Published in Economic Development

Online notarization allowed under executive order likely to be ‘new normal’

BY Sunday, April 19, 2020 05:26pm

An executive order issued by Gov. Gretchen Whitmer allowing for the wider use of electronic signatures and online notarization will likely be more widespread in the wake of the coronavirus pandemic, says an attorney who helped draft the order.

“I think this is going to become the new national norm afterwards,” said Christopher Ballard, partner at Varnum LLP

Ballard is part of a committee now preparing draft legislation that would codify the practices in state law so it “would become the new normal way of doing things.”

The April 8 order, which lasts through May 6, has far-reaching effects on finalizing legal documents, contracts, real estate transactions and estate planning — which is particularly crucial amid statewide stay-at-home orders now widespread in the U.S.

The order loosens restrictions on how documents are witnessed and notarized, which typically requires face-to-face interaction. It details how these interactions and verifications can take place via two-way video communication through software including Zoom or Skype.

“It is important that Michiganders take every precaution to avoid person to person contact,” Whitmer said in a statement about the order. “Encouraging the use of e-signatures and alternative means of notarization will protect more people and help us slow the spread of COVID-19 in Michigan.”

Unless state law specifically requires a physical or “wet ink” signature, the order temporarily suspends rules under the Uniform Electronic Transactions Act while specifying conditions for online notarizations. Experts across the U.S. say requirements for wet-ink signatures are likely to fade as a result of the pandemic.

The original draft of the order focused mainly on legal documents, but was broadened to “take into account basically any sort of business that relies on witnessing and notarizing,” Ballard said. Without the order, there was a “severe risk” of invalid documents, Ballard added.

Beyond legal documents, Ballard said the order particularly applies to banking and financing and real estate transactions. He added that there was a “huge demand in the estate planning world. With the virus, a lot of people are scared now and are updating their wills and trusts.”

The Michigan Energy Innovation Business Council says the order has helped clean energy developers move projects forward despite a stay-at-home order.

“Our companies just see it as a huge benefit,” said MEIBC President Laura Sherman. “A lot of projects require easements with landowners and contracts that need to be signed and notarized. This is a huge enabler to allow that work that can be done to keep working.”

The MEIBC held a member meeting on April 3 with Michigan Public Service Commissioner Dan Scripps. Members raised concerns about finalizing contracts in light of the state’s stay-home order. Scripps took those concerns to the Whitmer administration, but said there was pressure from elsewhere to make the changes.

“It allows for a way to keep (notarization and witnessing of documents) going even in this new environment,” Scripps said, adding that “we’re going to learn a lot of lessons” from the pandemic. “There’s nothing like a crisis to drive home how quickly we’ve got to update our systems.”

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