COVID-19: An Update on Governor Hogan's Mandate on Non-Essential Businesses
March 23, 2020
As we are sure most of you know, Governor Hogan announced today that all non-essential businesses must close their office locations and operate from home. In light of this order, we know that there is a great deal of uncertainty for all of us in the real estate industry as to how transactions can continue to close, which is especially challenging considering the incredible transaction volume the industry was experiencing prior to the onset of the COVID-19 pandemic. For the last few weeks leading up to Governor Hogan’s order, there has been a tremendous amount of conversation in the industry around the concepts of e-signing, e-notary, and remote online notary. As a leader in the industry, we at Liff, Walsh and Simmons and Eagle Title, are here to assist all of you with understanding where things stand in terms of closing transactions remotely, something that will likely be necessary in light of Governor Hogan’s Order.
As a preliminary note, based on the information provided by Governor Hogan so far, it appears Maryland will be following the list of critical businesses and operations that are considered important in order to keep the country running as produced by the Department of Homeland Security, commonly referred to as the CISA list, a copy of which can be found HERE. Included in the CISA list are service providers including but not limited to Title Companies and Law Firms. While we do not yet know the full scope of how Title Companies and Law Firms will be permitted to operated, it appears that we will be exempt from the Governor’s order, at least to some extent. To that end, for the time being our office will be continuing to close transactions in our office utilizing the current COVID-19 protocols that we have already put into place, and will continue to update as the situation unfolds.
Regardless of whether title companies are classified as essential businesses, remote closings are likely to play a large role in closing transactions during the COVID-19 Pandemic. By way of background, in order to remotely close a transaction utilizing a remote online notary, the following components are necessary:
1. A title insurance underwriter (such as Fidelity, Chicago Title, First America, etc) that will insure a transaction that involves documents that have been executed and notarized utilizing a remote online notary platform.
2. A land records office that will accept documents that have been electronically signed and notarized utilizing a remote online notary platform.
3. A platform (such as Notarize.com, Notarycam, Doc Verify, etc), approved by the applicable title insurance underwriter, that provides the ability to have documents electronically signed and notarized utilizing a remote online notary.
4. If financing is involved, a lender that is willing to accept loan documents that have been electronically signed and notarized utilizing a remote online notary.
As of today, the status of each component is as follows:
1. The majority of the title insurance underwriters have issued emergency underwriting guidelines approving the issuance of title insurance for transactions closed utilizing a remote online notary platform.
2. Chief Judge Mary Ellen Barbera of the Maryland Court of Appeals issued an emergency order directing that all land records offices shall accept documents signed and notarized utilizing a remote online notary platform shall be accepted for recording.
3. There are a number of platforms that have been approved by the various title insurance underwriters at this time. These platforms include Notarize.com, Notary Cam, and Doc Verify. While the notaries working for these platforms do not include people in the state of Maryland (as Maryland Remote Online Notary bill doesn’t take effect until October), notaries in other states that have Remote Online Notary legislation in place, are able to perform Remote Online Notarizations utilizing these platforms for transaction in the State of Maryland at this time due to the emergency actions by the Title Insurance Underwriters and Chief Judge Mary Ellen Barbera, as noted above. The biggest challenge with respect to these platforms right now is that up until a few days ago, a large number of states, including Maryland, were not allowing the recording of documents that were electronically signed and notarized utilizing a remote online notary platform, nor were title insurance underwriters permitted the issuance of title insurance for transactions closed in states, including Maryland, where recording was not permitted. As a result, the various platforms were not ready for such a sudden increase in demand for the use of the platform and are delayed in being able to accommodate the incredible number of companies requesting the ability to utilize a platform. Our firms were able to get in the queue with a number of the platforms early and are hopeful to have access to a platform very shortly.
4. The biggest issue with respect to closing transaction utilizing a remote online notary platform at this time; however, continues to be the acceptance by the various lenders of e-signatures and e-notarizations on loan documents and their ability to create loan packages that are compatible with the e-sign and e-notary platforms.. As of right now the lenders each have their own perspective on the issue, but as a generalization, a number lenders have gotten comfortable with e-signatures on a large number of the loan documents, but most lenders are not yet comfortable with the Note, the Deed of Trust, or the 4506T being e-signed or, in the case of the Deed of Trust, being e-notarized via a remote online notary platform. Additionally, it should be noted that unless the lender is keep the loan on their own books, not only does the lender have to be comfortable, but the investor purchasing the loan on the secondary market, also has to be comfortable. We are continuing to reach out to all of our contacts at the various lenders to stay up to date on the ever-evolving positions of each lender and will continue to keep all of you updated on changes that would allow transactions to be closed remotely utilizing a remote online notary platform.
In summary, in order to close transactions without any physical interaction, the biggest obstacles right now are (i) the practical capacity of the various remote online notary platforms to handle the current increase in demand for remote online notary closing; and (ii) the need for revised underwriting guidelines from the lenders approving the use of e-signatures and e-notarizations utilizing a remote online notary platform on all transaction documents, including the Note, the Deed of Trust and 4506T.
While we know that the current climate is one of the most challenging any of us have ever faced, please know that our team of professionals is here to help you. We have always prided ourselves on staying at forefront of issues facing our industry and providing the highest level of service to of clients, partners, and colleagues, and we will continue to do so in spite of the new issues presented by the COVID-19 pandemic.
To that end, our office will continue to operate and process transactions remotely. We will also continue monitoring and working on those issues currently limiting our ability to close transactions as a result of Governor Hogan’s order in order to assist everyone with getting to settlement as quickly and efficiently as possible.
If you have any questions regarding the current status of remote closings and how you can continue to transact business despite Governor Hogan’s order, please do not hesitate to reach out to us at any time.