7.2 Penalties and Liability

Three Independent Tracks of Liability

The single most tested concept in this chapter is that notary misconduct can trigger three separate consequences at the same time: administrative action against the commission, criminal prosecution, and a civil lawsuit. They are independent — being acquitted of a crime does not erase civil liability, and paying a civil judgment does not stop the State Treasurer from revoking the commission.

Administrative Penalties

Under RULONA, the State Treasurer (through DORES) may deny, refuse to renew, suspend, or revoke a notary commission for fraud in the application, dishonesty, failure to perform the duties of office, or any violation of the notary statute or rules. Action is also taken when a notary is convicted of a disqualifying crime.

Note the eligibility bar: a person convicted of an offense involving dishonesty, or of any crime of the first or second degree, cannot hold a New Jersey commission. This is both a disqualification at application and a ground for removal.

Criminal Liability

Several notary acts are crimes in their own right. The headline number to memorize: completing a false notarial certificate is treated as forgery of a government document under N.J.S.A. 2C:21-1, a third-degree crime carrying 3 to 5 years imprisonment and a fine up to $15,000.

Criminal exposure does not require that anyone profit — the falsification itself is the offense.

Civil Liability

A notary may be sued by anyone harmed by the notary's negligence or misconduct. The most common claim is negligence: the notary failed to require personal appearance or to check identification, a forgery slipped through, and a third party lost money relying on the notarized document.

Damages can include actual loss, consequential loss, punitive damages for egregious conduct, and the opposing party's attorney's fees. The fact that a third-party forger caused the harm does not absolve the notary who failed to follow procedure.

Bond vs. E&O Insurance — Know the Difference

A frequent trap: the notary bond protects the public, not the notary — if a claim is paid, the surety can demand reimbursement from the notary. Errors and Omissions (E&O) insurance protects the notary, paying legal defense and settlements.

Best Practices to Limit Exposure

• Require personal appearance and satisfactory ID for every act.
• Keep the required RULONA journal — it is your best evidence of due diligence.
• Refuse blanks, conflicts, and anything that feels coerced.
• Carry E&O insurance to shield personal assets.
• Stay current with DORES rule changes.

Worked Scenario — One Mistake, Three Lawsuits

A notary notarizes a quitclaim deed without requiring the grantor to appear, relying on a phone call instead. The deed turns out to be forged; the rightful owner loses the property and sues. Trace the fallout: Civil — the rightful owner sues the notary for negligence and wins actual damages plus attorney's fees because the notary skipped personal appearance and ID. Criminal — because the certificate falsely states the grantor personally appeared, the prosecutor charges third-degree forgery (3–5 years, up to $15,000). Administrative — DORES revokes the commission for notarizing without personal appearance.

All three proceed from the single failure to follow procedure, and none depends on the others succeeding.

Why the Bond Does Not Save You

Many new notaries assume the bond is their safety net. It is the opposite. If a member of the public files a claim and the surety pays out, the surety has a right of reimbursement against the notary. So the bond can actually leave the notary owing money. The only instrument that absorbs the cost on the notary's behalf is E&O insurance, which pays defense costs and settlements without seeking repayment. Coverage is sold in tiers (commonly $5,000 to $100,000+), and a single negligence claim involving a real-estate loss can easily exceed the lowest tiers — a reason many mobile and signing-agent notaries buy higher limits.

How to Document Due Diligence

The RULONA journal is the notary's strongest defense in a civil suit. A complete entry records the date and time of the act, the type of act, the name and address of each person served, the evidence of identity relied upon, and any fee charged. When a notary is later accused of negligence, a contemporaneous journal entry showing that ID was checked and the signer appeared shifts the factual picture sharply in the notary's favor. A missing or sloppy journal does the reverse — it becomes evidence of the very carelessness alleged.

Penalty Quick-Reference

Exam focus: 2–3 items — the three liability tracks running at once, revocation grounds, the third-degree forgery penalty, and bond-vs.-E&O.