The trend in the title industry has been heading towards E-Closings and E-Recordings for quite some time. Yet some of us have resisted (myself included) because of some risks, lack of cooperation from the various county clerks, and the lack of personal interaction. Well COVID-19 has forced us to dip our collective toe into the E waters. So, what does that mean for settlement agents, realtors, buyers and sellers?
What is an E-Closing?
An e-closing, also known as RON (Remote Online Notary) is conducted through a secure software platform that allows the e-notary to verify the person’s identity through multiple sources and watch that person sign or click to sign electronic documents. The obvious benefit is that a closing can be done from virtually anywhere. No more travel involved! And, that means a company like mine in Front Royal, Virginia can conduct a closing in Virginia Beach easily. The second benefit is security. Traditional notaries rely on a picture ID to determine that the signer is indeed the person he claims to be. The platforms used by an e-notary verify the validity of the signer’s identification and further question the signer with information that would be known to only him. I was surprised to learn that traditional notaries are fooled by fake identification quite often. It makes sense, think about how many bartenders are fooled by a fake ID from someone under 21!
So why aren’t we e-closing more often? First is the issue of cost. Title companies have to pay for the e-notary platform, pay per transaction, pay an additional fee to the state to become an e-notary or pay somebody else with an e-notary license to notarize electronic documents. Secondly, some county clerks won’t accept and therefore will not record a document that has been signed electronically. Because of COVID-19, more and more county clerks are accepting e-notarizations, but even now, some are not. Thirdly, the companies hosting the platforms for e-notarizations are so overrun with demand that they can’t get new title companies onboarded in a timely fashion. Personally, Blue Ink Original has been on multiple e-notarization platform waiting lists for weeks. We do currently have the option of using a licensed e-notary with his platform if the need arises, but the cost to the consumer is significantly higher. And finally, there’s the personal connection. Some older clients aren’t comfortable with a video platform. Some new buyers want the hand-holding that comes with taking a seat at the closing table. There is something so impersonal about a video chat that while probably necessary now, may not appeal to folks once COVID-19 is in the rear-view mirror.
What is an E-Recording?
Instead of driving to the county clerk’s office and standing in line to record a document, e-recording allows the settlement agent to scan documents and send them to the appropriate county clerk’s office using an e-recording software platform. Yep, there’s another platform for e-recordings. While less expensive than the e-notary platforms, there’s still an additional cost. And, the settlement agent MUST use the platform that the corresponding county clerk’s office uses and there are at least two platforms out there. So, if a title company performs closings in multiple counties, it may need to pay for more than one platform. We here at Blue Ink Original have begun using e-recordings. It’s very convenient, but we’ve found the platform that we have to use is full of glitches. Probably because of the sudden surge in users, it just doesn’t work as well as it should.
Just like e-closings, e-recordings allow us to record in faraway jurisdictions without putting in the travel time or paying someone else to record. Everything is done from our desktop. No standing in line!
However, the downsides to e-recording are twofold. First, we are generally unable to update prior to recording a document. Updating is the process whereby the title search is updated to the point just prior to recording. What if somebody put a lien on a property, recorded that lien and then sold the property to somebody else? Part of our role is to make sure something like that doesn’t happen. With e-recordings, we can only check recordings that have been inputted into the clerk’s electronic system. Sometimes and in some jurisdictions, there are stacks of documents waiting to be inputted. We physically check them to make certain nothing applies to the property we are about to record. We can’t do that if we aren’t physically there.
Secondly, we have no control as to when the document is recorded. When we go to the clerk’s office and stand in line, our document is on record before we leave. When e-recording, we submit the recording and it could be recorded anywhere from 5 minutes to two days from the time it’s submitted. That has the obvious updating issue as previously mentioned, but we also cannot disburse funds until the recording is complete. Realtors may have to wait a bit longer for their commissions. Sellers may not get paid as promptly and payoffs of the seller’s mortgage may not get processed in time.
As we traverse this brave new E-World, I’m optimistic that some of the problems with e-closings and e-recordings will get resolved. We will use these resources more and more. But we at Blue Ink Original look forward to a day when we can sit together again at the closing table and listen to the excited new home buyer, or the seller who is moving on to the next adventure.
