How a Contract Notarized Adds Legal Strength

Do contracts actually need to be notarized? That's a question that is frequently raised and rightfully so.  

Most people think that a notarized contract is by default a legally binding one. In fact, most contracts, be it a vendor agreement, a lease, or a partnership agreement, don't need a notary stamp to be enforceable.  

With more than 1.25 billion documents notarized yearly in the U.S. alone, it's obvious that notarization remains a huge part of the way agreements are signed and validated. 

So, when exactly does a contract really have to be notarized, and when is it just a good idea? 

From notarized lease agreements to notary agreements between two people, we'll explore what the notary stamp really does and when it's absolutely necessary. 

Key Takeaways 

• Notarization doesn't render a contract legally enforceable, but it does provide an influential level of trust and validation. 

• A notary contract between two individuals validates identity, consent, and authenticity of the signatures. 

• Notarized lease agreements or notarial lease agreements may be more convincing in court disputes. 

• Certain documents, particularly in real estate and construction, are required by law to be notarized. 

• With online tools such as Remote Online Notarization, obtaining a notarized contract of lease or any other notarized document is now quicker and safer than ever. 

What a Notary Actually Does 

There is a widespread myth that a notary's stamp automatically makes a contract enforceable in law. It doesn't. 

A contract is legally binding only when it fulfills certain minimal requirements, such as a clear offer, acceptance, consideration, and the parties' legal capacity. 

A notary does not authenticate any of that. 

What they do is attest. A notary public's central task is verifying the legitimacy of a signing, not the wording in the document. 

Their job is to be an unbiased observer who verifies that: 

• The signatory is actually who they represent themselves to be. 

• They're signing it of their own accord and with awareness. 

• The signing occurred in front of the notary. 

Because when these steps are done by a notary, it becomes far more difficult for anyone to subsequently allege fraud, forgery, or coercion. 

It makes the signing an official record, sometimes even a digital breadcrumb trail if done remotely. 

Courts and institutions tend to place more trust in documents that are notarized precisely for this reason. 

So, whereas notarization does not impart legal life into a contract, it strengthens the agreement by avoiding typical disputes regarding signatures. 

In high-risk or high-stakes transactions, that added layer of confidence can prove to be a game-changer. 

The Strategic Advantage 

For most contracts, notarization is not legally necessary. 

But savvy businesses and individuals do it anyway. Why? 

Because a notarized contract is like putting armor on your agreement, it shields against future hassles. 

Let’s say you’re entering a high-value deal or a long-term lease. 

Even if the law doesn’t require it, having a notarized lease agreement makes the document harder to dispute. 

It tells the other party and a judge, if it comes to that, that everything was signed above board, with full identity verification and no funny business. 

One of the underappreciated strengths of notarization is the prevention of fraud. 

A notary verifies government ID, observes the signature, and makes an entry into a logbook or electronic journal. 

And there's the matter of credibility too. A notarized agreement, be it a lease, loan document, or power of attorney, carries more credibility. 

It seems official, because it is official. Courts are also more likely to consider notarized documents to be valid without delving into signature issues, which saves time and legal bills. 

From a risk management perspective, notarization is a no-brainer for contracts that could be contested in the future. 

Think of it as an investment in making your agreements dispute-proof. 

This is particularly the case in sectors such as real estate, building, finance, and healthcare, in which valuable contracts, authorizations, and regulatory requirements render notarization the prudent default even when not required. 

It shuts down the loopholes that scammers and opportunists prefer. 

And in the high-speed, high-risk legal world of today, that assurance is well worth more than the small price or hassle involved. 

When Notarization Is a Legal Requirement 

While most contracts don't require a notary's seal to be enforceable, some documents simply do. Let's examine where notarization changes from voluntary to mandatory. 

Real Estate Transactions 

In all but a few states, real estate documents such as deeds, mortgages, and leases of more than one year need to be notarized in order to be valid or recordable with local land records offices. 

Without a notarized contract, the transaction may not hold up in court or even get on public record. 

State regulations differ, so it's worth checking what's needed where the property is situated. 

Healthcare & Legal Authorizations 

Such documents as powers of attorney, advance healthcare directives, and guardianship contracts typically need to be notarized to be honored by hospitals, banks, or courts. 

Notarization serves to verify the identity and intent of the signer so that these documents will withstand examination. 

Other Specialized Contracts 

Some contracts, by nature and jurisdiction, also need notarization. 

They are adoption documents, debt contracts, certain financial instruments, and family law contracts. 

Where the contract touches significant legal rights, notarization is generally necessary. 

Notarization in Construction Contracts 

In construction, notarization is more than a check box, it's usually a strategic move or a requirement of law. 

The sector works with deep layers of paperwork, many stakeholders, and big-dollar transactions. 

In that setting, notarization can clarify who signed what, when, and under what authority. 

First, the construction contracts themselves don't typically need to be notarized in order to hold up. 

Such contracts are generally binding upon being signed by both parties, provided all the elements of a contract exist. 

However, certain developers or general contractors do choose to have them notarized as an extra measure of security, particularly when there are subcontractors or several layers of vendors involved. 

Then there are payment applications, the bills contractors send out for work completed. 

Notarization is not usually needed here either, but in some construction contracts (or project owners), it may be insisted on, particularly for big projects. 

Uncertainty typically arises with AIA forms, where notarization language is included by default, but sometimes incorrectly assumed to be required. 

Where notarization is no longer negotiable is with sworn statements and contractor affidavits. 

Most states mandate these to be notarized as part of payment, particularly when contractors are swearing that there are no liens or outstanding payments. 

Notarization of Business Entities 

Notarization in business transactions contributes more than mere legal finesse. 

It makes it easier to verify that the person signing for a corporation is who he or she claims to be and that he or she is so authorized. 

Consider a notarized lease agreement between two businesses. 

When one party challenges the transaction in the future, asserting the signer was not authorized, that notarized agreement becomes the key evidence. 

The notarization process that verifies the signer's identity and perhaps reviews a corporate resolution aids in the agreement's enforceability. 

In high-stakes contracts, for example, a notary contract between two groups of people dealing with real property, equipment loans, or intellectual property rights, corporations usually make use of power of attorney (POA) documents or board resolutions to vest signing authority. 

Notarizing these supporting documents is an evident paper trail of authorization. 

Many states require in many jurisdictions, for the POA or even resolution itself to be notarized, particularly if it's being filed for record or submitted to government agencies. 

Banks, lenders, and law firms are particularly vigilant here. 

A mere mistake, such as a missing notarization on a settlement, can slow down deal closings or complicate enforcement in court. 

Even private contracts, such as partnership agreements or contracts of sale of assets, may be notarized for protection against potential litigation. 

An effectively notarized document eliminates vagueness, and it becomes hard for a party to later contest "We never agreed to this" or "That individual was not authorized." 

Notarization serves two purposes: identity confirmation and authorization verification. 

It provides businesses with assurance that the correct individual, with the appropriate authority, entered into the proper terms. 

Final Thoughts 

Notarization isn't only a legal requirement, it's a trust signal. 

Mandatory or voluntary, placing a notary's stamp introduces transparency, credibility, and increased legal safeguard to your most valuable commitments. 

It's a more intelligent, easier process than ever. For companies working with complex agreements, particularly within departments such as legal, sales, and procurement, making notarization digital isn't only a good-to-have. It's a differentiator. 

That's where Dock 365's Contract Lifecycle Management (CLM) solution fits in. 

It's developed on Microsoft 365 and assists legal departments in automating all stages of the contract process, from creation and collaboration to approvals and, yes, safe e-signatures and notarization. 

Everything remains centralized, traceable, and compliant. 

Want to see it in action? Request for a free demo and learn how Dock 365 can assist your team in streamlining contract workflows while improving legal peace of mind. 

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