Under the guise of efficiency and cost savings, some lawmakers in Georgia are pushing to let out-of-state notaries conduct real estate closings online. It is a terrible idea that would destroy critical protections for Georgia homebuyers and leave them with nowhere to turn when the speedy online closing process leaves a trail of errors, title issues and potential financial ruin.
For decades, Georgia has required a Georgia licensed attorney to handle real estate closings from beginning to end, and for good reason. That local closing attorney is responsible for managing the complex closing process from start to finish and must be accountable to all parties in the process. When issues arise with the title — liens, fraud, public record errors or disputes over ownership or property lines — the local closing attorney helps resolve those issues on the front end to avoid legal and financial problems on the back end.
A bill pending in the Georgia General Assembly, House Bill 334, would allow Georgia real estate closings for the first time to be conducted online, in a “virtual signing room,” by a remote notary not even located in Georgia. It represents a massive, abrupt change that has had no thorough debate or study of how to maintain accountability and protections for Georgia consumers.
After more than two decades of handling real estate transactions in northeast Georgia, I am now seeing homeowners regularly stuck with problems when one of these “signature closings” involving an out-of-state lender using a mobile notary goes south. A remote notary doesn’t know you and won’t care about problems after the closing. The bill pending in the General Assembly will open the floodgates for big nationwide lenders to use remote online notaries to handle closings here in Georgia, and that will result in title disasters for homeowners all across our state.
Proponents of HB 334 say using a remote online notary for real estate closings will be cheaper for the homebuyer in the form of lower origination fees. But these alleged “savings” would come with a high price: The high standards now in place will be ignored and consumers will no longer be protected from the potential financial devastation of a botched closing.
HB334 is simply a Trojan Horse to allow large, out-of-state lenders to circumvent Georgia’s requirement for an attorney to supervise real estate closings from start to finish. Big Wall Street firms are chomping at the bit to see this bill passed so that they can churn out Georgia real estate closings remotely and online while smiling all the way to the bank. When a Georgia homebuyer has problems or questions after the remote online closing, these national firms will be nowhere to be found — so frustrating.
I urge all folks to contact your Georgia representatives and senators and demand that our northeast Georgia lawmakers reject HB 334 unless real estate closings are carved out of it. We must maintain the protections and accountability that Georgia consumers deserve when dealing with life’s largest purchase: their home.
Scotty Ball is a partner and real estate attorney at Stewart Melvin & Frost.