HB 124-ELECTRONIC DOCUMENTS AND NOTARIZATION  2:03:46 PM CHAIR COGHILL announced consideration of SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 124, "An Act relating to the recording of documents; relating to notaries and notarization, including notarial acts performed for remotely located individuals; and providing for an effective date." 2:04:39 PM REPRESENTATIVE MATT CLAMAN, Alaska State Legislature, Juneau, Alaska, sponsor of HB 124, said the bill would establish a secure process for remote online notarization to facilitate commercial transactions in Alaska. It would add substance to the words, "Alaska is open and ready for business." The legislature's current work to address the COVID-19 pandemic highlights the importance of this legislation. It makes it possible for individuals who are self-quarantined to safely execute legal documents from their homes and in the electronic presence but not the physical presence of a notary public. He said HB 124 was presented initially to the House Judiciary Committee in April 2019. Since then, his office has met regularly with the lieutenant governor's office to ensure that the bill aligns with the strengths and the daily operations of the Notary Commission. He expressed gratitude to Senator Hughes who carried the Senate version, which also sits in this committee. Notaries are responsible for supervising the signing of documents and attesting to the authenticity of a document and the identities of the parties involved. Setting up a system for a remote, online notarization is particularly useful in Alaska given the state's immense size and the fact that many communities are not connected by roads. REPRESENTATIVE CLAMAN stated that commercial transactions within the state are often delayed as parties ship documents back and forth for the purpose of notarization. HB 124 would allow individuals to have documents notarized from their own homes and offices without these delays. 2:06:23 PM REPRESENTATIVE CLAMAN offered an example of how the bill will help Alaskans. He described a military family that was in the process of selling the family home while the husband was deployed overseas. The wife could sign documents, but because she was not able to get the documents to her husband, the family lost the sale. If remote notarization had been in place, the husband could have had the document notarized from the base where he was stationed. REPRESENTATIVE CLAMAN said given the sensitive nature of notarized documents, any updates to notarial law must maintain the integrity and security of the process. HB 124 will update Alaska's notarial law to keep the process secure and make sure that it is consistent with notarial law in the growing number of states that permit remote online notarization. Use of electronic records in commercial, governmental, and personal transactions is becoming increasingly prevalent in Alaska and around the world. This bill will allow Alaskans to keep up with these trends and perform notarizations with greater ease. This bill will help strengthen Alaska by creating a process for remote online notarization and improving efficiency and convenience of transactions in the state. 2:08:06 PM DAVID CLARK, Staff, Representative Matt Claman, Alaska State Legislature, Juneau, Alaska, said HB 124 updates Alaska's current notarial laws by giving notaries the option to perform online notarizations for remotely located individuals. It would also make sure that these online notarizations remain secure. Through a series of meetings with the Notary Commission in the Office of the Lieutenant Governor, the sponsor has made the following revisions to HB 124: • Section 3: This section was added to establish that the Uniform Electronic Transactions Act (AS 09.80) applies to AS 40.17, and the Department of Natural Resources shall accept notarial acts as described in section 10 of this bill. • Section 5 Amends AS 44.50.034(a): Raises the bond requirement for a notary public applicant from $1,000 to $2,500. • Section 10: Similar to section 13 of version A, except that it establishes three requirements for identifying a remotely located individual: (1) viewing a government-issued identification card, (2) credential analysis of the government-issued identification card, and (3) one type of identity proofing. • Section 11: Subparagraph (b) is amended to add that a notary public must maintain at least one journal in a tangible medium to chronicle all remote notarial acts. The notary public may also keep one or more electronic journals to chronicle remote notarial acts. Additionally, because the Lieutenant Governor's office has never retained or stored notary journals, it removes subparagraph (f), which would allow a notary public to transmit a journal to the Office of the Lieutenant Governor for retention, and subparagraph (g), which would require the estate to transmit the notary public's journal(s) to the Office of the Lieutenant Governor upon death or adjudication of incompetence of the notary public. 2:09:59 PM CHAIR COGHILL asked whether the companion bill includes these changes. SENATOR HUGHES answered that she was aware of and did not object to the changes. She commented that Representative Claman's staff did a good job updating members on the changes. CHAIR COGHILL asked invited testifiers to comment on the bill. 2:10:58 PM TERRY BRYAN, President, Yukon Title Company; Member, Alaska Land Title Association, Anchorage, Alaska, spoke in support of HB 124, which would allow online notarization. He thanked staff and the Lieutenant Governor's office. He said that it is a pleasure to see bipartisan coordination and cooperation. He offered his view that HB 124 is good legislation. 2:12:04 PM CHAIR COGHILL noted that Senator Reinbold had joined the meeting via teleconference. 2:12:12 PM MR. BRYAN said the current regulations for notarization have been incorporated into the bill. He has vetted the process through the Lieutenant Governor's office, the Department of Natural Resources Recorder's Office, the Alaska Real Estate Commission, and the Alaska real estate and mortgage lending industries while confirming the compatibility of HB 124 with other states that have enacted or proposed similar legislation. He pointed out that this bill is not exclusively for real estate or insurance related industries. It also supports all segments of Alaska's economy and consumers that use or require a notary process. At present, 23 states have enacted remote online notarization statutes and 11 more are in the process of doing so. He offered his view, which is shared by the stakeholders, that passage of HB 124 will improve the flow of commerce while enhancing consumer protections. This need has been brought to the forefront by the current pandemic. The development of appropriate and necessary regulations by the Lieutenant Governor's office should be eased by his office's current engagement with the Association of Secretaries of State, who have developed a detailed set of recommended guidelines and parameters for writing and creating regulations. This could help provide a template for implementation of this legislation while taking into consideration the needs and uniqueness of Alaska and its citizens. The Alaska Land Title Association and other industry associations stand in support of HB 124, as currently written. 2:14:10 PM CHAIR COGHILL asked if the industry supported the increase in the bonding requirements. REPRESENTATIVE CLAMAN deferred to Mr. Bryan to answer. He noted that these bonds are referred to as signature bonds or unsecured bonds, but that is not seen as a barrier to performing work. MR. BRYAN answered that the Alaska Land Title Association is very comfortable with the increase, which has not been changed in many years. It is representative of bond requirements in other states. 2:15:56 PM SENATOR KIEHL asked how the process to notarize signatures would work remotely. When the bill speaks to credential analysis of an identification and the definition of identity proofing, it speaks to a third person assisting the notary. He asked for a sense of model regulations and how the process would work. REPRESENTATIVE CLAMAN deferred to Mr. Bryan to describe the regulations. He commented that the regulations will be consistent with other states and not simply developed in Alaska. MR. BRYAN said the Alaska Land Title Association worked with the sponsor to provide the Lieutenant Governor the flexibility to tailor the regulations and maintain compatibility with other states and yet allow the addition of other restrictions related to third-party analysis. He explained that the state could contract for electronic software programs to be used for credentialed analyses. For example, a person could hold real driver license identification up to a cell phone or camera which can provide a high level of authenticity, much greater than the visual eye. There are several models of identity proofing, including using private knowledge. For example, one question might ask which of five addresses was used for a car loan. A follow-up question could ask the person to select addresses the person is familiar with, including one with perhaps a childhood address. A certain set of private questions would be used to increase confidentiality and protection using information not normally found in a person's wallet or at one's home. SENATOR KIEHL said that gives him a better idea of the process and regulations. 2:20:26 PM CHAIR COGHILL asked how often notaries have been called for mistakes in identifying someone. MR. BRYAN answered that he is not aware of any in his 20 plus years and his office has over 40 notaries. It has not been an issue. 2:21:07 PM SENATOR MICCICHE asked why the requirement on page 7, lines [1- 4] in subsection (c) is only for remotely located individuals outside the U.S., but it is not required for domestic. (c) If a notarial act is performed under this section, the certificate of notarial act required under AS 44.50.060 must state that the notarial act was performed using communication technology. A statement is sufficient if it states substantially as follows: "This notarial act involved the use of communication technology." REPRESENTATIVE CLAMAN explained that much of the language came from the Uniform Laws Act. CHAIR COGHILL pointed out that the provision on page 6, [paragraph](1)(A), (B), and (C) has the same requirement for domestic notarizations. SENATOR MICCICHE said he didn't read it that way. REPRESENTATIVE CLAMAN clarified that the language on page 5, lines 29-30 requires the use of communication technology. 2:23:25 PM SENATOR MICCICHE said the language on page 6 talks about remotely located individuals outside the U.S. and the language on page 7 in subsection (c) requires a statement that says, "This notarial act involved the use of communication technology." He said he believes that requirement only applies to individuals living outside the state but not for domestic notarial acts. REPRESENTATIVE CLAMAN said he did not have an explanation. CHAIR COGHILL asked Mr. Bryan if he had an answer. MR. BRYAN said the industry understands that there would not be any differentiation between those living in Alaska, in the Lower 48, or outside the U.S, such that the same verification that identifies it as an electronic notarial action would be a requirement. He said that he did not notice the omission but the intent is for the process to be the same. CHAIR COGHILL commented that the language needs to conform. 2:25:18 PM REPRESENTATIVE CLAMAN agreed with Mr. Bryan that it appears to be a drafting oversight. He referred to page 5, noting there is clearly a requirement in subsection (a) that an individual can comply by using communication technology. He said a person could not comply with this section without using communication technology. CHAIR COGHILL referred to page 6, lines 16-18, which read, "(2) the notary public is able reasonably to confirm that a record before the notary public is the same record in which the remotely located individual made a statement or on which the individual executed a signature;". He mentioned the language in paragraph (B) and questioned whether he was missing the point. 2:26:15 PM SENATOR MICCICHE restated that a foreign individual must state on the record that the notarial act involved the use of communication technology but that doesn't seem to be required for a domestic notarial act. He said he didn't understand why more would be required for a foreign transaction than a domestic transaction because the notary wouldn't necessarily know the identity of someone in the next town any more than one located on the other side of the world. 2:27:03 PM SENATOR KIEHL said his reading was slightly different. The section related to remotely located individuals located outside of the U.S. is found [on page 6], Sec. 44.50.075](b)(4), which has its own subparagraphs (A) and (B). The statement that the notarial act was performed using communication technology is located in [Sec. 44.50.075](c). He said we jumped from subsection (b)(4)(B) to subsection (c) and he believes subsection (c) applies to all notarial acts performed remotely. 2:27:50 PM CHAIR COGHILL suggested asking the Legislative Legal drafter to review the language in Sec. 44.50.075. REPRESENTATIVE CLAMAN acknowledged that Senator Kiehl had a point. The language on page 5, line 29 says that complying with the law would be under AS 44.50.062(5)(A). The language on page 6, line 6, under subsection (b)[(1)(B)], also says complying with the law would be under AS 44.50.062(5)(A). But the language in subsection (c) on page 7 talks about a notarial act under AS 44.50.060, which is a slightly different statute. He referred to Sec. 44.50.062(5)(A) starting on page 3 that has to do with the signature and Sec. 44.50.060 on page 3 that applies to the foreign notarization and opined that the distinction between the foreign and the domestic notarial transactions is that each one references a different section of statute. CHAIR COGHILL related his understanding that AS 44.50.060 relates to the duties of a notary public. The new section would add language to certify that the tangible copy is accurate. REPRESENTATIVE CLAMAN agreed. 2:30:03 PM SENATOR MICCICHE said he believes that Senator Kiehl is correct. In Section 10, subsection (a) states that a remotely located individual may comply with AS 44.50.062(5)(A) by using communication technology to appear before a notary public. Subsection (b), beginning on page 5, line 31, includes substantial language but separates out the foreign located individual. Subsection (c) [on page 7 lines 1-4] is still part of Section 10, and it applies to foreign and domestic transactions. He said he was satisfied that all notarial actions that would be performed electronically using communication technology will require that statement. 2:31:02 PM CHAIR COGHILL asked Mr. Bryan if he agreed. MR. BRYAN responded that he was not able to track the cites, but he agreed that [requiring that statement for all transactions] was the intention. 2:32:08 PM SENATOR HUGHES said she was satisfied with the bill. 2:32:11 PM SENATOR REINBOLD said she too was satisfied with the bill. 2:32:23 PM CHAIR COGHILL solicited a motion. SENATOR MICCICHE said that he does not have any concern with the bill and he supports electronic conveyance of notarization. 2:32:59 PM SENATOR MICCICHE moved to report HB 124, work order 31-LS0627\S, from committee with individual recommendations and attached zero fiscal note(s). CHAIR COGHILL found no objection and SSHB 124 was reported from the Senate Judiciary Standing Committee.