California Moves Toward Streamlined Real Estate Closings with Remote Online Notarization (RON)

California lawmakers have recently given their stamp of approval to remote online notarization (RON). This development puts us on a path toward joining 44 other states that have already embraced this process which can allow for speedier real estate closings. Pending the expected signature from Governor Gavin Newsom, the bill, known as SB 696, is poised to reshape the real estate landscape in the nation's most populous state.

A Unanimous Decision

SB 696 received unanimous support, passing with a 39-0 Senate vote and a resounding 78-0 approval by the Assembly on September 7. This overwhelming consensus underscores the critical need for modernizing notarization processes in California. Pat Kinsel, founder and CEO of Notarize, emphasized that it was no small feat to navigate the intricate legislative landscape of California, a state renowned for its technological innovation but also recognized for its complexities due to its vast size and diverse population.

Stringent Identity Verification Standards

One of the standout features of SB 696 is its stringent identity verification standards. Notaries conducting RON in California will be required to employ an "identity proofing" process involving third-party validation of individuals' identities through a comprehensive review of personal information sourced from public and proprietary databases. This process must adhere to the Identity Assurance Level 2 standard set forth by the National Institutes of Standards and Technology (NIST). Moreover, notaries must collect and validate documents confirming signatories' identities and addresses.

Out-of-State Vendors Must Comply

For out-of-state vendors wishing to engage in online notarizations with California residents, SB 696 mandates their consent to the jurisdiction of California courts. This ensures that the same rigorous standards are upheld regardless of the notarization service provider's location, guaranteeing consumer protection and enforcement are consistent across the board.

Robust Record-Keeping Requirements

SB 696 also imposes robust record-keeping obligations on notaries. They must create encrypted electronic journal entries for each remote online notarial act, along with audio-video recordings of the entire communication process for each act they facilitate. This additional layer of transparency bolsters the integrity of the notarization process.

Raising the National Bar

Kinsel believes that California's adoption of RON will set a national benchmark, akin to the influence exerted by the California Consumer Privacy Act (CCPA) in 2018. Just as the CCPA reshaped the landscape of data privacy regulation, SB 696 promises to redefine the notarization process for the better.

A Path Forward

While SB 696's passage marks a significant milestone, its implementation timeline remains uncertain. The California Secretary of State must first certify that the necessary technology is in place before notaries can commence remote closings. The initial effective date of January 1, 2025, was removed from the final legislation, with SB 696 now setting a tentative deadline of January 1, 2030, for the completion of the required technology project.

California's embrace of remote online notarization represents a forward-looking step toward a more efficient real estate market. By aligning with the majority of states that have already adopted RON, California is poised to usher in a new era of convenience and security for notarization processes, ultimately benefiting consumers and businesses alike.

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