Why These 10 States Now Permit Fully Digital Closings

There are so many reasons that a closing can be delayed. Homebuyers and sellers constantly encounter little things that turn into big problems that, ultimately, lead one party to fail to attend a closing and the whole deal to be postponed or even put off indefinitely. In fact, nearly two-thirds of real estate professionals reported that at least one deal in 2018 had been delayed for this very reason. Apparently, they went to the ballot box and voted, because 10 states now have opted to permit buyers and sellers to conduct digital closings for mortgage transactions[1].

Is My Deal Eligible for Digital Closing?

If you have been tracking the progress of digital closings across the country, you may be thinking that the number 10 sounds a little low. Depending on how you buy your properties, you might be right. 15 states permit digital closings via electronic notarization, but they do not necessarily enable this type of electronic facilitation for all mortgage closings. Many lenders require a notary to be physically present with the borrower at the time of closing, for example, even if the borrower (buyer) and the seller are not in the same room when the closing occurs[2]. This type of closing is partially digital, but not entirely.

The 15 states that permit this type of digital closing are:

  • Colorado
  • Connecticut
  • Delaware
  • Hawaii
  • Idaho
  • Louisiana
  • Massachusetts
  • Michigan
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Oklahoma
  • South Carolina
  • Wisconsin

However, since not every county or every lender in these states permits digital notarization, you will still have to check local regulations before assuming you can conduct this type of closing. Virginia, Montana, Texas, and Nevada permit webcam notarization, which may enable digital closings in some cases as well[3]. Webcam notarization involves signers appearing before a notary using audio-visual technology. The District of Columbia and Minnesota are considering permitting this practice, but only for signers physically located outside the United States.

Tell us what you think:

  • Are digital closings a good idea?
  • Do you ever use this method to conduct transactions?
  • Do you think these closings are vulnerable to scammers?

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[1] https://magazine.realtor/daily-news/2019/05/01/more-clients-are-able-to-skip-out-on-closing-day

[2] https://www.forbes.com/sites/alyyale/2018/07/23/digital-home-closings-now-possible-in-15-new-states/#4944d2582ac8

[3] https://www.nationalnotary.org/notary-bulletin/blog/2018/02/webcam-notarization-2018-what-you-need-to-know

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