Due to the COVID-19 crisis and the impact of the Wisconsin Safer at Home Order , we have been faced with the challenge of how to legally accomplish real estate transactions while adhering to social distancing requirements.
Before we even had heard of the concept of “social distancing”, a real estate transaction would culminate in an in person “closing”. At the closing, all of the involved parties physically get together in one location and execute all documents to finalize the transaction. The closing occurs when, simultaneously, the title and ownership of the real estate transfers from the Seller to the Buyer (via a deed) and the transfer of money from the Buyer to the Seller occurs. These closings occur in person for several reasons (amongst them convenience and historical tradition), but another important reason is that there are legally required “formalities” that must be met for the conveyance of real estate to legally occur. One such formality is that the parties signing the conveyance documents must have a third party certify their signature before it is delivered to the Buyer. This is required by law in order for the Register of Deeds to accept the document and to record it–the final step in making the real estate conveyance legally effective. The purpose of this third party certification requirement is to provide assurance to the other involved parties and the public that the person who signed the conveyance document is actually the person they say they are. This provides assurance that the document isn’t being executed fraudulently.
Wisconsin law proscribes only two ways for this third party certification to be accomplished. The most common type of this third party certification is to have the signature witnessed by a notary public, or, as described under the statute, “acknowledgment”. Acknowledgement, however, to be legally effective, requires the notary to be physically present in the same room to witness the person signing the document before the notary can place their seal or stamp on the document. (We recognize that there is a new law going into effect May 1, 2020, Wisconsin Statutes Chapter 140, that allows for remote notarization of real estate documents via commercial remote notarization software. However, our research has found, at least as of the date of this post, that the cost associated with the third party remote notarization services are cost prohibitive).
That all being said, those wishing to buy or sell, or otherwise convey real estate (including refinancing of mortgages) during this time of social distancing can still accomplish the legally required formalities without having to meet with a notary.
In addition to the option for acknowledgement by a notary, Wisconsin law provides an alternative for Wisconsin Attorneys to certify real estate documents without being physically present to witness a signature. This option is referred to as “authentication”.
- Deeds, Mortgages, and Other Conveyance Documents. For conveyances of Wisconsin real property, (with certain exceptions that are discussed below), Wisconsin licensed attorneys, per Wis. Stats. § 706.06(2) have the unique ability to authenticate the conveyance document (such as a deed or mortgage) and still allow the document to meet legally required formalities necessary for the document to qualify to be recorded.Where notarization (a/k/a acknowledgement) requires the notary’s physical presence in the same room as the signing person, for a Wisconsin attorney to authenticate the same document, the attorney does not have to be physically present in the same room to witness the signature. However, the attorney must be “familiar” with the person’s signature. If the attorney is familiar with the signature, the attorney can sign the authentication portion of the conveyance document.
For many Wisconsin State Bar approved real estate forms such as deeds or mortgages that are commonly used in Wisconsin real estate transactions, there is pre-printed language on the bottom left side of the document for the attorney to authenticate the document. For other non-standard conveyance documents that need to be recorded, the attorney can draft the exact authentication language that is on the pre-printed State Bar forms, and then execute the document just as they would on the State Bar approved form. The attorney SHOULD NOT place a notary stamp or seal on the conveyance document if they are authenticating the document. The stamp or seal would be an indication that the attorney signed the document in an act of acknowledgement, not authentication.
Where the attorney has documentation of the signing person’s signatures from other documents (for instance if the signer is a past client), this evidence can create familiarity of the signature for the attorney. For a new client, our practice is to get a sample of the signature (such as a copy of their ID with a signature on it) and to do a Facetime/Zoom/Skype call with the person signing the document to be authenticated by the attorney. During the call, the signing person will have signed the document, gotten the signed document to the attorney, and then the attorney would then hold up the signed document by the signing person and have them verbally verify over the video call that the signature is theirs.
This practice can be useful to remotely authenticate documents without the necessity of a “drive-by notarization” as that practice still requires personal interaction. The client could pre-sign all documentation and mail and/or drop off at the attorney’s office, or even scan and forward the signed document via email or fax. The document can then authenticated by the attorney familiar with the signature after they’ve become familiar with the signature. Once authenticated, the document would then be ready and legally qualified to be recorded to effectuate the real estate conveyance at a remote closing. This option is also available for Wisconsin real estate for signing persons who are located out of state. This option may not only be beneficial for these times of social distancing, but in the future, for those wishing to conveniently transaction real estate related business remotely from their home.
- Affidavits. Real estate transactions also require involved parties to sign affidavits under oath as a part of the the closing (Owner’s Affidavits, Gap Affidavits, etc.). These affidavits are typically related to the Title Insurance Policy to be issued after closing to the Buyer and lender. These affidavits are usually notarized at closing too! We’ve concluded that per Wis. Stats. § 706.06(3), affidavits related to Wisconsin real estate can also be authenticated by Attorneys in good standing with the State Bar of Wisconsin, but, that the Attorney authenticating must also be a registered as notary public (or otherwise authorized to administer oaths per Wis. Stats. § 887.01(1)) in order to do so. When signing the affidavit, the attorney should list his or her title as “Member of the State Bar of Wisconsin AND Notary Public”. Again, the Attorney should NOT place their stamp or seal on the document if they are authenticating the affidavit.
- Termination of Decedent’s Interest in Property. As mentioned above, there is one exception we have found for certain types of real estate conveyances that cannot be accomplished by authentication and that must be accomplished by acknowledgement by a notary. This exception relates to execution of the Termination of a Decedent’s Interest in Real Estate (a/k/a TOD-110s/HT-110s). A conveyance of real estate pursuant to a TOD-110 would be done either under Wis. Stats. §§ 867.045 and 867.046. For these terminations to be legally effective, the statutes require that the person certifying the document declare that the applicant “appeared before him or her”. We interpret this to mean that the termination of the decedent’s interest under either of those sections cannot be effectuated without the person being within the physical presence when signing. You’ll note also that the standard TOD-110 form does not have a spot for an authentication and only have a spot for acknowledgment.
In sum, with the exception of the TOD-110/HT-110, we conclude that all real estate transactions with documents requiring a third party confirming a signature can be done via authentication and therefore do not require personal contact or notarization.
During this time, the attorneys of Schober Schober & Mitchell, S.C. are available (even remotely) to assist with your legal matters, including assisting with both residential and commercial real estate transactions, not only with closings, but also with negotiating offers and dealing with legal issues between signing the contract and closing. If you have concern about being able to accomplish a real estate transaction due to COVID-19, know that we can still assist you with the transaction and that it can be accomplished with limited to no physical interaction with others due to the unique ability of Wisconsin attorneys to authenticate real estate documents.