( Again with apologies to William Shakespeare) By Richard F. Lund, J. D., Vice President, Senior Underwriter, Swiss Re *

In William Shakespeare’ s“ Hamlet,” the title character famously ponders,“ To Be, or not To Be, that is the question.” He reflects on the unfairness of life, yet knows that it is better than the alternative. Such is the notary’ s dilemma. In most instances, a person who takes on the noble mantle of‘ Notary Public’ chooses it for himself knowing that the best way to avoid a‘ sea of troubles’ is not to become one. Still, they choose to do so in order to provide a valuable service to society – and their customers. But with that service, as with most things of value, comes risk. And the primary risk is the possibility of not doing the job correctly, which could ultimately lead to some error that may be of great cost.

So what is a“ notary”? In ancient times a notary was simply a scribe who wrote in shorthand. Over the course of time, notaries became able to draft legal documents and other written instruments. To commemorate their work, they used wax seals and ribbons to show that the document had a semiofficial status. Eventually, governments saw the need to regulate their actions and to give notaries the purpose that is bestowed upon them to this day: to act as“ a person of proven integrity by the state to act as an impartial witness”( National Notary Association Home Study Course). By being in such position, the notary is most commonly called upon to acknowledge that a signature placed on a legal document was, in fact, put there by the person to whom it is ascribed, and that the person signed the document in their presence. The notary does not pass judgment on the legality of the document or guarantee its truth, only that the named signatory did so in their presence.

While being a notary public may seem relatively innocuous, an error committed while exercising ones duties can be quite significant, both monetarily and emotionally. That is why the Swiss Re Corporate Solutions Insurance Agents Professional Liability( E & O) insurance policy provides coverage for several ancillary acts that an insurance agent or agency staff may undertake, including that of a notary public under the“ Other Related Services” section of the policy.( Coverage is also provided for teaching a formal insurance course, testimony as an expert witness, advertising, or services as a claims adjuster. Please see the policy itself for details or contact your state E & O administrator.) For a proper notarization to occur, it must include the following:

While these steps seem simple enough, the claims that occur can be complex because of the parties that may be involved.

The most common error associated with being a notary public is notarizing the signature of a person who later claims they did not appear in front of the notary and, in any event, the signature is not theirs. This will most likely occur when the document is a bond or some other financial guarantee that is later called into question. While it is not a claim that happens with great frequency, the severity can be quite sizable-- especially when a bond is at stake. In most such cases the bond involves some type of construction project in which there is some defect causing the entire amount of the bond to come due. Difficulty arises when the signature on the bond application is called into question. A claim in this situation is not unheard of to be in the value of 6 or even 7 figures. That’ s right, millions of dollars over something as simple as a signature.

Another common scenario involves real estate transactions. Sometimes the property in question is sold outright, while in other cases there is a partial grant of ownership, e. g., selling mineral rights. Did both husband and wife sign the deed? All of the siblings with an ownership interest? Every owner of the business? Gathering all of the busy parties to these transactions in one place just to scribble a quick signature can be a challenge.‘ Is it really necessary that [ the notary ] watch everyone sign in person? I can vouch for the signature of my wife / brother / partner …’

Faced with significant pressure from all concerned to cut a small corner or two, what must one do to avoid being put in the position of having a claim made against them while acting as a notary? Simple! Begin by following the guidelines set out by the American Society of Notaries, National Notary Association, and your state government.

See Notary … Page 10

6 KANSAS INSURANCE AGENT & BROKER | January-February 2016 |