Online home sale closures become reality in Texas

Texas’ first all-digital property transaction closed this week – meaning more US notaries are likely to start bearing witness to such deals with keyboard strokes, rather than pen flourishes.

Stewart Information Services, a Houston-based title and real estate company, and Georgetown Mortgage of Georgetown made the completion. But there was no public servant with pen and stamp standing by.

Rather, Notarise, a Virginia start-up founded in 2015, offered a sleeker, sexier version of a notary service, taking advantage of a 2017 Texas law that came into effect on July 1.

Passed with broad support in both chambers, the law allows notaries to approve documents over a two-way video conference rather than the centuries-old requirement that they give their stamp of approval in person.

Notarise, one of several companies already offering digital notarisation, was founded after Virginia became the first state to sign off on a similar law in 2012; since then, Nevada and Texas have followed suit.

In “e-notarisation,” as it’s being dubbed, documents are uploaded to the notary’s app or website and a webcam link is established between the parties.

Clients must display their government ID and sign their names on the screen. The notary then digitally signs and stamps. For security, a recording of this back-and-forth is uploaded to the cloud.

In Texas, security on the process is tighter than in other states. The notary has either to personally know the client or verify the ID through a third-party software and then ask the client certain personal questions to prove their identity.

But some notaries remain skittish about the prospect of online notarisation.

Before the bill passed, the Texas chapter of the American Association of Notaries actually asked people to digitally sign onto a letter to lawmakers, opposing the legislation because digital notarisation would “compromise notarial acts.”

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The association argues webcams don’t allow notaries to verify that nobody is coercing a signing party and that the digitisation of the process could put notaries out of work.

The law passed after lobbying from various players in the real estate and business spheres, including Stewart, Notarize and the Texas Association of Realtors.

“It was making sure that Texas laws were staying up to date with what’s happening in the marketplace,” said Daniel Gonzales, director of legislative affairs for the Realtors’ association.

“More mortgages and real estate transactions are going to be occurring electronically.”

He said the main benefactor of an initiative like this is the consumer, not any corporation. It’s saving people travel time, though not necessarily money – the state has set the maximum cost for digital notarization at US$25, a big jump from the $6 limit for the first in-person acknowledgement.

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And while Gonzales concedes new technologies often introduce some degree of risk, he hasn’t seen any problems with this one.

Byron Carlock Jr, the Dallas-based national real estate leader for PWC, said although the real estate sector isn’t known for its technological progressivism, the industry is changing, whether to catch up to other industries or attract younger audiences.

With sites such as Zillow and Trulia, online-only discount brokers, e-signatures and now e-notarisation, homebuyers can choose and buy to house and get a mortgage without leaving the sofa, so long as loan underwriters feel secure.

Consumer and car financing have found homes online. Credit cards can be applied for online, have their limits raised online, and homebuyers can even take detailed tours of flats on the internet.

It was only a matter of time before the home buying process – and with it, a notarisation experience that is been virtually unchanged since the advent of the self-inking endorsement stamp – caught up, he added.

“Real estate was a slow adaptor. We used to say it functioned as an analogue industry in a digital world.

“Now billions of dollars of venture capital has flooded into various prop tech initiatives.”