THURSDAY THINK TANK - Notary Signing Agent Code of Professional Responsibility, Guiding Principle #4 - Unauthorized Advice or Services
NO UNAUTHORIZED ADVICE OR SERVICES
Did you know, as a Notary Public, you must not ever offer legal, personal, financial or other advice or services to the signer in connection with loan signing? Did you also know that you may not explain the terms of any closing document presented to the signer? Many notaries do not. Let us break this down for you because some notaries do this unwittingly and can get themselves in trouble.
Did you know that every time you simply answer the wrong question or offer well-intended advice you could be giving what is known as legal advice unknowingly and give rise to liability? We want to help you avoid the unauthorized practice of law.
I would like to share a part of an article written by Evelin Garcia, a contributing writer with the American Association of Notaries, Inc.
Understanding the unauthorized practice of law. The unauthorized practice of law means offering legal services without being licensed as an attorney. Statutes, court opinions, and ethics rulings from state bars across the country often define legal services in the following ways:
offering legal advice or saying what a law means
giving advice about a document a customer needs
recommending the type of notarization required
offering an opinion about the legality or effect of a document
charging a fee for what amounts to legal work
Notaries may not perform these or related services.
Practice ways to avoid the unauthorized practice of law. Generally, a notary may not represent someone in court or legal proceedings or charge and collect a fee for such representation unless they are licensed to practice law in that state. They cannot provide legal advice or answer questions about a legal matter. More specifically, notaries may not choose the particular document a customer may need for a transaction. Nor may notaries choose the type of notarization or certificate wording for a given document. The customer must decide. Preparing a document or giving advice on how to fill out, draft, or complete a document is also prohibited.
What a notary may do is set appropriate expectations with signers by explaining what he or she is allowed by law to do. This need not be stiff and formal. The notary can refer the client to an attorney for additional help and legal advice if necessary. A notary may also describe to signers the types of notarial acts and certificates — generally jurats and acknowledgments — and the differences between the two whenever a document does not contain a notarial certificate. But the signer must always choose which act the notary will perform.
The problem with notario publicos. One of the most common ways a notary can run into trouble is advertising as a notario publico, which at first blush is Spanish for “notary public.” Notaries in many other countries, including Latin American nations, have legal training and credentials similar to attorneys in the United States. They may draft and archive documents, provide advice to parties concerning the legal effect of a transaction, serve as mediators or arbitrators, and issue judicial opinions. American notaries, of course, may not. These responsibilities are reserved for attorneys.
Consequently, in order to avoid any confusion and to prevent fraudulent behavior, most states prohibit using the misleading phrase notario publico. Furthermore, many states require notaries to post a written notice explaining they are not attorneys licensed to practice law and cannot offer legal advice or accept fees for legal services.
Best practices. The best practice for you as a notary public is to consult the UPL rules in your state and follow common sense guidelines. In your gut (and in your heart) you will know if what is asked violates your duties as a notary public. Be smart and be aware. You’ll do the right thing if you follow the guidelines here and with your state.
-- Evelin Garcia, is a Contributing Writer with the American Association of Notaries, Inc.
GUIDING PRINCIPLE 4:
UNAUTHORIZED ADVICE OR
SERVICES
The Notary Signing Agent will not provide legal, personal, financial, or other advice or services to the signer in connection with a signing assignment nor explain the terms of any closing document presented to the signer.
STANDARDS OF PRACTICE
4.1. Legal Advice
The Notary Signing Agent will not offer legal advice to a signer during an assignment to provide signing services unless the NSA is an attorney representing a party in the transaction.
4.2. Role and Limitations
The Notary Signing Agent will clearly explain to the signing parties that the NSA is solely responsible for providing signing services connected with the transaction and cannot answer specific questions about the transaction or the legal effect of the closing documents.
4.3. Response to Questions
The Notary Signing Agent may respond to a signer’s specific question by directing the individual to read the provisions in the critical or other closing documents identified by the NSA that may answer the question or by referring the individual to the lender’s representative or closing agent associated with the transaction.
4.4. Presentation of Documents
The Notary Signing Agent will present each closing document to a signer in conformance with a signing presentation guideline authorized by the contracting company, and by naming and stating the general purpose of the document, specifying the number of pages and indicating where signatures, dates or initials are to be placed.
4.5. Loan Terms
The Notary Signing Agent may identify and provide a general description of a loan or payment amount, interest rate, annual percentage rate, finance charge, payment schedule, assumption option, prepayment penalty or any other loan term to a borrower in the closing documents, but may not explain, interpret or provide legal advice about the loan terms.
4.6. Settlement Fees
The Notary Signing Agent may identify and provide a general description of a fee or charge appearing on a signer’s HUD-1, Closing Disclosure or other closing statement, as applicable, but may not explain, interpret or provide legal advice about the fee or charge.
4.7. Disbursement or Funding Date
The Notary Signing Agent will neither attempt to forecast nor disclose an actual disbursement or funding date to a signer unless expressly requested in writing by a lender’s representative or closing agent or the date is clearly identified in a closing document the NSA can present to the individual.
4.8. Loan Programs and Professionals
The Notary Signing Agent will not advise a borrower on loan products, programs, competitive rates or mortgage loan professionals at a signing appointment or in any verbal or written communication in connection with an assignment.
4.9. Contact Sources
A Notary Signing Agent will not commence a signing appointment without having obtained the contact information of the lender’s representative and closing agent associated with the transaction.
4.10. Disclosure of Contact Sources
The Notary Signing Agent will provide the borrower with the contact information of the lender’s representative and closing agent who may answer questions about the loan and explain the terms of the loan or any closing document presented to the borrower.
As you can see in the Guiding Principles above, it is okay for the Notary Signing Agent to identify and provide a general description of a loan or payment amount, interest rate, annual percentage rate, finance charge, payment schedule, assumption option, prepayment penalty or any other loan term to a borrower in the closing documents, but you may NOT explain, interpret or provide legal advice about the loan terms.
I have been asked many times at closing when the disbursement date will be. The Guiding Principles state: The Notary Signing Agent will neither attempt to forecast nor disclose an actual disbursement or funding date to a signer unless expressly requested in writing by a lender’s representative or closing agent or the date is clearly identified in a closing document the NSA can present to the individual. If you tell the borrowers an expected disbursement or funding date and it does not happen that way, they will report you to the Mortgage company and they more than likely will not call on you for another loan signing.
You are not there to be the borrower’s friend. You are there as a representative of the company that hired you to present the documents, obtain signatures and notarize where necessary. For any questions that fall outside of what you are allowed to answer you must refer the borrower to their loan representative or a lawyer for any legal advice.
Be a Notary of Integrity! Follow the rules. Not working according to these principles can cause you to lose work and not be hired by a company again.
Alabama Loan Signing Agent Errors and Omissions Insurance
While all signing agents are notaries, not all notaries serve as signing agents. A notary's responsibilities are limited to conducting notarial acts, whereas signing agents undergo training to facilitate the presentation of loan documents to clients and assist lenders in the closing process. It's crucial to note that Notary Errors and Omissions (E&O) Insurance does not cover all losses resulting from errors during signings. For more specialized coverage, signing agents require Signing Agent Errors and Omissions (E&O) Insurance.
Notary E&O Insurance safeguards notaries in case a mistake made during notarization leads to financial losses for the client. However, it exclusively pertains to notarial acts and doesn't extend protection to signing agents when they engage in tasks like document review with clients, calculating rescission dates, or returning paperwork to the loan provider.
Signing Agent E&O Insurance is designed to bridge the gaps left by Notary E&O Insurance. Independent signing agents assume personal liability for losses stemming from errors during signings, and this insurance type covers:
Innocent errors or omissions related to notarial acts by signing agents.
Incorrect dating of the right of rescission.
Missed initial or non-notarized signatures.
Unauthorized alterations to documents.
Neglect by signing agents in completing documents promptly.
Delayed return of time-sensitive documents.
To be eligible for Signing Agent E&O Insurance offered through CNA Surety, you must have completed signing agent training, obtained certification, passed a criminal background check, maintained membership in a professional association, and maintained a journal.
It's essential to carry E&O insurance for both professions because even if you are innocent, you might still face substantial legal expenses when defending yourself against lawsuits.
