In the category of “you learn something new all the time,” this week I learned something new about Remote Online Notaries (“RONs”) used for real estate closings.
The scenario was that a seller was unaware until he reached the closing table that the signature of his wife — married since the house was acquired — was needed on the deed in order to release her rights of dower. Unfortunately, the wife was (a) a non-citizen of the USA, (b) she had a green card and had resided in the US for years, and (c) was physically located in Germany as of the time of the closing.
In the days before RONs, the only option was (a) email the deed to the signer and have them print it out in the remote jurisdiction (usually on funny-sized paper), (b) make an appointment at the U.S. Embassy for an overseas equivalent of a notary (or acknowledgement) (typically you can’t just drop in unannounced), (c) wait for that appointment and (d) Fed Ex the deed back to Cincinnati.
The wife was able to get a quick appointment at the U.S. Embassy and would be able to get a deed back to Cincinnati about five days after the initial closing (even including an intervening weekend). Unfortunately, the buyer just could not wait the five days and was throwing a fit, demanding thousands of dollars of concessions for (what we saw as) a relatively short delay.
So, RON to the rescue, right?
Not so fast. The title underwriter’s (the guys who ultimately make the call as to whether we can close or not) first reaction was “so long as she is a US citizen, we can use a RON closing.” I replied, “well no, in addition to being out of the country she is not a US citizen.”
Digging deeper (which we appreciate our title underwriter doing), it turns out that the “US citizen” thing is not a bright line test. Rather, RON closings use sophisticated Knowledge-based Authentication (“KBA”). These are whose odd security questions that pull and query minute details from your past (many times when I am asked a KBA question, I don’t even know the answer, even though the question is about something I should know!). Well, as it turns out, those KBA questions are primarily pulled from information contained deep in your credit report, and — if your contacts to the US and its credit-reporting system ae sufficiently robust — RONs can possibly work for non-US citizens, including those who at the time are overseas. (You actually find out “if it works” during the execution of a RON closing.)
So, the closing was saved — RON got it done within hours of the first phone call. And I learned more about RON, citizenship and what “KBA” is.