Notary Liability: Myths Vs. Facts
By Michael Closen on November 17, 2011 in Best Practices
Updated 8-5-19. The law can be complicated, mysterious and intimidating — especially to nonlawyers. The law relating to Notaries and their duties certainly fits that description. Not surprisingly, myths abound among Notaries concerning their liability. Here’s what you need to know about them.
1. MYTH: Because the fees which Notaries may charge are so small, you will never be sued or you will not be sued for substantial amounts of damages.
Reality: Although Notary fees are modest (ranging mostly between $5 and $15), you face full and unlimited liability for any financial injuries due to your faulty performance of official acts. Notaries have been sued for tens of thousands and even hundreds of thousands of dollars (or more).
2. MYTH: You are not liable for bad acts committed by others using your Notary tools.
Reality: If you negligently allow someone to borrow or steal your seal and that person uses it to create a false notarization, which in turn causes financial injury, you will be liable for the forged notarization. In another example, if you negligently allow someone to borrow or steal your Notary journal and that person uses a customer’s personal identifying information to commit document fraud or identity theft, you will be liable for the resulting financial injuries.
3. MYTH: You have civil liability even if no financial injury results from your faulty actions.
Reality: If a faulty notarization does not cause financial harm to anyone, then there is no reason for anyone to make a claim or to file a lawsuit for damages against you. It is like the old basketball saying: “No harm, no foul.” Many Notary mistakes are minor or technical errors or omissions, and many are never even discovered or are not serious enough to prevent the notarized document from being accepted or utilized.
4. MYTH: Your liability due to a faulty notarization is limited only to a document signer.
Reality: In addition to document signers, other persons or parties may suffer financial injuries due to faulty notarizations. For instance, a party could be injured financially if a transaction of some kind was invalidated by a faulty notarization after money has been spent or has changed hands. So, anyone who is financially harmed by a faulty notarization could claim damages or sue.
5. MYTH: You will not have liability if you do not charge a fee for the faulty notarial service.
Reality: You must follow the law whether or not a fee is charged. Even if you are an unpaid volunteer performing notarizations free of charge, you are still responsible for abiding by all laws regarding notarial services.
6. MYTH: If you perform notarizations on behalf of your employer, you will not have liability because your employer’s insurance will cover any damages caused your faulty notarizations.
Reality: You are the commissioned public official, not your employer. Therefore, in all instances, you will have primary liability for notarization mistakes. Even if you do something wrong because your employer told you to do it, you will be still liable for the error or omission. It is quite possible that both you and your employer will have joint liability for financial damages resulting from notarial misconduct, but you will always face such liability.
7. MYTH: If your employer has errors and omissions (E&O) insurance or malpractice liability insurance, you are protected by such insurance.
Reality: Maybe not. It depends on how the insurance policy is written. The scope of insurance coverage is limited by exclusions. To illustrate, some law firm malpractice liability insurance policies expressly exclude coverage for Notary malpractice. You should respectfully ask your employer to confirm that their insurance policy includes Notary errors and omissions protection for you.
8. MYTH: Your Notary bond protects you against legal liability.
Reality: A Notary bond is not an insurance policy and does not work like insurance. A Notary bond protects the public, not the Notary, and only up to the maximum bond amount. Thus, a $10,000 Notary bond provides the public with protection up to the relatively small sum of $10,000. If a claim is paid against your bond, the surety company is entitled to seek reimbursement from you. So, it may be advisable to consider buying a separate Notary E&O liability insurance policy.
9. MYTH: Although you may face civil liability, you will not face additional administrative or criminal liability for mistakes and misconduct.
Reality: To the contrary, if you make a negligent or intentional mistake (even if no financial injury is caused to anyone), you may also face criminal and/or administrative consequences. It is considered official misconduct when a public official (such as a Notary) fails to abide by the law or to perform a required official duty (such as a notarization) — which in most states can be punished as a crime. It also can be grounds for the commissioning or oversight agency to sanction the Notary. Penalties can include censure, fines or the suspension or revocation of the Notary commission.
The risk of Notary liability is a very serious matter. But it is a simple matter to protect yourself: Know and abide by your state’s Notary laws and regulations; maintain a detailed Notary journal that documents your diligence and reasonable care; and proofread and double-check all your work before concluding each notarization.
Michael Closen is Professor Emeritus at the John Marshall Law School in Chicago, Illinois. A respected consultant on model Notary statutes and legislation, Closen served on the drafting committees for The Notary Public Code of Professional Responsibility and various editions of the Model Notary Act, and recently authored the book, Professor Closen’s Notary Best Practices.