required for that type of notarial act and in accordance with rules adopted by the Secretary of State.
  2. Requires a Notary to maintain the confidentiality of a principal’s documents and information at all times.
  3. Clarifies that all journal entries and communication technology recordings created by a Notary are not public records under G.S. 132-1.
  4. Clarifies these provisions are effective July 1, 2023.

Notary Commission; Status Changes

  1. Provides that notwithstanding subdivision (8) of subsection (b) of G.S. 10B-5, the Secretary of State may allow applications for commissions to be submitted electronically, in the format prescribed by the Secretary.
  2. Requires the Secretary of State to establish a process for submission of the signature of the applicant prior to commissioning, which may include electronic submission.
  3. Clarifies that within 45 days after the change of a Notary’s residence, business, or any mailing address or telephone number, the Notary shall send to the Secretary by an online notification to the extent it is made available by the Secretary, or by fax, e-mail, or certified mail, return receipt requested, a signed notice of the change, as the law requires now.
  4. Clarifies that information provided by a Notary to report a change of the Notary’s residence, business, or any mailing address or telephone number shall be treated as if submitted in an application under G.S. 10B-7 or G.S. 10B-106.
  5. Clarifies that within 45 days after the legal change of a Notary’s name, the Notary shall send to the Secretary by an online notification to the extent it is made available by the Secretary, or by fax, e-mail, or certified mail, return receipt requested, a signed notice of the change as the law requires now.
  6. Clarifies that a Notary who resigns the Notary’s commission shall send to the Secretary by an online notification to the extent it is made available by the Secretary, or a signed notice by fax, e-mail, or certified mail, return receipt requested, as the law requires now.
  7. Clarifies that Notaries who cease to reside in or maintain a regular place of work or business in North Carolina, or who become permanently unable to perform the duties of a Notary must resign the commission and deliver their seals by hand delivery, certified mail, return receipt requested, or other means offered by the U.S. Postal Service allowing confirmation of delivery by signature.
  8. Requires a Notary to deliver the Notary’s seal to the Secretary of State within 45 days of the expiration or resignation of the commission by hand delivery, courier service, certified mail, return receipt requested, or other means offered by the U.S. Postal Service allowing confirmation of delivery by signature.
  9. Clarifies these provisions are effective July 1, 2023.

Enforcement and Penalties

  1. Authorizes the Secretary of State to issue a warning, restriction, suspension or revocation for a violation of rules adopted by the Secretary, and on any ground for which an application, registration, certification, approval, or license may be denied.
  2. Clarifies that any period of restriction, suspension, or revocation shall not extend the expiration date of a commission. commission, registration, certification, approval, or license issued.
  3. Provides that law enforcement agents of the Secretary of State have all powers and authority of law enforcement officers and may conduct any investigation within or outside of North Carolina as the Secretary deems necessary to determine whether any person has violated or is about to violate any provision of G.S. Chapter 10B or the rules adopted pursuant to G.S. Chapter 10B.
  4. Provides that the files and records of the Secretary of State related to criminal investigations and enforcement proceedings undertaken pursuant to G.S. Chapter 10B are subject to the provisions of G.S. 132-1.4.
  5. Clarifies that the files and records of the Secretary of State relating to noncriminal investigations and enforcement proceedings undertaken pursuant to G.S. Chapter 10B shall not be subject to inspection and examination pursuant to G.S. 132-6 while the investigations or proceedings are pending, except as provided by G.S. 1A-1.
  6. Provides that any information obtained by the Secretary of State from any law enforcement agency, administrative agency, or regulatory organization on a confidential or otherwise restricted basis during an investigation or enforcement proceeding undertaken pursuant to G.S. Chapter 10B shall be confidential and exempt from G.S. 132-6 to the same extent that it is confidential in the possession of the providing agency or organization.
  7. Provides that a vendor or manufacturer who fails to comply with G.S. 10B-36(e) in providing a seal to a person purporting to be a Notary without presentation of the Notary commission shall be subject to a fine of $1,000 for each violation and further provides that a violation shall not preclude the civil liability of the vendor or manufacturer to parties injured by failure to comply with G.S. 10B-36(e).
  8. Provides that any person who knowingly creates, manufactures, or distributes a Notary seal for the purpose of allowing a person to act as a Notary without being commissioned and registered in accordance with G.S. Chapter 10B shall be guilty of a Class G felony.
  9. Clarifies these provisions are effective July 1, 2023.

Notary Fees

  1. Clarifies that the maximum fee of $10 for acknowledgments, jurats, verifications or proofs is per notarized principal signature.
  2. Provides that the maximum fee for an electronic acknowledgment or jurat is $15 per electronically notarized principal signature.
  3. Provides that the maximum fee for an electronic oath or affirmation without a signature, is $15.00 per person, except for an oath or affirmation administered to a credible witness to vouch for the identity of a principal or subscribing witness.
  4. Clarifies that the maximum fee of $25 for a remote electronic notarization is per notarized principal signature.
  5. Clarifies that the travel fee authorized to be charged is actual mileage at the federal business mileage rate.
  6. Clarifies that these provisions take effect June 23, 2023.

Other Changes

  1. Extends the emergency video notarization authorization until July 1, 2024.
  2. Requires the Secretary of State to begin rulemaking to implement the remote electronic notarization law prior to July 1, 2024.
Analysis

Last year the North Carolina General Assembly passed, and the Governor signed, House Bill 776. That bill enacted remote electronic notarization laws and provided standards for Notaries to register to perform these notarial acts and for how Notaries are to perform them. Even before that new law was set to take effect on July 1, 2023, now Senate Bill 552 has been enacted to amend House Bill 776 and push out the effective date until July 1, 2024. During the intervening time, the Secretary of State is to publish rules to implement the new law. As for the bill itself, it covers more than just remote electronic notarization. It also touches on Notary seals, the fees Notaries may charge, and requires all Notaries to keep a journal. Because there are different effective dates for different sections of the bill, the bill’s provisions noted under each heading in the “Changes” section above will contain the date when those provisions take effect. The reader should understand that the effective date noted at the top of the bill refers to when the remote electronic notarization provisions take effect. Due to system limitations, we are unable to note various effective dates in that field.

Read Senate Bill 552.

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