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Notary Notes

Direct or Financial Interest

by PAN
In Section 304, the Revised Uniform Law on Notarial Acts (RULONA) prohibits a notary from performing a notarial act on a record in which the notary or the notary's spouse has a direct or pecuniary (financial) interest.

Under Section 304, a notary is prohibited from benefitting financially from a transaction. This includes receiving money (other than an approved notary fee), property, vehicles, items of any value, or services of any kind. Where a will is concerned, a notary is not permitted to take the maker's acknowledgment if the notary is named as a beneficiary in the will. Likewise, a notary is not permitted to notarize property records, vehicle titles or any documents by which the notary gains something of value.

In these situations, the notary clearly has something to gain from notarizing the documents. RULONA extends the prohibition to the notary's spouse. That is, a notary may not perform a notarial act if the notary's spouse stands to gain directly or financially from the document being notarized.

Section 304 defines three specific situations that do not constitute a direct or financial interest:
  1. The notary may be a shareholder in a publicly traded company that is a party to the notarized transaction;
  2. The notary may be an officer, director or employee of a company that is a party to the notarized transaction, unless the notary personally benefits from the transaction other than as provided in 3;
  3. The notary may receive a fee - such as a bonus or reward from the notary's employer - that is not contingent upon the completion of the notarized transaction.
Here are some examples:
  • Alan is a notary who also owns 20,000 shares of XYZ Co., a publicly traded company. Alan may notarize documents to which XYZ Co is a party because simply being a shareholder in a publicly traded company does not constitute a direct or financial interest in the documents being notarized.
  • Bridget is a director of a bank that is a party to a certain transaction but she will not receive any personal benefit from the transaction. Bridge may notarize the required document because she does not have a direct or financial interest in the transaction.
  • Carl receives a referral fee for every customer he gets to fill out a mortgage application, whether the applications are approved or not. After a customer's mortgage application is approved, Carl may notarize the mortgage because Carl received the referral fee for the application, not the notarial act, and so does not benefit financially from the notarizaton.
A good rule of thumb is that if you think you have a direct or financial interestin the completion of a particular notarial act, you probably do. You should find another notary to notarize the document.

NOTE: Any statements by the Pennsylvania Association of Notaries (PAN) regarding RULONA, notaries public or notarial acts are not intended as legal advice and should not be construed as such. If you have a specific legal question regarding the law of your acts and/or conduct as a notary, we urge you to seek professional legal advice or contact the Department of State at www.dos.state.pa.us
 

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