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As of 9 August, 43 states have passed laws allowing real estate closings to take place online and the remaining seven states are facing growing pressure to make the shift unanimous.
The new laws permit online notarization of documents, a key step in closings.
Before the COVID virus arrived, only 22 states allowed virtual notarization, according to the National Notary Association.
In a remote closing, buyers, sellers, lawyers, and lenders teleconference, with notaries verifying identifications virtually. Documents are signed electronically with witnesses joining video calls as needed.
“It’s not a technology limitation,” Brian Woodring, chief information officer at Rocket Mortgage, told The Wall Street Journal. “We’ve got all the technology now where you can do a fully digital close.
“It’s the legal innovation that needs to happen,” he said.
That legal innovation is currently mired in California’s legislature.
In a letter to state lawmakers, the California Association of Realtors and the California Land Title Association wrote that allowing out-of-state notaries to certify in-state closings is not clearly permitted under the U.S. Constitution’s doctrine of interstate recognition.
Other groups have complained that California’s bill would make it too easy to sue online notaries.
“We’re in a holding pattern until we can come up with” language that mollifies all parties, assemblyman Reggie Jones-Sawyer, who introduced the bill, said to the WSJ.
Georgia’s state legislature is working to modify a law requiring a lawyer to be physically present at all real estate closings.
Others fear that online closings raise the risk of fraud. At least one such case already has been documented.
The U.S. House of Representatives has passed a bill called the Secure Notarization Act, which would permit remote notarizations throughout the U.S. The measure is now before the Senate.
Meanwhile, Delaware, Massachusetts, and Washington, D.C. are expected to legalize virtual notarization soon.
TREND FORECAST: Just as the work-at-home trend escalated when the COVID War was launched in 2020, so too will the virtual real estate closing trend. And while there will be scams, they will be minimal and do nothing to reverse this trend which is the new normal in the metaverse world.