It's Time for the Legalization of Electronic Notarization
Unfortunately, the mandatory quarantines imposed to halt the advance of the COVID-19 pandemic have wreaked havoc with the U.S. economy, and economists anticipate that gross domestic product will fall more in the second quarter of 2020 than at any other time in our nation’s history, including the Great Depression.
That makes the economic stimulus the federal government typically enacts during a downturn much less effective until people are allowed to return to work: people are constrained in spending additional money they receive from the government because of the quarantine, and even if they could manage to spend, businesses are less able to bring more people back to work to provide more goods or services.
However, there are a few things we could do at the national level that would make it easier for buyers and sellers to transact during the quarantines: the federal government could permit the electronic notarization of transactions.
Generally, whenever someone buys or transfers an automobile or house or conducts any number of other major financial transactions, a notary public must authenticate their identity and signature. This helps make it easier to prove that they signed a document of their own free will later on in court. To do this, the notary examines the document in person, witnesses the signatures, and affixes his stamp on the paper. However, in a world of social distancing completing such a transaction is all but impossible.
To address this problem several states have enacted laws permitting documents to be notarized electronically, a trend that (thankfully) began before the pandemic.
There is no reason that notarization cannot be securely done online; the technology to secure such transactions is readily available and a number of states already allow real estate closings to be done digitally. More than 20 states have already passed legislation allowing for remote online notarization and it has been introduced in several other state legislatures. In addition, several Governors have put in place emergency orders to also allow remote online notary activity during the pandemic. The biggest beneficiaries if we were to accomplish this nationwide would be the auto, insurance, and financial services sectors.
Allowing remote notarization would reduce the cost of transactions in each of these sectors, saving customers money. However, the short-term benefits from doing this would be even more significant. For instance, it would make it easier for people to refinance their homes and both reduce their interest rates (which are near all-time lows) and pull equity out of their home. For people who have been unable to work the last two months, electronically facilitating these transactions using secure technology will help solve painful cash crunches. Remote notarization would also facilitate all sorts of other transactions.
Senators Mark Warner (D--VA) and Kevin Cramer (R-ND) recently introduced a bipartisan bill called the SECURE Notarization Act that would allow remote online notarizations to take place in every state in the country. Representatives Guy Reschenthaler (R-PA-14) and Madeleine Dean (D-PA-04) introduced a companion bill in the House of Representatives. In both chambers, dozens of policymakers from both sides of the aisle have joined the effort.
The necessary, but unfortunate quarantines have required Americans to perform many more financial transactions remotely than they had ever previously done, and most of the country is becoming more accustomed to such transactions. It makes perfect sense to pass legislation that would allow all Americans to safely conduct critical transactions using secure technology remotely, benefiting us both during the pandemic as well as when the quarantines are safely behind us.