I've been recording docs here for almost 9 years now, and I've never gotten a document recorded if the seal was not 100% on the document. If it is smeared, but you can still read the notary's name, they will accept it, but if the name isn't there, it is not acceptable! I used to have a builder that would send me partial release deeds, and the notary in his office had an embosser that was worn out. 1/2 of the last name never impressed on docs. They were all rejected, had to write a letter to the builders notary to buy a new embosser or get a stamp.
The statute says that "The acceptance of a record for registration by the register of deeds shall give rise to a presumption that, at the time the record was presented for registration, a clear and legible image of the notary's official seal was affixed or embossed on the record near the notary's official signature." In this case, there can be no presumption that the seal was legible, as it was not. The entire center section of the seal was missing, so no name, county or state was there. It's not that the seal was illegible, it was defective and that information didn't even touch the page.
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