Letter to the Governor in opposition to the Journal Abolition Bill

SUMMARY

The Commercial Law and Uniform State Laws Committee issued a letter urging Governor Hochul’s office not to sign into law a bill that would eliminate the requirement that notaries keep a record of notarial acts for ink notarizations. S.8663/A.7241A would rescind 19 NYCRR 182.9, a critical notarial rule designed to protect New Yorkers against deed fraud and other forgeries. The committee warns that abolishing the notary journaling requirement for ink notarizations (as distinct from electronic notarizations, for which notaries are also required to keep a journal or record) could risk an epidemic of home theft and other documentary fraud, as ink notarizations account for virtually all cases of home theft, forgery and documentary fraud in New York. There are numerous sound reasons for requiring journals, including that the journal is the notary’s official record of her performance of duties as a public official; it provides admissible evidence of a properly performed notarial act in case the notary’s certificate of the act is lost or destroyed; it may provide evidence that helps a victim obtain redress for forgery or other documentary fraud; and it also provides evidence that protects notaries from false accusations and unwarranted liability by evidencing their compliance with notarial requirements.

REPORT

Hon. Kathy Hochul
Governor of the State of New York
New York State Capitol Building
Albany, NY 12224

RE: Opposition to the enactment of the Journal Abolition Bill (A.7241-A / S.8663)

Dear Governor Hochul:

The New York City Bar Association (City Bar) respectfully urges you to veto A.7241-A (AM Lavine) / S.8663 (Sen. Hoylman-Sigal) (the Journal Abolition Bill), which would rescind 19 NYCRR 182.9 (Section 182.9), a critical notarial rule designed to protect New Yorkers against deed fraud and other forgeries. If enacted, the Journal Abolition Bill would eliminate all notarial recordkeeping for wet-ink notarizations and risk an epidemic of home theft and other documentary fraud.

The Journal Abolition Bill should not become law because:

• Its enactment is inconsistent with and would impair enforcement of your key initiative to protect the vulnerable against home theft;[1]
• Its enactment is inconsistent with the Senate’s passage of S.5688-A[2] in February 2024 and the Assembly’s passage of its predecessor version, 4277-A in May 2022, which would have increased required notarial recordkeeping to prevent home theft;
• Keeping notarial journals is widely recognized as a notarial best practice that deters documentary fraud and is required by the laws of 22 states and the District of Columbia; and
• Enactment of the Journal Abolition Bill will eliminate the requirement for notaries to make or retain any records of wet-ink notarizations, which account for virtually all the cases of home theft and forgery and fraud involving notarized documents in New York.

In December 2023, the City Bar issued a report (City Bar Report) in support of New York’s new notarial regulations in which it concluded that Section 182.9 was validly issued by the Secretary of State and provides an important safeguard against “deed fraud” – i.e., the use of forged notarized documents to record fraudulent real property transfers – and other forms of documentary fraud and notarial misconduct.[3] Nothing in the legislative history of the Journal Abolition Bill provides any reason to think otherwise. For the reasons stated in the City Bar Report and as discussed below, the City Bar continues to endorse Section 182.9 and therefore opposes enactment of the Journal Abolition Bill.

I. BACKGROUND

The Journal Abolition Bill originated in response to certain objections to Section 182.9’s requirement that all New York notaries keep a journal of their official notarial acts as public officers. In particular, some lawyers urged that commissioned notaries who are employed by lawyers or who are themselves lawyers be exempted from this requirement.[4]  However, rather than just exempting lawyers and their notary employees, the Journal Abolition Bill would eliminate the requirement that any notarial officer maintain a record of every wet-ink notarial act, the name and address of the person for whom the act was performed, and the method used to confirm that person’s identity.

The Journal Abolition Bill would retain that requirement only for electronic notarial acts. But electronic notarial acts are not the cause of the epidemic of home theft in New York and elsewhere during the past ten years. Electronic notarization was only recognized in New York recently and requires the notary to make and retain for ten years an audio-visual recording of the notarial act. The recordation of fraudsters acknowledging their signing of forged signatures is itself a substantial deterrent to deed fraud. It is wet-ink notarizations, which are not recorded, that give rise to the greatest risk of forgery and fraud, and, for that reason, the journal requirement is most important for wet-ink notarizations.

The Justification section of the Sponsor Memo for the Journal Abolition Bill (Sponsor Memo) asserts that the journal requirements for wet-ink notarizations “are unduly burdensome and serve no legitimate purpose.” It further asserts that “These [journal] requirements have a chilling effect on those wishing to act as notaries and pose serious attorney-client privilege concerns for attorneys acting as notaries.”[5]

However, as the City Bar Report details, there does not appear to be any persuasive evidence for these assertions. The journal requirement does not pose any risk to the attorney-client privilege, and any attorney who believes it does can decline to provide notarial services.

Furthermore, nothing in the legislative history of the Bill explains or justifies why a record of electronic notarizations should be mandated but wet-ink notarizations exempted. Elimination of the journal requirement for wet-ink notarizations would foreclose the Secretary of State’s ability to monitor and enforce compliance with the requirement of Executive Law Section 135-c(2)(a) that notaries use the same identification methods for both electronic and wet-ink notarial acts. And, as explained below, the Journal Abolition Bill would eliminate any recordkeeping protection to deter fraud in wet-ink notarial acts, where virtually all the fraud occurs. It would also deprive prosecutors of evidence essential to prosecute cases of deed fraud and deprive fraud victims of evidence necessary to obtain judicial relief.[6]

II. THE JOURNALING REQUIREMENT IS AN ESSENTIAL SAFEGUARD AGAINST FRAUD

As the City Bar Report describes, there are numerous sound reasons for requiring journals. First, the journal is the notary’s official record of their performance of duties as a public official. Second, it provides admissible evidence of a properly performed notarial act in case the notary’s certificate of the act is lost or destroyed. Third, it reinforces required procedures, thereby encouraging notaries to perform notarial acts properly, deflecting pressure on employee-notaries to take shortcuts, and reducing the risks of forgery and other fraud. Fourth, it provides evidence that protects notaries from false accusations and unwarranted liability by evidencing their compliance with notarial requirements. Fifth, it may provide evidence that permits detection of notarial negligence or misconduct, thereby deterring both. Sixth, it may provide evidence that helps a victim obtain redress for forgery or other documentary fraud, when it does occur.[7]

As explained in the Model Notary Act Comment to “Article 6—Notarial Records”: “[j]ournals serve the interests of principals and requesters, parties who rely upon those records, the public, government, law enforcement, the courts, and notaries themselves.”[8] And notarial experts universally recognize the value of properly kept notary journals for all these purposes.[9]

Significantly, a December 2018 Report of the Grand Jury of the New York Supreme Court, First Judicial District recommends that notary journals be required to help combat rampant deed fraud and house theft.[10] Notary journals also have been recognized as an important tool for helping law enforcement authorities track down forgers. National Notary Association Executive Director Tim Reiniger has stated: “Law enforcement. . .is coming to see the services of the Notary as an invaluable weapon in [the] widening war [on identity theft and document fraud].”[11]

Notary journaling is not just a good idea or best practice but has been recognized as a critical component of providing notarial services and protecting the integrity of notarized documents. “Journalizing…is mandated as a standard of reasonable care. The lack thereof is arguably a form of negligence. It is wrongful to think it is discretionary.”[12]

And notary journals help and protect notaries themselves by reminding them to follow step-by-step procedures for each notarization and enabling them to keep a record of each notarization for future reference.[13] The requirement to make a contemporaneous journal entry of each notarial act thus serves the dual purpose of reminding notaries to perform their duties properly and creating a record of their diligent compliance with notarial standards and requirements.

III. THE JOURNALING REQUIREMENT DOES NOT IMPAIR THE ATTORNEY- CLIENT PRIVILEGE

The argument that keeping a notarial journal may violate attorney-client privilege confuses the role of the notary versus that of the lawyer. The information required for a journal entry is not privileged – and, if it were, disclosure to the notary would waive any potential privilege. Notaries are liable to any person injured by notarial malfeasance, whereas the attorney-client privilege runs only to the attorney’s client. If a lawyer-notary cannot perform a notarial duty because of a conflicting duty to a client, then that lawyer should exercise the discretion provided by Executive Law § 135 and decline to serve as a notary.  But even if notarial recordkeeping conflicted with the attorney-client privilege, that is no basis for exempting all non-attorney notaries from the requirement to keep a record of how they performed each of their official acts.

IV. THE LEGISLATURE RECOGNIZES THE IMPORTANCE OF NOTARIAL RECORDKEEPING AS A BULWARK AGAINST FRAUD

You signed A.6656 / S.6577 into law last year to protect vulnerable New Yorkers from an increasing wave of deed theft.[14] As the Assembly Memorandum in support of that legislation recognized:

Deed theft perpetrators often target minority homeowners in gentrifying neighborhoods because their property values have increased significantly and tend to single out those who are likely to be vulnerable to fraudulent schemes – preying on seniors and those facing financial hardship. Real property thieves target these individuals using a variety of schemes . . ., including the use of fraudulent signatures . . . to deceive homeowners into signing away their ownership.

Moreover, three months after the Journal Abolition Bill was introduced, the Senate approved S.5688-A, a bill intended to prevent the form of deed fraud known as “home theft.” That bill would require notaries to create and file with county clerks even more detailed records of notarizations of transfers of residential real estate than Section 182.9 requires, and it would impose substantial penalties on notaries who fail to comply.[15] Although the Assembly did not pass the corresponding bill this session, its action in 2022^[16] and the Senate’s action this year demonstrates legislative recognition of the vital importance of notarial recordkeeping to prevent forgery and fraud.

The statement in the Sponsor Memo that journals “serve no legitimate purpose” is inconsistent with and refuted by these other legislative actions. But if the information mandated by existing journal regulations is inadequate to deter, detect or remedy fraud, the solution is not to abolish journals but to remedy the deficiencies, as A.4277-A and S.5688-A were intended to do.[17]

V. THE JOURNALING REQUIREMENT IS NOT UNDULY BURDENSOME

Although lawyers who are notaries may object to journal keeping as “unduly burdensome,” there is no evidence that notaries themselves object and no reason to exempt them from a key element of their duties as notarial officers. There is no evidence that the new journal requirement, which has already been in effect for 17 months, has had any adverse effect on the community of New York’s professional notaries. Given the existence of journal requirements in 22 other states and the District of Columbia, there is no reason to believe the journal keeping is an undue burden.  Furthermore, a burden is undue only if the cost of the burden exceeds the value it provides. The benefits of notarial recordkeeping described above are universally recognized. No one has presented any reason to believe that the burden of making such beneficial records exceeds their benefit.

***

For these reasons, we respectfully urge the Governor not to sign A.7241-A/S.8663.

Sincerely,

Gizem Alper, Chair
Commercial Law and Uniform State Laws Committee

Curt Mechling, Immediate Past Chair
Commercial Law and Uniform State Laws Committee

Alan Kolod, Immediate Past Chair
Commercial Law and Uniform State Laws Committee

CC:
Hon. Charles D. Lavine
Hon. Brad Hoylman-Sigal