New Statutes Taking Effect in North Dakota
by Amy Kleinschmit
Chief Compliance Officer
6/20/2019

As follow-up from coverage that Jay Kruse, CUAD Chief Advocacy Officer, presented on the North Dakota Legislative Session, in total, there were 905 bills (545 in the House and 360 in the Senate) introduced during the regular session in ND. In the end, 337 House bills and 233 Senate bills passed. Here are some additional summaries on a few of the laws that will be going into effect in North Dakota later this summer that may be of interest to credit unions – Part 1.

Smart Contracts and Blockchain

HB 1045 amended NDCC 9-16 to define blockchain technology and smart contracts. It also provides that smart contracts may exist in commerce. A contract relating to a transaction may not be denied legal effect, validity, or enforceability solely because the contract contains a smart contract term. However, these new provisions have a very limited scope and only apply to title 10 (corporations) and transactions governed by chapters 41 – 02 (UCC sales), 41 - 02.1 (UCC leases), and 41 – 07 (UCC Documents of title).

Motor Vehicle – Body Damage Disclosure

HB 1055 made a minor amendment to NDCC 39-05-17.2 to the thresholds used to define “motor vehicle body damage.” Specifically, $8,000 is increased to $10,000 and 40% is decreased to 25%.

The full definition of "motor vehicle body damage" under NDCC 39-05-17.2, as it relates to body damage disclosure, means “a change in the body or structure of a motor vehicle, generally resulting from a vehicular crash or accident, including loss by fire, vandalism, weather, or submersion in water, resulting in damage to the motor vehicle which equals or exceeds the greater of ten thousand dollars or twenty - five percent of the pre-damage retail value of the motor vehicle as determined by the national automobile dealers association official used car guide. The term does not include body or structural modifications, normal wear and tear, glass damage, hail damage, or items of normal maintenance and repair.”

Remote Notarization

HB 1110 was adopted in North Dakota that revised NDCC 44-06.1 Revised Uniform Laws on Notarial Acts. Similar to South Dakota, discussed in a prior Memo article, North Dakota also adopted provisions to allow notarial acts for remotely located individuals. Unlike South Dakota, North Dakota’s law is a lot more detailed with requirements that must be met to be in compliance.

The new law provides, that a notary public located in this state (ND) may perform a notarial act using communication technology for a remotely located individual, or in other words, an individual not in the physical presence of the notary public, if certain criteria are met.

For purposes of this rule, “communication technology” means electronic device or process that: (1) Allows a notary public and a remotely located individual to communicate with each other simultaneously by sight and sound; and (2) When necessary and consistent with other applicable law, facilitates communication with a remotely located individual who has a vision, hearing, or speech impairment.

First, if a notary public intends to perform notarial acts for remotely located individuals, they must first notify the secretary of state that they will be performing this service and identify the technologies the notary public intends to use. If the secretary of state has adopted admin rules for approval of communication technology or identity proofing, the communication technology and identity proofing they must conform to those standards.

The notary public must have personal knowledge of the identity of the individual, which is consistent with existing notarial requirements. Or, the notary public must have satisfactory evidence of the identity of the remotely located individual by oath or affirmation from a credible witness appearing before the notary public. Last option is that the notary public has obtained satisfactory evidence of the identity of the remotely located individual by using at least two different types of identity proofing.

Next, the notary public is able reasonably to confirm that a record before the notary public is the same record in which the remotely located individual made a statement or on which the individual executed a signature.

If the individual is located outside of the US, you must also ensure “the act of making the statement or signing the record is not prohibited by the foreign state in which the remotely located individual is located.”

The notary public, or a person acting on behalf of the notary public, must create an audiovisual recording of the performance of the notarial act. This recording must be retained for at least 10 years after the recording is made – unless a different period is required by adopted rule. The recording is to be retained by the “notary public, a guardian, conservator, or agent of a notary public, or a personal representative of a deceased notary public.”

The certificate of notarial act and short-form certificate must indicate the notarial act was performed using communication technology.

In addition to keeping copies of the audiovisual recording, the notary public must also keep a journal. The rule provides that, “a notary public shall maintain a journal in which the notary public chronicles all notarial acts the notary public performs with respect to a remotely located individual under section 44 - 06.1 - 13.1. The notary public shall retain the journal for ten years after the performance of the last notarial act chronicled in the journal.”

The journal can be tangible medium or electronic format – provided it is complying with the details of the format rules. I.e, if a journal is maintained on a tangible medium, it must be a permanent, bound register with numbered pages, if the journal is maintained in an electronic format, it must be in a permanent, tamper-evident electronic format complying with the rules of the secretary of state.

The journal entry must be made contemporaneously with the performance of the notarial act and contain specified information including: The date and time of the notarial act; A description of the record, if any, and type of notarial act; The full name and address of each individual for whom the notarial act is performed; If identity of the individual is based on personal knowledge, a statement to that effect; If identity of the individual is based on satisfactory evidence, a brief description of the method of identification and the identification credential presented, if any, including the date of issuance and expiration of the identification credential; and The fee, if any, charged by the notary public.

If the journal is lost or stolen, notary needs to report that to the secretary of state.

The statute provides that the secretary of state may also adopt rules regarding performance of a notarial act. These rules may cover a number of areas discussed here including - Prescribe the means of performing a notarial act involving a remotely located individual using communication technology; Establish standards for communication technology and identity proofing; Establish requirements or procedures to approve providers of communication technology and the process of identity proofing; and Establish standards and a period for the retention of an audiovisual recording. So in short, there may be more in the future to comply with.

CUAD members may contact Amy Kleinschmit with any compliance related questions.

 

 

 

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