Who needs to sign the disbursement directive, and does it have to be notarized? – North Carolina

Short Answer

In a North Carolina real estate closing, the disbursement directive should be signed by the party (or parties) whose closing funds will be disbursed and who has authority to give the settlement agent instructions—most often the buyer/borrower, the seller, or both, depending on whose proceeds are being directed. A disbursement directive usually does not have to be notarized because it is not typically a document recorded with the Register of Deeds. However, the closing lawyer may require notarization (or a specific signing method) as a risk-control measure, especially if proceeds are going to a third party or the instructions change at the last minute.

Understanding the Problem

In North Carolina, a real estate closing often requires a written “directive” that tells the closing attorney (acting as the settlement agent) how to disburse money held for the transaction. The decision point is who must sign that directive to make it valid and whether a notary acknowledgment is required before the settlement agent can follow it. The timing matters because disbursements typically occur at or right after closing, and the settlement agent must have clear authority before sending funds out.

Apply the Law

North Carolina law places the duty for handling and disbursing closing funds on the settlement agent and limits when funds can be disbursed. In practice, a disbursement directive functions as written authorization for the settlement agent to send funds in a particular way (for example, where seller proceeds should go). Because a directive is typically an internal closing instruction and not a recorded instrument, North Carolina law generally does not require it to be notarized. Notarization rules matter mainly for documents that need an acknowledgment (such as many recordable real estate instruments), or when the closing firm sets a notarization requirement to confirm identity and authority.

Key Requirements

Proper signer with authority: The directive should be signed by the person or entity entitled to control the funds being directed (for example, the seller for seller proceeds, the buyer/borrower for buyer-paid funds), or by a legally authorized representative (such as an agent acting under a valid power of attorney).
Clear, specific instructions: The directive should match the settlement statement and clearly identify payees, amounts (or how calculated), and delivery method so the settlement agent can disburse without guessing.
Timing consistent with closing-fund rules: Even with a signed directive, the settlement agent may not disburse until statutory conditions for handling “closing funds” and recording are met.

What the Statutes Say

N.C. Gen. Stat. § 45A-4 (Duty of settlement agent) – sets rules on when a settlement agent may disburse closing funds and requires key documents to be recorded before most disbursements.
N.C. Gen. Stat. § 47-38 (Acknowledgment by grantor) – provides a sufficient form of acknowledgment for certain instruments; notarization requirements usually attach to acknowledged/recorded documents rather than internal closing directives.
N.C. Gen. Stat. § 10B-41 (Notarial certificate for an acknowledgment) – provides a sufficient North Carolina notarial certificate form when an acknowledgment is required.

Analysis

Apply the Rule to the Facts: Here, a closing law firm requested a directive for disbursement of real estate funds. The directive should be signed by the person whose funds are being directed (for example, the seller for net proceeds, the buyer/borrower for buyer-provided funds) or a properly authorized representative. Since a disbursement directive is typically an instruction for the settlement agent and not a document recorded with the Register of Deeds, it usually does not need notarization, but the firm may still require a notary acknowledgment to confirm identity or to reduce the risk of misdirection or fraud.

Process & Timing

Who files: No one “files” a disbursement directive with a public office in most closings. Where: It is delivered to the closing attorney/settlement agent handling the North Carolina closing. What: The closing firm’s directive form (or a written instruction that the firm accepts) signed by the appropriate party. When: Ideally before closing or by the time final numbers are approved, so the settlement agent can schedule disbursement.
Verification step: The settlement agent confirms the signer’s authority and confirms that disbursement timing complies with North Carolina closing-fund rules and the recording sequence required for the transaction.
Disbursement: After statutory conditions are met (including recording requirements for most funds), the settlement agent disburses per the directive and the settlement statement.

Exceptions & Pitfalls

Power of attorney or entity authority issues: If someone signs for another person or for a business/trust/estate, the settlement agent may require proof of authority and may require an acknowledgment depending on the documents involved.
Last-minute changes or third-party payees: Directing proceeds to someone other than the party on the settlement statement often triggers extra scrutiny, written confirmation requirements, and sometimes notarization or in-person signing.
Submission method (scan/photo/email/text): Many closing firms accept a scanned PDF or clear photo for review, but may still require the original “wet” signature or a particular delivery method before releasing funds. Firm policies vary, and some instructions may be rejected if they do not allow the settlement agent to confirm authenticity.

Conclusion

In North Carolina, the disbursement directive should be signed by the party with the right and authority to control the closing funds being directed (often the seller for seller proceeds, the buyer/borrower for buyer-provided funds, or both depending on the instruction). A directive usually does not have to be notarized because it is not typically recorded, but the closing attorney may require notarization in higher-risk situations or to confirm identity. The next step is to submit the signed directive to the closing attorney/settlement agent before disbursement is scheduled.

Talk to a Real Estate Attorney

If a closing requires a disbursement directive and there are questions about who must sign, whether notarization is required, or whether a scan/photo/email will be accepted before funds are released, our firm has experienced attorneys who can help explain the options and timelines. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.