Signature Guarantee vs Notary: Key Differences and Uses

When handling important documents like financial transactions or legal agreements, you may encounter the need for a signature guarantee or notary service. While both serve to validate signatures, they cater to different purposes.

This guide will break down the differences, explore their specific uses, and highlight the key benefits of each, helping you understand which service fits your needs.

What is a Signature Guarantee?

A signature guarantee is a financial certification that verifies the authenticity of a signature on documents related to financial transactions, such as transferring securities or mutual funds.

Typically provided by banks, credit unions, or trust companies, it ensures the signer has the legal authority to execute the transaction and protects against forgery or financial fraud.

When Do You Need a Medallion Signature Guarantee?

A medallion signature guarantee is required for specific financial transactions to ensure security and authenticity.
Common scenarios include:

• Transferring Securities: Changing ownership of stocks or bonds.
• Mutual Funds Transfers: Moving investments between accounts.
• 401(k) Rollovers: Transferring retirement funds to a new plan.
• Large Financial Transactions: Verifying authority for substantial transfers.

Banks and financial institutions require this service to prevent unauthorized asset transfers. It provides a crucial layer of protection for both the signer and the institution.

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Where to Get a Medallion Signature Guarantee?

You can obtain a medallion signature guarantee from:

• Banks: Many large banks offer this service, but availability varies.
• Credit Unions: Often provide the service to their members.
• Financial Institutions: Some trust companies and brokerage firms also offer it.

Keep in mind that not all banks or institutions provide this service, so it’s best to call ahead or check their website. Additionally, many providers limit this service to account holders, so having an established relationship is often necessary.

How Much Does a Medallion Signature Guarantee Cost?

The cost of a medallion signature guarantee varies widely, ranging from free for account holders to over $100 at some institutions. Many banks and credit unions waive fees for loyal customers or those with high account balances.

For most account holders, this service is typically free or available at a reduced cost, making it more affordable at institutions where you already bank.

Why Does a Notary Need a Surety Bond?

A surety bond is required in many states to protect the public from errors or misconduct by a notary public. It ensures financial compensation if a notary’s actions cause harm, such as notarizing fraudulent documents. Beyond protection, a surety bond adds credibility to a notary’s service, reinforcing accountability and trustworthiness for their clients.

What Does a Notary Bond Cover?

A notary bond is designed to protect the public from financial harm caused by a notary’s errors or misconduct. While it does not protect the notary directly, it ensures accountability for their actions. Common situations covered by a notary bond include:

• Fraudulent Acts: Notarizing forged or fraudulent documents.
• Negligent Errors: Mistakes made during the notarization process.
• Failure to Verify Identity: Not properly confirming the identity of a signer.
• Non-Compliance: Failing to follow state notary laws and regulations.

This coverage ensures that affected parties can seek financial compensation, providing peace of mind and reinforcing the notary’s professional responsibility.

Differences Between Signature Guarantee vs Notary

While both a signature guarantee and a notary service verify signatures, they serve vastly different purposes and offer varying levels of protection. Understanding these differences can help you determine which service is right for your needs.

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FAQs About Signature Guarantees and Notaries

Answers to common questions about notary and signature guarantee services to help clarify their roles and requirements.

What Is a Notary Bond?

A notary bond is a surety bond required by many states to protect the public from financial harm caused by a notary’s errors or misconduct. It ensures accountability and provides financial compensation if a mistake occurs.

Is a Signature Guarantee the Same as a Notary?

No, a signature guarantee and a notary are not the same. A signature guarantee is used for financial transactions like transferring securities, while a notary is typically needed for verifying signatures on legal documents like contracts and affidavits.

Can a Notary Do a Medallion Signature Guarantee?

No, notaries cannot provide medallion signature guarantees. Medallion guarantees are issued by banks, credit unions, or financial institutions and require a higher level of verification backed by financial liability.

Does a Medallion Signature Guarantee Expire?

A medallion signature guarantee does not expire. However, the validity depends on the specific transaction it is tied to. It’s best to complete the transaction soon after obtaining the guarantee to avoid complications.

Does a Notary Expire?

Yes, a notary’s commission expires after a set term, usually four years, depending on the state. Notaries must renew their commission to continue providing services legally.