BILL ANALYSIS �
AB 2326
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Date of Hearing: April 10, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2326 (Wagner) - As Introduced: February 24, 2012
SUBJECT : Execution of documents.
SUMMARY : Requires notaries to obtain a fingerprint before
notarizing any document affecting real property, as specified.
Specifically, this bill :
1)Provides, under current law governing the recording of
property transfers, that proof of the execution of any
instrument affecting real property is not permitted, as
specified, though proof of the execution of a trustee's deed
or deed of reconveyance is permitted.
2)Provides that, if a document to be notarized is a document
affecting real property, the notary public shall require the
party signing the document to place his or her thumbprint in
the notary's journal, as specified.
3)Exempts any document affecting real property from current law
allowing certain instruments to be proved by a subscribing
witness before they are recorded by a county recorder.
Clarifies that this provision of law shall not apply to a
trustee's deed resulting from a decree of foreclosure, or a
nonjudicial foreclosure, as specified, or to a deed of
reconveyance.
EXISTING LAW
1)Requires a notary public to keep one active sequential journal
at a time of all official acts performed as a notary public.
2)Provides that, if a document to be notarized a deed, quitclaim
deed, deed of trust affecting real property, or a power of
attorney document, the notary public shall require the party
signing the document to place his or her thumbprint in the
notary's journal, as specified.
3)Authorizes proof of the execution of an instrument as it
relates to the recording of transfers of property by certain
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persons, and prescribes the form for that proof.
4)Allows proof of the execution of an instrument, when not
acknowledged, to be made by any of the following:
a) By the party executing it, or either of them;
b) By a subscribing witness; or,
c) By other witnesses, in specified cases.
5)Provides that proof of the execution of a power of attorney,
grant deed, mortgage, deed of trust, quitclaim deed, or
security agreement by use of a subscribing witness is not
permitted, as specified, though proof of the execution of a
trustee's deed or deed of reconveyance is permitted.
6)Requires certain instruments, before they are recorded by a
county recorder, to be acknowledged by the person executing
them and the acknowledgment certified as prescribed by law,
except as specified. The execution of these instruments can
be proved by a subscribing witness, as specified, except for
any power of attorney, quitclaim deed, grant deed other than a
trustee's deed or deed of reconveyance, mortgage, deed of
trust, or security agreement.
7)Defines a subscribing witness as one who sees a writing
executed or hears it acknowledged, and at the request of the
party thereupon signs his name as a witness.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author, "Although
current law prevents the use of a subscribing witness as proof
of signing on powers of attorney and specific real property
documents?a subscribing witness can currently be used when
notarizing other real estate documents?that could be later used
to fraudulently sign multiple real property documents.
"Notaries report substantial concern about the potential for
fraud when asked to notarize a document under the subscribing
witness exception to personal appearance. Personal appearance
before a notary public is a greater deterrent to fraud than
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allowing notarization without personal appearance. Notaries are
widely available in California, thus a circumstance where an
individual would need to have a signature notarized and find the
subscribing witness procedure to be the only one available would
be rare; because of the lack of personal appearance before the
notary, signature by subscribing witness presents a greater risk
than benefit.
"Notaries (also) indicate that requesting a thumbprint in the
notary journal acts creates an additional cautionary signal to
the signer, thereby serving as a fraud deterrent. A consistent
requirement for the right thumbprint of the signer will clarify
the circumstances under which a thumbprint is required and will
be a greater deterrent to crime. Additionally, the notary
journal can be used as a source of evidence for law enforcement
authorities; obtaining a thumbprint in the notary journal for
all real estate documents may assist in the identification and
prosecution of fraudsters."
Background .
California notaries public are commissioned by the Secretary of
State, and must keep one active sequential journal at a time of
all acts performed as a notary public. The journal must
include:
1)The date, time and type of each official act;
2)The character of every instrument sworn to, affirmed,
acknowledged or proved before the notary public;
3)The signature of each person whose signature is being
notarized;
4)A statement that the identity of a person making an
acknowledgment or taking an oath or affirmation was based on
satisfactory evidence; and,
5)The fee charged for the notarial service.
The notary must require the person signing the document to place
his or her right thumbprint in the journal if the document to be
notarized is a deed, quitclaim deed, or deed of trust affecting
real property, or a power of attorney document.
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This bill extends this fingerprint requirement to any document
affecting real property.
A "subscribing witness" is a person who witnesses the signing of
a document and appears before a notary public on behalf of the
principal signer to attest that the principal signer has signed
the document. A notary can make a proof of execution even if
the principal signer of the document is not present, as long as
a subscribing witness testifies that the signature is genuine.
Due to the potential for fraud, California law does not permit a
notary to certify the principal signer's signature through the
authority of a subscribing witness when the document involves a
power of attorney, a grant deed, a mortgage, a deed of trust, a
quitclaim deed, or a security agreement (a trustee's deed or
deed of reconveyance may be acknowledged through a proof of
execution). Proof of the execution of these documents by use of
a subscribing witness is also prohibited under current law
governing the recording of property transfers. This limitation
is due to the potential for a single individual, acting in the
role of subscribing witness, to make false claims in order to
commit fraud.
This bill extends this prohibition to any document affecting
real property.
Support . The National Notary Association (NNA) writes, "Since
1996, journal thumbprints have served an invaluable purpose in
assisting law enforcement investigate and prosecute frauds
involving notarized deeds, quitclaim deeds, deed of trust
affecting real property, and most recently, powers of attorney.
In addition, the prospect of leaving evidence in the form of a
thumbprint in the Notary's journal serves as a strong deterrent
for the commission of many crimes.
"The NNA can attest that most claims on a Notary's bond that it
has seen involve real estate transactions. Requiring a journal
thumbprint, as well as prohibiting the notarial act of proof of
execution by subscribing witness for these transactions, makes
good policy sense and will protect the public.
"The bill also will help Notaries comply with statutory
requirements. Knowing that all - and not some - real estate
documents require journal thumbprints and may not be proved by
subscribing witness will make it more likely that Notaries will
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follow the law."
Previous legislation .
AB 75 (Hill), Chapter 269, Statutes of 2011, among other
provisions, adds a power of attorney to the types of instruments
for which a proof of the execution is prohibited, and prohibits
a proof of the execution for any instrument requiring a notary
public to obtain a thumbprint from the party signing the
document in the notary public's journal.
AB 898 (Lieu) of 2009, among other provisions, prohibits the use
of a subscribing witness when establishing a power of attorney.
This bill was vetoed, with the Governor citing concern over an
unrelated provision.
AB 886 (Runner), Chapter 399, Statutes of 2007, among other
things, adds a power of attorney to the types of documents that
require a fingerprint in the notary's journal in order to be
notarized.
REGISTERED SUPPORT / OPPOSITION :
Support
California Land Title Association
National Notary Association
Opposition
None on file.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301