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What Notaries Need To Know About Disqualifying Interest

Disqualifying interest in a notarization

Updated 1-16-17. A Notary’s impartiality is a critical element of every notarization. Anything that indicates a conflict of interest could undermine the public’s ability to trust that you are fulfilling your duties honestly and without any undue influence.

While not everything that “looks” like a conflict of interest is one, there are times when your connection to the signer or the transaction might inappropriately influence your conduct when completing the notarization. This is known as “disqualifying interest.”

What Is 'Disqualifying Interest'?
 

But what constitutes “disqualifying interest”? Is it when the Notary would receive some kind of material benefit from the document being notarized? When the Notary is married to the signer? Or is it when the Notary is a sibling, child or other relative of the signer? Depending on state law, the answer may include any or all of the above. Check out the short video below to get a better understanding of what constitutes disqualifying interest.

Why Notaries Should Always Act Impartially
 

Why should Notaries always act impartially? Simply put, the legality of a document could be challenged if a party harmed by the notarization proves the Notary’s impartiality was compromised. Consider the following scenario. A property owner sells a home to a buyer and finances the loan. The buyer defaults on the loan and declares bankruptcy. The owner loses $19,000 in the bankruptcy because the deed of trust was invalidated. The Notary who notarized the deed of trust was named as trustee in the deed of trust. In this actual case, the West Virginia Supreme Court in Galloway v. Cinello ruled that the Notary negligently notarized the deed of trust. As a result, the Notary could be held liable for the owner’s losses.

Self-Interest
 

Some cases of disqualifying interest are easy to spot. For example, a Notary must never notarize his or her own signature — there’s no way a Notary can be an impartial witness in such a situation.

As a general rule, it’s inappropriate to notarize a signature on any transaction in which the Notary is named in a document or would receive a direct benefit from the transaction.

However, some states make specific exceptions to this rule. Kansas and California broadly permit a Notary who is an agent, employee, insurer, attorney, escrow officer or lender for a person with a financial or beneficial interest in a document to notarize transactions involving the Notary’s client. Nevada is more restrictive, allowing only attorneys to notarize signatures on an instrument or pleading if the attorney has received a fee for legal services related to the instrument or pleading beyond the statutory Notary fee. Texas permits employees to notarize an acknowledgment or proof of a written instrument in which the employee's company has an interest. Texas also permits a shareholder in a corporation to notarize corporate documents unless the corporation has 1,000 or fewer shareholders or the Notary owns more than one-tenth of one percent of the corporation's issued and outstanding stock.

Florida permits employees to notarize an employer’s signature provided they do not receive any benefit other than their normal salary and any authorized Notary fee.

If you are unsure whether you have beneficial interest in a notarization, always check your state’s laws before proceeding. If there is any uncertainty whether you have an inappropriate interest in the document, have another Notary handle the notarization instead.

Relational Interest
 

If the Notary is related to the signer in some way, a disqualifying interest may exist. State laws vary widely on the issue of notarizing for family members. Most states are silent on the matter, thus permitting Notaries to notarize for any relative. Others make exceptions for specific relatives — Arizona allows Notaries to notarize for blood relatives, but not for relatives related by marriage (such as a brother-in-law or father-in-law) or for relatives by adoption.

Florida prohibits notarizing signatures of spouses, sons, daughters, mothers or fathers, but allows Notaries to conduct weddings for relatives. Nevada — arguably with the most restrictive statute — includes a prohibition against notarizing for relatives related by blood and marriage, and includes adopted children, half- and step-relatives as well as domestic partners.

Again, always check your state’s laws if you are not sure if your connection to a signer constitutes beneficial interest, and when in doubt, ask a different Notary with no interest to notarize instead.

David Thun is an Associate Editor at the National Notary Association.

22 Comments

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Eileen Wood

22 Feb 2016

Nevada does allow a notary to notarize for ex-relatives-by-marriage, provided the document being notarized doesn't provide any benefit to the notary or his/her immediate family. For instance, I could notarize a document for my ex-husband or his parents provided our children were not mentioned in, or would benefit by, whatever the document pertained to.

National Notary Association

23 Feb 2016

Hello. Nevada Notary law defines a relative as (NRS 240.065[3]): (a) A spouse or domestic partner, parent, grandparent or stepparent; (b) A natural-born child, stepchild or adopted child; (c) A grandchild, brother, sister, half-brother, half-sister, stepbrother or stepsister; (d) A grandparent, parent, brother, sister, half-brother, half-sister, stepbrother or stepsister of the Notary’s spouse or domestic partner; and (e) A natural-born child, stepchild or adopted child of a sibling or half-sibling of the Notary or of a sibling or half-sibling of the Notary’s spouse or domestic partner.

susan cochran

22 Feb 2016

unable to read the text because of this verificqtion and comment section so I cannot offer any other comment.

National Notary Association

23 Feb 2016

Hello. If you are having issues viewing an article, please contact us at social@nationalnotary.org with a description of the problem and what type of device you are viewing the article with, and we will try to assist you.

Stacy

01 Mar 2016

I am wondering if a Nevada notary is receiving an incentive/commission as a result of a loan signing that includes a notarized document, can they notarize the docs or should they use another notary?

National Notary Association

02 Mar 2016

Hello. Nevada Notaries may not notarize a document if they have received or will receive as a direct result of the notarization any commission, fee, advantage, right, title, interest, property, or other consideration in excess of the authorized notarial fee. (NRS 240.065[1])

Elizabeth Silver

26 Sep 2016

In NY the law says that a notary cannot notarize documents if the notary is "a party to or directly and pecuniarily interested in the transaction". If I notarize a document for a project at my company, I would benefit because I would be helping the company to complete a business transaction. In NYS, would I be able to act or would I be precluded in such a case?

National Notary Association

27 Sep 2016

Hello. Executive Law 138 states that corporate stockholders, directors, officers and employees may notarize for other stockholders, directors, officers or employees if the notarizing officer is not a party to the transaction, either individually or as a representative of the corporation (EL 138)

Deborah Planet

16 Jan 2017

Please write about loan fraud and examples in the State of California

joe pfeiffer

16 Jan 2017

I am a notary in Tennessee. I am also clergy. If a couple is asking me to officiate their marriage I can easily perform the rite of marriage. However, if one of the couple is hospitalized and an affidavit to marry needs to be notarized. Can I notarize the license? (the fiance returns to the clerk to get the official license after presenting the notarized affidavit since the other fiance is hospitalized and unable to appear before the County Clerk).

National Notary Association

17 Jan 2017

Hello. Tennessee does not specifically address the example of clergy notarizing for a couple the clergy is performing a marriage for . However, in an opinion issued in 2010, the Tennessee Attorney General stated that a Notary should not perform an acknowledgment to which the Notary is a party to or has an interest in.

Alessandro

16 Jan 2017

Washington State seems to me more lax: RCW 42.44.080 - Standards for Notarial Acts states simply that (10) A notary public is disqualified from performing a notarial act when the notary is a signer of the document which is to be notarized.

Howard Loewenstein

24 Feb 2017

I wanted to know if you are working for a govt town and get called in for am meetign with your superiors and the town attorney who works for the same town and the attorney is the one kind of "holding" the meeting ,it is for adding 6 more months onto your initial probation in relation to your new job. well after this meeting is all said and done and they draft the document and you already signed it with others in same room. Can this town attorney/notary be legal and okay to be the one notarizing this document after he was the one "leading the charge" so to speak ? i would love any clarification on this, thanks much. is this conflict of interest? would this void that document?

National Notary Association

28 Feb 2017

Hello Howard. In order for us to answer your question, can you please tell us 1. What state you are located in and, 2. can you please clarify if the attorney signed or is named in the document, and 3. if your signature was notarized without you being present?

Josh

03 Mar 2017

I live in Massachusetts and work as a financial advisor for a firm. Our clients typically need to open new financial accounts which we will manage. I'm trying to determine whether there is a conflict for me to notarize forms for my clients or clients for other advisors at the firm. Opening the account itself provides no financial interest to me. If the account is funded and we charge advisory fees it's possible that there is some financial interest because if the firm is more profitable they might increase my salary, but I do not receive commissions for my clients or any other clients.

National Notary Association

06 Mar 2017

Hello. Massachusetts prohibits notarizing if the Notary is a party to or is named in the document that is to be notarized, if the Notary will receive a fee or benefit in excess of the state maximum fee for notarizations, or if the Notary has any financial interest in the subject matter of the document. If there is uncertainty on this issue, we strongly recommended having another Notary without any interest in the document perform the notarization instead just to be safe.

Samantha

25 Oct 2017

I live in New Jersey and just recently got my notary license and a translator certificate. Some one told me that it would be a conflict of interest if i both translated and notarize the same document. Is this true under the laws of NJ? I have tried to look online but haven't been able to find an answer.

National Notary Association

25 Oct 2017

Hello. If you have translated a document, you may not notarize your own signature on a statement verifying the translation is accurate. You would need to have another Notary notarize your signature on such a statement.

Alysha

28 Dec 2017

Hello, I am a notary in CA. I work for a Bank, certain transactions I receive a sales incentive on. Is this permitted if I am notarizing a document and then receiving this sales incentive?

National Notary Association

02 Jan 2018

Hello. “A notary public who has a direct financial or beneficial interest in a transaction shall not perform any notarial act in connection with such transaction. For purposes of this section, a notary public has a direct financial or beneficial interest in a transaction if the notary public: (a) With respect to a financial transaction, is named, individually, as a principal to the transaction. (b) With respect to real property, is named, individually, as a grantor, grantee, mortgagor, mortgagee, trustor, trustee, beneficiary, vendor, vendee, lessor, or lessee, to the transaction” (GC 8224) If you have any concern that your impartiality as a Notary might be challenged due to receiving the sales incentive for the documents, we would recommend having another Notary that does not receive a benefit from the documents perform the notarization instead to be on the safe side.

Aubree

22 Jan 2018

Hello, I am in Colorado. I am the Office Manager for my husband's company in which he needs certain documents notarized (mostly for DMV purposes). Would I be permitted to notarize for him as long as I am not named in the document?

National Notary Association

23 Jan 2018

Hello. Here is what the Colorado Secretary of State's office website says about notarizing for a spouse: “You are not prohibited from witnessing and notarizing the signatures of a spouse or other relatives. However, a notary public who has a disqualifying interest in a transaction cannot legally perform any notarial act in connection with the transaction. If the document were to be questioned for any reason, the notarial act may be looked at more closely than if the notary was not a relative. In addition, if the witnessed document is one from which you might benefit, your right to receive that benefit may be jeopardized. To avoid questions about your impartiality as a notary as well as accusations of undue influence, it is always safest for a signer to find a notary that he or she is not related to” (https://www.sos.state.co.us/pubs/notary/FAQ/duties.html)

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