For some, the North Carolina notary’s role in doing loan docs is still a gray area, and several notaries seem to have different information. Much of the problem stems from the fact that it is a “bar opinion” or “bar rule,” but not a law, that a North Carolina notary must have a supervising attorney when doing loan closings. Some notaries wonder if this state is moving towards becoming an “attorney only” state, and there are rumors among some North Carolina notaries. Although the Secretary of State’s Office confirms that there are no plans for North Carolina to become “attorney only” (which it was 10 years ago), there are other ways, it seems, that borrowers are being pushed to work with attorneys rather than with notaries.
What is a “bar rule” or “bar opinion”? It is essentially an ethical directive, a matter of preferred conduct. It is not a law. This means that, if a notary is reported to have given ‘legal advice,’ the bar could contact the local DA, or the bar could contact the notary and send “a very scary letter” (according to the Secretary of State’s Office). That will be that, unless there is evidence that the notary is giving ‘legal advice’ on a regular basis. How this would be determined, of course, is anyone’s guess. It would take some pretty consistent “giving of legal advice” on the part of a notary firm.
The North Carolina Secretary of State’s Office points out that “We are 49th [among all the states] in terms of costs for loan closings, so this is not about money.” Lawyers wanting more money? Nah; not possible. Still, attorneys would get double what the notary gets– $250 for a closing vs. the notary’s getting $125 for a closing. Of course, a notary signing agent may charge for travel…but he/ she may also take 4 hours to do a closing, including travel. But in North Carolina, a state with 20% unemployment in some areas, such income is vital to notaries. The question is, Does having a “supervising attorney” compromise the notary’s authority or reputation or ability to collect a fee in any way? And what if the notary is totally competent, and attorney and document producers are not?
One seasoned North Carolina notary laughs, and recalls doing a loan package for Countrywide where he was asked to get both a quitclaim deed and a deed of trust; the quitclaim deed took a spouse off the loan, and the deed of trust says Yes, the spouse is on the loan. “I called Countrywide and spoke to them…and they didn’t understand at all! As it happened, the woman had two social security numbers and we had to wait anyway…But what could I have done? Now, I am supposed to just call a supervising attorney…even when I have a clear idea that the closing cannot take place,” says our notary. “So I guess in that case, I am just supposed to quietly scare the pants off the borrowers and say ‘I have to call an attorney now…’ ” Still another notary reminds us, “A deed is not valid unless the spouse signs. I believe this whole supervising attorney thing started with Countrywide, who never made spouses sign. It wasn’t the notaries’ fault. When B of A bought out Countrywide, B of A had no recourse…they could not get the people out/ could not foreclose. Banks and title companies now want attorneys involved, but notaries know that it’s the place that makes out the documents that is responsible. And how many totally correct sets of documents have you received lately?” A Connecticut notary counters with, “Too bad. We also are told not to give ‘legal advice,’ and many clients here are encouraged to use attorneys for loan closings, just like in North Carolina. So I do not give legal advice: If I were sent both a quitclaim deed and a warranty deed, I would have the people sign both and would send them both in the package with a note. It’s up to the company to make sure they choose one doc or another. It’s up to them to fix it. I am just the notary.”
Are North Carolina notaries poorly educated? Nothing is lacking in the education program or certification of North Carolina notaries, so there is no reason to doubt them or supervise them on this account. North Carolina has one of the most comprehensive education programs and notary exam of all states; the online notary exam is timed, so it is really not ‘open book’, whereas Connecticut, for example, like some other states, has an “open book” notary exam. Over half the states do not even require an exam. Still, good notaries in Connecticut are busy, and do not concern themselves with the fact that it is “traditional,” according to the Connecticut Secretary of State, for lawyers to do closings; North Carolina notaries may not be as busy, and need the work and also have time to reflect on exactly what is happening. And do lawyers always do everything right? Our successful Connecticut notary laughs and recalls, “When I sold my house, I had a lawyer do the docs. When it came to the signatures, I said “Aren’t you going to notarize them? The attorney answered, ‘Oh, I’ll have my notary do it later.’ ‘Interesting!’, I said.” Is there no North Carolina attorney who might do the same?
Remember, in North Carolina, a supervising attorney is required only in the case of loan closings, not other notary work. What many notaries do is arrange to have an attorney to call during the closing in case there is “a question.” Although North Carolina is not an “attorney only” state, a North Carolina notary does have a form to sign saying he/she is not an attorney. Each North Carolina notary is advised to state (verbally) to signers at the beginning of any loan notarization that he/ she is not an attorney and cannot provide legal advice, yet some title companies or procedures require the North Carolina notary to also fill out the form stating this. One notary told us that, when he was contracted to do notary work for an attorney, the documents given to the borrowers already had a clause that pointed out that the person doing the notarization was not an attorney and could not give advice. “It made me feel kind of cheap,” the North Carolina notary says. “I had known this attorney for a long time. Greed is making relationships different.”
It also seems someone is trying to push the North Carolina title companies out of business, according to one experienced North Carolina notary. “Most title companies here are agents, and the title company is actually out-of-state; some out-of-state title companies do not pay the notary for 120 days, and some attorney’s offices pay notaries late as well. But I have heard that the lenders pay better if you use their title companies. In North Carolina, the borrower can pick his own title company, but the out-of-state lender might say ‘No, you can’t use that title company.’ But that company might be saving the borrower a few hundred dollars. I can get a better deal by working with local companies,” the notary points out. “It has kind of gotten blown out of proportion now. I had to have an interview with an attorney to work for a title company. Someone at a mortgage company also said the state bar is trying to shut title companies down in North Carolina. It seems like a way to put more people out of work. The big companies are always trying to manipulate the situation instead of doing things for the greater good.”
Another North Carolina notary explains, “In the state general statutes, chapter 84.4 http://law.onecle.com/north-carolina/84-attorneys-at-law/84-4.html simply points out that a notary is prohibited from practicing law. It does not say that a notary may not sign/ notarize loan docs for a closing.” Yet one North Carolina notary insisted, “Doing loan docs is, for a notary, against the law!” Yet another North Carolina notary shows us, “Here is the latest (2012) legal update on the issue. Be sure to read all the way down to Opinion 2: http://www.ncbar.com/ethics/ethics.asp?id=656 . It clearly says a notary may do his/ her job in loan closings.” But, as described on the website of the Secretary of State http://www.secretary.state.nc.us/notary/, that job is to only “acknowledge signatures; administer oaths and affirmations, and verify or prove signatures.” There is no leeway for a notary to offer any idea as to right or wrong, good or bad, legal or illegal.
The ethics opinion above (middle link) is prefaced by the statement that this (2012) updated bar rule or bar opinion was issued after reviewing the activities of over 50 notaries since 2003, including injunctions “against two companies.” Thus, there are few cases where North Carolina notaries were actually found “giving legal advice.”
What have you done in cases where there are errors or questions at a closing? Let us know how you handle this gray area.