Electronic Notarization of Documents under Arizona Law and the Model Statute Drafted by the Mortgage Bankers Association (MBA) and the American Land Title Association (ALTA)

Notarizing documents electronically is currently a hot topic in the mortgage and title industries.  Allowing the parties to the purchase and sale of a home, as well as the buyer who is obtaining the mortgage loan, to have their signatures on the documents notarized electronically affords much greater convenience and flexibility than requiring them to appear personally before a notary public to sign the documents.

The Mortgage Bankers Association (MBA) and the American Land Title Association (ALTA) have drafted a model statute for electronic notarization (the “MBA/ALTA Model Statute”).  The MBA/ALTA Model Statute is available on the MBA’s website.  The MBA noted that Montana, Virginia and Texas passed laws with significant differences.  The MBA/ALTA Model Statute is based upon the Texas statute.  The MBA’s goal is to have all 50 states enact substantially similar statutes so that the standards will be uniform across the country.

Arizona enacted a statute in 2000 regarding electronic notarization, A.R.S. § 41-351 et seq.  This Arizona statute is to be administered by the Arizona Secretary of State.   A.R.S. § 41-369.   When this statute was first enacted, the Arizona Secretary of State licensed “e-notaries.”  Due to lack of demand and technology, the Arizona Secretary of State stopped licensing e-notaries.  Currently, as a result of renewed interest, the Arizona Secretary of State is considering licensing e-notaries again.

Arizona has also enacted the the Arizona Uniform Real Property Electronic Recording Act (Arizona URPERA) A.R.S. § 11-487 et seq.  This statute authorizes the electronic signature and notarization of documents to real estate and mortgage loan transactions and provides that such documents are acceptable for recording with county recorder’s offices.

The general Arizona electronic notarization statute,  A.R.S. § 41-351 et seq., was “ahead of its time” when enacted.  However, this Arizona statute requires that the person signing the document appear personally before the notary public.  A.R.S. § 41-355(B)(1).  This requirement is antiquated and is now an impediment to successful implementation of electronic notarization in mortgage loan and real estate closings in Arizona.  Eliminating the “personal appearance” requirement would require action by the Arizona legislature and consideration should be given to adopting provisions of the MBA/ALTA Model Statute.