Bill Summary for H 776 (2021-2022)

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Summary date: 

Sep 8 2021

Bill Information:

View NCGA Bill Details2021
House Bill 776 (Public) Filed Monday, May 3, 2021
Intro. by D. Hall, Davis, Hardister, Reives.

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Bill summary

Senate committee substitute amends the 2nd edition as follows. 

Deletes proposed Article 4, Remote Online Notarization Act, of GS Chapter 10B. Instead, enacts new Part 4A, Remote Electronic Notarization, to Article 2, GS Chapter 10B as follows. 

Sets forth defined terms. Authorizes a remote electronic notary registered with the Secretary of State to perform the types of notarial acts listed in GS 10B-115 by means of communication technology, defined as an electronic device, process, or system that allows a remote electronic notary and a remotely located principal to communicate with each other simultaneously by sight and sound using audiovisual technology and that makes reasonable accommodation for remotely located principals with vision, hearing, or speech impairments. Allows for remote electronic notaries to perform any authorized remote electronic notarial act with respect to tangible records and electronic documents. Prohibits a remote electronic notary from performing a remote electronic notarial act if the principal is not physically located in the State, is not personally known to the notary, or whose identity cannot be verified. Also prohibits remote electronic notarial acts for any reason set forth in GS 10B-20 (limitations of notary publics) or GS 10B-134.9 as enacted (requirements and procedures for remote electronic notarial acts). Lists nine documents which remote electronic notaries are prohibited from performing any remote electronic notarial act upon, including self-proved wills, advance directives for a natural death, health care powers of attorney, trusts, codicils to wills, and mail-in absentee ballots. Provides an exception to the stated prohibitions if the remotely located principal is a member or spouse of a member of the US Armed Forces who meets specified criteria. Bars remotely notarized powers of attorney to be used by the attorney-in-fact with any other remotely notarized document to convey title to, or transfer any interest in, a remotely located principal's real property, with the exception of a member or spouse of the US Armed Forces meeting the specified criteria.

Lists requirements for the use of communication technology to perform remote electronic notarial acts for remotely located principals, including making reasonable accommodations for principals with vision, hearing, or speech impairments; hosting the meeting in real time; allowing direct interaction between the principal and the remote electronic notary so that each can communicate simultaneously by sight and sound through an electronic device, process, or system; being capable of recording; and being capable of using the IP address of the remotely located principal to corroborate that the remotely located principal is physically located in the State. Provides for security and automated backup requirements. Bars requiring a remote electronic notary from being required to use a communication technology the notary has not selected.

Requires the remote electronic notary and the remotely located principal to be physically located in the State in order to perform authorized remote electronic notarial acts, with the exception of a member or spouse of a member of the US Armed Forces who meets specified criteria. Makes such acts governed by State law. Requires verification of the remotely located principal through one of two described methods. 

Details the requirements and procedures for remote electronic notarial acts. Requires the notary to give prior notice to the participants of the communication technology recording requirement, and to verify the identity of the remote located principal. Requires the principal to demonstrate that he or she is not under duress or being coerced to complete the transaction, and to verbally state the documents for the notarial record or the general nature of the transaction. Requires the notary to refuse to perform if the notary has reasonable grounds to believe the principal is acting under duress or being coerced or is aware of insecurity of the communication technology, if the electronic signature cannot be attached to the electronic document, if the 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, or if the location of the remotely located principal cannot be verified as statutorily required. Requires using communication technology for oaths and affirmations. Allows any notary public registered with the Secretary, regardless of registration as a remote electronic notary, to administer an oral oath or affirmation to a remote witness in judicial actions or proceedings which do not require notarization of a record of a notarial certification and seal when done in person, so long as the notary is physically located in the State and the notary uses communication technology and meets the requirements for identity proofing. Specifies that a notary is not required to select the medium of communication technology or retain a recording of the performance of each remote oral oath or affirmation. Provides that failure to comply with the requirements for remote electronic notarization does not invalidate the notarial act or electronic record, but does not prevent an aggrieved person from seeking to invalidate the record on other substantive grounds. Requires the notary to maintain confidentiality of the remotely located principal's documents at all times. 

Details requirements and procedures for the remote electronic notary to have each remotely located principal's the identity verified, which must include credential analysis, identity proofing, and related comparisons if the remote electronic notary does not have personal knowledge of the remotely located principal creating the electronic signature. Allows a remote electronic notary to require the principal to provide additional information or identification credentials necessary to assure the principal's identity. 

Provides requirements for using electronic notarization and conducting remote electronic notarization. Requires each remote electronic notarization to include a communication technology recording. 

Details electronic journaling requirements for remote electronic notaries performing remote electronic notarizations for each remote electronic notarization, deemed the exclusive property of the remote electronic notary. Requires a remote electronic notary or the notary's guardian, conservator, agent, or personal representative to retain a communication technology recording of the performance of each remote electronic notarial act for 10 years after the performance of the notarial act. Provides required terms for third-party contracts for communication technology recording storage. Provides for retention of the electronic journal upon resignation or revocation or suspension of the remote electronic notary's commission. Provides for designation of a custodian for acts associated with electronic journaling. Allows for designation of a steward approved by the Secretary to maintain the electronic journal and backups, retain communication technology recordings and backups, and/or provide methods of access or export for the electronic journals or communication technology recordings. Provides for delivery of the electronic journal to a designated steward for maintenance for the designated time period upon death or adjudication of incompetency of a current or former remote electronic notary. Details security requirements of remote electronic notaries. Allows for surrender of the electronic journal upon termination of employment, with the duty to maintain an accurate backup of the journal for at least 10 years. Provides required action following discovery of any permanent loss of data, unauthorized use, loss of use, or compromised security of the electronic journal or communication technology recordings. Provides for suspension of the remote electronic notary's commission for failure to comply with a records request of the Department of State within 30 days until the Secretary reinstates the commission. 

Details security measures required of the Secretary. Allows the Secretary to establish guidelines for the secure storage of the electronic journal and communication technology recordings associated with remote electronic notarial acts that use standard encryption technologies; establish any necessary additional guidelines for identity proofing and credential analysis; establish standards and processes for the technology communication to allow secure real-time communication; establish standards for tamper-evident technologies; require use of a communication technology provided by a third-party vendor that has presented evidence of compliance with industry standards; adopt rules to ensure the integrity, security, and authenticity of remote electronic notarizations, such as imposing additional educational requirements; and adopt rules regarding the performance of a remote electronic notarial act as specified. Requires technology selected by a remote electronic notary, and communication technology, credential analysis, identity proofing, and custodial services selected by the notary, to conform with standards established by the Secretary. Provides for liability of third-party vendors. 

Provides for laws and court and NC State Bar opinions relating to the unauthorized practice of law to be unaffected by the new Part, including laws and opinions concerning real estate transactions. Explicitly prohibits a remote electronic notary who is not an NC licensed attorney from rendering services or advice that constitutes the practice of law. 

Makes conforming changes to GS 10B-2.

Adds remote electronic notary public or remote electronic notary to the defined terms in 10B-101, applicable to Article 2 (Electronic Notary Act). Makes technical changes.

Makes the qualifications for electronic notary registration and registration procedures for electronic notaries under GS 10B-105 and GS 10B-106 applicable to remote electronic notaries. Additionally makes the electronic notarial components required for electronic documents, set forth in GS 10B-117, applicable to remote electronic notarial acts; adds required attachment of the phrase "Remote Electronic Notary Public Utilizing Communication Technology." 

Enacts new Part 7, Article 2, GS Chapter 10B. Deems a paper or tangible duplicate of an electronic document subject to electronic notarization to be a true and correct duplicate of the notarized electronic document if the electronic notarial certificate is affixed to the document in compliance with new GS 10B-226, and the electronic document has not been changed or modified since the affixation of the certificate. Makes a custodian's attestation of such requirements prima facie evidence that the requirements of the statute have been satisfied with respect to the paper or tangible duplicate of the electronic document. Requires the custodian to attest that the electronic document is in tamper-evident format, along with five other attestations, including that the custodian personally printed or supervised the printing of the electronic document onto paper or other tangible medium. Requires documents with the described attestation to be accepted for recording by a register of deeds so long as all other statutory and locally adopted prerequisites are met. Defines custodian. 

Amends GS 20-30, as amended by SL 2021-34, to permit making a color photocopy of a color reproduction of a drivers license, learner's permit, or special identification card to perform a remote notarization act under new Part 4A, Article 2, GS Chapter 10B (currently, limited to black and white copies). 

Effective January 1, 2022. Authorizes the Secretary to begin rulemaking to implement new Part 4A, Article 2, GS Chapter 10B prior to that date, but prohibits temporary or permanent rules from becoming effective prior to January 1, 2022. 

Makes conforming changes to the act's titles.