NEW YORK STATE CHANGES TO EXECUTIVE LAW FOR NOTARY PUBLICS

Apr 07, 2023

By: Christopher J. Babiarz, Esq.



On January 31st, 2023, New York State implemented new changes to the rules and regulations concerning Notary Publics which imposes additional important requirements on all notaries whether they are performing traditional notary services, or electronic notary services.


The most significant new change is the requirement that all types of notaries keep a journal documenting all notarial acts performed for a period of ten years.  The journal must track the following required pieces of information:


1. The date and time the notarial service was performed; and

2. The name and address of the principal (individual whose signature is being notarized); and

3. The number and type of notarial service performed; and

4. The type of credential used to verify the identity of the principal; and

5. The verification procedure used to confirm the principal's identity.


In addition to the five above categories, notaries performing electronic notarization must also document:


6. Identification of the communication technology, certification authority, and verification providers used; and

7. An actual audio and video recording of the act.


While these requirements apply to all notaries performing all types of notarial services, real property transactions are especially vulnerable to fraud, and the notary public is the first line of defense in preventing such crimes.  Fraud involving notaries typically occurs in one of two ways, and diligently adhering to the above-described process significantly helps to eliminate both.


The most obvious way that fraud is committed is when someone tries to get a document notarized and they are not the principal that they are claiming to be.  This type of circumstance can present itself a few different ways, such as by presenting a forged document that has already been signed outside the presence of a notary, and the individual is now seeking to have it notarized after the fact.  Or in a similar situation, the fraudster could be trying to get you to notarize a document without presenting a valid form of identification with a signature to compare to.


By routinely following a patterned behavior whenever you notarize a document you can avoid being implicated in this type of fraud entirely.  The requirements of the journal set forth core pieces of information that will eliminate many types of fraud just by carefully collecting this information in a methodical way.  While there are different credentials and/or personal knowledge which can be used to comply with item 4 in the journal list above, the gold standard would be a government issued photo ID or driver's license.  If an individual is asking you to notarize without providing this particular document, that should trigger a red flag in your mind, and cause you to take a pause and re-evaluate the circumstance to make sure you are being compliant with the requirements above.  A notary may always refuse to provide a notarization service if they are not satisfied with the proof of identity, or if there is concern that the principal lacks capacity to execute a record, or if the notary suspects it is done so under duress.


The second type of fraud is less preventable on the part of the notary, but the impacts and inconveniences are also able to be greatly diminished by diligent journal keeping.  This type of fraud occurs when someone forges your notary stamp/seal using publicly available records.  In this scenario, your seal may be used to complete documents for recording with the county clerk that you will have never seen before, let alone have been in the same room as the person claiming to be the principal.  It is in this circumstance that being able to point to a meticulously kept journal that adheres to a consistent process will enable you to prove that you were not involved in the fraudulent notarization process and help you clear your name more efficiently than any other preventative measure. 


In addition to the above described journal keeping requirements, New York has also clarified the current rules concerning electronic notarization. Previously during the height of the pandemic, notaries were able to provide services via programs such as Zoom and Skype, this program was known as Remote Ink Notarization.  Although this program has since been removed, New York is seeking to replace it with Electronic Notarization. The key difference between these two programs is that electronic notarization requires the use of specialized commercial software which allows the notary to perform identity proofing and credential analysis. Although New York has not provided significant guidance on recommended programs to use for this purpose, we can anticipate that many reputable companies such as title companies will begin to rollout New York compliant programs that provide the above services, and allow for the recordation and storage of audio and video. Until and unless this program and software is in place, the important takeaway is that no notaries should be providing services through programs such as Skype or Zoom in New York without such additional software features. Electronic notarization is an additional program on top of traditional notarization, and must be applied for separately.


Whether you are performing an electronic notarization or a traditional notarization, the requirement to keep a journal is mandatory.  While the imposition of additional requirements on Notary Publics in New York may seem frustrating, they are truly designed in a way to protect the integrity of the notary service, and it also serves as an important safeguard to protect the individual notary as well from those seeking to commit fraud.


This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.

SMB M&A SERIES: What Is A Letter of Intent?

26 Jun, 2024
By: Daniel J. Fetter, Esq. The SMB M&A series provides insights into buying and selling a small business. If buying or selling a business, you may have heard of a "Letter of Intent" or "LOI". What is it and why is it important? The LOI is a non-binding offer that allows the parties to agree at a high level on certain key terms and conditions of a proposed deal. Starting with an LOI can make the deal process more efficient as it creates a roadmap when drafting and negotiating the definitive agreements. The LOI typically includes the following terms/conditions: Transaction Structure . In most cases, the LOI will specify the transaction structure – whether the buyer is acquiring the stock or assets or some other type of arrangement. Purchase Price and Method of Payment . It sets forth the purchase price or how the purchase price will be determined, including any post-closing price adjustments or working capital calculations. The LOI will also address how the purchase price will be paid (cash, seller financing, debt assumption, equity, etc.). Due Diligence . The LOI will outline the time period for the Buyer to conduct its due diligence investigation (typically 30-90 days after signing the LOI) and the limitations around that investigation (e.g., when the Buyer can contact employees and customers). The due diligence investigation will allow the Buyer to inspect the business from a financial, legal and tax standpoint. Conditions . It may include certain conditions that must be met for the parties to proceed with the transaction, including Buyer obtaining financing and/or any necessary government or third-party approvals. Exclusivity . The LOI will typically include an "exclusivity" or "no shop" clause that prohibits the Seller from entertaining other offers from prospective buyers for a period of time. Generally speaking, the LOI is non-binding and cannot force a buyer or seller to proceed with the transaction. With that said, however, there are certain provisions which create binding obligations on the parties, including: (a) each party will cover their own expenses in pursuit of the transaction; (b) the governing law applied to the LOI; (c) the confidential nature of the proposed transaction; and most importantly (d) the exclusivity clause discussed above. The Scolaro Law Firm handles small business M&A transactions throughout New York State, Vermont, Pennsylvania and Florida. If you are interested in buying/selling a business, please contact Daniel Fetter or the attorney at our firm with whom you work. This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.

SMB M&A SERIES: Before Disclosing Confidential Information. . .

24 Jun, 2024
By: Daniel J. Fetter, Esq. The SMB M&A series provides insights into buying and selling a small business. When preparing to sell your business, make sure you require any potential buyer to sign a Non-Disclosure Agreement ("NDA") before disclosing any confidential information. An NDA protects sensitive information like financial records, customer information, intellectual property and other proprietary information (including that you are in discussions to sell your business) from unauthorized disclosure. By requiring potential buyers to sign NDAs, you maintain confidentiality throughout the sale process and preserve the value of your business. In the event of a breach, the disclosing party may be entitled to monetary damages or injunctive relief to prevent further disclosure. In addition to the NDA, Sellers should take other precautions to avoid disclosure of Confidential Information, including: Limit disclosure only to those individuals who need to know for purposes of pursuing the transaction; Wait to disclose your most sensitive information (e.g., customer list) until you have more assurance that the deal will close; Use data rooms to share information rather than sending documentation by mail/email. This also allows users to track who viewed the information. The Scolaro Law Firm handles small business M&A transactions throughout New York State, Vermont, Pennsylvania and Florida. If you are interested in buying/selling a business, please contact Daniel Fetter or the attorney at our firm with whom you work. This article is intended to be for informational and discussion purposes only and is not to be construed as legal advice or as a legal opinion on which certain actions should or should not be taken.
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