Is it Time to Ditch the Pens?
Why the Push for Digital Closings May Be More Complicated Than You Think
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Wicked Insights: Crowd-Sourced Solutions
This week, the title industry was asked…
Can affidavits and documents for Title, Underwriting, and Lenders (not requiring notarization or recording) be eSigned? Can notaries handle a combination of eSignatures and Wet Signatures?
Answers:
Here is what title agents and other industry professionals across the country had to say…
Hybrid closings, where some documents are signed electronically while others are wet-signed, are becoming more common. This can save time but requires careful coordination with the lender and the closing team to ensure compliance.
Ultimately, whether a hybrid closing is permitted depends on the state laws, underwriter guidelines, and lender requirements.
Here are the key considerations:
State and Federal Regulations Regarding eSignings and Electronic Notarizations
eSignature Validity and UETA/ESIGN Compliance
The use of eSignatures is governed by the Uniform Electronic Transactions Act (UETA) and the federal Electronic Signatures in Global and National Commerce Act (ESIGN). These laws establish that eSignatures are legally valid as long as all parties consent to using them, and the eSigned documents meet certain criteria.
However, compliance with UETA/ESIGN does not override state, lender, or underwriter-specific requirements. Always ensure your eSignatures adhere to these guidelines as well.
State Requirements
Many states allow eSignatures on non-recordable, non-notarized documents. For example:
In Texas and Florida, eSignatures are acceptable for cash transactions and non-notarized documents, but lenders have the final say.
In California, escrow documents not requiring notarization or recording can be eSigned.
Current State of the SECURE Notarization Act of 2023 (as of Jan 2025, it’s waiting in Senate Committee)
Title Underwriter and Lender Guidelines on eSignatures and Remote Online Notarization (RON)
For Title only documents, your title underwriter must approve the use of eSignatures.
For loan documents, the lenders will dictate whether hybrid signings (a mix of eSignatures and wet signatures) are permitted. Generally, if the lender permits hybrid signings, they’ll actually require it and have their own platform on which the esigning must be performed.
Notary Capabilities to Accommodate Requests for Hybrid Closings and RON
Most notaries who specialize in real estate settlements have the equipment and experience to facilitate a mix of eSignatures and wet signatures, when required.
A lot, but not all notaries are equipped and licensed to perform RON (Remote Online Notarization) Closings.
Be sure to verify if your remote closer is able to accommodate your signature and notarization requirements before booking them.
Other Things for Title Agents to Consider When Determining How Best to Get Documents Executed for Settlement
Client Communication About Technology Requirements at Closing
Clearly communicate with buyers, sellers and other parties to the transaction, prior to settlement, the signing requirements early in the process to prevent confusion at closing. Be prepared to provide additional education and support to less tech-savvy customers.
Cybersecurity Measures to Safeguard Settlements
When implementing eSignatures, ensure the platform you use adheres to the highest standards of data security to protect sensitive client information. Platforms like DocuSign or Qualia Connect are commonly accepted for eSignatures in real estate transactions.
Hybrid closings, which combine eSignatures and wet signatures, offer flexibility and efficiency but require careful coordination to ensure compliance with state laws, underwriter guidelines, and lender requirements. By understanding the specific rules in your state, verifying lender and underwriter policies, and working with knowledgeable notaries equipped for both traditional and digital signing methods, title professionals can confidently navigate these transactions.
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Cheryl
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**DISCLAIMER**
The Wicked Title Forum is a crowd-sourced resource. To help us keep our information current and correct, please comment below with any corrections or updates and we will update the article accordingly.
All sample forms should be carefully reviewed for federal & state regulatory and underwriter compliance.
The information provided here (including, but not limited to instructions, steps, or forms) is for general guidance and educational purposes only. I am not an attorney and am not giving legal advice. Information should not be considered legal, underwriting, or financial advice and is followed at your own risk. Readers should consult with their attorney and/or underwriter to obtain advice tailored to their specific circumstances.