NM Notary Notary Bond and Liability 2 — Questions and Answers
Question 1: Is Errors and Omissions (E&O) insurance mandatory for notaries in New Mexico?
- Yes, at least $25,000 in coverage is required
- Yes, but only for remote online notarization
- No, it is recommended but not required by state law (Correct answer)
- No, because the surety bond replaces the need for it
Correct answer: No, it is recommended but not required by state law
New Mexico does not mandate E&O insurance for notaries; however, it is strongly recommended as the surety bond does not protect the notary from personal liability.
Question 2: If a New Mexico notary's surety bond is cancelled or lapses, what must the notary do?
- Continue notarizing until the commission expiration date
- Immediately cease performing notarial acts (Correct answer)
- File a waiver with the county clerk
- Notify only clients who used their services
Correct answer: Immediately cease performing notarial acts
A valid surety bond is a prerequisite for holding a notary commission; if the bond lapses, the notary must stop performing notarial acts until a new bond is obtained and filed.
Question 3: Which of the following situations would typically NOT be covered by a notary's E&O insurance policy?
- Accidentally omitting a required notarial certificate element
- Notarizing a document without properly identifying the signer
- Intentionally notarizing a document knowing the signer was not present (Correct answer)
- Failing to record the notarial act in the journal due to oversight
Correct answer: Intentionally notarizing a document knowing the signer was not present
E&O insurance covers unintentional errors and omissions; intentional misconduct or fraud is specifically excluded from coverage.
Question 4: What is the legal term for the right of the surety company to recover money paid on a bond claim from the notary who caused the loss?
- Indemnification
- Subrogation (Correct answer)
- Restitution
- Contribution
Correct answer: Subrogation
Subrogation is the surety company's legal right to step into the shoes of the claimant and seek repayment from the notary after paying a bond claim.
Question 5: An employer instructs their notary employee to notarize a document without confirming the signer's identity. If a loss occurs, who may be liable?
- Only the employer, since the notary was following orders
- Only the notary, as they are solely responsible for all notarial acts
- Potentially both the notary and the employer (Correct answer)
- Neither, because the signer assumed the risk
Correct answer: Potentially both the notary and the employer
Both the notary and the employer may face liability — the notary for failing to follow proper procedures, and the employer for directing improper conduct.
Question 6: How does a surety bond differ from E&O insurance in terms of who it ultimately protects?
- A surety bond protects the notary; E&O protects the public
- A surety bond protects the public; E&O protects the notary (Correct answer)
- Both protect the public equally
- Both protect the notary equally
Correct answer: A surety bond protects the public; E&O protects the notary
The surety bond protects the public by guaranteeing payment for the notary's misconduct, while E&O insurance protects the notary personally from the financial consequences of honest mistakes.
Question 7: Under what circumstance can the New Mexico Secretary of State revoke a notary's commission?
- Only if the notary fails to renew their bond on time
- For official misconduct, incompetence, or a disqualifying criminal conviction (Correct answer)
- If the notary moves to a different county
- When the notary changes their legal name
Correct answer: For official misconduct, incompetence, or a disqualifying criminal conviction
The Secretary of State may revoke a notary commission for misconduct, incompetence in performing notarial duties, or a criminal conviction that disqualifies the individual.
NM Notary Notary Bond and Liability 2
Is Errors and Omissions (E&O) insurance mandatory for notaries in New Mexico?