NSA - Notary Signing Agent Preventing Unauthorized Practice of Law Questions and Answers 1 — Questions and Answers
Question 1: A married couple signing a Deed of Trust asks the Notary Signing Agent, "We're listed as 'community property,' but our friend said we should be 'joint tenants.' What is the legal difference and which one is better for us?" What is the appropriate response from the NSA?
- Explain that they cannot give legal advice and must direct the question to their lender, title company, or an attorney. (Correct answer)
- Provide a brief, factual definition of both community property and joint tenancy so they can decide for themselves.
- Advise them that community property is the standard and most common vesting for married couples in their state.
- Suggest they cross out 'community property,' write in 'joint tenants,' and initial the change on the document.
Correct answer: Explain that they cannot give legal advice and must direct the question to their lender, title company, or an attorney.
Explaining, interpreting, or advising on different ways to hold title to a property (vesting) is considered the unauthorized practice of law. The NSA's role is to be an impartial witness, not a legal advisor. The only correct action is to refer the borrowers to a qualified professional, such as their lender or an attorney, for clarification before they sign.
Question 2: Which of the following actions by a Notary Signing Agent constitutes the unauthorized practice of law (UPL)?
- Advising a borrower that waiving their three-day right to cancel would be a good idea to expedite the loan funding. (Correct answer)
- Stating, "This is the Closing Disclosure, which summarizes your final loan terms and closing costs."
- Pointing to a signature line and saying, "Your signature is required here."
- Referring a borrower's question about a specific fee to their loan officer.
Correct answer: Advising a borrower that waiving their three-day right to cancel would be a good idea to expedite the loan funding.
Advising a borrower on the advisability of a decision, such as waiving a legal right, is a clear example of providing unauthorized legal and financial advice. An NSA may identify a document, point to where a signature is needed, and refer questions, but must not influence the borrower's decisions.
Question 3: During a signing, a borrower points to the prepayment penalty clause in the Promissory Note and asks, "Can you help me understand what this means for me financially if I sell my home in two years?" What is the NSA's most appropriate course of action?
- Read the clause aloud word-for-word without offering any interpretation.
- Explain that such clauses are very common and usually only apply for the first few years of the loan.
- Calculate a hypothetical penalty based on the loan amount to illustrate the clause's effect.
- State that they cannot interpret loan terms and advise the borrower to contact their loan officer for an explanation. (Correct answer)
Correct answer: State that they cannot interpret loan terms and advise the borrower to contact their loan officer for an explanation.
Interpreting legal clauses and explaining their financial implications is a form of legal and financial advice, which NSAs are strictly prohibited from giving. The correct and professional response is to halt the signing on that document and have the borrower get clarification directly from the lender or another authorized party.
Question 4: A document in the loan package contains a blank line where the borrower is expected to write in a date, but the instructions are unclear. The borrower asks the NSA what date they should use. How should the NSA proceed?
- Advise the borrower to use the current date since that is the most common practice.
- Tell the borrower to leave the line blank so the title company can complete it later.
- Instruct the borrower to stop and contact their lender or the title company to get the correct information. (Correct answer)
- Suggest looking at other documents in the package to find a date that seems appropriate.
Correct answer: Instruct the borrower to stop and contact their lender or the title company to get the correct information.
A Notary Signing Agent must not provide or suggest substantive information to be entered into a document, as this constitutes UPL. Instructing a signer to leave a material line blank is also improper. The only correct action is to have the borrower obtain the necessary information from the contracting company (lender or title) to ensure the document is completed accurately.
Question 5: To avoid engaging in the unauthorized practice of law, a Notary Signing Agent must refrain from which of the following activities?
- Expressing a personal opinion on whether the loan's interest rate is fair. (Correct answer)
- Verifying the signer's identity using a government-issued photo ID.
- Ensuring the borrower dates the document with the actual date of the signing.
- Attaching the correct notarial certificate as required by state law.
Correct answer: Expressing a personal opinion on whether the loan's interest rate is fair.
An NSA must remain impartial and cannot offer personal opinions or advice regarding the loan terms, as this crosses into the unauthorized practice of law. The other three options—verifying identity, ensuring correct dating, and using the proper notarial certificate—are all core, required duties of a notary public and signing agent.
Question 6: Which of the following statements is an acceptable practice for a Notary Signing Agent and would NOT be considered the unauthorized practice of law?
- Defining the legal term 'encumbrance' for a borrower who asks for its meaning.
- Recommending that the borrowers add a trust amendment before signing.
- Naming the document and stating its general purpose, such as, "This is the Deed of Trust, which secures the loan with the property as collateral." (Correct answer)
- Assisting the borrower in deciding whether to initial or decline an optional credit insurance agreement.
Correct answer: Naming the document and stating its general purpose, such as, "This is the Deed of Trust, which secures the loan with the property as collateral."
According to the Notary Signing Agent Code of Conduct, an NSA may name a document and state its general purpose. Defining legal terms, recommending legal actions (like a trust amendment), or helping a borrower make a decision on an optional agreement are all forms of legal or financial advice and constitute the unauthorized practice of law.
NSA - Notary Signing Agent Preventing Unauthorized Practice of Law Questions and Answers 1
A married couple signing a Deed of Trust asks the Notary Signing Agent, "We're listed as 'community property,' but our friend said we should be 'joint tenants.' What is the legal difference and which one is better for us?" What is the appropriate response from the NSA?