Navigating Notarization: What It Means for Surety Bonds

A New Era of Notarization

Need a notary but not sure where to start? Understanding the various requirements for notarization, especially across different states, can feel overwhelming. That’s why Merchants Bonding Company™ is here to help. This guide will walk you through the evolving notary landscape, including traditional and remote notarization options, key legal considerations, and how Merchants supports every step.

A notary is a third-party individual authorized to perform legal formalities, primarily serving as a witness and certifying the validity of contracts. In the surety industry, notaries play a supporting but essential role. They verify the identity of individuals signing important documents, such as indemnity agreements, bond applications, power of attorney forms, corporate resolutions, and more, ensuring the signers are who they claim to be and are signing willingly.

This verification helps protect against fraud by confirming that the individual appeared in person, provided valid identification, and was not under duress. Fraudulent activity can expose a surety company to significant financial risk. Notaries are instrumental in situations involving court or probate bonds, where they administer oaths and affirmations to ensure the accuracy of sworn statements. Additionally, notarized documents are more likely to be upheld in court if Merchants pursues recovery from a defaulted principal. In this way, notaries serve as a protective layer for all parties involved.

Notarization also establishes a clear and verifiable date of execution, which can be critical in determining when a bond obligation legally begins. This timestamp serves as a legal reference point if any disputes arise over when a document was signed or when liability was triggered.

While not all surety bonds need to be notarized, it is commonly required in:

• Public official bonds
• Court bonds
• Probate bonds
• License and permit bonds (especially in regulated industries)
• Certain performance or payment bonds in construction, depending on the project or obligee

Traditional Notarization: Face-to-Face and Time-Tested

Traditional notarization requires the notary to be physically present during the signing of documents. At the time of signing, the notary validates the identities of the signers using acceptable identification, such as a driver’s license or state-issued ID. In the surety industry, this method is commonly used to deter fraud.

This face-to-face format provides several benefits, including personal interaction, secure transfer of original documentation, and immediate trust building. In a digital age, some value the reassurance of human interaction. In-person notarization offers enhanced security, making it more difficult for individuals to impersonate others, forge signatures, or sign under coercion. The retention of original documents can also support credibility in legal proceedings or future reference. The face-to-face nature of traditional notarization fosters trust between all parties involved.

However, this method has its limitations. It depends on the physical presence of all parties, and is often restricted by geography and scheduling. Coordinating travel and availability can be especially difficult when multiple indemnitors are required to sign a general indemnity agreement, particularly when those individuals are located in different cities or states. These logistical hurdles can delay the bonding process and complicate timely execution of financial documents.

Remote Online Notarization: Surety in the Digital Age

The process of remote online notarization (RON) mirrors traditional notarization but occurs entirely online. It utilizes audio-visual technology and digital identity verification to connect the notary and signer(s), enabling the entire notarization process to be completed remotely through electronic signatures and verification tools.

RON adoption has increased significantly in recent years, especially since the COVID-19 pandemic accelerated the demand for remote legal services. This growth is driven by the greater convenience, faster turnaround, and expanded flexibility RON offers. Individuals can now notarize documents from virtually anywhere with internet access. This is especially beneficial when multiple parties are involved, eliminating the need to coordinate in-person meetings at a notary’s office. The streamlined digital process reduces turnaround times, making notarization more efficient.

Like any technology, RON comes with challenges. Technology literacy, platform compatibility, and digital comfort can vary widely among users. Not everyone requiring notary services is familiar or comfortable with the technology. Additionally, notaries and signers need compatible devices and reliable internet connections, which are not always guaranteed.

Despite these considerations, RON represents a major step forward in modernizing the notarization process, delivering a more accessible and adaptable solution in the digital age.

Regulation and Compliance: Navigating a Patchwork of Laws

Notary laws vary significantly across states. While most states have authorized remote online notarization (RON), a few have yet to adopt this technology, continuing to require traditional, in-person notarization.

This inconsistency across jurisdictions can create obstacles for individuals and businesses, particularly those operating across state lines. For surety professionals, agents, and clients, these variations can lead to delays and logistical challenges when attempting to finalize documents or issue bonds in different states.

Keeping track of individual state requirements can be difficult. That’s why Merchants helps its agents stay compliant across jurisdictions, supporting both traditional and remote notarization processes to ensure a smooth and legally sound experience.

Notarization is just one step in the bond execution process. In many cases, the bond must also be authenticated with a company seal, which serves as an added layer of validation that further confirms the bond’s legitimacy.

What is a Company Seal?

A company seal is a physical or digital mark used by a corporation, such as a surety company, to formally authenticate a bond or legal document. In surety, it signifies that the bond has been executed with proper authority and is backed by a licensed surety.

The Company Seal: Physical or Digital, Always Secure

The Merchants company seal acts as a formal indicator that a bond is authentic and issued by a licensed surety. It verifies the legitimacy of the bond and confirms the surety company backing the obligation. Many obligees require a seal to ensure the bond has not been forged or altered.

Merchants provides both physical and digital company seals to meet the diverse needs of obligees and agents. Physical seals can be requested through a Merchants underwriter or the Merchants agency team. Digital seals are also available and are compatible with leading e-bonding platforms and remote execution tools. Digital seals can be downloaded from the Merchants Bonding Company Hub™.

Both seal formats are legally valid, depending on the requirements of the obligee and the issuing state. Merchants can assist in selecting the appropriate option to ensure compliance and secure bond execution.

Merchants Supports It All

Merchants Bonding Company is dedicated to providing flexible, reliable solutions that support agents and clients in an ever-evolving notary landscape. Through our common sense underwriting approach and commitment to first class experiences, we ensure that notary-related needs, whether traditional or digital, are met with ease and confidence.

Here’s how Merchants supports you every step of the way:

Traditional Notarization Support:

• Our underwriters and agency teams are ready to help navigate state-specific requirements for in-person notarization. Whether it’s verifying compliance or coordinating document execution, Merchants provides the expertise to ensure a smooth process.

Remote Notarization Readiness:

• Merchants partners with a trusted third-party vendor to facilitate remote online notarization (RON) services. This ensures secure, compliant digital execution, helping you complete important documents from anywhere while meeting jurisdictional standards.

Seal Ordering – Physical and Digital:

• Whether in need of a physical seal for traditional documentation or a digital seal compatible with e-bonding platforms, Merchants has you covered. Our team can quickly fulfill requests to keep your processes moving without delay.

As a trusted surety advisor in notary-related surety processes, Merchants is equipped to meet the needs in any format. For resources, state-specific guidance, or seal requests, contact your underwriter or agency representative today.