What Does Notarization Mean?
Notarization is the process by which a public official, known as a notary public, verifies that signatures on documents are legitimate. The notary is authorized to perform a number of official acts such as certifying documents, taking depositions, and administering oaths. For the purposes of this article, we will focus on why notarization matters for contracts.
A notary public is a state-licensed individual who is appointed to serve the public as an impartial witness in the signing of important documents. Notaries are responsible for verifying the signer’s identity, willingness, and awareness of the contents of the document.
Notarization involves a few different steps. The individual requesting the notarization must sign the document in front of the notary. The notary will verify the signer’s identity against a government-issued photo ID . The signer will then complete a notarization journal entry where they will provide basic details of the transaction and sign the journal attesting that they understand what they are signing and are doing so voluntarily. After all steps have been successfully completed, the notary will affix their signature and seal to the document.
Notarization matters in legal transactions because it establishes a presumption of authenticity. This means that a notarized document is presumed to have been signed by the individual as stated. While this presumption can be refuted through legal proceedings, a "document signed under seal" is typically considered to be sufficient proof of authenticity. For this reason, it is important to have contracts notarized whenever notarization is necessary or recommended.
Contracts and Their Legal Standing
Before we discuss notarization and its legal effect on a contract, let’s be clear about the definition of a contract. A contract is simply an agreement to do or not do something in exchange for something of value. Courts across the world review contracts every year. In many of those cases, the courts uphold or strike down contracts as necessary.
What is considered legally binding?
So, what constitutes an enforceable contract? The elements for a contract are:
•Offer – There must be a specific offer to sign.
•Acceptance – A full acceptance of the terms.
•Consideration – There must be a trade of some value to seal the deal. A contract cannot be formed without consideration.
•Capacity – All parties involved must have the legal capacity to form a contract.
•Legality – The terms of the contract must be legal.
If an agreement or all these elements are missing, then that agreement is not legally binding. It is worth noting that while signatures are generally required – notaries are not always necessary. When the elements listed above are satisfied, contracts become legally binding and enforceable.
So does notarization matter?
Again, a notary is not always necessary for a binding agreement… unless the offeror requires notarization in order to uphold the proposed agreement. If notarization isn’t part of a proposed agreement, you will be okay without a notary. However, if notarization is required and not performed, then the contract is void. Naturally, this does vary for wills, deed, etc. And, certain limits to notarization do exist in some jurisdictions. For example, certain jurisdictions do not require notarization in order to upholding a contract, while others do.
When is Notarization Necessary?
Not all contracts require notarization, but there are certain cases where it is necessary to achieve legal effect. Here are some scenarios and types of contracts that typically must be notarized.
Real estate transfer documents
In a transaction involving real estate, a deed or mortgage generally must be signed in front of a notary, no matter how simple or for how little money it is being sold. In addition, wills must be signed by two witnesses in non-community property states and notarized in order to be effective.
Documents that will be used abroad
When dealing with documents used abroad, you may insist upon notarization and even apostille, which is a certification of the authenticity of a document for use abroad under the 1961 Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents. Apostille does not translate information; it only certifies that the document is genuine. Apostille is appropriate for documents going to any of the 116 countries that have signed the convention. If the document is going to a country that is not a signatory to the Convention, however, and there is no agreement between the two countries, the document may have to go through the judicial and foreign affairs ministries of the state of origin, as well as the embassy of the recipient country.
Loan documents
Loan documents may require notarization as well, depending on where the money is coming from. For example, the loan needs notarization when the lender is from a different state or when federal money is involved.
Adoptions
Any adoption process requires notarization of the consent of the adoptive parents.
Trust and estate documents
Executors and heirs of estates and trusts, as well as accountants and financial advisors who maintain custody of assets that are subject to a trust or estate, may have to sign a notarized statement.
Unconditional waivers
An unconditional waiver of a mechanic’s lien must be signed by the contractor who is waiving the lien and then recorded at the office of the county clerk.
Documentation of titles to assets
References to certificates of title are among the most common instances in which documents require notarization. Examples are vehicle titles and deeds to real estate.
Advantages and Disadvantages of Contract Notarization
The pros and cons of notarizing a contract
In the same way that a signature on a contract signifies that the parties intend to be legally bound by its terms, so too does a notarized signature. But there are pros and cons to having it done.
A notary seals or stamps a document certifying it as having been properly executed. It is true that notarization is not required for the validity of most contracts. Simply putting pen to paper will suffice to make it a legally binding agreement. However, some people believe that notarization is necessary, particularly for contracts that involve real estate or large sums of money.
The first thing to understand about notarization is that it is just a formality. A notary is not qualified to make legal judgements about the validity of the document before him or her and certainly not the authenticity of the parties’ signatures. The role of a notary public is to verify the identity of the signatories and that they are executing the document of their own volition. Stated simply, a notary’s job is to observe the signing process of a document. Notaries are not responsible for its contents or why the parties are signing the document. And if witnesses are required, there are no laws specifying that the notary must be the witness. A notary public’s ability to validate a signature on a contract is limited to his or her presence at the execution of the document. That being said, the question remains: Is notarization worth it? The answer is yes. Here are a few reasons to consider:
Notarization, in effect, will deter fraud but will not serve as an impenetrable wall. If a contract is improperly notarized or the notary witnesses what he or she believes to be a fraudulent transaction, the notary can be held liable.
Exceptions: Contracts That Are Not Required To Be Notarized
Not every contract requires notarization. Where state or local law does not require that the contract be in writing, then it may be expressed orally between the parties without notarization. The Louisiana Civil Code Article 1846 states that "Contracts may be made in any form except where the law requires a certain form for either the validity or the effect of the contract." Other areas of law in Louisiana, such as real estate, do not require a particular form, but do require valid notarial acts.
Other exceptions exist , such as leases not exceeding one year, or those contracts that do not involve a transaction of immeasurable value. These less formal agreements may still be binding if all parties have accepted their obligations.
However, the general rule in Louisiana is that there is no formal requirement that agreements be in writing, executed and notarized to become enforceable. Some contractual obligations will be enforced as long as there is clear and convincing evidence that the terms exist, even if that proof comes from oral testimony rather than a written contract.
How to Proceed With Notarizing a Contract
Though the exact process that a party follows to have a contract notarized may vary depending upon the parties’ preferences or specific circumstances, the overall steps that most parties follow are likely to be broadly similar as outlined below. The first step that the parties must take is to contact a notary public in their area. Since notary publics may be located throughout the country, they may be relatively easy to find by obtaining a list in the local area and then calling several in order to determine their fees. When the parties contact the notary public, they should first ask whether it is beneficial to schedule an appointment prior to the notarization or whether they may walk in. If necessary, the parties should schedule an appointment at least a few days before the notarization will occur. During the notarization, the parties should bring the contract to be notarized, their state-issued IDs (i.e. driver’s licenses) and any other agreements that may be important for the notary public to review before notarizing the agreement. It is also a good idea for the parties to bring along a blank piece of paper, since the notary public will need to know the state in which they live in order to place an appropriate notary stamp on the contract. It is worth noting that in most states, the notarization process cannot occur unless the parties are in the presence of the notary. When the contract is notarized, the parties will each need to sign the contract in front of the notary public and provide him or her with their state-issued identification so that their identities can be verified. It is also common for the notary public to keep a copy of the contract after the notarization process.
Conclusion: Considerations Regarding Contracts
In this article, we have uncovered the often-overlooked reality: a notarized signature on a contract is not necessarily a prerequisite for that contract to be valid and enforceable. State laws differ, of course, but most don’t require notarization of contracts other than in specific enumerated circumstances, and even then it’s usually a matter of discretion.
On the other hand, notarized signatures can help bolster the authenticity of a contract, especially for contracts that involve significant rights or obligations. So in deciding whether to get a contract notarized, ask yourself the following questions:
1 . Do I need to have it notarized in order for the contract to be enforceable?
2. Would having it notarized strengthen its legitimacy and weight when needed, such as in future disputes or court proceedings?
3. Once I determine whether notarization is necessary, should I explore other options that can provide very similar benefits, such as having an existing witness, adding a certification by the other party, or obtaining a private certificate?
By considering these factors, you can make an informed decision as to whether notarization is right for your specific circumstance.