Remote Closings in Illinois: Can Real Estate be Contactless?

I've handled remote and contactless real estate closings since Illinois legalized remote notarization in March 2020. None of mine has ever snagged. This page is the notary and e-signature guide I give clients before we close.

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Remote Closings

Recently, the American Land Title Association (ALTA) released this article that generated a ton of buzz on remote closings. ALTA believes that remote closings are necessary to progress during the COVID pandemic to stop unnecessary human interaction. Now, I read this article, and when I did I was confronted with one outrageous sentence:

So wait, they don’t know what to do in Illinois? Is there help for doing remote closings in Chicago? Then, I thought, what are those electronic transactions laws in Illinois? How do I provide great value as a real estate closing attorney in an era of remote closings? Really, this must be how to do real estate closings in the coronavirus era, and our clients will expect answers.

This might be our new normal for COVID investment. Therefore, I took the time to research remote closings in Illinois and how real estate closing attorneys can help. Surprisingly, I found that most of the laws on this subject are only a few weeks old. We’re in uncharted waters! So then, let’s try to figure out, together, how to meet and manage goals in a contactless closing in Chicago.

Is a Contactless Closing even Legal?

Remote closings became legal in Illinois in March 2020. Before the Stay at Home Orders, Illinois notaries could not certify your signature unless they were physically present with you. Since many of the closing documents require notary, this was a huge change! Now, in Illinois, a closing can be done so long as the notary can “see, hear, and communicate with the person by means of audio-video communication.” With that in mind, let’s look at what a real estate closing attorney expects from a remote notary in a contactless closing.

What do I sign at a Remote Closing?

When you complete a real estate closing in Illinois, remote or in-person, you are going to sign a dozen papers. They put probably 15 pens on the desk (all blue ink) because some wear out every single day. Although your real estate closing attorney will review each of these documents for you, we want to know whether these documents will work. At your real estate closing you will sign (and the notary certifies):

• Your full closing disclosure: The Buyer’s information on every cost she pays at closing and who that money goes to.
• A Certified Loan Application: The Buyer’s sworn statement that she didn’t lie to get a mortgage.
• The Mortgage and Note: The Buyer’s promise to pay back the home loan, using the house as collateral
• The Title Insurance Documents: Proof that the Seller can give this home to the Buyer
• An Affidavit of Title: The Seller’s sworn statement that nothing happened to the property that might hurt the Buyer’s interests.
• Legal Name Affidavits: Both parties sign a document confirming they are who they say they are.
• Escrow Disclosures: Both parties agree about a particular way the money will be handled.
• Transfer Taxes: The Seller provides some important tax information on a sworn statement to the IRS.

As you can see, many of your Illinois closing documents need a notary. Most of the requirements are similar to how real estate closings were done before COVID-19. There are a few idiosyncrasies for remote closing that a good Chicago real estate closing attorney can you help with.

Notary Requirements at a Contactless Closing

The new remote notarization order allows closings to take place over Zoom, Teams, or even Skype. Remote closings need to meet only a few conditions. Obviously, we want to make sure your real estate closing is perfect. So, we made sure to explore the requirements for remote notaries. Here are the 5 points on the checklist for a legal, contactless closing in Illinois.

A bad ID check is not a minor slip. If the notary cannot confirm who is signing, the notarization can be voided. A voided notarization can hold up the whole closing. Once the remote notary procedure completes, the real estate closing has the power of law. To be sure, the new laws treat the remote signature just as though it happened in person. Even still, the Notary should keep these video recordings for 3 years. This helps verify that the signing was done correctly and without fraud. Personally, our firm will record the video call and upload it to our high-security client document cloud. We believe you can never be too safe.

Why You Can’t E-Sign Your Mortgage Note

A bad ID check can cost you a redo. The Note can cost a lender decades of trouble. A lender may have to produce that paper in court long after your closing. If the document is the Note, sign it in ink. Every other closing document can be signed and notarized remotely. The Promissory Note is different from all these other documents. As a Chicago foreclosure attorney, I’m in the best position to tell you why that is.

Why Your Home Loan is like an IOU

To begin, promissory notes are different from the other affidavits you will create at closing. For all of those sworn statements, the title company is mostly concerned with whether or not you made this promise. On the other hand, for the Note, the concern is whether there is good evidence if something goes wrong. Effectively, you sign your disclosures to acknowledge that you got them, but you sign your Note to protect the Bank. The closer always notifies the Buyer’s lender once the buyer signs. This is what starts the money moving. So, until the ink is on the paper, the house doesn’t start changing hands.

So, like an IOU, the only person who can ask for payment is the person with the paper. This is true in Illinois. In Illinois, the lender (or whoever now owns the paper) must show the Note to the judge to collect. Importantly, in many places in Illinois only the physical paper copy of the Note counts. That will bring us to our next question, something nobody has ever asked me at a real estate closing table.

Where are Foreclosure Records Kept?

Now, while this question looks out of place in this discussion, it isn’t. The reason you can’t e-sign your mortgage note is all about record-keeping. After you physically sign your Note, the title company guards that original closely. For one thing, the lender must store that Note until it is paid off. Sometimes, the Lender has to keep track of those Notes for 30 years! Remember, only the original is good enough, so you will never be able to avoid putting wet ink on that one at closing.

Once these Notes are signed, they’re shipped off to the Lender to put into a document vault. After, the Lender will try to broker that Note to a mortgage servicer or third party company for the day-to-day administration of the loan. Often overlooked, this transfer after closing is usually a huge benefit for the homebuyer. Oftentimes, the local company that walked you through the transaction can only afford to stay in business by their relationships with the companies that will eventually purchase the home loan. So, it is safe to say that this whole process, in all this detail, is solely so that a buyer can get the money and security she needs to purchase a home!

How can I find staff for a Contactless Closing?

As a real estate closing attorney, I write title policies for a number of title companies that are doing remote and contactless closings in Chicago. The best policy offered in the area is North American Title Company‘s true Contactless Closing. Out of all of the companies I’ve researched, their procedures best utilize all of the technology at our disposal. In brief, they will allow you to complete the entire process from your current home, only asking you to sign and ship the originals to them at the end of the call. While COVID is a big concern for our clients’ safety, we are going to be working with North American Title to protect our clients and their families.

I’ve done a lot of work with Stewart Title, but I have yet to see how their team does remote closings. As of May 2020, they are promising a similar experience to North American Title’s contactless closing. I do think Stewart is on the right track. However, they have not quite rolled this program out to Illinois yet. I am really anticipating seeing what happens next as they figure out that market.

Elsewhere on this blog, you will see me recommend Citywide Title. I did nearly all of my 2019 closings at Citywide. So, I’ve gotten to know their staff very well over the past two years. However, Citywide does not currently offer a fully contactless closing but instead offers a drive-up closing. Since those closings are still largely done in person, I cannot recommend them. This criticism does not extend just to Citywide, but also to Chicago Title Insurance Company and to First American Title Company. The two largest companies in our area have very meager offerings for contactless and remote closings.

What do I have to do at my Remote Closing?

When you are attending a remote closing, your job is very simple! First, your title company will often supply you with a list of documents that you must bring to the closing table. Those come before anything I’m about to tell you here. Normally, though, the documents for a contact closing are only a Driver’s License and some banking instructions. As long as you have proof that the person on screen is the person signing, you should be fine. Just print the documents, sit at your desk, and sign them one after another as your real estate attorney explains them to you.

What does my Real Estate Closing Attorney do at a Remote Closing?

Whether you are doing a contactless closing, a drive-up closing, or a traditional closing, your real estate attorney has several key functions. My job is to:

• Review the fifty pages of documents for any errors.
• Calculate all the numbers for the transaction to ensure there is no overpayment or underpayment.
• Explain what you are signing to you.
• Verify the property may be legally transferred.
• Prepare all documents regarding the furniture, fixtures, and cosmetics.
• Minimize all tax consequences from the transaction.
• Direct the handling of all your money so that the transfers are done safely.

Now, we can do all of that remotely. I go line by line over each document you will sign at closing, sometimes for an hour on one disclosure. I want you to know what you are spending your money on.

What happens after my Contactless Closing?

Well, right after your contactless closing, there is an exchange of keys and a completed sale. But, for the documents, the trip is only beginning. After the remote closing happens, the title company must record the documents you sign with the proper authorities. These documents include the Deed, the Mortgage and the tax disclosures. So, how do they do it when you’re signing remotely?

Well, in some select counties in Illinois, the title company can just e-record the documents. Most of the time it’s as simple as uploading the PDF and a credit card to pay the fees. As one can imagine, those are the easy counties to verify the closing went off properly. While Chicago allows e-recording, most of the surrounding counties aren’t ready for it yet. The same remote process lets me handle closings in Danville and Vermillion County without either of us leaving home.

So, in those counties, after your closing, the Title Company sends a care package of your closing documents to the County Recorder’s dropbox to be recorded the next day. Just like the Post Office, most of these counties do a pickup in the morning and second in the evening. We have not seen any significant errors or backlog with the County Recorder’s offices. Therefore, there will be no reason to worry about lost documents or human error in these remote closings. As your real estate closing attorney, we put alerts on the property address so we’re the first to tell you that everything is finished and to give you peace of mind.

Next Steps for Your Remote Closing

Illinois has allowed remote closings since March 2020. The process now saves clients the cost of in-person title offices on every corner. None of my remote or contactless closings has ever snagged. Call me at (630) 839-9195 to check whether your county e-records. Or call to get the notary checklist before your closing date.