What Is South Carolina’s New IPEN Electronic Notary Law?

What Is South Carolina’s New IPEN Electronic Notary Law?

On May 13, the General Assembly passed legislation that permits electronic notarization of signed documents. The South Carolina Electronic Notary Public Act was signed by Governor McMaster on May 18. While the law does not go as far as some want to allow remote notarization, it’s a step in the right direction. To its credit, the law does contain several safeguards to alleviate opposition to remote online notary (RON) legislation that may be taken up by the General Assembly in a future session.

First things first: what is IPEN? It stands for in-person electronic notary. As the term implies, the person signing the document must do so in the presence of a notary. This requirement makes it clear that the new law does not enact RON, and for many raises the question of why it was necessary in the first place.

Proponents of the law will point out that it adds a layer of security to the notarization process. Each electronic notary will be required to include the following items:

• Electronic signature
• Recording in an electronic journal
• Public key certificate
• Electronic seal

A so-called Certificate of Authority for an Electronic Notarial Act must be included with each electronic notarization. And while this all sounds impressive, skeptical observers have asked: what’s the point, unless this will pave the way for RON legislation?

RON isn’t just convenient for notarizing documents during pandemics, when in-person signings are less safe. It increases the efficiency of executing documents and allows parties to signings to devote more resources to other needs. Imagine the time and cost that could be saved if signatories and notaries did not have to show up at the same place to sign and notarize documents.

IPEN could be seen as a baby step in the direction of RON. But it would need to overcome resistance from lawyers and others who fear abuse of remote notarization. South Carolina real estate lawyers, for example, have long opposed remote notarization out of concern that notaries, not lawyers, will supervise closings.

However, these worries are unfounded. Included in the text of the new IPEN law is this: “Nothing in this act contravenes the South Carolina law that requires a licensed South Carolina attorney to supervise a closing.” In other words, there would be little to fear from a remote option because future legislation could easily address its worst excesses and potential abuses.

The work ahead to implement this new law will take some time. The South Carolina Secretary of State will be tasked with registering electronic notaries. That means creating the necessary regulations to govern the procedures, practices, forms, and records needed for electronic signatures and seals. Unique registration numbers must be assigned to each electronic notary, and technology vendors have to be approved.

Perhaps this will open the door to South Carolina enacting true RON legislation. The General Assembly won’t consider such legislation before January 2022. During the intervening period, the practice of electronically notarizing documents may allay concerns of forgery, non-lawyers practicing law, and other issues that have stood in the way of RON.

In the last year, we’ve seen how technology can help law firms adapt to exigencies like the coronavirus pandemic. And Gaffney Lewis, LLC, has steadily kept pace. We are excited to see this move forward and what it could mean for the future of the notarization process. If we can assist with your legal needs, please reach out to us today.