Bill Summary for H 776 (2021)

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Summary date: 

Jun 30 2022

Bill Information:

View NCGA Bill Details2021
House Bill 776 (Public) Filed Monday, May 3, 2021
AN ACT TO ALLOW REMOTE ELECTRONIC NOTARIZATION.
Intro. by D. Hall, Davis, Hardister, Reives.

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Bill summary

Conference committee substitute to the 4th edition makes the following changes.

Section 1

Revises proposed Part 4A, Remote Electronic Notarization, of Article 1, GS Chapter 10B, as follows. Revises the Articles defined terms, amending the terms credential analysis, electronic journal, identity proofing, remote electronic notarial certificate, remotely located principal, and third-party vendor. Now requires a remote electronic notarial certificate to contain a statement in the acknowledgement, jurat, or verification certificate identifying where the remotely located principal was physically located at the time of the remote electronic notarization (consolidating and replacing previous requirements regarding attestations of the principal's location). Requires a remotely located principal to be located, at the time of the remote electronic notarial act, either (1) inside the US; (2) outside the US and physically on the military installation or vessel named in the military orders assigning the member to active duty for more than 120 days, provided the remotely located principal is a member, spouse of a member, or dependent of a member of the US Armed Forces of the United States; or (3) outside the US at a US Embassy, Consulate, or Diplomatic Mission. Makes conforming changes throughout to eliminate restrictions upon remote electronic notaries performing acts for remotely located principals not located in the State. Eliminates the provision of communications technology from the term third-party vendor. Adds the terms platform and tamper-evident. 

Eliminates authority for remote electronic notaries to perform notarial acts with respect to tangible documents. Eliminates limitations of the notary in performing acts when the remotely located principal is not personally known to the remote electric notary. Revises the documents for which a remote electronic notary cannot perform remote electronic notarial acts to only include self-proved wills, revocable or irrevocable trusts or any other document amending the same with the exception for a certification of trust or similar document, a death beneficiary form that requires acknowledgement, a codicil or will, any document related to the relinquishment of parental rights, and mail-in absentee ballots (no longer excluding advance directives for a natural death, health care powers of attorney, and durable powers of attorney). Makes technical changes to the provisions which allow for remote electronic notaries to perform notarial acts upon the prohibited documents identified if the remotely located principal is located, at the time of the notarial act, outside the US and physically on the military installation or vessel named in the military orders assigning the member to active duty for more than 120 days, provided the remotely located principal is a member, spouse of a member, or dependent of a member of the US Armed Forces of the United States (as described in GS 10B-134.1(10)b.). Requires a power of attorney executed by a remotely located principal to be recorded in at least one county register of deeds office in the State, excluding those executed for remotely located principals described in GS 10B-134.1(10)b.

No longer explicitly requires the communication technology used to make reasonable accommodations for remotely located principals with vision, hearing, or speech impairments. Requires the communication technology to be capable of geolocating the remotely located principal to corroborate the location of the principal. Now requires rather than permits a remote electronic notary to select tamper-evident technologies to perform remote electronic notarial acts with respect to electronic documents. No longer references electronic notarizations (only remote electronic notarizations). 

Prior to performing a remote electronic notarial act, requires the remote electronic notary to ask the remotely located principal if the principal would like an attorney to participate in the remote notarization, and allow for such if so requested, and use geolocation via communication technology to verify the remotely located principal's location. Makes the grounds for refusal to perform notarial acts under GS 10B-20 applicable to remote electronic notaries. Allows for the notary to perform the act if an oath is administered when the remote 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. Requires use of a licensed platform, as defined, to administer the oath of affirmation. Now authorizes any registered notary public to administer an oath or affirmation to a witness in judicial actions or proceedings which does not require remote electronic notarization of a record or a notarial certificate and seal when done in person so long as three criteria are satisfied, including identity proofing requirements. Now provides that non-material failures (was, any failures) of the remote electronic notary to comply with the requirements of the remote electronic notarization do not invalidate the act or the record notarized, and more specifically 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 fraud, forgery, impersonation, duress, incapacity, undue influence, minority, illegality, unconscionability, or another basis not related to the remote electronic notarial act or constructive notice provided by recording of the electronic record. Now requires the remote electronic notary to treat information gained from a remotely located principal in the course of performing a remote electronic notarization as confidential (previously, required the notary to maintain the confidentiality of a remotely located principal's documents at all times). 

Requires the remote electronic notary, prior to the remote electronic notarial act, to verify (was, cause to have verified) each remotely located principal's identity, including through credential analysis and identify proofing by third-party vendors for remotely located principals not personally known to the notary. 

Eliminates the enumerated components and provisions relating to a remote electronic notary's journal and instead directs the Secretary of State (Secretary) to adopt rules specifying the content and secure storage requirements of the electronic journal. Includes five required components of such rules, including required retention for 10 years after the remote electronic notarization. Adds new provisions to allow the remote electronic notary to surrender the electronic journal to the remote electronic notary's employer upon termination of employment, but requires the remote electronic notary to 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. Otherwise, prohibits the notary from surrendering or destroying the electronic journal or the communication technology recordings of remote electronic notarial acts except as required by a court order or as allowed under rules adopted by the Secretary.

Regarding the required security measures of a remote electronic notary, now requires that if a steward is appointed, the steward must be a third-party vendor approved by the Secretary. Specifies that the required actions following discovery of permanent loss of data, unauthorized use, loss of use, or compromise of security must occur within 10 calendar days (was, 10 days), and now specifically includes notifying the register of deeds in the county of the remote electronic notary's commissioning (rather than the appropriate register of deeds). Provides for suspension of the notary's power for failure to produce any record required by rule within 30 calendar days (was, 30 days) of the Secretary's request.

Replaces the previous provisions (1) authorizing the Secretary to establish guidelines for the secure storage of the electronic journal and communication technology recording; to establish, supplement, or amend third-party service guidelines for identify proofing and credential analysis services; to establish standards and processes for the communication technology; to establish standards for tamper-evident technologies; to adopt other rules necessary to ensure the integrity, security, and authenticity of remote electronic notarization; and to adopt rules regarding performance of a remote electronic notarial act; and (2) requiring remote electronic notary to use a communication technology provided by a third-party vendor that has presented evidence to the Secretary that the technology complies with the applicable industry standards for the industry in which it is to be utilized. Instead, requires remote electronic notaries to only use communication technology through a platform licensed by the Secretary. Charges the Secretary with the review and issuance of platform licenses. Provides for license applications, subject to a $5,000 application and annual renewal fee, and detail qualifications. Requires Secretary approval of license assignments or transfers. Requires platform licensees to collect $5 per remote notarial act fee and monthly remit the fees to the Secretary to be accounted as specified. Directs the Secretary to adopt rules necessary to establish the standards, procedures, practices, forms, and records relating to remote electronic notarial acts to implement the Part, including five components, such as additional education requirements for remote electronic notaries and matters related to communication technology, credential analysis, and identity proofing. Authorizes the Secretary to use emergency and temporary rulemaking as needed for the Part's implementation. 

Replaces the previous provisions relating to the standards and liability for third-party vendors, instead providing as follows. Requires all platform licensees and third-party vendors to meet all standards established by the Secretary and prohibits providing services until the Secretary has determined that the provided services meet generally accepted security standards in the absence of rules adopted establishing standards for service. Authorizes the Secretary to adopt rules establishing, supplementing, or amending third-party vendor guidelines for standards and processes for identity proofing and credential analysis services so that third-party vendors interacting with remote electronic notaries satisfy the security qualifications of establishing the identity of the remotely located principal. Enumerates five actions and remedies the Secretary can take, at the Secretary's discretion, if a licensee or third-party vendor violates the Part or rules adopted thereunder, including assessing a civil penalty of up to $1,000 per violation. Provides requirements for continued access or transition to a different licensee or third-party vendor upon technology restriction, suspension, or revocation by the Secretary. Deems a licensee or third-party vendor liable to any person who suffered damages from a remote electronic notarial act if two criteria are met, including that the damage is proximately caused by a service provided by the licensee or third-party vendor that failed to meet any standard under the Part, and the person damaged was a party to, or in privity with a party to, the remote electronic notarial act proximately causing the damage. Provides immunity to the remote electronic notary who exercised reasonable care in selecting and using a licensee or third-party vendor who fails to comply with the Part; voids any contractual provision waiving this immunity.

Makes technical, clarifying, and conforming changes throughout.

Section 2

Makes conforming changes to GS 10B-20.

Amends GS 10B-102 to require remote electronic notaries to comply with the requirements of the Notary Public Act, Article 1 of the Chapter, when conducting remote electronic notarizations. 

Repeals GS 10B-118, which sets maximum fees for electronic notarial acts.

Section 3

Amends GS 10B-10(b1), which allows, for commissions granted after March 9, 2020, and before March 1, 2021, the appointee 90 days to appear before the register of deeds to take the general oath of office, and allows the register of deeds to administer the required oath using video conference technology. Eliminates the provisions allowing for the 90-day period between the granting of a commission and appearing to take the oath. Maintains the authority to administer the oath using video conference technology.

Amends GS 10B-25, concerning emergency video notarizations, extending the sunset of the statute until June 30, 2023 (was, December 31, 2021). Regarding the required identification of the principal, requires current documents, no longer allowing for expired documents.

Amends GS 10B-200, extending the sunset of Article 3, Video Witnessing During State of Emergency, until June 30, 2023 (was, December 31, 2021). 

Deems any emergency video notarization completed after December 31, 2021, and before the date the act becomes law, valid and cured as if such act was performed pursuant to GS 10B-200 as it existed on December 31, 2021. 

Amends GS 10B-31, which sets maximum fees for notarial acts. Increases the maximum fees from $5 to $10 per principal signature for acknowledgments, jurats, verifications or proofs, and from $5 to $10 for oaths or affirmations without a signature. Adds the following maximum fees: $15 for an electronic notarization under GS 10B-118 (appears to intend GS 10B-117, which provides required components of an electronic notarization; GS 10B-118 provides for maximum fees for electronic notarial acts, and is repealed by this act); $25 per principal signature for remote notarizations under new Part 4A, Article 2; and actual mileage at the federal mileage rate for any notarial act if the travel reimbursement is agreed to by the principal in writing prior to the travel.

Section 4

Enacts new subsection (a3) to GS 47-14, requiring a register of deeds to record a paper copy of an electronic document that is otherwise eligible for real property recordation under state law if five requirements are met, including that the register has no electronic recording system, the system does not accept the type of document submitted, or the system is not operational at the time of submission, and the copy meets all other specified requirements. 

Section 6

Enacts GS 143B-976 authorizing the Department of Public Safety to provide the Secretary a criminal history for platform license applicants. Details the requirements and procedures for the request. Requires provision of the report to the Secretary and requires information obtained to be kept confidential. 

 Section 7

Amends GS 10B-60 to allow the Secretary of State (Secretary) to refer evidence pertaining to violations of GS Chapter 10B (Notaries) or other criminal acts involving a notarization under the Chapter to the proper district attorney who may institute the appropriate criminal proceedings. Allows the district attorney, upon such referral, to request that a duly employed attorney of the Secretary prosecute or assist in the prosecution of the criminal proceedings; upon the Secretary’s approval the employee may be appointed as a special prosecutor without receiving compensation from the district attorney. Gives the special prosecutor the powers and duties prescribed by law for district attorneys and other powers and duties delegated to the special prosecutor by the district attorney for the prosecution for which they are appointed.

Section 8

Appropriates the receipts established by Part 4A of Article 2 of GS Chapter 10B to the Secretary of State (Secretary) for establishing four new positions, consisting of one attorney, one information technology specialist, and two law enforcement positions. Allows the Secretary to use up to $500,00 of the funds appropriated to the Secretary in the 2022-23 fiscal year to fill these positions. Allows the Secretary to use up to $350,000 of the funds appropriated to the Secretary in the 2023-24 fiscal year to implement new Part 4A.

Deletes the following from the act.

Deletes Section 3 of the act, which created new Part 7, Article 2, GS Chapter 10B, deeming 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.

Deletes Sections 5, 6, 7, 8, 9, 10, 11, 12, and 13, which made changes related to the privacy of employee personnel records kept by each department, agency, institution, commission, and bureau of the State, local boards of education and community colleges, LME/MCOs, local governments, and water and sewer authorities.

Section 9

Changes the act’s effective date so it is now effective July 1, 2023, except as otherwise provided. Requires the Secretary of State to begin rulemaking to implement Part 4A of Article 2 of GS Chapter 10B before July 1, 2023, put specifies that no temporary or permanent rule is to be effective before July 1, 2023.

Changes the act’s titles.