The Difference Between a Notary Public & a Signature Guarantee

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Notaries public are empowered by the state to affirm signatures, but they don't assume loss if forged documents are presented to them.
Notaries public are empowered by the state to affirm signatures, but they don't assume loss if forged documents are presented to them. (Image: Stockbyte/Stockbyte/Getty Images)

Both a notary public and signature guarantee involve witnessing and authenticating a signature and applying a stamp to documents. However, the power of a notary public rests in an individual and a signature guarantee is an act of an institution. Signature guarantees are also mostly used for financial transactions, and institutions that use them bear the risk of covering all losses if they guarantee the wrong signature. A notary public does not assume this risk, but his stamp can be used on a bigger variety of documents.

What Notaries Do

A notary public is a person who, by the authority vested by the state, determines that the person who signs a document in his presence is in fact who that person claims to be. When appearing before a notary you bring proper identification and sign the documents in the presence of the notary public. The notary compares your appearance to the picture in your identification, verifies your signature matches and applies a seal to your document. The notary, in effect, acts as an impartial witness and implements requirements that deter fraud.

Signature Guarantees

A signature guarantee is a stamp placed on financial instruments by a financial institution, guaranteeing that the signature is valid. The most common use for a signature guarantee is to authenticate your right to sell or transfer securities. It protects the person who owns the stock or certificate and makes it more difficult for someone to forge a signature. To be able to affix the signature guarantee stamp or imprint, financial institutions join a signature guarantee program, the most widely used being the three Medallion Signature Guarantee Programs. Like a notary service, a representative of a participating financial institution reviews your paperwork, witnesses your signature and then, in applying the signature guarantee stamp, guarantees that your signature is genuine. The stamp uses a bar code, special ink and other security features to make it more difficult to copy or counterfeit.

Key Differences

There are several important differences between what notaries do and what a signature guarantee does. First, a signature guarantee comes from an institution. Any representative of that institution can conduct a signature guarantee, whereas a notary designation applies to one person. In addition, signature guarantees are almost exclusively used for financial documents and notaries can be called to witness for several types of documents. Most important is the degree of risk associated with a notary’s stamp and a signature guarantee stamp. With a signature guarantee, the financial institution assumes risk of the cost of the transaction, up to certain limits, if the signature guaranteed isn’t authentic.

Fitting Your Need

It’s usually not your choice when deciding between a notary or a signature guarantee. The accepting institution will likely make one or the other a requirement. Its decision is often predicated on how much risk is involved and the dollar value of the transaction you want to conduct. Chances are, if a lot of money is involved, a signature guarantee may be required.

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