Notary Disqualifying Interest

notary disqualifying interestNotary Disqualifying Interest

Colorado notary law, CRS 24-21-504, Authority to Perform Notarial Act, prohibits a notary from performing any notarial act for a transaction where the notary has a disqualifying interest in the transaction.

A notary is disqualified by a disqualifying interest if:
1. The notary or the notary’s spouse, partner in a civil union, ancestor, descendant, or sibling is a party to or Is named in the record that is to be notarized, or
2. The notary or the notary’s spouse, or partner in a civil union, may receive directly, and as a proximate result of the notarization, any advantage, right, title, interest, cash, or property exceeding the notary fee allowed by law.

A notarial act performed in violation of this law is voidable.

Neutral, Unbiased Witness

The notary must maintain a role as a neutral, unbiased official witness to the transaction, and not be a named party or beneficiary of the transaction.

To remain a disinterested, neutral party, and avoid problems, the notary may not notarize documents for the specified family members.  Although the law does not specifically mention ex-spouses, in-laws, aunts, uncles, cousins, half-siblings, step-parents, step-children, or adopted children, it is a best practice to avoid notarizing for any family members to avoid an appearance of favoritism or impropriety.

In his book, Professor Closen’s Notary Best Practices, notary author and legal expert Michael Closen states in section 19.11: The notary should abide by the ethical duty to refrain from notarizing for any known member of the notary’s family in any degree of relationship by blood, marriage or adoption.

Note: Before Colorado notary laws changed to RULONA on July 1, 2018, the old notary law did not prohibit notarizing for a spouse or family member. Some states prohibit notarizing for a spouse or other family members, some states allow it.

The law does not prohibit notarizing for friends, neighbors, co-workers, bosses, business partners, clients, or customers.

Many businesses have workplace notary employees for the convenience of the business or customers.  Workplace notaries may notarize documents for their co-workers, managers, executives, or customers only if they are not related by marriage. civil union, or familial status.

A real estate agent or commissioned salesperson who is also a notary must avoid notarizing a document for a transaction where the agent or salesperson will receive a sales commission when the transaction closes.  To avoid a conflict of interest, another person in the office, such as an office assistant, or a disinterested notary, could notarize the document.

Granting Signing Authority to an Employee

checkmark box greenTip: It may be useful for the President or CEO of a business or family business to delegate or grant signing authority to a trusted employee or an independent contractor.  For oversight, the authority can be delegated or granted on a case-by-case basis, requiring written approval.

This may be useful if the President is out of the office, traveling, sick, or hospitalized, or if the contract needs to be notarized by a notary employee who is a family member, related to the President, and the notary is disqualified under state notary law from notarizing for a family member.

Signing authority might be delegated or granted to a trusted employee such as an executive assistant, office manager, sales manager, project manager, foreman, supervisor, bookkeeper, secretary, or treasurer.

If no other suitable employee is available, another possibility is to hire a virtual assistant or a nominee officer as an independent contractor and pay a service fee for signing contracts when authorized by the President.

The corporation bylaws or LLC operating agreement must include provisions and restrictions for delegating or granting of signing authority by the President or CEO.

Sample language for signing authorization: Employee/job title/contractor shall have the authority to enter into a written contract binding upon the business, only when specifically authorized in writing, signed by the President/CEO of the business.  All contracts shall be in writing, no verbal contracts are authorized.

A detailed service contract, prepared or reviewed by an attorney, should be used when hiring a virtual assistant or a nominee officer.

Notary Public Serves All of the Public

If a notary employee serves customers, the notary should also serve non-customers.  A notary public is a public official, and should not deny notary services because a person is not a customer or client.

A person should not be required to buy products or services or open an account as a prerequisite to receiving notarial services.  Showing preferential treatment does not maintain neutrality, and the notary is serving as a private notary, not a public notary.

As a public official, a notary may not accept a gift, bonus, tip, gratuity or anything of material value, other than the authorized fee for services rendered.  States have gift ban laws or clauses in the state constitution to prevent undue influence of public officials.

Decline if there is a Disqualifying Interest

Notaries must recuse themselves and avoid notarizing in situations where they have a disqualifying interest.  It is a best practice to make a note of the recusal and the reason in the notary journal.

[Updated 2020-07-27] updated for RULONA laws

Disclaimer: This information is not legal advice. Contact an attorney for legal advice.

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