California Code: Notary Must NOT Have an Interest in the Document Being Signed

I caught this from the comments section: He’s right and I think if you look in the statutes of every state and industry standards that are published by Notary Associations you will find the same language. The fact that the Title agent is the closing agent is the Trustee on the Deed of Trust DOES create an interest in the document being signed (Deed of Trust). In judicial states it might be a different story. The logical conclusion is that either a quiet title or mandatory injunction removing the Deed of Trust from the official records of the county in which they are recorded might be successful. This would remove the security but not necessarily the obligation or the note (which is evidence of the obligation). It DOES accomplish two things (a) the loan is no longer secured and (b) there is nobody authorized to enforce it. Take a look at this:

California Civil Code § 1185.
8224. A notary public who has a direct financial or beneficial
interest in a transaction shall not perform any notarial act in
connection with such transaction.
For purposes of this section, a notary public has a direct
financial or beneficial interest in a transaction if the notary
public:
(a) With respect to a financial transaction, is named,
individually, as a principal to the transaction.
(b) With respect to real property, is named, individually, as a
grantor, grantee, mortgagor, mortgagee, trustor, trustee,
beneficiary, vendor, vendee, lessor, or lessee, to the transaction.
For purposes of this section, a notary public has no direct
financial or beneficial interest in a transaction where the notary
public acts in the capacity of an agent, employee, insurer, attorney,
escrow, or lender for a person having a direct financial or
beneficial interest in the transaction.

8227.1. It shall be a misdemeanor for any person who is not a duly
commissioned, qualified, and acting notary public for the State of
California to do any of the following:
(a) Represent or hold himself or herself out to the public or to
any person as being entitled to act as a notary public.
(b) Assume, use or advertise the title of notary public in such a
manner as to convey the impression that the person is a notary
public.
(c) Purport to act as a notary public.
8227.3. Any person who is not a duly commissioned, qualified, and
acting notary public who does any of the acts prohibited by Section
8227.1 in relation to any document or instrument affecting title to,
placing an encumbrance on, or placing an interest secured by a
mortgage or deed of trust on, real property consisting of a
single-family residence containing not more than four dwelling units,
is guilty of a felony.
8228.

30 Responses

  1. Hello

    I need help with any from California, that knows about Trust, after a person dies, and there is funds that are to go to beneficiary. This lawyer in CA, gave us notice that we are to be given money (funds) from the death of an uncle,

    How long does he have to settle funds that are to be given to each person? Does it have to go to probate?, what can a person do, that does not live in CA, to get information about the lawyer, he did tells us, that he was not ready to do things, and that when he felt like doing it, it would. But, he wasn’t going to give no on any funds, until he was ready.

  2. Doesn’t the escrow officer at the title company usually notarize the deed of trust?

    I just looked and my deed of trust was notarized by the escrow agent who is the same one that quickly gets you to sign off on the 3″ thick pile of papers.

    Is this a conflict as described above?

  3. I agree with everyone…on this post…Yes a problem exists and its not getting better. The average consumer does not understand the entire mortgage process/language period. Title companies or a mobile notary lacks the requisite knowledge to oversee signing let alone explain the terms of the transaction. In addition if the blow the signing they will never see business from the lender/broker again. So really whats the solution? The government has been bumbling around with revamping TILA, extra loan disclosures but really is that going to solve the problem? NO!

    Let me give you an example…if you were in the market to purchase a used car from a private party…would you ask the owner of the vehicle how the car runs take his/her word for it and write the check? I would hope the answer is no! I would hope you pay a mechanic a reasonable fee…say $200.00 to inspect the entire vehicle before you buy! So when you take out a mortgage loan and ask the lender if the rate is the best they can offer and are the costs reasonable and is there any dirty little secrets I should know about this loan….what do you think the answer will be? Undoubtably…it will be its a great deal and yes the rate is in line with the market and we have covered everything!…Why is that?…Because both the lender/loan officer and the guy selling you that used car both have something to gain by you transacting business with them.
    The guy sells you that used hunk of junk for 10k he made out like a bandit.
    If the lender/loan officer sells you a 5.5% rate in a 5.0% market and charged you non-esential fees on top of it…he made out like a bandit.

    The only resoultion is for consumers to have the opportunity to consult with an independent mortgage expert whom they(buyer or owner trying to refinance) retain and pay a flat fee to review all the terms and conditions and closing costs with them prior to signing the loan documents. Would you as a consumer be willing to have someone inspect your mortgage? I assume most are willing to pay for a mechanic to inspect that 10k car purchase…how about a 180k home loan and a 30 year comittment?

    All the extra disclosures will never help! In addition, the average consumer can’t effectively shop and compare loan programs…its impossible..it’s a shell game…lower costs higer rate, Higher Costs, Higher RATE! Higher Costs/Sometimes lower rate.

  4. it start back in 2002 when the home was purchase we only had 12,000 so by the time you paid all those other fee the loan was a 80/20 first franklin financial was going to give us the whole loan but before closing they said no only the 80 so the agency got us another lender which was chase now fff record two deed of trust but only gave us one loan now chase never record the loan only too the credit buruea in 2006 chase transfer the loan to radian services llc which they use a document state that the assignment was 2002 and record 2006 even the notary date has expired on it but they turn around and transfer the loan to pacific national holding inc they had lawyer which was les a zieve and he foreclosure on the second loan cause fff omitted themselve from their own foreclosure since a broker bought the loan current and place his advances to the second and bought the property at the trustee sale but guess what the trustee and the notary was in california the date of the sale them the broker from goldfinger investments llc which is the broker that was the higher bidden at a foreclosure that never happen he then quit claim deed to a timothy phillis timothy then evict me claim he broght the property at the auction now he evict on the 3 of november and he did not record the quit claim deed until the 20 of november along with the trustee deed upon sale and assignment of rent and disclaimer from his wife now he did not record a deed of trust until fff decide after a year sending me billing like i was the one paid all the time it was goldfinger investment llc they decide to send me a deed of trust and the note and record the substitutuin of trustee and full reconveyance 12/24/07 timotthy recorded his 1/2/08 all this is record in pinal county under marvin m berry and jenny berry. please help me file a complaint with the courts i can not afford an attorney i would have to do with God help and whom ever help me

  5. Florida has a statute that makes it a felony for a notary to notarize his own signature. I recently looked at a mortgage for a friend. The fellow who signed for the bank was the same fellow who notarized the document.

  6. An employee for the lender notarized the heloc loan at the banks branch, in California.
    Can this dismiss the loan and how do I start?

  7. Does this mean that if the notary comes to your house and no lender or broker is present to explain the documents you are signing then you may have an argument for invalidating the notarized document?

  8. That was difficult reading. I assume that it says something like this:

    If the notary is in a different location from the signers, the document is invalid.

    Can Neil or an attorney translate this document into plain English?

    Thanks!
    Dan Edstrom
    dmedstrom@hotmail.com

  9. 349 F.2d 580
    William V. MARTIN, as Trustee in Bankruptcy for Aerocolor,
    Inc., dba Aero Press Co., a corporation, Appellant,
    v.
    CROCKER-CITIZENS NATIONAL BANK, Appellee.
    No. 19670.
    United States Court of Appeals Ninth Circuit.
    Aug. 3, 1965.
    Edward I. Gorman, David K. Golding, Flaxman, Coleman, Gorman & Rosoff, Los Angeles, Cal., for appellant.

    Samuel H. Rindge, Cosgrove, Cramer, Rindge & Barnum, Los Angeles, Cal., for appellee.

    Before JERTBERG, Circuit Judge, MADDEN, Judge of the Court of Claims, and DUNIWAY, Circuit Judge.

    MADDEN, Judge:

    1
    Aerocolor, Inc., was in bankruptcy in the United States District Court for the Southern District of California. The appellee herein, Crocker-Citizens National Bank, applied to the referee in bankruptcy for leave to exercise the bank’s power of sale under a chattel mortgage which the bank claimed to have received from Aerocolor before Aerocolor became bankrupt. The referee in bankruptcy denied the bank’s application, stating several reasons for the denial. We shall discuss only one of those reasons, the failure of the officers of Aerocolor to acknowledge, in the presence of the notary public who attached his certificate to the document, their signatures to the chattel mortgage.

    2
    The referee having denied the bank’s application for leave to sell the chattels under the mortgage and the bank having sought review of the referee’s decision by the District Court, the bank and the trustee in bankruptcy entered into a stipulation providing for the sale of the chattels in order to prevent deterioration and wastage, the proceeds of the sale to belong ultimately to the trustee or to the bank, depending upon the outcome of the bank’s appeal.

    3
    The District Court reversed the judgment and order of the referee and held that the bank’s chattel mortgage was valid and that the proceeds of the sale of the chattels should be paid to the bank. The trustee in bankruptcy has appealed to this court from that judgment.

    4
    At the time Aerocolor executed its chattel mortgage to the bank, Aerocolor had one or more existing creditors who are now creditors of the bankrupt estate. If, under California law, the chattel mortgage was invalid as against that creditor or those creditors, it is invalid as against the trustee in bankruptcy. First Nat. Bank of Baltimore v. Staake, 202 U.S. 141, 26 S.Ct. 580, 50 L.Ed. 967; Noyes v. Bank of Italy, 206 Cal. 266, 274 P. 68; Bankruptcy Act, 70, sub. c, 11 U.S.C. 110, sub. c. The appellee cites In re Hurt, 129 F.Supp. 94, as containing language contrary to the foregoing authorities. It seems to us, however, that the law on this question is as we have stated it.

    5
    Our problem, then, is to determine whether, under California law, the bank’s chattel mortgage was valid as against Aerocolor’s creditors. California Civil Code 2957 provides:

    6
    A mortgage of personal property or crops is void as against creditors of the mortgagor and subsequent purchasers and encumbrancers of the property in good faith and for value, unless:

    7
    1. It is acknowledged, or proved and certified, in like manner as grants of real property;

    8
    4. The mortgage * * * is recorded in the office of the recorder * * *.

    9
    California Civil Code 1185 provides that the acknowledgment of an instrument must not be taken unless the officer taking it knows, or is furnished evidence, that the person making the acknowledgment is the person described in the instrument. Sections 1188 and 1190 provide a form of words which the officer must indorse on or attach to the instrument acknowledged. That form states that the person making the acknowledgment personally appeared before the officer who took the acknowledgment. California Government Code 6203 provides:

    10
    Every officer authorized by law to make or give any certificate or other writing is guilty of a misdemeanor if he makes and delivers as true any certificate or writing containing statements which he knows to be false * * *.

    11
    California Government Code 8214 makes a notary public and his sureties liable to any person injured by the notary’s official misconduct or neglect.

    12
    In the instant case the chattel mortgage was not acknowledged. The California statute says that such a mortgage shall be void as against creditors of the mortgagor. At least as to existing creditors of the mortgagor, the purpose of the legislature in requiring acknowledgment, and recordation, to which acknowledgment is a prerequisite, could not have been the giving of notice, since such a creditor would have already parted with his money or his goods or his labor, and the only benefit which would accrue to him from a recordation which might come to his notice would be the warning that he had better not part with any more of his money or his goods or his labor on the assumption that because his debtor was in possession of many chattels he would probably pay his debts. The legislators’ view may well have been that if a person had many chattels in his possession, and many debts, some one of his many creditors ought not to be allowed the advantage of a secret, non-possessory lien upon the debtor’s apparent chattel riches, which advantage the favored creditor would disclose when the debtor’s financial structure was about to collapse. The legislature may well have thought that if one creditor is to be permitted to gain such an advantage over others, he should at least take certain prescribed steps in order to accomplish that purpose. As we have said, the notice given by recordation would have come too late to be of use to existing creditors.

    13
    We think, then, that at least as to existing creditors, the requirement of Civil Code 2957 that chattel mortgages be acknowledged in order to be valid prescribes a necessary step in the creation of the lien of the chattel mortgage itself, and not a method of giving constructive notice of an otherwise valid lien.

    14
    In the instant case, although the chattel mortgage was not acknowledged, the notary public certified that it had been acknowledged. On its face, then, when it was presented by the bank to the recorder there was no reason why the recorder should not record it, and he did record it. In such a situation, there are obvious possibilities of great inequities. If someone had bought Aerocolor’s note from the bank and had sought to enforce the chattel mortgage against Aerocolor, which for the purpose of the illustration we will assume was still in business, it would be difficult to see any equity in a defense by Aerocolor that its officers had not acknowledged the chattel mortgage.

    15
    As the District Court pointed out in its memorandum opinion, many courts have held that when an acknowledgment is defective but the defect is not apparent on the face of the record of the instrument, the record imparts constructive notice of the instrument to persons not having actual notice of the defect. The Court cites 59 A.L.R.2d 1299, and cites Boswell v. Laramie First National Bank, 16 Wyo. 161, 92 P. 624, 93 P. 661, for an able elaboration of the doctrine. As to California law, the Court cites Merced Bank v. Rosenthal, 99 Cal. 39, 31 P. 849, 33 P. 732; Lee v. Murphy, 119 Cal. 364, 51 P. 549; Overton v. Harband, 6 Cal.App.2d 455, 44 P.2d 484. The Court recognized that the statements in the cited California cases were dicta, and said:

    16
    Admittedly, the authorities in California in support of the exception are few and weak, but the courts have never had occasion to rule with greater force upon it. These cases, I believe, are sufficient to indicate that if the courts of California were to rule upon the point, they would uphold, under such circumstances, an acknowledgment valid on its face, even though subject to a latent defect.

    17
    We suggest, with deference, that the patent-latent dichotomy has no application to the instant case. It is for the protection of persons who rely upon what appears fair on the record, and as to whom it would be inequitable to assert defects in the acknowledgment which they had no reason to suspect. In the instant case the defect was created by the chattel mortgagee itself, the bank. On its premises, and under the supervision of its agents, the officers of the mortgagor signed the mortgage, and were allowed to depart without having acknowledged their signatures. Under the supervision of the bank’s agents, a notary later made a false certification that the mortgagor’s officers had acknowledged their execution of the instrument. If such a complete disregard of the provisions of the California statutes is to be treated as irrelevant, not for the protection of an innocent third person but for the benefit of the party who so disregarded the statutes, it should be the California courts, not a court of another sovereign, which should announce that doctrine.

    18
    In view of our conclusion that the acknowledgment of the chattel mortgage was invalid and the mortgage was therefore invalid as against the trustee in bankruptcy, we have not considered the other asserted grounds of invalidity of the chattel mortgage.

    19
    The judgment of the District Court is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.

  10. Neil,

    The same thing happened to me, in Arizona……….

    Kathi

  11. jenny: If what you say is true and you can prove it, it sounds like an invalid notarization, which tagged onto other claims will make your other claims of fraud, TILA violations, securities fraud, identity theft etc. all the stronger. It also would serve as an attack on the recording of the Trustee deed. So if you get something else recorded now in the county records, and then you attack the Trustee’s deed as improperly executed and therefore removed from the county records, when they re-submit the the corrected deed, your document precedes theirs giving you priority over them. Check with local counsel to make sure you get this just right. Their only way out is to sue you for quiet title but then they must make allegations and prove them. The allegations they must make are not true. Thus, I’ve seen reported many times the “disappearance” of the “lender.” So at that point homeowners are filing quiet title actions, naming the “lender” and anyone else in the title record. Their reports indicate that they are getting judgments and clearing title in their names without the note and mortgage.

  12. how can a trustee be in two places, i had a foreclosure in Arizona and the trustee and notary was in California the same day of the sale.

  13. okay even if they had no beneficial interest isn’t there still possible conflict of interest considering the fact that the notary has a duty to explain the security agreement the borrower is entering & might leave some things out of explenation?

  14. according to my father the notary at the time of loan closing was an employee of the lender/closing agent what recourse should I take?

  15. by operation of law is any handwritten alterations made to trust deed documents after being signed not initialed by borrower considered forged or fraudulent?

  16. the NOD and elect. to sell doesn’t contain an official notary stamp but is signed and stamped I assume this person isn’t a notary?

  17. were your closing documents notarized in your presence at the time you signed them???

  18. the notary must witness the act of signing, it cannot a remote thing, all these lenders and foreclosure attorneys are using notary employees at different locations to do this, everyone should check their foreclosure notices and substitution of trustee notices, notices of sale, they could be fraudulent. We found a person here in VA signing as notary when he was not one.

    Question everything, question everyone.

  19. also where should documents like assignments be notarized if prepared by a law firm here in california why have it notarized in texas especially when the lender is located here in california?

  20. There is a story in today’s editon of the washington post in a front page story , depicting the hurdles homeowners who are not prepared are facing in one judge’s courtroom. This story should be a wake up call to all homeowners who are facing foreclosure. Seek help from knowledgeable sources even if you are unable to secure the services of a lawyer initially.File a complaint on your own and seek discoveries from all parties.Don’t wait for the sale to occur and then rush to the court for help it may be to late.

  21. Does the implication of notary fraud by the notary……..lead to the title companies, who would have known that the loan officer’s supervisor was the notary…………his signature as notary and loan supervisor should have raised a RED FLAG by someone…………CORRECT?

    Kathi

  22. Philip…………

    Go to your State’s Notary Public Reference Manual. The person who “supposedly” notoraized my loan documents was my mortgage broker’s supervisor, since this was her first loan.

    Kathi

  23. Neil,

    In the State of Arizona, according to the Notary Public Reference Manual…………on page 8……….item 213………..”Party to the instrument”……An instrument is the document, a signature on which you are notarizing. A party to the instrument is someone who is mentioned in the document either by name or by job title or classification or who would have some kind of beneficial or financial interest in the document. If you are a party to the instrument, then you have an interest in the transaction and are no longer an impartial witness; therefore you could not notarize a signature………..So my question to you is………..when I closed my loan at my home at dinnertime with my five children and the loan officer and her supervisor had me sign the documents without dating the right to cancel document…………and later found out that the supervisor notarized my documents…………..were the loan documents valid??????????????

    Please help me?????????As it appears that I will be going the ProSe route since I have yet to make personal contact with a “Lawyer Who Gets It”.

    Thanks again for all that you do,

    Sincerely,
    Kathi

  24. how do you go about finding out if the notary has an interest in the document?

  25. And I thought they were just a bunch of nice people!

  26. Here’s one for you to ponder. Prior to closing, I called the Title and Closing company if they knew a local attorney I could use to represent me. Of course, they did know an attorney. He showed up, took my check, and advised me that “yup, that’s just a boilerplate mortgage”. We closed, and now I’m in this mess we call foreclosure. I have since determined that the lawyer they referred to me (the closing company) is actually the OWNER of the closing company. TALK ABOUT ASYMMETRIC INFORMATION! I believe he is also the notary for the transaction and on the Deed of Trust. I am retrieving my docs from the attorney so that I may ascertain the attorney’s role throughout the transaction. JOKE IS ON ME! I’m smarter now than I was then. Who’d have thunk it!

  27. I saw hundreds of settlements where the attorney at settlement was getting a fee for do the settlement and at the same time they were notarizing the documents, also borrowers signing their loan docs with a settlement agent and the documents were being notarized after the fact and having the notary back date their work.

    Actually most of the settlements in VA, DC and MD were done under this scheme.

    Can these loan documents be challenged in any way. I understand the notary must witness and register the documents being signed. this almost never happened.

  28. Here is what I could find for VA:

    § 47.1-30. Conflict of interests.

    No notary shall perform any notarial act with respect to any document, writing, or electronic document to which the notary or his spouse is a party, or in which either of them has a direct beneficial interest. A notary nominated as a fiduciary in a will shall not, for that reason alone, be deemed a party to the will or to have a direct beneficial interest therein.

    Any notary who violates the provisions of this section shall be guilty of official misconduct.

    A notarial act performed in violation of this section shall not automatically be void for such reason, but shall be voidable in the discretion of any court of competent jurisdiction upon the motion of any person injured thereby.

    (1980, c. 580; 1992, c. 194; 2007, cc. 269, 590.)

  29. Well …look at this link and open up this discussion http://www.mersinc.org/about/shareholders.aspx

  30. This is what I found for Florida:
    117.107 Prohibited Acts
    (12) A notary public may not notarize a signature on a document if the notary public has a financial interest in or is a party to the underlying transaction; however, a notary public who is an employee may notarize a signature for his or her employer, and this employment does not constitute a financial interest in the transaction nor make the notary a party to the transaction under this subsection as long as he or she does not receive a benefit other than his or her salary and the fee for services as a notary public authorized by law. For purposes of this subsection, a notary public who is an attorney does not have a financial interest in and is not a party to the underlying transaction evidenced by a notarized document if he or she notarizes a signature on that document for a client for whom he or she serves as an attorney of record and he or she has no interest in the document other than the fee paid to him or her for legal services and the fee authorized by law for services as a notary public.

    Question: If the notary is an employee of a title company, are they expempt?

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