Current News

REVISIONS TO ILLINOIS NOTARY ACT AFFECTS REAL ESTATE TRANSACTIONS

By:  Leo G. Aubel

            Trouble in the U.S. housing and mortgage financing markets has been well-documented over the last year.  Not surprisingly, this has resulted in a wide variety of new legislation intended to combat fraud in the residential housing market.  In addition to dozens of new federal regulations, the Illinois General Assembly has recently enacted a couple of new statutes that add to the ever-growing paperwork burden for those engaged in residential housing transactions.

            The first of these are revisions to the Illinois Notary Public Act, which now requires that for virtually all types of deeds for residential properties (defined as condominiums and residential buildings containing four units or less), the parties signing the deed must all provide a fingerprint, specifically a right-thumb print, on a form entitled “Notarial Record.”   A version of that form as provided by the Illinois Secretary of State can be viewed at http://www.cyberdriveillinois.com/publications/pdf_publications/i212.pdf.

            If the Notary Public who notarizes the Notarial Record is not exempt, then the Notarial Record is to be recorded with the local county recorder along with the deed.   Luckily, the new statute provides that if the Notary Public is an attorney, or an employee of an attorney, or an employee of a title company, then the Notarial Record does not need to be recorded so long as the Notary’s employer keeps the form for a period of seven years.

            We are very concerned about having our clients’ thumbprints recorded with any county recorder, because the Notarial Record then becomes a matter of public record, and therefore accessible to anyone.  More troubling is the fact that many county recorders’ offices, including the Cook County Recorder of Deeds, make recorded documents available online, meaning that anyone with online access could download these thumbprints.  Given the ease with which documents can be manipulated by computers these days, we advise our clients to make sure that whoever notarizes their deeds for residential property transactions is an exempt Notary Public, so that our clients’ thumbprints are not inadvertently made a matter of public record.  All of our attorneys and employees who are notaries are exempt from this recording requirement.

            This is a “pilot” program that expires in 2013.  We have addressed a letter to members of the Illinois General Assembly indicating that this new statute creates a substantial privacy concern and probably fails to adequately address the problem of fraudulent deeds.

            With respect to the recording of mortgages, another new statute from our lawmakers in Springfield now requires that every mortgage be accompanied by a Compliance or Exempt Certificate cover sheet printed out from the existing Illinois Anti-Predatory Lending Database Program.  This Program is administered by the Illinois Secretary of State, and has already been in existence for about a year, but previously it only applied to residential mortgage insured by FannieMae or FreddieMac (which is the vast majority of all bank-related residential mortgages).  The new statute makes clear, however, that the Compliance or Exempt Certificate cover sheet must accompany all mortgages, even, for example, private mortgages between family members.

            The purpose of the Illinois Anti-Predatory Lending Database Program is to create a central clearing-house for mortgage lenders engaged in unfair, deceptive or negligent lending practices. Details of the Program are available at https://www.ilapld.com.

            While we applaud the purposes of the Program, there’s a catch:  members of the general public cannot obtain the required Certificate themselves.  One must be a licensed real estate professional or title company in order to obtain the Certificate.  Many of Deutsch, Levy & Engel’s attorneys are also licensed real estate professionals, and we can obtain the Certificate on behalf of our clients.  If you are engaged in any kind of private mortgage financing, we encourage you to contact one of our real estate attorneys to assist you in all aspects of such a transaction, including complying with the new Illinois statutes.

            Real estate attorneys at Deutsch, Levy & Engel regularly handle hundreds of residential real estate transactions every year.  Contact us if you are considering buying, selling, leasing or financing residential real estate.