Texas' first all-digital real estate transaction closed this week, meaning that some notaries will start bearing witness to important deals with keyboard strokes rather than pen flourishes.
The deal was between Stewart Information Services, a Houston-based title and real estate company, and Georgetown Mortgage LLC, of Georgetown, Texas. But there was no public servant with pen and stamp standing by.
Rather, Notarize, a Virginia startup founded in 2015, offered a sleeker, sexier version of a notary service, taking advantage of a 2017 Texas law that went into effect on July 1.
The law, which passed with broad support in both chambers, permits notaries to approve documents over a two-way video conference rather than the centuries-old requirement that they give their stamp of approval in person.
Notarize, one of several companies offering digital notarization, was founded after Virginia became the first state to sign off on a similar law in 2012; since then, Nevada and Texas have followed suit.
In "e-notarization," as it's dubbed, documents are uploaded to the notary's app or website and a webcam link is established between the parties. Clients must display their government ID and sign their names on the screen. The notary then digitally signs and stamps. For security, a recording of this back-and-forth is uploaded to the cloud.
In Texas, security on the process is tighter than in other states. The notary has to either personally know the client or verify the ID through a third-party software and then ask the client certain personal questions to prove their identity.
Some notaries were skittish about the prospect of online notarization. Before the bill passed, the Texas chapter of the American Association of Notaries asked people to digitally sign onto a letter to lawmakers opposing the legislation because digital notarization would "compromise notarial acts."
The association argued that webcams don't allow notaries to verify that nobody is coercing a signing party and that the digitization of the process could put notaries out of work.
The law passed after lobbying from various players in the real estate and business spheres, including Stewart, Notarize and the Texas Association of Realtors.
"It was making sure that Texas laws were staying up to date with what's happening in the marketplace," said Daniel Gonzales, director of legislative affairs for the Realtors' association. "More and more mortgages and real estate transactions are going to be occurring electronically."
He said the main benefactor of an initiative like this is the consumer, not any corporations. It's saving people travel time, though not necessarily money – the state set the maximum cost for digital notarization at $25, a big jump from the $6 limit for the first in-person acknowledgement.
And while Gonzales concedes that all new technologies introduce some degree of risk, he said he hasn't seen any problems.
Real estate isn't known for its technological progressivism. But the industry is changing, whether to catch up to other industries or attract younger audiences, said R. Byron Carlock Jr., the Dallas-based national real estate leader for PricewaterhouseCoopers.
With sites like Zillow and Trulia, online-only discount brokers, e-signatures and now e-notarization, home buyers can choose and buy a house and get a mortgage without leaving the sofa, so long as loan underwriters feel secure.
Consumer and auto financing have found homes online. Consumers can apply for credit cards online, get their limits raised online, apply for and even tour apartments online. It was a matter of time before the home buying process – and with it, a notarization experience that's been virtually unchanged since the advent of the self-inking endorsement stamp – caught up.
"Real estate was a slow adapter. We used to say it functioned as an analogue industry in a digital world," Carlock said. "Now billions of dollars of venture capital has flooded into various prop tech initiatives."