2. e-Notarization and the Law John H. Messing, Esq. Law-on-Line,Inc. 5151 E. Broadway Blvd., Suite 1600 Tucson, AZ 85711 (520) 512-5432 Email: jmessing@law-on-line.com Copyright JHM 2005

3. HUMANSHUMANS ACHINE$

4. The Questions

5. 1. Does the law permit it?

6. The Questions 1. Does the law permit it? 2. Will human notaries survive the change?

7. The Questions 1. Does the law permit it? 2. Will human notaries survive the change? 3. Will the nature of the tasks differ?

8. The Questions 1. Does the law permit it? 2. Will human notaries survive the change? 3. Will the nature of the tasks differ? 4. Will there be a reasonable chance to prosper? Qualifiedly, yes The outlook is promising Probably not fundamentally With continued wise leadership, yes

9. The State of Current U.S. Law The law is technically complex, layered and confusing Esign (federal) – Supreme Law of the Land 15 U.S.C.Sec. 7001 et seq. Uniform Electronic Transactions Act or UETA (state) – Widely adopted, with variations between the states Uniform Real Property Electronic Recording Act or URPERA (state) – Brand new, few adopters as yet, but likely to be widely adopted in the next few years. It is general and relies upon regulations to fill in the gaps.

10. The State of Current U.S. Law Basically Documents and signatures relating to transactions that are electronic are fully enforceable like paper documents and signatures, within limits. Electronic signatures only must “logically associate” a signer with a transaction or a document, without further specification. Notarial seal requirements for paper are abolished for electronic documents and signatures. No particular technology to create electronic documents or signatures is required by law for either signers or the notaries, in most places as of today.

11. The State of Current U.S. Law Keep in mind, please: Under Esign section 7001(d)(1), retained electronic documents and signatures must accurately reflect the transactions, remain accessible and be capable of accurate reproduction for later reference. Long-term XML technologies are being developed by powerful industrial consortia with the help of academics and the government. Security of documents and personal identity information under section 7001(d)(1) remain serious unresolved problems, but are an ideal opportunity for notaries, electronic and otherwise. State governments have powers to mandate particular technologies wherever the state is a consensual party to a transaction. Extensive regulation of enotarization by state agencies is highly likely, but the future direction and scope are unknowable today.

12. Survival “In the presence of”… Time-honored in the paper world But costly when compared with computerized processes In certain corporate and some regulatory circles, the idea has been advanced that technology can and should replace human notaries Arizona has by statute adopted machine notarization as one form of legal e-notarization -ARS § 41-356 (on CD) It requires a technology called public key infrastructure (“PKI”) which is favored outside of the US for electronic signatures and notarizations *

13. Survival The statute was vocally promoted nationally by the AZ notary administrators not long ago So far, no other state has adopted it Yet notaries still are viewed as an item of significant cost and a barrier by certain businesses and officials impatient to conduct electronic business in earnest Your NNA leadership has kept them largely at bay – Enormous effort to join the overwhelming number of industry and governmental groups, participate in meetings, and deliver a timely and effective defense of the need for notaries

14. Survival One lawyer’s view favoring human e-notaries over machines: In court cases, human notaries can be – called to testify – cross-examined, and – evaluated in terms of credibility Machines cannot testify Expert witnesses are required to testify about machine processes – Numbers of experts can be found to testify on just about any side of a scientific issue – They are costly Hard to prove a negative if the machines seemed to work okay Machines cannot evaluate the capacity and voluntariness of a human signer or meaningfully administer oaths

15. Changes Human electronic notaries will still be expected to check credentials, administer oaths and witness signings Wet signatures, physical stamps and seals will be replaced by electronic substitutes – Digital certificates will be used identify the source of the notarized documents, either individual or enterprise-wide – Timestamps may be required to prevent backdating of documents Authentication gateways such as the electronic notary seal program – Real time web service to enable or revoke notary’s credentials directly from state administrative offices – Registry of notaries and their acts Electronic journaling, with biometric components New and unfamiliar technologies, including cryptographic protections

16. Prosperity US notaries have a unique opportunity to become authentication and identification agents for a variety of purposes in an age of rampant identity theft With global e-commerce, a need exists to give common law notaries equivalent powers of civil law notaries so that US documents can be quickly accepted in foreign jurisdictions. This is not easy today because US notarial acts are not fully compliant with civil law notary requirements. With increased responsibilities and opportunities, additional financial rewards are possible The NNA leadership has stressed these points in public meetings, and position papers (See CD)

17. End John H. Messing, Esq. jmessing@law-on-line.com Law-on-Line, Inc. 5151 E. Broadway Blvd. Tucson, AZ 85711 (520) 512-5432 Copyright JHM 2005