What does "Recognize" Mean?

By Big Tent Democrat, Section Legislation
Posted on Thu Oct 07, 2010 at 08:30:32 AM EST
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The Interstate Recgnition of Notarizations Act would require state and federal courts to:

Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located[.]

What does "recognize" mean in this legislation? In terms of admissibility, most trial lawyers are familiar with the concept of the exception to the hearsay rule for public records and the concept of judicial notice. Is this what the term is intended to mean? Are notarized documents now to be viewed as "public records?" Because they aren't. Notary publics are not public officials and the documents they notarize are not public records. The problems that recent events have demonstrated are that, in fact, notarized documents in foreclosure proceedings are very unreliable. Recent events actually point to a policy that should exclude notarized documents from eligibility for such a presumption. More . .

What has been happening around the country in foreclosure proceedings has been the denial of due process for homeowners who want to challenge the veracity and validity of the evidence that the foreclosing parties have been introducing as evidence. This law will only exacerbate this problem.

At the very least, a legislative history and clear definition of what Congress means by the term "recognize" is required. The President must veto this bill and send it back to Congress so it does its work of properly drafting this legislation.

FULL DISCLOSURE: This legislation affects cases I am involved in. Speaking for me only

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What does "Recognize" Mean? | 33 comments (33 topical)

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BTD, here is D-day's take on it, (5.00 / 1) (#5)
by Anne on Thu Oct 07, 2010 at 09:42:42 AM EST

which you might want to address:

That's it entirely [referring to text of the bill]. Out of state notaries can notarize documents, including with e-signatures. And there's a serious split in the legal community over whether this would mean anything to the foreclosure mess.
Basically, notarization means that a notary public witnessed the act of signing and identified the signer. If a document is fraudulent, whether the notarization came from in state or out of state is of little consequence. The Reuters article says this act would "make it harder" to challenge foreclosure documents without saying how. In fact, nobody has properly explained how this would make it more difficult. The legal term of art is that notarization gives something the "presumption of truth" and the "presumption of validity," but those terms don't appear in this bill, and the foreclosure documents being challenged were already notarized. The banks are already doing fraudulently what some in the legal community fear they would be doing fraudulently if this bill passes.
Most important, this bill would take effect after signage, and I'm at pains to figure out how the millions of foreclosures and their documents already filed would be affected by this in any way. I see nothing about retroactivity in here.
It seems to me that some lawyers may have used the notarizations issue to get at the broader fraud, like a cro-bar to pry open the door. And going forward, the cro-bar may not be as available, though I'm still trying to figure out why. But that doesn't impact what's already been done. I cannot see my way clear to calling this TARP 2 based on the given information.
I am not a lawyer, and it's entirely possible I'm missing something. The Secretary of State of Ohio, Jennifer Brunner, seems to have a problem with it, but again, in her entire statement, I can't pick out anything that would actually be a problem, instead of some shadowy, undescribed menace. And the Ohio Attorney General, who is likely to have had knowledge of this issue, had no problem filing a lawsuit yesterday against GMAC.
I'll be doing some more digging on this today. I'm sorry if this answer is unsatisfactory, but in the comments, I'd like anyone to specifically tell me how HR3808 would 1) affect foreclosure document fraud that has already been committed, and 2) affect it going forward.

I guess I have at least one question: Dayen says this would only apply to documents post-enactment, but I don't see anything in the language that conforms with that opinion.

This will make foreclosure fraud (5.00 / 1) (#9)
by scribe on Thu Oct 07, 2010 at 09:55:48 AM EST

the rule, and not the criminal exception.

The whole part about "securely attached to" or "logically a part of" is a direct way of validating the (previously unlawful) practice of using fraudulent allonges on assignments; sub rosa it redefines what an allonge is into something the inancial industry needs.

And there's plenty of room for chicanery in deciding whether or not the act is retroactive - no individual homeowner being foreclosed will be able to hold out long enough to work through the appellate process to find out whether the act is or is not retroactive. If they had wanted to make it prospective only, all they had to do was add a single sentence "This act shall be prospective in its effect." They didn't. They knew what they were doing....


I explained it (none / 0) (#6)
by Big Tent Democrat on Thu Oct 07, 2010 at 09:43:54 AM EST

What does "recognize" mean.


D-Day is wrong (none / 0) (#10)
by Big Tent Democrat on Thu Oct 07, 2010 at 10:04:59 AM EST

D-day writes "the legal term of art is that notarization gives something the "presumption of truth" and the "presumption of validity," but those terms don't appear in this bill, and the foreclosure documents being challenged were already notarized. The banks are already doing fraudulently what some in the legal community fear they would be doing fraudulently if this bill passes."

That is precisely the point. The term in the bill is "recognize" which is totally undefined. What we have experienced with foreclosure judges is they bend over backwards to throw people out of their houses. the lack of a definition of "recognize" gives them the ability to say 'Congress said I have to accept as true these documents." Therefore, foreclose.

Further, D-Day writes:

"Most important, this bill would take effect after signage, and I'm at pains to figure out how the millions of foreclosures and their documents already filed would be affected by this in any way. I see nothing about retroactivity in here."

This is just wrong. When the law goes into effect courts must "recognize" these notarizations. This is not about closing documents. It is about pending cases.


This is how I was interpreting (5.00 / 1) (#11)
by Anne on Thu Oct 07, 2010 at 10:27:12 AM EST

both his comments and your posts - to his credit David has updated his post to quote and link to you on this subject.

I thought this, from Yves at Naked Capitalism, sums it up well:

Rather than deal with the considerable consequences of these abuses, the banks are prepared to bulldoze well settled state laws to give them an easy way out. And I'm not basing my view on this story alone; I had a conversation yesterday with a Congressional staffer who matter-of-factly said (but with little understanding of the underlying issues) that Congress would intervene on behalf of the industry, via its authority over national banks.
The result is that we institutionalize kleptocracy while keeping largely gutted forms of due process as theater. The powers that be hope that the broad public will remain unaware of what is really at work.

Inquiring minds now want to know: what will Obama do?

I think we have some idea of the fallout for homeowners and the can of worms of unintended consequences in other areas if he signs this into law - any thoughts on what the political fallout will be?


: I'm glad he did (5.00 / 2) (#13)
by Big Tent Democrat on Thu Oct 07, 2010 at 10:34:48 AM EST

I've tried to make the point that lack of clarity (or even the presence of clarity)does not help - judges, pols, people, all spin to the way they want things to go.
This law is certainly not going to help homeowners and imo, will likely hurt them.

: I'm not certain (none / 0) (#33)
by Dakinikat on Thu Oct 07, 2010 at 03:49:29 PM EST

of all the legal ramifications. But as a financial economist, I can tell you that it introduces another moral hazard issue into an asset pricing mechanism. It clouds the certification of due diligence and fiduciary responsibility so it makes the risk less transparent. This usually adds risk cost to a transaction and with the implied liability suspended on the part of one side, it means the risk premium is transferred to the other. Bad news for asset pricing. Financial assets backed by collateral that has cloudy valuation really wrecks havoc in a market.

What is this legislation going to (none / 0) (#1)
by Militarytracy on Thu Oct 07, 2010 at 09:16:20 AM EST

burn down as well? I read that it was tied up and died in Judiciary Committee twice because it is potentially dangerous to many legal processes. This was the third time it was going to die there and then it was yanked out of committee and thrown out on the floor for the wolves to vote for.

But the problem of reliability (none / 0) (#2)
by Demi Moaned on Thu Oct 07, 2010 at 09:18:39 AM EST

... applies just as much to in-state documents, doesn't it? So, is this law creating a special privilege for out of state documents? That would be unusual. Or just leveling the playing field between the two classes?

BTW, I think you want 'affects' instead of 'effects' in:

FULL DISCLOSURE: This legislation effects cases I am involved in.

: Yep (none / 0) (#3)
by Big Tent Democrat on Thu Oct 07, 2010 at 09:21:38 AM EST

I don't see how it changes anything (none / 0) (#4)
by nolo on Thu Oct 07, 2010 at 09:35:28 AM EST

"Recognize" is a pretty low-key word. I think all the legislation really does is put out-of-state notarizations on the same footing as in-state notarizations. Which isn't that groundbreaking, really. I've been a practicing lawyer for 17 years, and have yet to see a state or federal court reject a document or affidavit because it was notarized out of state. I also haven't seen any official recorder reject a document because it was notarized out of state. But maybe there have been courts or recorders that have done so -- it's not beyond imagining. In this day and age, though, it would be stupid for a court or agency to require documents to be notarized by a notary of that state (as opposed to the state in which the document or affidavit was made) in order to be admissible.

I also don't see how "recognizing" an out-of-state notarization would elevate the evidentiary value of a document or affidavit above that of a document or affidavit notarized in-state. You can still challenge them, after all, both on the facts set forth in the document/affidavit and on the legitimacy of the notarization itself.

You don't understand? (5.00 / 1) (#8)
by scribe on Thu Oct 07, 2010 at 09:50:11 AM EST

Get a notary stamp on anything, and it's good.

Every species of fraud has now been legalized, so long as it bears a notary stamp.


I understand (none / 0) (#12)
by nolo on Thu Oct 07, 2010 at 10:34:03 AM EST

There are a lot of people suspicious about the proposed bill (which has been around for years). Myself, I'm not that suspicious. "Recognize" is a far cry from "accept as non fraudulent, completely decisive and unchallengably true just because it came from out of state." What I've seen from a quick perusal of the legislative history is that it was intended to deal with the fact that states have different technical requirements for notarization (such as qualifications for the notary, magic language stuff like what the jurat's supposed to look like, what have you) that do not go to the substance of the document. It would be silly to reject a document or affidavit simply because it does not conform to the technical requirements for notarization in the jurisdiction in which it is submitted if the document or affidavit does, in fact, conform to the technical requirements for notarization in the jurisdiction in which it was executed.

That being said, I do question its necessity for the reasons I stated above. Right now, even without the bill, in 17 years of practice before multiple state and federal courts I have yet to have seen any court reject a document or affidavit because it was notarized out of state.


When reality hits the road (none / 0) (#20)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:05:40 AM EST

Or when a lawyer argues that "recognize" means that a state court must accept as true a notarized document absent, let's give it a fig leaf, "clear and convincing evidence," and a judge agrees, then what will "recognize" mean?

And if you think this is implausible, you've never been in a courtroom.


: Anything is plausible (none / 0) (#31)
by nolo on Thu Oct 07, 2010 at 01:05:02 PM EST

and yes, I've been in a courtroom. Thanks for asking.

That's how it works now. (none / 0) (#15)
by jpe on Thu Oct 07, 2010 at 10:59:18 AM EST

This bill wouldn't change the status quo.


: If that's true (5.00 / 1) (#19)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:03:43 AM EST

what is the purpose of the bill?

Law of Unintended Conseqquences (none / 0) (#7)
by Big Tent Democrat on Thu Oct 07, 2010 at 09:44:13 AM EST

See my posts above.


After spending a little time on LEXIS (none / 0) (#25)
by nolo on Thu Oct 07, 2010 at 11:27:37 AM EST

I'm finding that at least one state (California) has a statute on the books that expressly permits instruments to be acknowledged by out of state notaries (see Cal. Civ. Code 1182), and that at least one federal court has referred to this statute as establishing that California "recognizes" instruments notarized in other states. See Reynoso v. Paul Fin., LLC, No. 09-3225, 2009 U.S. Dist. LEXIS 106555 n. 1(N.D. Cal. Nov. 16, 2009). This was in the context of determining whether the documents were authentic, though, and nothing more. If you look at the opinion, nothing about this formal recognition stopped the court from considering the litigant's foreclosure challenge.

Conversely, in a non-foreclosure case, a federal district court sitting in Ohio criticized (but ultimately chose to consider) affidavits filed by a plaintiff in opposition to a motion for summary judgment because they were "electronically" signed because "the State of Ohio does not recognize an electronic notary signature." See Thomas v. Ametech, 464 F. Supp. 2d 688 n. 3 (N.D. Ohio 2006). Again, the issue dealt with the threshold issue of admissibility, and not the substance of the allegations themselves.

I really think "recognize" in this context simply means "acknowledge the legal effect of notarization," and nothing more. But like I said, I'm not sure I see a clear necessity for this statute anyway, so if it makes people happy to be vociferously agin' it, I don't plan on raining any more on the parade.


I'm glad you are comforted (none / 0) (#27)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:35:07 AM EST

by 2 district court opinions construing the word "recognize."

Me, I'd like the law itself to define the term.

Why do you object to that? Not that I want to rain on your parade or anything.


: I'm not objecting (none / 0) (#32)
by nolo on Thu Oct 07, 2010 at 01:07:17 PM EST

and I'd certainly prefer to see words defined in statutes. I'm just saying that I don't see a nefarious intent in the original statute. But as I keep saying, I don't see any particular need for it either. Not being a fan of unnecessary legislation, I'm fine with folks being against it. But I don't see it as some kind of huge bankster plot.

Are there other instances where Congress (none / 0) (#14)
by oculus on Thu Oct 07, 2010 at 10:57:30 AM EST

has legislated how one state's courts must treat documents from generated by private parties in another state? Whatever happened to the states' rights people in Congress?

Probably (none / 0) (#17)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:02:04 AM EST

And, in theory, the Full and Faith and Credit Clause, does.


Is a notarized document (none / 0) (#22)
by oculus on Thu Oct 07, 2010 at 11:26:10 AM EST

public Acts, Records, and judicial Proceedings of every other State.

What does "public" modify? Only "Acts"?


No idea (none / 0) (#24)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:27:01 AM EST

: Check it out! Article 4 give Congress (none / 0) (#26)
by oculus on Thu Oct 07, 2010 at 11:29:21 AM EST

the power to legislate, but it seems to be limited in scope.

"Recognize" means something like (none / 0) (#16)
by jpe on Thu Oct 07, 2010 at 11:00:22 AM EST

"national treatment" in international trade law: a state has to treat the notarizations of other states the same as it treats those of its own notaries.

: How do you know this? (none / 0) (#18)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:02:40 AM EST

Where in the bill does it say that?

What a notary does (none / 0) (#21)
by abdiel on Thu Oct 07, 2010 at 11:18:12 AM EST

is provide reasonable proof that the person who signed the document was actually that person. It does not present any kind of proof that the document is true or that the person knows what's on it. But to form a written contract, the signed acknowledgment is important.

I suppose what the law is saying is that it will accept a notarization from outside the state as providing that proof.

: It's that what you suppose? (none / 0) (#23)
by Big Tent Democrat on Thu Oct 07, 2010 at 11:26:20 AM EST

Well that's comforting.
I suppose if you said that wasn't your signature on a document that has an out of state seal, you'd like to confront the person claiming it is your signature.
But of course,since the court has been told to "recognize" the notarization, what will you say when the court says no, you can't bring that person into court and he must "recognize" the notarization.
The issue is not "recordng" of the deed or mortgage. The issue is is the "recording" of the signature.

Notarizations (none / 0) (#28)
by movalca on Thu Oct 07, 2010 at 12:01:35 PM EST

As a California Notary Public, I am a Public Official and my Notarizatiosn are Public Record. Here in CA we have strict laws concerning notarizations. While it is true I cannot attest to the validity of the document, I am required to enter into a journal who was signing and check therr identification. If I do not, I can be fined or imprisoned.

Other states, however have very lax laws concerning notarizations.

: Thanks for the info (none / 0) (#30)
by Big Tent Democrat on Thu Oct 07, 2010 at 12:08:01 PM EST

In Puerto Rico, which is NOT covered by the bill strictly speaking (not a State), Notaries actually DO attest to the contents and validity of a document which they must describe in their journals.

Addendum (none / 0) (#29)
by movalca on Thu Oct 07, 2010 at 12:06:28 PM EST

As an addendum, as far as I know notarizations are already required to be recognized by other states. Just as your driver's license is valid in other states, so are notarizations.