What it means
When a business notarises a document, the signer appears before a notary, shows acceptable photo identification and signs in the notary's presence. The notary checks that the person is who they claim to be and appears to understand what they are signing.
The notary then completes a short certificate on the page and applies a seal or stamp. The reason this matters in finance is fraud prevention.
Loan agreements, property transfers, powers of attorney, affidavits and corporate resolutions often involve large sums, and a notarised signature makes it far harder for someone to later claim that they never signed or that someone else forged their name. Banks, courts, registries and overseas counterparties frequently insist on it before they will act.
There are two common types of notarial act. An acknowledgement is where the signer confirms they signed voluntarily, while a jurat (sometimes called a sworn statement) is where the signer swears or affirms that the contents are true.
The wording of the certificate tells you which one was performed, and using the wrong one can get a document rejected. A notary is not a lawyer giving advice on the deal and does not check whether the terms are sensible or even lawful.
If a contract is unfair, the notary stamp does not fix it. Notarisation also does not make a document valid in every country; documents used abroad often need a further step called an apostille or legalisation, which confirms the notary's own authority.
In recent years many places have allowed remote online notarisation, where the signer and notary meet over a secure video link and sign electronically. The rules differ widely by jurisdiction, so finance teams should confirm with the receiving party whether an electronic notarial act will be accepted before relying on one.
In practice
Real-world examples.
Example
A founder in Manchester is signing a share transfer so that an investor in Singapore can take a 10% stake in the company. The investor's lawyers require the signature to be notarised, so the founder visits a local notary with a passport and the signed document, pays a modest fee and sends the stamped original by courier.
Example
A property developer in Texas is closing a $750,000 loan secured on a warehouse. The lender will not release funds until the mortgage document has been signed in front of a notary and the certificate has been attached, so the developer books a notary to attend the closing meeting.
Example
A retired restaurant owner in Florida appoints her daughter to manage her investment accounts while she travels. The brokerage will only accept the power of attorney if her signature has been notarised, so she signs in front of a notary at her bank, which offers the service to customers free of charge.
Case study
Seen in the real world.
Harbour Lane Foods is a fictional distributor that agreed to sell a minority stake to an overseas investor for $1,200,000. The funds were due to be wired on a Friday, but the investor's bank refused to release them because the board resolution approving the sale carried no notarial certificate. The company's finance manager had assumed that a signature from the company secretary was enough.
The team found a notary the same afternoon, but the resolution had been signed by three directors on different days and in different cities. The notary could only certify signatures made in their presence, so each director had to re-sign in front of a notary, and the transfer slipped by nine days. The illustrative lesson is to ask the receiving party at the start of a deal exactly which documents must be notarised, by whom and in what form.
Watch out
Common mistakes.
- Assuming a notary checks that the document is accurate or legal. The notary confirms identity and the act of signing, not the truth or fairness of the contents.
- Signing the document before arriving at the notary. In most places the signature must be made, or at least personally acknowledged, in front of the notary.
- Assuming a notarised document is accepted everywhere. Overseas recipients often need an apostille or other legalisation on top of the notary's seal.
Questions
People also ask.
Does a notary have to be a lawyer?
Not always; the qualification rules differ widely, and in some countries notaries are senior lawyers while in others they are commissioned officials with limited powers.
How much does notarisation cost?
Fees are usually modest for a simple signature, but they vary by place, number of signatures and whether the notary travels to you.
Can a notary refuse to act?
Yes; a notary can decline if they cannot verify your identity, doubt that you understand the document or believe you are being pressured to sign.
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