Modern technology has made the home buying process and finalization of transactions simple and fast. Although the essence of closing remains the same, technology has added more convenience to the closing process.
Ordinarily, you would have to sign many documents in-person to finalize the contract of a new home. Today, technology offers a streamlined approach that brings eClosing into the spotlight.
But what exactly is eClosing? Let’s find out:
- What is eClosing?
- How does eClosing work?
- What makes eClosing better than traditional closing?
- Different types of eClosing
- Using RON for eClosing
- Is the eClosing process complicated?
- Key elements of eClosing
- Major advantages of eClosing with PandaDoc Notary
- Why you should choose PandaDoc Notary
- The future of eClosing
1. What is eClosing?
eClosing refers to electronic closing and uses a secure digital portal through a computer to sign a portion or all closing documents online. Fundamentally, closing is the process of settlement and requires the signing of involved parties to transfer the property ownership and finalize the loan. Gone are the days of having to be physically present to sign closing documents.
With eClosing, the buyer and the seller can sign the closing documents without being in the same room or space. On the flip side, when it comes to important documents like a promissory note or deed of trust, involved parties usually prefer to sign the closing documents in person. But the signing of a single document electronically accounts for partial eClosing.
In layman’s terms, think of eClosing as a digital closing that makes it possible to sign different types of documents electronically and close online. In most cases, people just have to e-sign by writing down their digital signature on the computer or tablet. In fact, eClosing has become the most efficient way to save time and resources.
2. How does eClosing work?
It is crucial to understand that eClosing does not involve wet signatures from involved parties like traditional closing. Instead, eClosing requires eSignatures on a non-editable file to demonstrate the approval from the involved parties. You can send the non-editable file through email to get digitally signed through an eSigning app.
Usually, you receive the closing documents in the email in order to e-sign. After the preview, you can check the documents and sign digitally. For the sake of transparency, you can e-sign “after” a brief physical appointment and then finalize the closing documents.
When it comes to eClosing, you can take care of the paperwork on your preferred schedule rather than spend hours in offices. The truth is that eClosing has managed to cut out a lot of bureaucratic complexities for involved parties.
3. What makes eClosing better than traditional closing?
There are many elements that make eClosing beneficial than traditional in-person closing. For starters, eClosing is faster and saves the closing to over 45 minutes. On average, it just takes 10 to 15 minutes to finalize eClosing than having to go through traditional closing that can take more than an hour.
More speed brings more convenience for involved parties. You can review and e-sign documents at a suitable time. Predominantly, people prefer to e-sign documents from the comfort of their homes. Also, eClosing offers more security than traditional closing.
In fact, you can control access protocols for sensitive information. This practice creates a consistency that minimizes accidental errors. The hallmark benefit of eClosing over traditional closing is its eco-friendliness. With eClosing, involved parties can minimize the use (and storage) of paper significantly.
Now, let’s dive into eClosing types, mechanics, processes, and its relationship with Remote Online Notarization (RON):
4. Different types of eClosing
When it comes to in-person eClosing, involved parties e-sign documents through a certified notary public.
Remote Online Notarization
A RON closing refers to a digital closing where the notary and the signers meet through an audio-video app. The closing documents will have an electronic notarization and an electronic signature.
As the name suggests, hybrid closing refers to a combination of traditional and digital closing. In hybrid closing, involved parties can review and sign documents online. Simultaneously, there will be a need for others to physically wet sign closing documents through a notary public.
5. Using RON for eClosing
After the COVID-19 pandemic, Remote Online Notarization became legal in most states through the RON bill. The fact remains that the idea of inviting someone over for notary purposes became unsafe during the outbreak and it paved the way for RON using eClosing solutions. In fact, title underwriters started to expand the use cases of Remote Online Notarization for eClosings. After an effective Remote Online Notarization bill in different states, RON services started to peak at an all-time high record.
6. Is the eClosing process complicated?
The modern eClosing process is fairly simple and easy. But the confusion creeps in when involved parties try to navigate and determine their state-specific eClosing requirements. For instance, California just allows the closing of documents in-person.
Usually, people seek out a notary to verify their identity. And after a thorough review, it becomes easier to proceed with the closing documents. You can explain each document and the notary will help you where to sign. But the handling of closing documents is a back-and-forth process to meet specific terms and conditions.
You can opt for the hybrid closing method but ultimately it boils down to the required laws of your state.
7. Key elements of eClosing
Contrary to misguided perception, eClosing does not solely revolve around eSigning apps. Realistically, there are many tech factors that lead to eClosing. The focus is on a combination of technologies that make sending, accepting processing, and viewing information among multiple parties possible.
Before you seek out a platform, it makes sense to understand the process, components, and structure of eClosing. Here are the essential five factors in the eClosing process:
One of the main components of eClosing is eDelivery. eDelivery refers to the electronic transfer of documents to multiple involved parties. The delivery or transfer of documents can be between the settlement agent, the buyer, and other parties like the count recorder and the lender.
With eDelivery, you can send the acknowledgment documents to the buyer. But eDelivery also comes into play when you want to send a document like a security instrument and eNote. Most eDelivery tools now come with Outlook and Gmail services that make it easier for users to attach and send files in PDF format.
It would be fair to state that eSignatures are arguably the most important aspect of the eClosing process. It showcases consent and affirmation of involved parties through electronic signatures.
In short, eSignatures have managed to replace old school wet ink signatures. You can use UETA and ESIGN compliant eSignature apps to apply eSignatures on different types of documents. PandaDoc Notary offers a robust eSignature app for real estate transactions and other industries.
eClosing platform – PandaDoc Notary
Without an eClosing platform, you cannot upload and review documents online. But a robust and reliable eClosing platform like PandaDoc Notary makes it effortless to upload and review documents online beforehand involved parties make e-signs.
And e-Signature apps help title agencies and lenders to track the paperwork and entire eClosing process. PandaDoc Notary is a user-friendly and straightforward eClosing and notarization platform. It allows multiple users to coordinate, track, and upload documents instantly.
eNotarization and Remote Online Notarization (RON)
Electronic notarization is the final step in the eSigning process. It requires involved parties to be present in-person with the notary office and verify the records for ownership transfer. You can check eNotarization as the act of distributing funds from the seller to the buyer using an escrow account.
Despite mainstream adoption of electronic notarization, it is far from 100% adoption. So, eNotarizations can be partial or completely digital. And complete digital notarization refers to Remote Online Notarization. It is where involved parties can have a remote presence and meet in a call via audio-video technology.
After that, notaries apply the digital seal on specific documents to finalize the transaction. Digital notarization outweighs the perks and use cases of traditional notarization, but it is still not legal in all states. But most states have approved or plan to pass new laws to make eNotarization legal.
After the transfer of the deed to the new owner and distribution of funds, the next course of action is to store documents in a secure online vault. This storage vault allows restricted access of documents to just involved parties.
8. Major advantages eClosing with PandaDoc Notary
Implementing eClosing comes with several benefits for involved parties:
Flexibility to review documents
It can be overwhelming to review the documents on the day of signing. But eClosing allows involved parties to get a closing package and review the details of the documents at their own convenience and at a suitable time.
Short closing period
One of the main benefits of eClosing is that it accelerates the closing process. Unlike traditional closing that can take up to an hour, eClosing, on average, takes 15 minutes to e-sign over 40 documents. eClosing does not involve traditional time lag. It makes the signing, receiving, and sending process fast and significantly eliminates turnaround time.
Usually, missed or flawed signatures on documents can extend the time of the closing process. But eClosing through a reliable partner like PandaDoc Notary is the best way to make sure that each eSignature block is properly signed. In fact, eClosing has become the answer to ensure small turnarounds.
Remote Online Notarization ensures a tamper-resistance seal on digital documents that makes it impossible to edit closing documents. This heightened state of security cuts out the anxiety among involved parties and makes the closing process more transparent.
9. Why you should choose PandaDoc Notary
PandaDoc Notary helps real estate entities, investors, and businesses to perform eClosing through our specialized service solutions. PandaDoc Notary works as a uniform and all-in-one platform that can cater to your specific needs.
We can help you pair RON with the best eClosing in an instant. We work with a wide range of businesses that need notarization and eClosing services. As the digital and tech space evolves, it is high time for you to make notarization and eClosing of documents in a safe, secure, eco-friendly, and convenient manner.
At PandaDoc Notary, we help business entities, investors, and individuals figure out the basics of online notarization and how it works with eClosing. We offer a dedicated platform that makes signing and notarizing documents electronically seamless. You can count on our online platform to keep an eye on the paperwork and entire process in a user-friendly and navigational interface.
If you want to make a transition from traditional closing to eClosing, seek out the expertise and tools of PandaDoc Notary. If you’re curious to learn more about eClosing, you can reach out to us to find out how to deliver value to businesses.
10. The future of eClosing
Technology is changing and evolving at a faster pace and mainstream adoption of notarization tools and eClosing is a step in the right direction. Of course, the COVID-19 pandemic managed to speed up the mainstream adoption, but the future still lies with Remote Online Notarization and eClosing solutions. And to some degree, eClosing has already become a new standard in the mortgage industry.
But the fact remains that there is an urgent need to cut out stringent state laws. The fewer the legal barriers, the more eClosing adoption you can expect in the coming years. Today, eClosing works as a layered process, and most states have their own laws.
Consumer Financial Protection Bureau (CFPB) states that the total eRecordings have increased by 4 times in the past five years. This makes up for a perfect opportunity to lean towards digital eClosings. Ideally, all states need to establish uniform laws to accelerate the early adoption of eSigning, eNotarization, and eClosing.
Business entities like real estate need verifications and approvals as wet signatures for closing. For instance, you need the signatures of several parties in order to finalize a home closing and process the transaction. But eClosing paired with RON allows real estate businesses, investors, lenders, and homeowners to finalize closing in a secure and convenient manner and without physical contact.
During the peak COVID-19 pandemic crisis, eClosing became a standard option to finalize closing and protect the health of everyone. But even without the outbreak crisis, eClosing makes perfect sense. It is a secure, convenient, time-saving, eco-friendly, and cost-effective way to perform closings.
Can you sign closing documents online?
Yes, some states allow individuals and businesses to sign closing documents online, a process known as virtual closing (or eClosing). While not all states allow this, if your state does, then you can use a remote online notarization provider, such as PandaDoc Notary, to eSign your home loan, mortgage, and refinancing documents from the convenience of your own home.