Client Alerts
April 09, 2019

Kentucky General Assembly Approves Electronic Recording and Notarization

Stites & Harbison Client Alert, April 9, 2019

The General Assembly recently passed Senate Bill 114 into law, which reforms Kentucky’s recording and notary laws in two significant ways: county clerks will soon be able to record real estate deeds, mortgages and other documents electronically, and notaries public will be able to notarize real estate documents electronically and remotely.

SB 114 will finally permit the use of electronic recording (“e-recording”) of real estate documents by county clerks. Kentucky has been behind the times—just one of only four states that does not provide for electronic recording in real estate transactions. The bill will also permit the use of digital signatures for the in-person electronic notarization of real estate documents. In this regard, SB 114 adopts key provisions of the Uniform Real Property Electronic Recording Act (URPERA), a uniform law adopted by several other states to allow clerks and recorders to e-record real property transactions and land records, and the Revised Uniform Law on Notarial Acts (RULONA), a uniform law allowing notaries to electronically perform notarial acts. SB 114 also provides for remote online notarization and authorizes the use of a remote online notary (e.g., where signer is not in the physical presence of the notary) to acknowledge the execution of real estate documents. Among other things, this will facilitate transactions where the signing party is out of the country; under current law, such parties must typically travel to the U.S. embassy to execute important documents.

Previously, Kentucky had adopted the Uniform Electronic Transactions Act (UETA) which made many electronic documents and e-signature legally valid, just like printed documents and manually-signed signatures. But unlike the uniform act, the Kentucky version prohibited the use of e-signatures for transactions involving deeds and other instruments that convey interests in real property. KRS 369.103(2). Under SB 114, these prohibitions have been removed entirely, so that e-signatures are now permitted, although not required, for real estate transactions. SB 114 does not affect or expand the prohibitions on using e-signatures for wills, negotiable promissory notes, or motor vehicle titles, however.

While the bill facilitates the use of new technologies to record real estate documents, it is permissive, not mandatory, and counties may implement the changes at their own pace for purposes of efficiency, convenience, and data security. These changes will not happen overnight, as many county clerks begin planning the proper and effective implementation of these new systems. Jefferson and Fayette Counties are expected to be among the first counties ready to adopt the new recordation method.

SB 114 will also create new sections of the Kentucky statutes addressing “Notaries Public and Commissioners of Foreign Deeds” requiring notaries to maintain journals chronicling all notarial acts performed, as is required in many other states and by many mortgage litigation settlement agreements. The new statute is expected to deter fraud by preserving more detailed records of notarial acts, specifically including the form of identification presented by the witness. The new law additionally requires the Secretary of State to maintain an electronic database of all notaries public.

Secretary of State Alison Grimes and her staff played a significant role in the creation and support of a task force to address stakeholder concerns and issues, which ultimately led to the legislature’s adoption of SB 114. Because Kentucky’s antiquated notary laws were confusing and generally ineffective in discouraging fraud and misconduct, this statutory renovation was desperately needed, and should increase confidence and reduce risk in real estate transactions.

Signed by the Governor on March 25, 2019, the new legislation takes effect on January 1, 2020

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