On June 7, Florida Gov. Ron DeSantis signed a bill into law permitting remote online notarization adding Florida to the growing list of states that permit notaries to perform notarizations online for clients anywhere in the world. The law, which takes effect on Jan. 1, 2020, will benefit Floridians in many ways, but has the potential to significantly encourage foreign direct investment in Florida. When the law takes effect, foreign visitors to Florida who negotiate business contracts, form companies, or purchase real estate will be able to close on their deal from the comfort of home, without a second visit to Florida. For investors living in Asia and other distant parts of the world, knowing that they will be able to conclude their investment online removes psychological barriers to investing in Florida.
Operationally, remote online notarization essentially updates notarization procedures to permit the use of readily available online technology and communications, specifically video conferencing, for the verification and execution of the documentation witnessed by Florida notaries. Those signing documents requiring notarization (or any witnesses to the signing) will no longer be required to be physically present before the notary, or even in Florida, for that matter. Notaries will remain responsible to confirm the identify of the signer, if necessary via third party confirmation, and additional requirements were crafted to ensure the integrity of the new process. Florida notaries wishing to perform remote online notarizations will pay a $25 fee, submit a signed and sworn registration to the Executive Office of the Governor, meet certain new bond requirements, complete a required course, and establish an account with an approved remote online notarization software service provider. Additionally, the law requires online Florida notaries to store a secure electronic journal (including audio-video) for each transaction for a period of 10 years.
The practical impact of the new law, which at first glance would appear to be simply a bureaucratic concession to the availability of technology, is potentially vast. Florida’s real estate industry understands the implications of Remote Online Notarization and has eagerly followed the legislative process, but the mainstream media has paid little attention. But the
process stands to facilitate direct foreign investment in real estate and business investments, given the logistical complexities such closings present when parties cannot physically be at the table. The use of powers of attorney and agents is cumbersome and invariably complicates, and often delays, the conclusion of the transaction. Moreover, for foreign investors who reside in distant parts of the world and lack trusted local contacts in Florida, using a power of attorney is generally out of the question. Being able to remotely close on a deal they negotiated during an earlier visit to Florida not only saves them another trip; the option of an online closing removes the bulk of impediments to the long-distance investment.
Remote online notarization has the potential to not only drive Florida real estate sales, but, perhaps more importantly, to increase the amount of foreign direct business investment in the state. Florida has historically attracted foreign business investment from South America and Europe; much higher levels of B2B investment via mergers, acquisitions and joint ventures from cash-rich Asia has traditionally been focused on California and the West Coast. Remote online notarization removes barriers to contemplated business deals by removing the logistical problems of closings and, properly communicated, can serve to lure such investors from the West Coast to Florida, driving growth and creating jobs.
For high net worth investors with busy lives who reside on the other side of the planet and have many investment options, the need to physically return to Florida to close on a purchase can often be a deal breaker. Remote online notarization will permit such investors to make an informed investment decision when they are here negotiating their purchase, knowing that the deal can be concluded without another trip halfway around the world. While the new law may not substantially affect sophisticated high net worth foreign investors with established legal and financial relationships in the United States (and, accordingly, those who can facilitate closing logistics), the big winners will be small to mid-size real estate and business investors who lack such contacts in Florida.
The real estate community is clear on how remote online notarization can favorably impact their industry, but the potential upside for law firms, accounting firms and financial advisers is equally compelling. Using the same video-conferencing technology mandated for the remote online notarization process, professionals who advise foreign clients contemplating investments in the states can use this technology to guide prospective buyers through the negotiation, due diligence and planning processes. These Florida professionals can expand their use of technology to ensure that after the contract is signed, everything that happens from that point through closing can be handled virtually.
The passage of the remote online notarization law represents a significant milestone for the state of Florida. Properly communicated by the State, by wealth advisers and by all Floridians who provide professional services to foreign investors, remote online notarization can represent a powerful tool for stimulating direct foreign investment in Florida.
José E. Latour is founding partner at LatourLaw, which has offices in Miami and Ho Chi Minh City, Vietnam. Latour, who is a former U.S. Consul to Mexico under the Reagan administration, handles business immigration.
The Daily Business Review