What is a Contract That is Notarized?
In most cases, there is no legal requirement that a contract must be memorialized in writing, signed by the parties, or notarized. The primary reason it is important to have a written contract is because it creates evidence of the agreement that can be used against a party if the contract is breached. With respect to the types of contracts that we write, they typically do need to be in writing and signed, but that’s because the applicable statute of frauds requires it (a topic I wrote about in this article). Of course, some contracts must be in writing to be enforceable, but there is no legal requirement that a contract must be notarized.
A "notarized contract" is simply a contract that has been signed and notarized by a notary public . The legal definition of a notary public is:
A public officer appointed by a court or other public authority of a State to administer oaths, take affidavits, and perform certain other formalities, including drawing up certain legal instruments that require no judicial participation, such as protests of notes and bills, acknowledgment of certain instruments, and the like.
The typical process to have a contract notarized is to have all parties physically present, along with the notary, in order to sign the contract and have the signature notarized. The notary must then attest to the signature on the contract, which typically involves comparing the signature to some valid form of identification. A notary may be a person, such as an attorney, or an entity, such as a bank or other commercial establishment.
When Does a Contract Need to be Notarized?
The requirement for notarization of a document is generally determined by the laws of the particular state where the document is being signed. In Connecticut, assuming that the contract is not being signed as part of a real estate transaction, there are few contracts that are required to be notarized.
Claims on Promissory Notes: Although it is not set forth in Connecticut statute, judicial authority supports requiring the notarization of the signatures on a promissory note as a condition of bringing a claim on such note.
Purchase Money Mortgages: Most purchase money mortgages, involving the sale of residential property, require that there be a notarized signature of the mortgagor.
Powers of Attorney: Connecticut statutes require that if a principal signs a power of attorney in Connecticut, it must be notarized or signed by a judge, clerk, notary public or other officer authorized by law whose signature and title appear thereon.
Deeds: Connecticut General Statutes section 47-5 states that a deed can transfer real property if signed by the owner of the property "in the presence of two or more witnesses and acknowledged by him before a commissioner, court clerk or notary public." While seldom enforced, including the notarization as part of the deed helps to shield the seller from a claim to the property after closing. Most Connecticut purchase and sale agreements will require this notarization on a deed as a condition to closing.
Advantages of Notarizing a Contract
Though many contracts are valid without being notarized, certain agreements benefit from notarization. The primary benefit of notarization may be protective—to deter fraud by ensuring that the parties’ identities are verified. For example, a person who is asked to sign a will will do so in front of a notary, who verifies their identity and "witnesses" their signature. Adding pages, changing terms, or altering conditions or pricing can become the subject of dispute after they’re completed. Again, having a contract notarized helps prevent this.
Still, there are a few significant benefits that apply even for simple contracts executed by competent adults, including: Specifying that a contract will be notarized helps prevent future disputes or allegations of fraud, as it indicates a knowledgeable decision to get the contract notarized. Clearly stating terms also prevents later claims of misunderstanding or confusion as to whether a specific term was included or omitted. Where a contract does not specifically require notarization, however, a party may be forced to rely on a signature as evidence of the contract’s validity.
Types of Contracts that are Typically Not Notarized
In some cases, an informal written agreement may be just as effective as a notarized contract in the eyes of the law, even if all parties consented to notarization. Examples include contracts such as bilateral leases, purchase orders, and bank loans. In fact, such informal agreements may have been written or executed with the intent of the parties that the agreement will not be notarized.
Because notarizing a contract does not affect the rights, obligations, and liabilities of the parties, the following contracts are commonly not notarized:
- Contracts that have not reached an essential stage but are signed for evidentiary purposes only.
- Contracts that parties have agreed will not be notarized as part of their mutual understanding or arrangement. This is especially true where an agreement has been prepared with specific provisions that ensure compliance with a particular law or rule or required a specific form of agreement. These clauses or provisions may already be executed in order to comply with the law or rule, and thus further notarization on separate documents is not necessary.
- Contracts where the parties have complied with certain laws or rules that do not require notarization. For example, there are laws where a notarized signature is not necessary for conveying property, book debts, or negotiable instruments.
- Contracts where the parties have formed an agreement in which the parties have executed separate instruments for each clause.
- Contracts that do not require notarization according to the laws of the state, territory, or country where the contract was made.
- Contracts where all signatories are the same individuals.
Consequences of Not Notarizing a Contract
The legal enforceability of a contract hinges significantly on whether it has been notarized or not. In many jurisdictions, public policy does not recognize oral contracts or contracts that are not authenticated in some manner. Notarization is the most common way to authenticate a contract and legally solidify the obligations of the parties.
In principle, if neither party seeks to enforce a contract or if both parties are satisfied with the terms of the agreement and its successful fulfillment, then the enforceability of the contract is a legal moot point. It exists in the realm of theory and academic debate, but it is not something that either party wishes to confront directly in their business.
However, if one of the two parties does seek to rely upon the agreement , the importance of the notarization may suddenly become all too real. Many contracts specifically require that the agreement be notarized in order to be enforceable. The failure to notarize such a contract when required will open a sliding scale of complications. At the least, it will require contract renegotiation. At the most, it may result in a court toss out the case entirely. The potential to change the contract would be entirely consequential for the outcome of the case in such a scenario. Bring a contract to court that requires notarization but lacks notarization may also open the door to added attorney fees, a round of appeals and ultimately the need to draft an entirely new contract to fill in the blanks.
In other words, notaries serve the important function of acting as a third-party witness. They verify that the person signing the agreement is who they say they are, and they are fully aware of the contract terms. They also add peace of mind that the contract is legally binding and absolutely enforceable in the eyes of the law.
How Do You Notarize a Contract?
Not all states require that contracts be notarized for execution, but the process is beneficial in terms of providing additional evidence of intention of the parties and that they voluntarily agreed to be bound by the contract. If you do determine that you need to have a contract notarized, the following is a basic description of the steps you will need to follow:
- Ensure that you have all of the documentation you need to obtain the notarization. This may include the signed contract and a current government-issued photo ID.
- Review the requirements of your state to determine whether or not the contract needs to be "acknowledged" or "proven." This is generally in order to determine who can perform the notarization.
- Visit a notary public within the time frame specified by your state and have them appropriately notarize the document (that is, acknowledging a signature, if required).
- Pay the notary public for the service as required (not all private notaries charge a fee).
While these are broad-stroke steps in notarizing a contract, you should refer to the requirements in your state (and any other relevant jurisdictions) to determine the precise steps you must take. As long as you have a basic understanding of what you’ll need to do, though, the process is relatively straightforward.
How Much Does Notarizing a Contract Cost?
As previously mentioned, notarization serves as a form of authentication to protect all parties involved in a contract. Because notarization bears such an important function, the law describes when this process is necessary and the situations under which it is not. Not every document requires notarization to ensure its validity; it is only necessary when the law deems it "essential" for a particular type of contract. Generally speaking, notarization for contracts serves as an additional guarantee for nationwide enforcement. Notarization for lease contracts would make it easier for a landlord to pursue an eviction of a non-complying tenant who moved from Idaho to Texas, for example.
In the previous section, we explored the situations in which notarization is either required or optional. A common thread throughout those circumstances is that notarization is a legal standard of proof; in other words, a notarized contract has more value than one without a stamp of authenticity as far as the court is concerned. However, the only real value of a notarized contract lies on the possibility that it will help with enforceability.
There is no universal fee schedule for notarization. Due to state law , some notaries charge more than others, or they may be limited to charge only a certain total fee. In Idaho, for example, notaries are allowed to charge no more than $6 per signature, not per stamp, and there is no cap on the total amount of fees charged for an entire document. Idaho Code Section 51-905 explains that the general fees for notarization among states are capped anywhere from $2 to $25 per document, but there will be exceptions that also need to be taken into account.
Keep in mind that there is more to a notarization than merely stamping your signature; the actual costs involve time and services rendered. Some notaries may charge extra for each signature legally notarized, to cover their time and travel expenses. The national average for a stamp is $35, while private organizations may charge upwards of $100 per notarization. A good rule of thumb is that the more professional the service (such as a notary specifically located at an attorney’s office), the more expensive it may be. However, don’t let the price of your notarization alone dictate your choice; if you feel more comfortable paying for a professional service, or if you need the service of a mobile notary, that’s perfectly okay.
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