Digital closings can create a more efficient, convenient closing experience, but the right process depends on the transaction, jurisdiction, and parties involved.
TL;DR:
Knowing how digital closing options work can help title agents prevent delays, set clearer expectations, and keep transactions moving.
An eClosing generally refers to a real estate closing in which one or more participants use electronic signatures to sign some or all of the closing documents. Depending on the transaction, the process may be partly digital or fully electronic. Understanding where each option fits can help title agents identify potential issues earlier and choose the right process for the transaction.
First, know what kind of closing you’re working with.
In a traditional closing, documents are generally printed, wet-signed, and notarized with the signer and notary physically together.
A hybrid eClosing moves part of the process online. Some documents may be eSigned, while the note or documents requiring notarization are still wet-signed in person.
In-Person Electronic Notarization (IPEN) takes the process a step further. The documents and signatures are electronic, but the signer and notary are still in the same room.
Remote Online Notarization (RON) removes that in-person requirement. The signer and notary meet through live audio-video technology, and the applicable documents are electronically signed and notarized.
The important distinction is that RON is not another name for eClosing. It’s one notarization method that may be used within a digital closing.
Don’t assume a transaction can use RON.
A borrower may be ready to close online, but that doesn’t mean the transaction is eligible.
State requirements vary, and lender or investor guidelines may affect whether documents can be electronically signed or remotely notarized. Recording capabilities can create another hurdle if the jurisdiction cannot accept the executed documents.
The transaction type can also change what is permitted. That makes early confirmation important. Before the closing is scheduled around a remote process, verify that the transaction can actually support it.
Treat identity verification as more than a technology step.
One of the biggest differences with RON is obvious: the signer and notary are no longer sitting across the table from each other.
That makes the identity-verification process especially important. RON platforms may use tools such as credential analysis and identity proofing to help verify the signer. But technology doesn’t replace good judgment.
If identification information doesn’t match, the signer’s behavior raises concerns, or something about the transaction seems unusual, follow established procedures and escalate the issue. A faster process is only an improvement if it remains secure.
Make sure the borrower is ready before closing day.
A digital closing can be convenient for the borrower, but unfamiliar technology can quickly turn that convenience into frustration.
Before closing, make sure the signer knows how the process will work and can access the required platform. If RON is being used, the signer also needs to be able to complete the required identity-verification steps and participate in the live session.
Advance access to documents can help, too. It gives borrowers more time to review what they are signing and can make the actual appointment more efficient.
If the borrower is not comfortable with the process or cannot complete the required steps, another closing option may be the better path.
Know when to pivot back to an in-person process.
RON can expand closing options, but it won’t work for every transaction.
In-person notarization may still be necessary because of state law, lender or investor requirements, or recording limitations. It may also be required when the signer cannot complete the identity-verification process or doesn’t have the necessary technology.
The best time to discover that is before the signing appointment. Having a backup option can help keep a digital closing issue from becoming a closing delay.
The real value is what happens before and after the signing.
The benefits of eClosing go beyond replacing paper with a screen.
Consumers may have more time to review documents and spend less time at the signing appointment. Title and settlement professionals can reduce missed signatures and post-closing cleanup. Lenders may also see fewer operational errors.
A well-designed process can help documents move more efficiently from signing through recording and post-closing. But the technology only works when the process around it works, too.
Set the transaction up for success.
The right digital closing process starts well before the signing appointment. A few early checks can help confirm that the transaction is set up for the right approach and reduce the risk of last-minute changes.
- Identify early whether the transaction is a candidate for eClosing or RON.
- Confirm lender and investor requirements.
- Review applicable state requirements.
- Verify that the recording jurisdiction can accept the documents.
- Follow approved identity-verification and fraud-prevention procedures.
- Make sure the borrower understands the digital closing process.
- Have an alternative closing option available when needed.
- Escalate underwriting or procedural questions when appropriate.
Digital closing options can make the process easier for everyone involved, but only when the transaction is set up to support them from the start. For title agents, a little preparation can make the difference between a smoother digital closing and a last-minute change of plans.
Interested in learning more? Check out First American's digital closing resources.
You can also explore AgentNet® Knowledge for even more eClosing and RON guidance.