Jerry Kopel

Notary Public

By Jerry Kopel

Nov. 9, 2008


Will the legislature reinstate an outrageous money grab?

Here's background on surety bonding for Colorado notaries public which was repealed in 1992. It may be pushed back into law by the bonding industry when the 2009 legislature considers the Dept, of Regulatory Agencies (DORA) Sunset review of the notary public law.

In 1981, the legislature increased the four year surety bond required for a notary public commission from $1,000 to $5,000. The $1,000 amount had been the law from 1908 (if not earlier) through 1980.

From 1981 through 1990, the notary surety industry took in $5,734,021 as Colorado premiums, according to their figures. They paid out $106,644 for damage claims, which is a two percent loss ratio.

How much did the surety bond cost a Colorado notary public? From the National Notary Association position paper in 1991: "A $5,000 bond ... costs a Colorado notary $50 or less, with some bonding agents charging premiums as low as $25".

But the state department's notary licensing director in 1991 disagreed, stating the average cost was $50, with prices ranging from $35 to $80.

The (in my opinion) "scam" was uncovered by DORA research staff which prepared the Notary Public 1991 Sunset review for the legislature to consider in 1992. At that time the reasonable loss ratio (claims paid out) suggested by insurance commissioners was 40 percent.

Actually, Colorado's payment to victims was greater than the rest of the country. In 1990, the surety industry's released figures were $17,825,344 direct premiums earned, with $288,071 in claims paid for a loss ratio of 1.6 percent. Talk about windfall profits!

DORA's 1991 Sunset report recommended the $5,000 surety bond be repealed based on the small numbers of claims and repaid losses. Since the bond requirement was repealed in 1992, why this column?

In 2008, the state auditor out-sourced a performance review of the notary public law to Clifton Gunderson LLP, Certified Public Accountants from Greenwood Village.

While the report mentioned the 1992 surety bond repeal, it provided the reader with NO INFORMATION as to why the bond had been removed from the law. No one presently serving in the legislature (thanks to term limits) has any reason to know the background.

The Gunderson staffer recommended the legislature consider the Model Notary Act of 2002 which, among other suggestions, requires a $25,000 surety bond.

DORA's review found 110,000 new and reappointed notaries public presently active with an average of 27,000 to 28,000 commissioned in each yearly cycle. DORA did not recommend reinstating a surety bond requirement finding "a manual sifting of complaints filed ... did not provide justification for recommendation ..."

The Gunderson staffer also recognized the vagueness of record keeping by the secretary of state of 149 complaints from fiscal years 2006 and 2007, resulting in four notary commissions revoked, two suspensions and two resignations.

Neither Gunderson nor DORA mentioned that bonding companies, by law, can recover from a notary public who caused a monetary loss, the full amount of the loss, further reducing the percent of claims paid out compared to the profit figures. Small claims courts have jurisdiction up to $7,5000 in damages with no attorneys needed for representation.

DORA and Gunderson did agree on other recommendations:

  • Keep commissioning notaries public since they are usually required by all states to be involved in real estate transactions;
  • better record keeping on complaints;
  • accurate journals for each notary act performed and not just in real estate transactions.

For many notaries, DORA reminds us "a commission is simply an adjunct to their other job duties" but "there are certain occupations in which holding a notary commission is an essential requirement".

However, that is no reason for the state by statute to pick their pockets.

(Jerry Kopel served 22 years in the Colorado House.)

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