Recently, the California Court of Appeals for the Second Appellate District explained the safe harbor provisions of California law for California notaries in North American Title Company, Inc. v. Gugasyan.

The Appellate Court explained:

The job of a notary is to verify that the person executing a document is, in fact, the person who is supposed to be executing that document. If the notary is “neglect[ful]” in this job, the notary is civilly liable for damages. (Gov. Code,   8214.) However, California law nevertheless sets up a presumptive “safe harbor” for notaries (1) if, as pertinent here, the notary is presented with “[a] driver’s license issued by the Department of Motor Vehicles” (the DMV) that is current or issued within the preceding five years, and (2) if there is an “absence of information, evidence, or other circumstances that would lead a reasonable person to believe that the person [appearing before the notary] is not the individual he or she claims to be.” (Civ. Code,   1185, subds. (b), (b)(3)(A), (c), italics added.) (fn omitted)”

The Court on appeal was required to define the scope of this statutory safe harbor. It concluded that the safe harbor (1) applies when a notary relies upon a driver’s license that looks like one the DMV would issue (and thus does not require a notary to verify with the DMV that the driver’s license is, in fact, a legitimately issued license), (2) applies even if an expert opines that industry custom requires a notary to do more than the statutory safe harbor requires, and (3) is not overcome by the simple fact that the person who appeared before the notary was an imposter.

In North American Title Company, Inc. v. Gugasyan, two deeds of trust were signed by an imposter who presented a fake California Driver’s License to the notary that resulted in the proceeds of the loans to be sent to Dubai. North American Title Company, Inc. sued the notaries to recover the stolen loan funds plus interest, attorneys’ fees and punitive damages. The notaries successfully brought motions for summary judgment based on the safe harbor provisions and North American Title Company, Inc. appealed. The Appellate Court upheld the dismissal of the notaries and affirmed summary judgment in their favor.

If you are involved in a transaction that requires notarization of documents, reliance on a notary to confirm the identity of the signed is misplaced. We recommend that all of the parties to the transaction obtain counsel to perform due diligence as to the identity of the parties before funding the transaction.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.