In Ohio, documents used require both an acknowledgment by a notary and two witnesses. There were a lot of cases where the witnesses weren't actually present when the documents were executed. Often times, a notary signing agent would go to the borrowers' homes and the documents were returned to the office where someone there would add the witnesses signatures. It didn't take long for the bankruptcy trustees to catch on and they were able to set aside mortgages that were not properly executed.
In response, the Ohio legislature changed the law - now, only the notary is required, no witnesses are needed. This was probably the result of real estate, mortgage and title industry lobbying efforts. But, I wonder now if even this lax standard is being properly followed. I came across a document that set off warning bells.
The document is a "Regulatory Agreement" that was executed in connection with a $7.3 million mortgage. There were two parties required to sign the agreement and each signature needed to be notarized. The signatures were both on page four, and page five contained both acknowledgment clauses. The first signature was notarized on page five and the second clause was left blank. Another page, a copy of page five, was attached with the second signature notarized in the second clause and the first was left blank.
Both acknowledgement clauses were properly completed, signed and stamped with the notary's seal. But, it really made me wonder why both parties were able to sign the same page, yet the notaries used two different pages for their acknowledgements.
I could understand if both parties were in different locations and they each signed a separate page, properly notarized. However, in this case, it appears that both parties were able to sign the same physical page, which leads me to believe that the same acknowledgement page could have been used. So why wasn't it?
Perhaps there was a good reason for this, but the obvious conclusion is that one of the notaries wasn't actually present when the document was executed. That, of course, is just speculation. On their face, each acknowledgement clause is properly executed, but the manner in which it was done raises some doubt that both notaries were actually present when the parties signed.
A bankruptcy trustee would certainly notice this anomaly and could try to use it to have the document invalidated for failure to comply with the execution requirements. The trustee would simply ask the debtor if he signed in the presence of the notary.
Certainly, the change in the law - eliminating the requirement for witnesses - has made it much easier to get documents executed. Still, there is a potential for abuse. And, without the witnesses, it may actually be easier to get away with it. If there were still a requirement for witnesses, there would be two more people to testify that the parties, the notaries, and the witnesses were all present when the document was executed.
As I said, there may not be anything wrong with this document. But, the circumstances do raise some suspicion that the acknowledgement was improper.
Robert A. Franco
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