Deed of Trust: Everything You Need to Know

Buying and selling property is a complex experience. The exchange of such a valuable asset is riddled with paperwork. No exchange of property is complete without having to handle a deed. However, did you know there are different types of deeds? In this article, we are going to cover everything from a quitclaim deed to a deed of trust, and everything in between. Get your signing pen ready, because you are about to become a well-informed property owner!

What is a Deed of Trust?

More than likely, the purchase of a home or property is going to involve borrowing money. If that is the case, you will likely need a deed of trust. A deed of trust is a written arrangement between a borrower and a lender. This document appoints an unbias third party, known as a trustee, as the bearer of the legal title of the property. This arrangement serves as leverage while the borrower pays off the loan to the lender. In the meantime, the borrow maintains the right to the equitable property title. Therefore, the borrower is responsible to care for and maintain the property.

Deed Definition

To better understand a deed of trust, let’s take it back a few steps. What is a deed, in general? A deed is a legal instrument used to transfer ownership rights in property sales. A deed is a physical document that is signed by both the buyer and the seller in a property transaction.

The property on a deed may be a home, condo, commercial space, or a plot of land. Every piece of real estate property should have a deed.

Trust Definition

Like deeds, there are various types of trusts. However, for the sake of this article, we only need to know what the definition of a general trust is. A trust is a financial agreement in which a third party (trustee) bears ownership of a certain asset on behalf of a beneficiary.

Parties Involved in a Deed of Trust

To further clarify, a deed of trust is an agreement between three different parties. Everyone involved plays a specific role.

The Trustor – Whoever is borrowing money to purchase the property. Bearer of the equitable title
The Trustee– A neutral third party that holds the legal title (sometimes called the “bare” title)
The Lender – Also known as the “beneficiary”. The lender is providing the money for the loan

This relationship is intended to protect the lender in the event the trustor defaults on their payments.

The Role of the Trustee

The function of the trustee in a deed of trust requires extrapolation. You may assume that a trustee is required to take over the trustors payments in case of default. However, that is not the case. Instead, a trustee will handle the sale of the property if the trustor can no longer cover their debt. The property itself is collateral in a deed of trust.

As previously mentioned, the trustee must be an impartial, unbias third party. This fact is a crucial element of a deed of trust. The impartiality of the trustee helps prevent fraud. The trustee should not financially favor the lender or the trustor in terms of the sale. Once the property is sold, the trustee will distribute the funds acquired from the sale. The lender will receive the amount outstanding from the loan. The trustor, on the other hand, will receive whatever is leftover.

Title vs. Deed

At this point, you may be thinking to yourself “deeds and titles sound like the same thing”. However, that is not legally the case. A title states that you legally own the right to access and use a property as you so desire. A deed, on the other hand, is a legal document that is used in the transfer of property ownership. However, in order to have full and true ownership of a property, your name must be on both the property’s title and the deed.

What is a Title?

A property title expresses ownership over a property. Having your name on a title gives you the right to access, alter, and sell a piece of property. A title also makes you responsible for the properties maintenance and well being.

Legal Title vs. Equitable Title

While a title indicates ownership, it can be split amongst parties. In a deed of trust, the trustee holds the legal title of the property. The legal title represents actual ownership. If the property only has a legal title documented, the title owner will be responsible for the care and maintenance of the property. Additionally, the legal title holder would have the right to alter and enjoy the property as they please. Finally, a legal title allows you the right to sell the property.

On the other hand, the trustor maintains an equitable title in a deed of trust. In this case, the trustor would have the sole rights to maintain, alter, and enjoy the property. Therefore, if a property has both a legal title and an equitable title, only the equitable title holder can benefit from the property.

For example, let’s say Sarah signed a deed of trust and has the equitable title to her home. Her trustee, Jason of Small Town Title and Loan, is the legal title holder. Sarah has the sole right to use and enjoy the house to her liking. Jason cannot simply show up with friends wanting to host a dinner party. As the legal title holder, Jason merely has the right to sell the house is Sarah defaults on her loan. Once Sarah has successfully paid her loan in full, she will become the legal title holder.

Elements of a Deed of Trust

A deed of trust form will outline the following information:

The amount of money being borrowed (also referred to as the “principle”)
Names and roles of all involved parties
A legal description of the property (more specific than just the address and the paint color)
Any known floor plans, diagrams, or blueprints related to the property
Dates of both the signing and maturity of the loan
Various additional riders, requirements, and provisions
How to legally proceed should the trustor default on payments
Acceleration or alienation clause (more on that to follow)

The requirements listed above can vary based on the state and the type of property detailed in the deed. Be sure to check the necessary requirements for your specific transaction.

Legal Description

To enumerate, a legal description is far more than just a simple street address. “Legal description” is a term often used in real estate regarding property sales. Previous deeds on the property should have a legal description listed. You can usually find previous property deeds at your local county clerk’s office or recorder of deeds office. Many of the offices even offer online access!

While a physical address should be included on a deed, a legal description is more specific. Different types of properties may require different descriptors. However, the description will usually detail survey information. Such as lot or block references, subdivisions names, and detailed plot measurements.

Acceleration and Alienation Clauses

These provisions mandate that the buyer pay the remaining balance in full under specific circumstances. Namely, if the buyer chooses to sell the property. In that case, the acceleration clause will kick in and require the buyer to pay their outstanding loan balance on the property. These type of clauses are standard in every loan agreement these days. According to the U.S. Securities and Exchange Commission, verbiage included in the clause is as follows:

“In the event the Property or any part thereof or any interest therein is sold, conveyed or alienated by the Trustor, whether voluntarily or involuntarily, except as prohibited by law, all obligation secured by this instrument, irrespective of the maturity dates express therein, at the option of the holder hereof and without demand or notice, shall immediately become due and payable.”

Not only will the trustor (buyer) owe the remaining balance on the loan, but may be subject to fees and interest charges.

Mortgage vs. Deed of Trust

More often than not, when someone buys a house they will have to borrow money to do so. Borrowing money is referred to as a “loan”. Once the money has been granted, the lender is going to want to protect their investment. The lender will either do this in the form of a mortgage or a deed of trust.

Banks and other large lending companies tend to favor using mortgages. Conversely, smaller companies or individual lenders will likely choose to use a deed of trust. Both documents have the same purpose: to ensure the loan is paid back to the lender. Additionally, both mortgages and deeds of trust do this by placing a lien on the property. A lien uses the property as collateral. Meaning, the lender has the right to sell the property if the loan defaults.

The Differences: Mortgage vs. Deed of Trust

While mortgages and deeds of trust are similar in many ways, they are also different. For example, a mortgage is a contract between two parties: the lender and the borrower. Conversely, a deed of trust includes an additional third party: the trustee. As previously stated, the trustee holds the legal title while the loan is being repaid.

Furthermore, the quintessential difference lies in what happens when the trustor (borrower) cannot pay back the loan. In terms of a mortgage, the home will go through a judicial foreclosure process. Translation: the property sale must go through the courts and is instigated by the lender filing a lawsuit. Unfortunately, lawsuits are notoriously expensive and time-consuming. In the case of a mortgage loan default, this process negatively affects both the lender and the borrower.

On the other hand, a loan default with a deed of trust goes through a non-judicial foreclosure. Should the loan payments falter, the foreclosure of the home can bypass the courts. Naturally, this makes the process less of a time-consuming financial burden.

Who can Use a Deed of Trust?

As previously mentioned, rules and regulations pertaining to deeds of trust vary by state. In fact, not all states even allow deeds of trust. Conversely, some states require a deed of trust when money is borrowed for real estate purposes. Fortunately, Rocket Lawyer has a cohesive list of states that allow deeds of trust.

If your state has the option to use a deed of trust, your lender will likely encourage it over a mortgage. Deeds of trust are a better deal for the lender. Should the borrow default, the lender can avoid the expensive judicial foreclosure process.

Deed of Reconveyance

You did it! You paid off your loan! What now? The lender will issue a deed of reconveyance. This document formally states that the borrower has paid off their debts in full. Better yet, a deed of reconveyance transfers the legal title of the property to the trustor (buyer).

Additionally, a Deed of Reconveyance goes by different names in some states. Such as Full Reconveyance, Release of Deed of Trust, or Reconveyance of Deed of Trust.

Finally, a Deed of Reconveyance must be notarized filed with your local recorder of deeds or county recorder. A buyer will typically have 30 days to file without penalty. Once the document is accepted by the state, the property will officially be paid for and free of liens.

Promissory Note

A promissory note is often used in tandem with a deed of trust. Therefore, it is important to discuss how a promissory note fits into this process. A promissory note is a document in which the borrower promises to pay back a loan. This document, sometimes simply called a “note”, will go on to specify the terms of the loan. A note will typically include the following information:

Borrower and Lender information – Legal names, addresses, contact information, and sometimes a social security number for added identification purposes
Loan Amount and Terms – The full amount of the loan, and the agreed-upon increments of payment. This section will typically include any applicable interest rates and payment schedules. Additionally, the inciting date as well as when the loan must be paid off
Security Agreement – This is where the mortgage or deed of trust comes in. A security agreement details the collateral promised, should the loan default. In the case of a deed of trust, the collateral is the property purchased.

Promissory notes are used in all types of transactions and agreements. Home and car loans, business loans, student loans, and even personal loans amongst friends and family. The note is a legally binding record of a transaction. Promissory notes help ensure a lender will get their money back.

What is a Notary?

A number of the documents mentioned in this article require notarization. If you are unfamiliar, notarization is when an unbias third party, called a notary, witnesses the signing of important documents. A proper notarization involves several steps:

Identification – The foundation of notarization is proper identification of the signing party
Confirmation – Confirming identity is simply the tip of the iceberg. A notary will also ensure that each signing party understands the document in full. Finally, the notary will confirm that everyone involved is signing by choice and not by force
Oath or Affirmation – Sometimes, certain documents require a jurat notarization, or “jurat”. The foundational element of a jurat is the addition of a spoken oath by the signer. This oath confirms that, to the knowledge of the signer, the contents of the document are true. A signer can also opt to agree to an affirmation. The context is the same as an oath, however, an affirmation does not make the promise to God or a higher power.
Signing – Not all states require that the actual signing take place in the presence of a notary. However, it is best to air on the side of caution and wait to sign until a notary is physically present
Notary Stamp – Finally, the notary themselves will sign and stamp the document. The stamp will include the name of the notary, their state of commission, and the date their certification expires (note: Your document will remain valid after their stamp expires)

Notary laws are not federally mandated. Therefore, laws and requirements vary depending on the state where the notarization is taking place. Be sure to check your local notary laws to ensure a valid notarization.

Where can I find a Notary?

Notaries are far more common than you may think. In fact, there are millions of certified notaries in the United States alone. The hours, pricing, and availability of notaries vary locally. However, here are a few places you can typically find notary services:

Your place of business! – Save yourself the hassle of running around town, many companies have a notary on staff for business use. However, they will typically allow employees to use their services for personal use as well
Financial Institutions – Banks and local credit unions almost always offer notary services. Better yet, if you are a client their services are often complimentary
Colleges and Universities – Many educational institutions offer free or low-cost notary services to students and faculty
Car dealerships, Insurance offices, and real estate agencies – Due to high notarization demand internally, certain businesses will have a notary on staff that is also available for public use
Mobile Notaries – Better yet, have a notary come to you! This option is prominent in large cities. Naturally, this premium service can have a high price tag. However, you will save valuable time

Keep in mind that notaries are official representatives of the state. Therefore, they serve the public. For this reason, you cannot get turned away for notary services if you are not a customer of any of the above places.

What do I Need to get my Deed Notarized?

Especially in matters pertaining to buying a selling property, the paperwork can be a tornado of confusion. To make your life easier, be sure to literally cross all the t’s and dot the i’s when attending a notary appointment. You should bring with you:

The document requiring notarization (duh) – Make sure to bring the original copy. Should any amendments be added, a new notarization will be necessary. Save time at the appointment by filling out any necessary fields. However, resist the urge to sign it until in the presence of a notary
Photo Identification – A valid, photo i.d. is mandatory for an official notarization to take place. A current drivers license or passport are the two most commonly accepted forms of i.d. If you have a different type of i.d. be sure to check whether or not it is an acceptable form of identification
All signing parties – Many documents require signatures from multiple people in order to be accepted. Save time and money by having all necessary parties present at once for notarization. If this is not possible (say, if someone lives in another state) a document can be notarized multiple times, even by multiple notaries. However, this significantly lengthens the process and typically costs more money to process
Notary payment – As previously mentioned, some businesses offer free notary services. However, most notaries will charge a per-signature fee. This fee is usually legally capped at a certain amount by state. California notaries, for example, cannot charge more than $10 per signature. However, ertain services may incur additional fees. For example, a mobile notary usually charges a fee for travel time

Check with your local preferred notary to make sure you have all the necessary requirements for your state and/or type of document.

Deed of Trust: In Conclusion

Buying property is a thrilling step in a persons journey. Whether you are buying your first family home or your seventh business office – you are procuring a space for memories to form and life to unfold. However, property transactions are riddled with layers of paperwork and legal snafus. Chief amongst them: a deed of trust. This document aids in the purchase of a property in which a loan is required. A trustee will hold the legal title to the property, while the buyer pays back the loan. During this time, the buyer maintains the equitable title to the asset, and therefore the right to enjoy the property. Specifics of real estate transactions vary by state, so be sure to research the details of your location. Hopefully, this article cleared up some of the process of property transactions. Happy property buying and selling!

Sources

https://www.rocketlawyer.com/article/what-is-a-deed-of-trust-ps.rl

https://smartasset.com/mortgage/house-deed

https://www.rocketlawyer.com/article/mortgage-vs-deed-of-trust.rl

https://smallbusiness.chron.com/components-promissory-75239.html

https://www.thebalance.com/definition-of-deed-of-trust-1798782

https://www.fidelity.com/life-events/estate-planning/trusts

https://www.lawdepot.com/contracts/deed-of-reconveyance-form/?loc=US#.XMIdcZNKjow

https://www.investopedia.com/terms/d/deed-of-reconveyance.asp

https://www.superiornotaryservices.com/blog/what-need-document-notarized/

https://www.google.com/search?q=deed+of+reconveyance&oq=deed+of+reco&aqs=chrome.0.0j69i57j0l4.3280j0j4&sourceid=chrome&ie=UTF-8

https://www.realtor.com/advice/buy/deed-vs-title/

https://www.rocketlawyer.com/article/whats-the-difference-between-a-property-deed-and-a-title-ps.rl

https://info.courthousedirect.com/blog/bid/336876/what-s-the-difference-between-legal-title-and-equitable-title

https://www.legalzoom.com/articles/what-is-a-promissory-note

https://info.courthousedirect.com/blog/bid/336876/what-s-the-difference-between-legal-title-and-equitable-title

https://www.nationalnotary.org/knowledge-center/about-notaries

https://www.thebalanceeveryday.com/where-to-notarize-affidavit-896914

About The Author

Chelsea Rivera

Durable Power of Attorney: Breaking Down The Definition

/ Uncategorized / By Chelsea Rivera

At one point or another, you may find yourself in need of a power of attorney. When that time comes, you may have some questions. What is a power of attorney? When do I need one? How do I get one? To make matters more complex, there are, in fact, different types of power of attornies. In this article, we will cover everything from the curious durable power of attorney to the perplexing medical power of attorney.

What is Power of Attorney?

Before we dive into the specifics of a durable power of attorney (POA), let’s learn about a standard power of attorney. First of all, a power of attorney is not a person, but a document. A properly executed POA will legally give another person the right to act on your behalf. Powers of attorney are accepted nationwide. However, specific rules and requirements vary from state to state.

The person selected to act on your behalf is referred to as your “agent” or “attorney-in-fact”. Whoever is granting the POA, is the “principal”. A power of attorney has levels. For example, say you are selling a car and are unable to be present at the time of the transaction. Boom! A power of attorney can solve this problem. You will be able to legally give someone you trust the legal right to sign off on the sale. On the other hand, a POA can give someone absolute power in decision making. This tends to be a common choice in medical situations. Particularly in the event that someone cannot make their own decisions, from a physical or mental standpoint. A POA can last indefinitely, or for a pre-determined amount of time.

What is a Durable Power of Attorney?

Prior to the establishment of a durable power of attorney, there were four cases in which POA would be considered null and void:

You, the principal, choose to revoke the POA
The POA surpasses its pre-determined expiration date
Death of the principal
If the principal loses their mental capacity or becomes incapacitated

However, with the establishment of a durable POA, only three of those cases would cancel the power of attorney. If you select to draft a durable power of attorney, the document will remain legally valid even after the principal is deemed mentally incompetent.

Define Incompetent

Legally speaking, mental incompetence occurs when a person is mentally unable to make informed decisions. Additionally, this definition also includes instances where a person is physically incapable of communicating decisions.

A common example of incompetence is mental illness. Unfortunately, mental illness can sometimes be tricky to define and prove. Lawyers and doctors may have to get involved.

To clarify, a person should not be considered mentally incompetent simply for disagreeing with you. POA’s are involved in situations dealing with the exchange of money and/or power. Therefore, sometimes greedy people jump at the opportunity to deem a principal unfit to manage their affairs.

Furthermore, people can be deemed incompetent for more physical reasons. Such as injury, disease, comas, or unconsciousness.

Types of Power of Attorney

Hooray! We now know what a durable power of attorney is. However, that is just the tip of the POA iceberg. There three other types of power of attorney: limited, medical, and springing.

1) Medical Power of Attorney

Medical and financial reasons are typically involved in POAs. So naturally, you can draft a power of attorney based solely in medical need. A medical POA may also be referred to as a healthcare power of attorney, or a durable power of attorney for healthcare. Therefore, the medical power of attorney is also considered a durable POA by nature. A medical power of attorney gives the agent the right to make medical decisions on behalf of the principal. Specifically, in the event the principal is medically considered unable to make their own decisions. For example, if the principal is in a coma.

Medical Power of Attorney vs. Living Will

As morbid as it may sound, it is a good idea, at any age, to consider drafting a living will. Don’t worry, you do not need to go around your house putting sticky notes with family members names on furniture. The purpose of a living will is not to assign post-mortem ownership of your assets. Instead, a living will detail your medical desires should you become incapacitated. Accidents happen. You and your loved ones can avoid certain legal and medical drama by being prepared. A living will is also be referred to as a healthcare directive, advanced directive, or an advanced medical directive.

In a living will, you will detail your medical preferences in the event of certain trauma. A common example is when an accident results in a person being braindead. For many people, this state of “life” is not living at all. Therefore, they may make the choice to state in a living will that they would want their family members to “pull the plug”.

A living will is more limited in scope than a healthcare power of attorney. However, it is not uncommon for people to have a living will and a medical power of attorney.

2) Springing Power of Attorney

A springing power of attorney, as the name suggests, is designed to “spring” into effect upon the meeting of predetermined circumstances. You may also hear a springing POA referred to as “conditional”. This type of POA works in tandem with general or healthcare power of attornies.

Commonly, this type of POA is used in the event that the principal is deemed mentally unfit. Although, a springing POA can be used in a number of other situations. For example, active military men and women often choose to utilize a springing power of attorney form. Therefore, in the event of deployment, their spouse or relative can have the ability to access and control necessary finances while they are away.

3) Limited Power of Attorney

It should come as no surprise that a limited power of attorney limits the power of the agent. The principal will detail with great specificity the authority the agent will have. Often times, the principal will use a limited POA for the agent to carry out a specific task. For instance, in the event of a transaction where the principal cannot be present to sign a contract. Furthermore, a principal may grant a trusted investment adviser limited power of attorney to make portfolio decisions.

In addition to finite power, a limited POA is likely to have an expiration date. Moreover, a limited power of attorney form can include a revocation clause. Therefore, giving the principal the opportunity to void the POA at any time.

Power of Attorney Form

Specifics of POA forms vary from state to state. Additionally, the language in the document depends on the type (see above) of POA drafted. However, some basic elements in a POA are:

Date of execution
The signature of the principal (or a witness chosen by the principal who signs in their presence)
A proper notarization

Furthermore, a proper POA will typically list the powers afforded to the agent. Some transactions where the principal may utilize an agent may include:

Buying or selling property (such as cars or houses)
Various financial decisions (banking, managing investments, taxes)
Insurance matters
Legal business
Estate planning
Matters pertaining to business operations
Personal affairs (social security, retirement, family matters)
Medical decisions

Naturally, this list just skims the surface. Be sure to consult your lawyer before drafting a power of attorney. Anyone can download a POA form online, but you want to be sure you have the appropriate language to deal with your specific matters appropriately.

Durable Power of Attorney Form

Specific language is required for a POA to be considered durable. The specifics of this language may vary based on state law. To reiterate, a durable power of attorney remains effective no matter the mental competence of the principal.

There are two general types of language that can make a power of attorney durable. The difference lies in the moment of effectiveness.

Immediate effectiveness – “This power of attorney shall not be affected by my subsequent disability, incapacity, or incompetence.”
Effective only in the event of mental incompetence – “This power of attorney shall become effective upon the date of my disability, incapacity, or incompetence.” (this language is also indicative of a springing POA)

Remember, specific verbiage and other necessary requirements may differ by state. Be sure to check with your local lawyer to draft a proper POA for your state and situation.

How to Choose an Agent

Choosing a suitable agent is vital in the POA process. This is an incredibly important role. An agent has immense power. The amount of said power is, however, entirely up to the principal to dictate.

Things to ask yourself when selecting an agent:

Do you trust this person with valuable financial information?
Will this person be able to manage this responsibility? Be sure to discuss your offer with them, as opposed to simply assigning it to someone
Do you trust this person to handle your legal affairs wisely?
How does this person manage financial and legal matters of their own? This can be a good indication of their ability to wisely (or poorly) handle yours

Keep in mind that an agent is typically a spouse, parent, or family member. However, in certain matters, you may hire a lawyer or an accountant to act as your agent. Therefore, you may have to pay them a fee for this service.

Additionally, it may be a good idea to have a second agent on your POA. This decision can be helpful in the event your original agent can no longer perform their duties (be it from illness, death, or refusal to do so).

Power of Attorney Fraud

Cleary, POA’s are incredibly influential legal documents. Giving someone the ability to legally make decisions on your behalf is a big leap of faith. Unfortunately, sometimes that leap turns into a hard fall. Sadly, power of attorney fraud is a not-so-uncommon issue. Financial abuse and identity theft are common examples of POA fraud. Evan’s Law specializes in fraud cases and details several examples of power of attorney fraud.

Signs of Power of Attorney Fraud

The best way to prevent POA fraud is by assigning someone you fully trust as your agent. However, it is useful to know the signs of power of attorney fraud. Such as:

Hesitation to communicate by the agent
Reluctance or refusal for the agent to share financial records with the principal
Sudden changes bank accounts, finances, or other personal matters
Pushy or demanding behavior from the agent (especially in regards to signing something)

If you are experiencing any of the aforementioned red flags, terminate your POA immediately. Remember, as the principal you have the power to retract the POA at any time.

Power of Attorney by State

As previously mentioned, POA rules and regulations can vary from state to state. For your convenience, we have listed a few states below as examples. If your state is not listed, US Legal provides a helpful breakdown of the power of attorney rules by state.

Power of Attorney California

In California, the principal must be at least 18 years old and of sound mind in order to legally sign off on a power of attorney. In matters pertaining to finances, the principal must sign in the presence of a notary, or at least two witnesses. Regarding real estate transactions, notarization is mandatory. Two witness signatures are required on medical POAs. However, the witnesses cannot be your healthcare provider or their employees, nor your agent.

The specifics of California power of attorney laws can be found in the California Probate Code.

Power of Attorney Texas

Any legal adult (18+) can have a power of attorney in the state of Texas. According to Legal Zoom, the Texas state-mandated power of attorney language is as follows:

For an immediately effective durable POA: “This power of attorney is not affected by subsequent disability or incapacity of the principal.”
For a springing durable POA: “This power of attorney becomes effective on the disability or incapacity of the principal.”

Furthermore, the Texas legislature provides state-approved power of attorney forms online. Using these pre-approved forms will make your POA more official in the eyes of the state. Finally, notarization will make the POA official.

Power of Attorney Florida

It can be quite tricky to get a power of attorney in Florida. Unlike most other states, Florida does not accept provide a state financial POA or accept springing POAs.

If you desire a durable POA, the following language is required:

“This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in Chapter 709, Florida Statutes”

We have established the terms “healthcare power of attorney” and “medical power of attorney” earlier in this article. In Florida, however, these documents are called a “Designation of Health Care Surrogate”. Special requirements for this type of Florida POA are detailed in Florida Statutes.

A power of attorney must be signed by two witnesses and a notary to be official in Florida.

All legal specifications can be found in the Florida Power of Attorney Act.

What is a Notarization?

Power of attorney laws and regulations clearly vary greatly across the nation. However, whether or not your state requires it, you should get any and all POA documents notarized. If you are unfamiliar with that term, a notarization is when an unbias third party witnesses the signing of important documents. The purpose of notarization is to prevent fraud and make documents more official in the eyes of the state. A notary is a person who witnesses signatures. Notaries are official representatives of the secretary of state.

Steps of a Notoriztion

What happens exactly during a notarization? Like POAs, there are different types of notarizations, with different rules across the country. However, most notarizations involve the following steps:

Identification – The foundational element of notarization is properly identifying the signer. The notary will ask you for an accurate photo i.d. The most widely accepted forms of i.d. are a valid drivers license or passport
Understanding and Consent – Once the notary has confirmed your identity, they will ask you if you understand the document in full and are choosing to sign at your own free will
Signing – Some states do not require the actual signing to occur in the presence of the notary. However, it is a good idea to wait to sign your document in front of the notary. Better safe than sorry!
Notary Journal – Specifics of this will vary by state, but essentially the notary will document the transaction in their notary journal. Some notaries may require that you sign and stamp a thumbprint in the journal for their records
Notary Stamp – The final and official mark of a proper notarization is a seal (or stamp) on the document. These stamps vary in appearance, but should all include the notary’s name, state of certification, and date of expiration

Be sure to check with your local secretary of states office about the rules of your state.

Where to Locate a Notary

Fortunately, there are millions of notaries easily available nationwide. Hours, pricing, and availability are dependent entirely on where you live. Some ideas of where to start your search:

Public library – Your local library houses more than literature! That’s right, you can often find free or affordable notary services at the public library
Local government offices – Your city or town hall, courthouse, or county clerks office will likely have a notary available for public use
Financial Institutions – If you have an account at a bank, you may qualify for complimentary notary services. Otherwise, smaller banks and local credit unions typically offer a notary at an affordable rate
Your workplace – Many larger companies require the services of a notary regularly, so they keep one on staff! Talk about work perks!
Car dealerships, real estate offices, and insurance agencies – Check with your local businesses about their notary pricing and availability
Mobile Notary – These days, anything can get delivered to your door – and a notary is no exception! Skip the traffic and have a notary come to you. This is a very convenient option for people living in thriving cities, with little spare time.

Clearly, you should have no trouble finding a notary near you. However, save yourself time by doing research on your areas pricing and availability.

Notary vs. Attorney

It is important to understand that a notary is not an attorney. Notaries cannot give legal advice to their clients. Therefore, a notary cannot explain the content of the document to the client. Notarization does not validate the legality of the contents of a document.

A power of attorney is a very influential legal document. You should strongly consider having a lawyer look over yours. Moreover, you should have your lawyer translate the document to you. Legal jargon is notoriously confusing. It is imperative that you understand any document that you are signing.

Durable Power of Attorney: In Conclusion

In America, we are fortunate enough to have the ability to exercise free will and make our own decisions. Having a durable power of attorney is often necessary, but should be executed with great care. Transferring your power to make important medical, financial, and personal decisions should not be taken lightly. Keep in mind that laws and regulations vary widely depending on your state of residence. Consult a trusted lawyer in your area to determine the best type of POA for you and your situation.