40th Anniversary Convention
Wire Fraud Scenario
Message from the Editor
I suspect that many of you are preparing for your summer vacation to some wonderful destination that you may have never been to before. This year I actually get to take one myself. Our family is preparing for a trip to Nashville. It will be nice to get away from the hectic routine we have been in.
The last few months have indeed been busy for all of us. Your legislative committee has been fervently working on House Bill 707 (Curative) and House Bill584 (Lien). While many of you are all well acquainted with the “serve” and “volley” that occurs when bills are introduced, I find the process pretty exhausting. Many conversations have occurred both by meeting and email to determine the right language that both protects and pleases all interested groups. Our lobbyist, David Ferrell, continues to do a great job in the negotiating process. The changes will allow the ability to cancel a lien or for the expiration of a lien as filed on LiensNC. These tools will alleviate the backlog and confusion which has been a chronic issue for closing attorneys.
The language in Curative Bill H707 as introduced by Investors Title was tweaked by the Committee as well as interested groups. This Bill was no different in that the Committee had to present just the right language for all stakeholders. The goal for this bill is to clarify and ease the method of correcting errors. Both of these bills passed the legislature and have been sent to the Governor. We will anxiously await the Governor’s signature.
The Annual Convention is only a couple weeks away. Marc Garren and Tracy Steadman have put a great program together. Topics on the agenda will range from claims and an economic update to what is going on in our industry on a national level. The Greenbrier is a beautiful location and will be a great place to celebrate the 40th Anniversary of NCLTA. This event is one that I look forward to every year. It is the only time that I get to catch up with many of you. I hope you all have it on your calendar!
As my year as President quickly comes to a close I want to thank the Board members, Karl Knight, Marc Garren, Ben Ipock, Don Merritt and Jeff Dunham not only for their support but for their patience as well. This year presented many challenges for me. Operating Carolina Title without a key employee for 3 months has been really tough. I have felt at times I was stumbling and about to fall. So, again many thanks.
Thank you to our Legislative Committee particularly, Kim Rosenberg and Nick Long and lobbyist, David Ferrell for their tireless efforts in keeping up not only with “what is going on” but making things happen as well. Many of the proposals that become bills and later law are due their insight on how things affect our industry.
Thank you to Nancy Ferguson-for pretty much your help on everything. You keep all of our connected organizations on track.
Thank you to Tracy Steadman for her diligent efforts to keep us organized and on the right path.
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Click HERE to register today! Early Bird Registration ends 8/25/2017!
Thursday, September 14, 2017
2:00 pm - 5:00 pm Executive Committee Meeting
2:00 pm - 5:00 pm Early Registration
6:00 pm - 7:30 pm Welcome Reception
Friday, September 15, 2017
7:45 am – 8:45 am Registration & Breakfast
8:30 am – 8:45 am Announcements and Welcome
8:45 am – 9:45 am Economic Update – Eugenio J. Aleman, Wells Fargo Securities
9:45 am – 10:30 am The Path Forward: ALTA’s Strategic Priorities to Advance the Industry – Jack Rattikin III, Rattikin Title Company
10:30 am – 10:45 am Break
10:45 am – 11:45 am Claims: The Good, The Bad, and The Ugly – Zip Edwards, Horack, Talley, Pharr & Lowndes, P.A.
11:45 am – 12:30 pm Real Property Case Law – Chris Burti, Statewide Title
7:00 pm – 8:00 pm Cocktails
8:00 pm – 11:00 pm Annual Banquet and President’s Reception
Saturday, September 16, 2017
8:00 am – 9:00 am Attorney Section Breakfast
9:00 am – 10:00 am Legislative Update – David Ferrell, Vandeventer Black LLP
10:00 am – 10:15 am Break
10:15 am – 11:15 am But I Didn’t Know (Ethics) – Steve Brown, Investors Title Insurance Company
11:15 am – 12:00 pm NCBA Real Property Update – Frankie Jones, Smith Moore Leatherwood LLP
12:00 pm – 12:30 pm NCLTA Annual Meeting
Meet the Speakers
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2017 North Carolina Legislative Wrap–up
By: David Ferrell, NCLTA Legislative Counsel
The legislature adjourned the 2017 “long” session at 2:00 a.m. on the morning of June 30, 2017, wrapping up an approximate 6-month session that began January 11, 2017. This legislative session marked the first in four years where the legislature was controlled by the Republicans and the Executive Branch was controlled by the Democrats. The Republican legislature held a veto-proof majority in both the House and Senate, and exercised that advantage five times by the end of the June, by overriding Governor Cooper’s vetoes of various legislation. It is anticipated that Governor Cooper will veto additional legislation, and the legislature could have the opportunity to override additional vetoes in the next month or so. Governor Cooper has until July 30 to either sign or veto a bill that was approved by the legislature in the last days of the legislative session; otherwise it would become law without his signature.
When the legislature adjourns its "long session" in odd-numbered years, lawmakers typically do not return in a formal legislative session until the "short session" begins the following spring. Not this year. The adjournment resolution adopted by the House and Senate as one of their last acts of the session adds two more legislative sessions this year - one starting on August 3, and another starting on September 6.
In the August session, the legislature could address a variety of topics, including overriding any vetoes from Governor Roy Cooper, making appointments, approving bills currently in negotiations between the House and Senate or bills involving impeachment of an elected official, and responding to lawsuits -- including any court order on redistricting. The September session will likely focus on state legislative redistricting, and the legislature could consider redistricting plans for judicial and prosecutorial districts as well. A plan to redraw judicial districts that was released this week did not move forward this session due to strong opposition from judges and others. The September session could also involve appointments, veto overrides, referendums on constitutional amendments and impeachment matters.
The adjournment resolution also includes a final deadline of November 15 for court-order legislative redistricting to be completed. However, the process could happen much earlier depending on the deadlines imposed by judges.
Once these 2017 sessions are adjourned, the General Assembly is scheduled to be out of session until they reconvene on Wednesday, May 16, 2018 at 12:00 noon for the 2018 “short” session.
This Final Legislative Report for 2017 includes a summary of all the bills enacted by this year's General Assembly that are of interest to the association, and some bills that were considered but not enacted.
BILLS OF INTEREST THAT WERE ENACTED INTO LAW
Senate Bill 131, Regulatory Reform Act of 2016. Provisions of interest include:
- Streamlines certain mortgage notice requirements.
- Exempts from the subdivision requirements the division of a tract into parcels in accordance with the terms of a probated will or in accordance with intestate succession.
- Provides that a city or county may require only a plat for recordation for the division of a tract or parcel of land in single ownership if all the following criteria are met:
(1) The tract or parcel to be divided is not exempted under subdivision (2) of subsection (a) of G.S. 153A-335 or G.S. 160A-376.
(2) No part of the tract or parcel to be divided has been divided under this subsection in the 10 years prior to division.
(3) The entire area of the tract or parcel to be divided is greater than five acres.
(4) After division, no more than three lots result from the division.
(5) After division, all resultant lots comply with all of the following:
a. Any lot dimension size requirements of the applicable land‑use regulations, if any.
b. The use of the lots is in conformity with the applicable zoning requirements, if any.
c. A permanent means of ingress and egress is recorded for each lot.
- Makes certain changes to the statutes governing obtaining copies of public records, specifically public computer databases. The bill provides that notwithstanding G.S. 132‑6.2(a), a public agency may satisfy the requirement under G.S. 132‑6 to provide access to public records in computer databases by making public records in computer databases individually available online in a format that allows a person to view the public record and print or save the public record to obtain a copy. A public agency that provides access to public records under this subsection is not required to provide access to the public records in the computer database in any other way; provided, however, that a public agency that provides access to public records in computer databases shall also allow inspection of any of such public records that the public agency also maintains in a nondigital medium.
- Amends statute of limitations statues to provide that there is a 6-year statute of limitations against the owner of an interest in real property by a unit of local government for a violation of a land‑use statute, ordinance, or permit or any other official action concerning land use carrying the effect of law. This subdivision does not limit the remedy of injunction for conditions that are actually injurious or dangerous to the public health or safety. The claim for relief accrues upon the occurrence of the earlier of any of the following:
a. The facts constituting the violation are known to the governing body, an agent, or an employee of the unit of local government.
b. The violation can be determined from the public record of the unit of local government.
- Amends statute of limitations statues to provide that there is a 7-year statute of limitations against the owner of an interest in real property by a unit of local government for a violation of a land‑use statute, ordinance, or permit or any other official action concerning land use carrying the effect of law. This subdivision does not limit the remedy of injunction for conditions that are actually injurious or dangerous to the public health or safety but does prescribe an outside limitation of six years from the earlier of the occurrence of any of the following:
a. The violation is apparent from a public right‑of‑way.
b. The violation is in plain view from a place to which the public is invited.
Effective: May 4, 2017. Session Law 2017-10.
Senate Bill 257, Appropriations Act of 2017, the State Budget bill, sets the percentage insurance regulatory charge for insurance companies for 2017-2018 at 6.5%. Effective: July 1, 2017. Session Law 2017-57.
Senate Bill 450, Uniform Trust Decanting Act, adopts the North Carolina Uniform Trust Decanting Act. The bill defines decanting power as the power of an authorized fiduciary under Article 8B to distribute property of a first trust to one or more second trusts or to modify the terms of the first trust. The bill defines first trust as a trust over which an authorized fiduciary can exercise the decanting power. The bill defines second trust as a first trust after modification pursuant to Article 8B or a trust to which a distribution of property from first trust is or can be made pursuant to Article 8B. The bill establishes that Article 8B would not limit the power of a trustee, power holder, or other person to distribute or appoint property in further trust or to modify a trust under the trust instrument, law of this State other than this Article, common law, a court order, or a nonjudicial settlement. The bill provides that this Article does not affect the ability of a settlor to provide in a trust instrument for the distribution of the trust property or appointment in further trust of the trust property or for modification of the trust instrument.
The bill details the criteria of a trust that would make this Article applicable to the particular trust. The criteria would include (1) the trust has its principal place of administration in the State, including a trust that has had its principal place of administration changed to this State and (2) the trust provides by its trust instrument that is governed by this State’s law or is governed by the law of this State for the purposes of administration, construction of terms of the trust, or determination of the meaning or effect of the terms of trust. Effective: July 18, 2017. Session Law 2017-121.
Senate Bill 567, Reform/Correct/Wills and Trusts, provides for the judicial reformation of wills to correct mistakes and the judicial modification of wills to achieve the testator's tax objectives. The bill revises the North Carolina Uniform Trust Code to achieve consistency in the reformation of trusts with the reformation of wills, as recommended by the General Statutes Commission. Effective: January 1, 2018. Session Law 2017-152.
Senate Bill 569, Uniform Power of Attorney Act, adopts the Uniform Power of Attorney Act in North Carolina. The bill provides that a power of attorney created pursuant to this Chapter would be durable unless the instrument expressly provides that it is terminated by the incapacity of the principal. The bill provides that this Act applies to all powers of attorney except the following:
(1) A power to the extent it is coupled with an interest in the subject of the power, including a power given to or for the benefit of a creditor in connection with a credit transaction.
(2) A power to make health care decisions.
(3) A proxy or other delegation to exercise voting rights or management rights with respect to an entity.
(4) A power created on a form prescribed by a government or governmental subdivision, agency, or instrumentality for a governmental purpose.
Regarding real property, the bill provides that unless the power of attorney otherwise provides, language in a power of attorney granting general authority with respect to real property authorizes the agent to do all of the following:
(1) Demand, buy, lease, receive, accept as a gift or as security for an extension of credit, or otherwise acquire or reject an interest in real property or a right incident to real property.
(2) Sell; exchange; convey with or without covenants, representations, or warranties; quitclaim; release; surrender; retain title for security; encumber; partition; consent to partitioning; subject to an easement or covenant; subdivide; apply for zoning or other governmental permits; plat or consent to platting; develop; grant an option concerning; lease; sublease; contribute to an entity in exchange for an interest in that entity; or otherwise grant or dispose of an interest in real property or a right incident to real property.
(3) Pledge or encumber an interest in real property or right incident to real property as security for the principal or any entity in which the principal has an ownership interest to borrow money or to pay, renew, or extend the time of payment of (i) a debt of the principal, (ii) or a debt guaranteed by the principal, (iii) a debt of any entity in which the principal has an ownership interest, or (iv) a debt guaranteed by any entity in which the principal has an ownership interest.
(4) Release, assign, satisfy, or enforce by litigation or otherwise a mortgage, deed of trust, conditional sale contract, encumbrance, lien, or other claim to real property which exists or is asserted.
(5) Manage or conserve an interest in real property or a right incident to real property owned or claimed to be owned by the principal or to be acquired by the principal, including all of the following:
a. Insuring against liability or casualty or other loss.
b. Obtaining or regaining possession of or protecting the interest or right by litigation or otherwise.
c. Paying, assessing, compromising, or contesting taxes or assessments or applying for and receiving refunds in connection with them.
d. Purchasing supplies, hiring assistance or labor, and making repairs or alterations to the real property.
e. Obtaining title insurance for the benefit of the principal and/or any lender that has or will obtain a mortgage or deed of trust encumbering the real property.
(6) Use, develop, alter, replace, remove, erect, or install structures or other improvements upon real property in or incident to which the principal has, or claims to have, an interest or right.
(7) Participate in a reorganization with respect to real property or an entity that owns an interest in or right incident to real property and receive, hold, and act with respect to stocks and bonds or other property received in a plan of reorganization, including all of the following:
a. Selling or otherwise disposing of them.
b. Exercising or selling an option, right of conversion, or similar right with respect to them.
c. Exercising any voting rights in person or by proxy.
(8) Change the form of title of an interest in or right incident to real property.
(9) Dedicate to public use, with or without consideration, easements or other real property in which the principal has, or claims to have, an interest.
(10) With respect to any real property owned or claimed to be owned by the principal's spouse and in which the principal's only interest is a marital interest, waive, release, or subordinate the principal's inchoate right pursuant to G.S. 29‑30 to claim an elective life estate in the real property, regardless of whether the waiver, release, or subordination will benefit the agent or a person to whom the agent owes an obligation of support.
Effective: January 1, 2018. Session Law 2017-153.
House Bill 144, Credit Union/Trust Institution Changes, makes various changes to the statutes applicable to credit unions and trust institutions. The bill changes the reference to banks, savings and loan institutions, etc. in various statutes to “federally insured depository institution lawfully doing business in this State”. Effective: June 2, 2017. Session Law 2017-25.
House Bill 205, WC Changes/Legal Notice Modification, modernizes publication of legal advertisements and notices by allowing legal notices to be posted in statewide newspapers that meet certain requirements. The bill allows Guilford County and any municipality in Guilford County to use electronic means to provide public notice in lieu of publication; and to allow Guilford County to opt to post legal advertisements and notices on the county web site for a fee, with monies collected to be used for local supplements for teacher salary and other county needs. The bill was vetoed by Governor Cooper, and the legislature could vote to override the veto at the August 3 or September 6, 2017 legislative sessions.
House Bill 228, Postpone Assumed Name Revisions, postpones from July 1, 2017 to December 1, 2017 the implementation of new Article 14A of Chapter 66 of the General Statutes, which revised the law on assumed business names, as recommended by the General Statutes Commission. It appears the postponement is due in part to a lack of funding for the program which was to be implemented by the Secretary of State’s Office. Effective: June 2, 2017. Session Law 2017-23.
House Bill 229, GSC Technical Corrections 2017, makes technical changes to various statues, as recommended by the General Statutes Commission. The bill, among other things, repeals NCGS 39-33 (method of release of limitation of power) and 39-34 (method prescribed in 39-33 not exclusive).
The bill includes a provision that appears directed at the tenancy by the entirety issue. The bill adds two new definitions in NCGS 12-3 as follows:
"Husband and Wife" and similar terms. – The words "husband and wife," "wife and husband," "man and wife," "woman and husband," "husband or wife," "wife or husband," "man or wife," "woman or husband," or other terms suggesting two individuals who are then lawfully married to each other shall be construed to include any two individuals who are then lawfully married to each other.
"Widow" and "Widower." – The words "widow" and "widower" mean the surviving spouse of a deceased individual."
Effective: July 12, 2017. Session Law 2017-102.
House Bill 236, NCAOC Omnibus Bill, makes various changes to the law as requested by the Administrative Office of the Courts (AOC). The bill provides for the clerk to appoint an interim guardian ad litem on the clerk's own motion. The bill allows the clerk to extend the time for filing inventory in the property of the deceased. The bill provides for issuance of an order for an arrest when a person fails to appear after being served with a show cause in a civil proceeding. The bill amends how costs in administration of estates are assessed.
The bill addresses the effect of orders entered by Clerks of Superior Court that may not contain a file stamp, which is a provision supported by NCLTA. This provision was included in a bill in the 2016 legislative session, but was not enacted into law that session. By way of background, there are some Clerk’s Offices that apparently do not always file stamp orders that are signed by the Clerk. So, although the Clerk may sign, record and enter an order in their docketing system, it may not contain a file stamp. A Court of Appeals case, In re Thompson, ruled that such an order was not effective and set aside subsequent orders and proceeding that relied on the order that lacked a file stamp. This has caused great concern among Clerks and others, such as title insurance companies that rely on orders as a part of the chain of title.
I worked with the Administrative Office of the Courts (AOC) to draft language to address this issue, which clarifies that the clerk’s order is valid and can be relied upon regardless of whether it contains a file stamp. The provisions of the bill apply to future orders and orders entered previously – so it would have retroactive application. The language states:
“The failure to affix a date stamp or file stamp on any order or judgment filed in a civil action, estate proceeding, or special proceeding shall not affect the sufficiency, validity, or enforceability of the order or judgment if the clerk or the court, after giving the parties adequate notice and opportunity to be heard, enters the order or judgment nunc pro tunc to the date of filing.”
Effective: July 12, 2017. Session Law 2017-102.
House Bill 239, Reduce Court of Appeals to 12 Judges, reduces the number of judges on the Court of Appeals to 12. The bill provides that on or after January 1, 2017, whenever the seat of an incumbent judge becomes vacant prior to the expiration of the judge's term due to the death, resignation, retirement, impeachment, or removal of the incumbent judge, that seat is abolished until the total number of Court of Appeals seats is decreased to 12.
The bill also provides for an appeal directly to the Supreme Court for cases from the NC Business Court or cases designated as complex business cases or exceptional under Rule 2.1 of the General Rules of Practice. The bill allows discretionary review by the Supreme Court when the subject matter of the appeal is important in overseeing the jurisdiction and integrity of the court system. The Governor vetoed this bill, but the legislature successfully voted to override the veto, so the bill became law. Effective: April 26, 2017. Session Law 2017-7.
House Bill 454, Surveying and Plat Recording Changes, modernizes and makes changes to the recording requirements for plats and subdivisions, and eliminates the use of control corners in favor of grid control in the preparation of plats and subdivisions. The bill provides that the information required by G.S. 47-30(c) shall be listed prominently on the plat, and information listed in the notes contained on the plat does not satisfy the requirements of this G.S. 47-30(c). The bill specifically states that the presence of the personal signature and seal of a professional land surveyor shall constitute a certification that the map conforms to the standards of practice for land surveying in this State as defined in the rules of the North Carolina State Board of Examiners for Engineers and Surveyors. Effective: July 1, 2017 and applies to plats and subdivisions submitted for recording on or after that date. Session Law 2017-27.
House Bill 501, DOT/Surveying Information in Plans, requires the Department of Transportation to include surveying information in any plans prepared for the purpose of acquiring certain property rights, including rights-of-way, permanent easements, or both.
The bill requires the coordinates and associated localization metadata to be based upon and tied to the NC State Plan Coordinate system, and to be clearly identified within the plans. The bill further requires each property corner marker to be accurately tied to the design alignment or the NC State Plane Coordinate system by either a system of bearings and distances or by station and offset. Effective: October 1, 2017. Session Law 2017-137.
House Bill 530, Counties/Condemnations of Unsafe Buildings/Liens, grants counties the same authority as cities to declare certain buildings or structures unsafe and to remove or demolish unsafe buildings or structures. The bill provides that a lien would be placed on the owner’s real property for the costs incurred. Effective: July 12, 2017. Session Law 2017-109.
House Bill 584, Real Prop./Error Correction & Title Curative, amends the procedures for correcting typographical, obvious description, or other minor errors in recorded instruments. This bill was introduced at the request of Investors Title Insurance Company.
The bill amends G.S 47-36.1, regarding the corrective notice of nonmaterial typographical and other minor errors in a deed or other similar instrument. For purposes of this section, an error that would affect the respective rights of any party to the instrument is not a nonmaterial typographical or minor error.
The bill provides for a “corrective affidavit” process in certain situations, to take the place of a reformation action. The bill creates a new G.S. 47-36.2 titled “cure of obvious descriptive errors in recorded instruments.” The bill defines obvious descriptive error as an error in the legal description of real property that is contained in an instrument affecting title to real property recorded in the office of the register of deeds in the county in which the real property or any part or parts thereof is located that is evidenced by any of the following:
a. One or more of the following, as stated in the instrument, are inconsistent in that one or more identify the property incorrectly, and the error is made apparent by reference to other information contained in the instrument, contained in an attachment to the instrument, or contained in another instrument in the chain of title for the subject parcel, including a recorded plat:
1. The legal description of the property.
2. The physical address of the property.
3. The tax map identification number of the property.
4. A plat reference.
5. A prior deed reference.
b. The legal description of the real property in the instrument contains one or more errors transcribing courses and distances, including, for example, the omission of one or more lines of courses and distances, the omission of angles and compass directions, or the reversal of courses.
c. The instrument contains an error in a lot or unit number or designation, and the lot or unit described is not owned by the grantor, trustor, mortgagor, or assignor at the time the instrument is executed.
d. The instrument omits an exhibit, attachment, or other descriptive information intended to supply the legal description of the subject property, and the correct legal description may be determined by reference to other information contained in the instrument, including, but not limited to, one or more of the items described in sub‑subdivision a. of this subdivision.
The bill requires notice to interested parties as a part of the “corrective affidavit” process. The bill provides a form for the corrective affidavit.
The bill creates a new G.S. 47-108.28 to provide for a seven-year curative provision for certain defects in recorded instruments. The bill provides that an instrument conveying an interest in real property that contains a defect, irregularity, or omission shall be deemed effective to vest title as stated therein and to the same extent as though the instrument had not contained the material defect, irregularity, or omission, if both of the following conditions are met:
(1) The instrument is recorded by the register of deeds in the county or counties where the property is situated.
(2) The material defect, irregularity, or omission is not corrected within seven years after the instrument was recorded.
The bill provides that for this section only, an instrument shall be deemed to contain a "defect, irregularity, or omission" when any of the following conditions are met:
(1) The recorded instrument lacks any of the following:
a. A properly executed form of acknowledgment as provided under Article 3 of this Chapter or Chapter 10B of the General Statutes.
b. The proper recital of consideration paid.
c. The residence of a party.
d. The address of the property
e. The address of a party.
f. The date of the instrument.
g. The date of any instrument or obligation secured by the instrument.
The bill makes other conforming changes to carry out the 7-year curative statute.
Effective: August 31, 2018 and applied to curative affidavits filed on or after that date. Session Law 2017-110.
House Bill 462, Banking Law Amends, makes technical, clarifying, and other amendments to provisions applicable to commercial banks, provisions applicable to bank holding companies, and provisions relating to mortgage notice requirements. Effective: June 28, 2017. Session Law 2017-165.
House Bill 707, Lien Agent/Notice of Cancellation. House Bill 707 was introduced at the request of NCLTA by Representatives Jordan, Stevens and Turner. Senator Lee introduced a Senate companion bill. House Bill 707 is intended to assist with certain improvements and enhancements to the LiensNC system for managing notices to lien agent on construction projects in North Carolina. Prior to the introduction of the bill, we met with a number of construction and other interest groups to discuss our intended enhancements to the LiensNC system. The primary objectives with the legislation was to provide for the cancellation of notices to lien agent from the LiensNC system once a potential lien claimant has been paid final payment on a project; and provide for statutory authority to rely on such a cancellation in the closing and transfer of the real property. We also wanted to provide for an end date for notices, similar to the way UCC filings expire; and provide for a renewal or extension of a filing. This will allow LiensNC to remove and archive notices on closed projects, to make the system and search functions more user friendly. We continued to work with interested parties once the bill was introduced, and made a number of changes to the bill to address questions and concerns raised by various stakeholders.
The bill requires cancellation of a notice to lien agent on the LiensNC system in one - and two - family residential projects within a reasonable time of acknowledgement by the potential lien claimant of final payment for the improvement at issue. For all other projects (commercial), cancellation would be optional. The bill clarifies that canceling a notice to lien agent would not cancel a filed claim of lien on real property or affect priority of lien rights.
The bill provides a process for renewing a notice to lien agent on the LiensNC system for one 5-year renewal period, and provides that a timely renewal would relate back to the original filing date.
The bill provides that any protections provided to a potential lien claimant under this law shall terminate upon the cancellation or automatic expiration of their notice to lien agent pursuant to this section and shall not thereafter be revived or renewed by subsequent delivery of a notice to lien agent by that potential lien claimant.
The bill also raises the fee paid by the owner to establish and appoint a lien agent from $25 to $30 for one - and two - family residential projects, and from $50 to $58 for all other projects where a lien agent is required.
We expect the LiensNC staff to develop the changes and enhancements to the system between now and the beginning of the 2018 legislative session in May 2018.
Effective: October 1, 2018. Session Law 2017-168.
House Bill 740, SAR Rename/Disputed County Boundaries/Mapping, allows the North Carolina geodetic survey to ratify results of county boundary resurveys, and clarifies that protective ridgeline maps are housed with the North Carolina geodetic survey rather than the Department of Environmental Quality.
The bill directs the North Carolina Geodetic Survey (NCGS) on a cooperative basis to assist counties in defining and monumenting the location of an uncertain or disputed boundary, upon receiving written request from all counties adjacent to the uncertain or disputed boundary. The bill provides that if the requesting counties have not ratified a survey plat submitted by NCGS within one year of receiving the map survey plat, the plat becomes conclusive as to the location of the boundary, and will be recorded in the Register of Deeds in each affected county, and the Secretary of State's office. The bill requires the Chief of the North Carolina Geodetic Survey to notify affected parties in writing of that action. The bill would require counties establishing a boundary between them to define the boundaries by natural monuments. The use of base maps prepared from orthophotography may be used if the natural monuments are visible, which base maps show the monuments of the National Geodetic Survey and North Carolina Coordinate System. The bill requires the orthophotography to be prepared in compliance with the State's adopted orthophotography standard. Effective: July 21, 2017. Session Law 2017-170.
BILLS OF INTEREST THAT WERE NOT ENACTED INTO LAW
Senate Bill 99, DOI Report Certain CTR Data, would provide for the reporting by the Department of Insurance of certain aggregate property insurance consent to rate data, as recommended by the Legislative Research Commission Committee on Regulatory and Rate Issues in Insurance. The bill does not apply to the North Carolina Title Insurance Rate Bureau or require any reporting of rate data of title insurance. This bill was not enacted into law, but is eligible for consideration in the August 3, 2017 legislative session, the September 6, 2017 legislative session, and the 2018 legislative session.
Senate Bill 114, Annual Report Modernization, would revise the laws governing the submission of annual reports by various business entities to the Secretary of State. The bill would require non-profit corporations to file annual reports with the Secretary of State; similar to the requirements for for-profit corporations. Annual reports would be filed electronically. The corporation would be required to provide an email address for the corporation in the annual report, as well as identify, in addition to its officers, “any other person who has actual authority to bind the corporation”.
The purpose of this bill is to add non-profits to filing of annual reports so attorneys and others will know who the officers are, and to strengthen the penalty for not providing all required information, to encourage compete and accurate records. Proponents of the bill state that Senate Bill 114 should allow title and corporate attorneys who are checking the records to see if resolutions and other similar documents contain and/or are executed by the proper officers or persons who hold themselves out as having the authority to sign documents. The intent is to give those dealing with corporations a way to verify “authority” by these records.
The bill would allow the Secretary of State to levy a $200 civil penalty on the corporation if the annual report does not contain all required information. The bill sets the fee for filing an annual report electronically at $125. There would be no annual report filing fee for a corporation organized under Ch 55A of the General Statutes (non-profit corporation). This bill was not enacted into law, but is eligible for consideration in the August 3, 2017 legislative session, the September 6, 2017 legislative session, and the 2018 legislative session.
Senate Bill 203, Establish Ownership of Mineral Rights, would establish a uniform procedure to determine title to oil, gas or mineral rights. The bill provides that where it appears on the public records that the fee simple title to any oil, gas, or mineral interest in an area of land has been severed or separated from the surface fee simple estate of that land and the interest is not currently being mined, drilled, worked, or operated, or in the adverse possession of another, or that the record title holder of any oil, gas, or mineral interest has not listed the same for ad valorem tax purposes in the county in which the oil, gas, or mineral interests are located for a period of 10 years prior to the effective date of this section, the oil, gas, or mineral interests shall be deemed to have merged with the surface fee simple estate subject to the interests and defects as are inherent in the provisions and limitations contained in the monuments of which the chain of record title is formed --- provided, however, the title holder on the surface fee simple estate has the legal capacity to own land in this State and has an unbroken chain of title of record to the surface fee simple estate of the area of land for at least 30 years and the surface fee simple estate is not in the adverse possession of another.
The bill provides that every person claiming any oil, gas, or mineral interest that is severed from the surface fee simple estate as provided above shall register the oil, gas, or mineral rights with the register of deeds office in the county or counties in which the oil, gas, or mineral rights are located. The registration would be accompanied by a deed demonstrating ownership of the oil, gas, or mineral rights. Any oil, gas, or mineral rights which are severed from the surface fee simple estate and not registered with the register of deeds office in the county or counties in which the minerals are located by January 1, 2020, shall be null and void, and the oil, gas, or mineral rights shall merge with the surface fee simple estate. The bill provides that any oil, gas, or mineral interests registered under the provisions of NCGS 1-42.1 through NCGS 1-42.9 are not affected by this section. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
Senate Bill 293, Insurance Technical Corrections, would revise the loan to value requirements for insurer mortgage investments. The bill amends G.S. 58-7-179(c) as follows: “No such mortgage loan or loans made or acquired by an insurer on any one property shall, at the time of investment by the insurer, exceed the larger of the following amounts, as applicable: (1) 97% (was, 95%) of the value of the real property or leasehold securing the real property in the case of a mortgage on a dwelling primarily intended for occupancy by not more than four families if they insure down to 80% (was, 75%) with a licensed mortgage insurance company, or seventy‑five percent (75%) of the value in the case of other real estate mortgages.” This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
Senate Bill 371, Building Code Regulatory Reform, would make various changes and clarifications to the statutes governing the creation and enforcement of building codes. The bill provides that when a submission is required from either an architect or engineer, the submission may be from a person under the direct supervisory control of the licensed architect or licensed engineer. The bill provides that no certification by a licensed architect or licensed engineer shall be required for any component or element engineered by the manufacturer of the component or element when the manufacturer has certified that the component or element complies with the North Carolina State Building Code or the North Carolina Residential Code for One‑ and Two‑Family Dwellings.
The bill provides that each inspection department shall create a process for an informal internal review of inspection decisions made by the department's inspectors. This process shall include, at a minimum, the following:
(1) Initial review by the supervisor of the inspector.
(2) The provision in or with each permit issued by the department of (i) the name, phone number, and email address of the supervisor of each inspector and (ii) a notice of availability of the informal internal review process.
(3) Procedures the department shall follow when a permit holder or applicant requests an internal review of an inspector's decision.
This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
Senate Bill 451, Joint Survivorship Clarifications, would replace and clarify the general statutes pertaining to the creation and severance of joint tenancy with right of survivorship pertaining to real property. The bill provides that a conveyance to two or more persons creates a joint tenancy with right of survivorship if the instrument expresses an intent to create a joint tenancy with right of survivorship. The following words in the instrument would be deemed to express an intent to create a joint tenancy with right of survivorship unless the instrument otherwise provides: "joint tenants with right of survivorship," "joint tenants," "joint tenancy," "tenants in common with right of survivorship," "joint with right of survivorship," "with right of survivorship," "to them or to the survivor of them," or words of similar import. The bill contains the methods to create and sever a joint tenancy. The bill provides that a joint tenancy interest conveyed to individuals married to each other and to one or more other joint tenants in the same instrument of conveyance shall be held by the married individuals in a tenancy by the entirety, and the married individuals shall be treated as a single joint tenant, unless otherwise provided in the instrument. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 454, LEO Personal Info and Public Records, would clarify the nature of personal information of law enforcement officers not subject to the public records law. The bill provides that the only information in employee personnel records for sworn law enforcement officers that may be disclosed is the list of names of all such current employees. The bill would clarify that information regarding the residence, emergency contact information, or identifying information of a sworn law enforcement officer must not be disclosed except in accordance with the State Personnel Act.
The bill specifies that public records may not disclose the mobile telephone numbers issued by any government to sworn law enforcement officers, nonsworn employees of public law enforcement agencies, fire department employees, or any employee whose duties include responding to an emergency, except upon consent of the employee. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
Senate Bill 493, C-PACE Program, would authorize cities and counties to participate in the Commercial Property Assessed Capital Expenditures (CPACE) Program, which would allow property owners to voluntarily agree to assessments to finance upgrades or improvements to their real property. The bill would give C-PACE loans etc. priority over prior recorded mortgages and other recorded interests in property. It is unclear whether these interests in real property would be of record, or would amount to a “hidden lien” on the property. It also appears the tax assessment piece of this legislation would be unconstitutional.
The proponents of this legislation sought feedback from NCLTA and other interest groups during the legislative session. We expressed our concerns with this legislation, as did the NC Bankers Association and other interest groups. Ultimately, the proponents of the legislation did not attempt to have this legislation considered in committee this session. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 582, Agency Technical Corrections, would make various technical changes to the general statutes. The bill would amend G.S. 4-10 to provide that an attorney who serves as the trustee or substitute trustee shall not represent either the noteholders or the interest of the borrower while initiating a foreclosure proceeding. The bill defines “noteholder” as the holders or owners of a majority in the amount of the indebtedness, notes, bonds, or other instruments evidencing a promise to pay money and secured by mortgages, deeds of trust, or other instruments conveying real property, or creating a lien thereon.
The bill would the statutes applicable to city and county requirements for recordation of plats when tracts are subdivided, to provide that after division, all resulting lots must either front an existing public right-of-way or may be accessed by a recorded permanent means of ingres and egress and such is indicated on the plat.
This bill was not enacted into law, but is eligible for consideration in the August 3, 2017 legislative session, the September 6, 2017 legislative session, and the 2018 legislative session.
Senate Bill 607, Job Order Contracting Method, would allow public contracts to utilize the job order contracting method of construction or repair contracts. The bill would amend G.S. 14349 to authorize and direct the Secretary of Administration to establish procedures permitting State government, or any of its departments, institutions, or agencies, to join with any nonprofit organization in this state or another state, in addition to the currently listed governmental entities, in cooperative purchasing plans, projects arrangements or agreements, including for construction or repair work through job order contracting. The procedures may not require a governmental entity to secure informal quotes or any other competition for construction or repair work through job order contracting if the initial contract was competitively bid. This bill would require contractors to provide a payment and performance bond to the governmental entity for job orders. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
Senate Bill 614, Withholdings for Property Sales: Nonresidents, would require a person who purchases residential real property, or residential real property and associated tangible personal property, from a nonresident seller to withhold the lesser of (1) the net proceeds payable to the nonresident seller, or (2) an amount equal to the product of the individual income tax percentage provided in G.S. 105153.7 multiplied by the gain recognized on sale.
The bill defines nonresident seller as (1) an individual whose permanent home is outside of NC on the date of the sale; (2) a partnership whose principal place of business is located outside of NC; (3) a trust administered outside of NC; or (4) an estate of a decedent whose permanent home was outside of NC at the time of death. The bill defines sale to mean a transfer where gain or loss is computed in accordance with Section 1001 of the Internal Revenue Code (Code) together with any modifications provided in Part 2 of Article 4 of Subchapter I of GS Chapter 105 (concerning individual income tax). The bill provides that sale does not include (1) tax exempt or tax deferred transactions other than installment sales, (2) transactions to the extent the gain on the sale of a principal residence is excluded in accordance with Section 121 of the Code, or (3) other transactions excluded by the Department of Revenue because the benefits to the State are insufficient to justify the burdens imposed by the statute.
The bill provides in the case where the seller finances all or part of the transaction, in lieu of remitting the tax due on each installment payment, the seller can give the buyer an affidavit stating that for State income tax purposes the seller will elect out of installment sales treatment, as defined by Section 453 of the Code, and remit the entire amount of tax to be due over the period of the installment agreement.
The bill would except from the provisions of the statute a nonresident seller who (1) has filed at least one State income tax return and is not delinquent with respect to filing State income tax returns; (2) has been in business in NC during the last two taxable years, including the year of sale, and will continue in substantially the same business in NC after the sale; and (3) is registered to do business in NC.
Concerning remittance, the bill establishes that a person who holds an amount pursuant to the statute is liable for the collection and payment of the amount, and must remit the amount withheld to the Department of Revenue on or before the fifteenth day of the month following the month in which the sale takes place, unless the time for remittance is extended by the Department for a sellerfinanced sale. The bill clarifies that the statute does not make a lending institution, real estate agent, or closing attorney liable for collection and payment of amounts withheld, however the statute does require those entities and agents to remit the amount the entity or agent has withheld within the time frame provided.
The bill details information the closing attorney is required to report to the Department of Revenue for every sale for which withholding is required by the statute.
The bill would be effective July 1, 2017, and apply to sales of residential real property, or residential real property and associated tangible personal property, occurring on or after that date. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 616, Limit LookBack for Immaterial Irregularities, provides that immaterial irregularities in listing, appraisal, or assessment of property for taxation, or in the levy or collection of the property tax or any other property tax proceeding or requirement, would be taxed for the year in which the immaterial irregularity was discovered and for any of the preceding five years (previously, 10 years) during which the property escaped proper taxation. The taxation would be for the assessed value it should have been assigned in each of the years for with it is to be taxed, coupled with the rate of tax imposed in each such year. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 617, Eliminate Emergency Recall Judges, would eliminate all emergency justices and judges except for retired special superior court judges who retired from the Business Court who may be recalled to serve as emergency judges on the Business Court. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 622, Business Corporation Act Revisions, would make various revisions to the North Carolina Business Corporation Act. The bill would enact new G.S. Chapter 55, Article 1, Part 6 (Ratification of Defective Corporate Actions). The bill provides that defective corporate actions are not void or voidable if ratified or validated. The bill provides that ratification or validation are not the exclusive means of ratifying or validating defective corporate action, and absence or failure of ratification or verification does not affect validity or effectiveness of ratification under common law or otherwise, nor does it create a presumption of voidness or voidability. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 633, Reduce Annual State Bar Fees, would reduce the annual fees charged by the North Carolina State Bar. The bill would lower the maximum membership fee from $300 to $50 and would lower the maximum fee for paying membership fees late from $30 to $5. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
Senate Bill 649, Public Records Access NC Residents Only, would provide that access to North Carolina public records are for North Carolina residents only. However, the bill provides that public records maintained by the clerk of court and register of deeds of every county shall be open to inspection and copying by any person, subject to the requirements and conditions of the Public Records Act. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 3, Eminent Domain Const. Amendment, would amend the North Carolina constitution to prohibit condemnation of private property except for a public use (deletes reference to public benefit). This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 10, Eminent Domain Statutory Revision, would amend North Carolina’s eminent domain statutes, to make conforming changes to outlined in House Bill 3. The bill would also specifically provide for utilities to be able to connect customers through condemnation. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 31, Material Fact Disclosure Clarifications, provides that if offering property for conveyance, rent or lease, it shall not be deemed a material fact that the real property is included in a comprehensive transportation plan, nor shall it be considered a required disclosure under NCGS 47E-4; provided however that a party or agent to the real estate transaction may not knowingly make a false statement regarding any such fact. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 56, Amend Environmental Laws, was amended to, among other things, exempt from taxation portions of real property that are a part of certain riparian buffers. The provision that exempted certain classes of property subject to riparian buffers from taxation was deleted and replaced with a provision to require the legislature’s fiscal research division to estimate the value of the property subject to these areas, to determine the value of land that would be exempt from taxation, and to report to the legislature by May 1, 2018. This bill was not enacted into law, but is eligible for consideration in the August 3, 2017 legislative session, the September 6, 2017 legislative session, and the 2018 legislative session.
House Bill 80, Bona Fide Ownership of Timber Parcels, would protect bona fide owners of timber from the unlawful cutting or removal of timber from their lands. The bill would amend NCGS 1-539.1 to provide that a person, firm, or corporation that cuts or removes wood, timber, shrubs, or trees from the property of another and fails to prospectively establish bona fide ownership pursuant to this section would be presumed to have acted with willfulness and knowledge, and shall liable for double the value of the timber or crops cut or damaged as well as being subject to criminal penalties. A landowner would establish “bona fide ownership” under this section by mutual agreement of the owners of the adjoining parcels prior to the cutting or removal of the wood, timber, shrubs, or trees. In the event of a dispute over a boundary line or failure of the owners to reach mutual agreement, the owner of the parcel seeking to cut or remove the wood, timber, shrubs, or trees would bear the cost of a boundary line survey required to establish only the location of the boundary line between the affected parcels. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 181, First Responders Act of 2017, would among other things provide a property tax homestead exclusion for surviving spouse of qualifying “emergency personnel”, which would include firefighting, search and rescue, or emergency medical services personnel or any employee of any duly accredited State or local government agency possessing authority to enforce the criminal laws of the State who (i) is actively serving in a position with assigned primary duties and responsibilities for prevention and detection of crime or the general enforcement of the criminal laws of the State and (ii) possesses the power of arrest by virtue of an oath administered under the authority of the State. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 227, Preserve Tenancy By The Entirety, would make conforming changes to various North Carolina statutes to clarify that tenancy by the entirety is preserved in North Carolina in light of the Supreme Court of the United States case of Oberfefell v. Hodges, as recommended by the General Statutes Commission. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 240, GA Appoint For District Court Vacancies, provides that District Court vacancies would be filled by appointment of the General Assembly. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 241, Special Sup. Ct. Judgeship Appointed by the GA, provides that District Court vacancies would be filled by appointment of the General Assembly. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 261, Displaced Residential Land Tax Deferral, would create a property tax deferral program for permanent residences that are subsequently rezoned for nonresidential uses. The bill provides that displaced residential land is designated a special class of property under Section 2(2) of Article V of the North Carolina Constitution and must be appraised, assessed, and taxed in accordance with this section. For purposes of this section, "displaced residential land" means a person's legal residence, including the dwelling, the dwelling site, and related improvements. The dwelling may be a single-family residence, a unit in a multifamily residential complex, or a manufactured home. The bill establishes the procedure for an owner to apply for the designation.
This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 405, Impact Fees/Refund to Homeowners, provides that if a homebuilder is awarded, by a court or pursuant to a settlement, a refund of impact fees paid to a county because the ordinance imposing the impact fees exceeded the county's authority under law, the homebuilder would be required to reimburse any homeowner who paid any portion of the impact fee refunded as part of the home purchased from the homebuilder. For purposes of this section, the term "impact fee" includes a facility fee, project fee, capacity fee, or any other fee that requires a developer or homeowner to pay an amount to help defray capital costs associated with new construction. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 457, Performance Guarantees/Subdivision Streets, would make changes to state law concerning performance guarantees on county subdivision streets offered for public dedication. The bill would apply to county subdivision streets located outside municipal jurisdiction. The bill would apply to all developments approved on or after August 1, 2017, and retroactively to all county residential subdivisions or development plans approved on or after October 1, 2010, that include an offer of dedication of roads and the roads that have been constructed and opened for travel and are fully completed. The bill describes the use of performance guarantees, the amounts of guarantees, and release of the guarantees.
The bill provides that the Department of Transportation shall work cooperatively with each county to provide the necessary information to the counties to enable the counties to compile a readily available "County Public Street Information Database" and place it in operation on or before January 1, 2019. The information provided shall accurately convey the status of roads within the jurisdictional area of the county, including municipal extraterritorial jurisdictions, and it shall be updated at least monthly. The data shall reside on any existing database system chosen by the county for this purpose, such as, but not limited to, a geographic information system (GIS) mapping system or property tax records system. The system chosen shall be able to convey clear and concise information regarding the status of roads to the public and more particularly to those individuals involved in the research of real property records and information.
The bill provides that the status of roads to be conveyed shall be:
(1) Federally maintained with a federal route number assigned.
(2) State‑maintained with a State road number assigned.
(4) Pending public acceptance with a financial consideration in place for the maintenance and repair of the street until it is accepted. This subdivision shall only apply to new streets offered for public dedication after October 1, 2017.
(5) Pending public acceptance without a financial consideration being in place for the maintenance and repair of the street until it is accepted.
(6) Private street requiring private maintenance.
This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 470, Responsible Wind Energy Implementation, would minimize interference with military operations, environmental degradation, reduction of property rights, and harms to public health, safety, and welfare resulting from the siting and operation of industrial wind energy facilities. The bill would require an application for a proposed wind energy facility (“WEF”) provide that if there are residential properties within two miles of the proposed WEF, a study of the possible human health impacts of the proposed WEF's turbines. This study shall use established industry standards to thoroughly and objectively assess the potential impacts of such concerns as infrasound; audible noise vibrations; electromagnetic fields; shadow flicker; blade glint; ice throw; and component liberation due to major storms, lightning, or other causes on humans within two miles of the WEF. The study shall be conducted by independent experts selected from a list of providers approved by the Department of Health and Human Services and paid for by the applicant.
The application would include documentation for the applicant's proposed property value guarantee (PVG) for all residential properties within two miles of the perimeter of the WEF. The specific terms and conditions of the PVG are the responsibility of each local governing body where the WEF is located. The bill provides that a PVG must effectively protect the property values of all residential property owners within two miles of the perimeter of the WEF.
The bill provides that turbines in a WEF shall maintain a setback from the property line of any residential or residentially zoned parcels outside the perimeter of the WEF. The setback shall be the greater of one mile or 10 times the maximum height of the turbine's blade tip.
This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 484, Servicemembers Civil Relief Act, would extend the right service members have to terminate certain contracts due to active military service to their dependents. The contracts that are subject to termination under this Act include those for rent, installment contracts, mortgages, liens, assignments, and leases. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 507, Land-Use Regulatory Changes, would make various changes to the land-use regulatory laws. The bill provides that amendments by cities or counties to land development regulations are not applicable or enforceable without the written consent of the owner with regard to uses of buildings or land, or subdivisions of land, for which a development permit has been issued that authorizes the use or subdivision of land, or for which a building permit has been issued under, or if a vested right has been established. The bill provides for the expiration of local development permits in one year unless work has substantially commenced. The bill provides that vested rights preclude actions by a city or county that would change, alter, impair, prevent, diminish, or otherwise delay the development or use of the property as set forth in the application, except where a subsequent change in the law has a fundamental and retroactive effect on the development or use.
The bill provides that zoning map amendments may not be initiated or enforced without the written consent of all property owners whose property is the subject of the zoning map amendment, unless the amendment was initiated by the city or county respectively.
The bill provides for landowners, permit applicants, or tenants aggrieved by final and binding decisions of administrative officials involving application or enforcement of an ordinance regulating land use or development may file an action in superior court for relief, where the aggrieved party makes any of a list of specified claims or defenses, so long as the party has not already presented the claims or defenses to the Board of Adjustment. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 573, Vacant Building Receivership, would authorize municipalities to petition the superior court to appoint a receiver to rehabilitate, demolish, or sell a vacant building, structure, or dwelling where the owner has failed to comply with an order to do so, and would charge the owner an administrative fee.
The bill requires the city, within 10 days after filing the petition, to give notice of the pendency and nature of the proceeding by regular and certified mail to the last known address of all judgment creditors and lienholders with a recorded interest in the property. The bill would allow a judgment creditor or lienholder, within 30 days of the date on which the notice was mailed, to apply to intervene in the proceeding and to be appointed as receiver. If the city fails to give required notice, the proceeding may continue, but the receiver's lien for expenses incurred in rehabilitating, demolishing, or selling the vacant building, structure, or dwelling will not have priority over the lien of that judgment creditor or lienholder. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 616, North Carolina Public Benefit Corporation Act, would enact the North Carolina Public Benefit Corporation Act. The bill defines a public benefit corporation as a corporation for profit that is incorporated under and subject to the requirements G.S. Chapter 55 and that is intended to produce one or more public benefits (a positive effect or reduction of a negative effect on one or more categories of persons, entities, communities, or interests); and to operate in a responsible manner by managing in a manner that balances the stockholders' pecuniary interests, the best interests of those materially affected by the corporation's conduct, and the one or more specific public benefits identified in its articles of incorporation.
The bill would require the articles of incorporation to include: (1) a statement that the corporation is a public benefit corporation; and (2) an identification of one or more specific public benefits to be promoted by the corporation. This bill was defeated on the House floor and thus is not eligible for consideration in the 2018 legislative session.
House Bill 625, HOA/Condo Crime & Fidelity Insurance Policies, would require homeowners associations, condominium associations, and their management companies to acquire crime and fidelity insurance policies to protect the associations' membership from loss due to the illegal conduct of the association, the executive board and its employees, or a management company. The bill would require annual financial audits to be performed by homeowners associations and condominium associations. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 675, Clerk of Court Notify AOC Judge Ends Early, would require the clerk of superior court to notify the Administrative Office of the Courts when a superior court session ends early, so that the presiding judge may be reassigned to another district if necessary. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 676, Special Superior Court Judge Assignment, would prohibit a special judge from being assigned to a district unless there is at least four hours of work as determined by the Chief Resident Superior Court Judge of that district. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 677 Amend Who Can Serve on Three-Judge Panel, would authorize the Chief Justice to appoint district court judges, in addition to the currently authorized superior court judges, to the 3judge panels for actions challenging the validity of acts of the General Assembly. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 693, Study/Public Records & Open Meetings, would create the 10member Joint Legislative Study Committee on Public Records and Open Meetings to study ways to improve transparency of state and local government in the state. The bill would require the Committee to examine existing laws regarding public access to government records and meetings, and legislation enacted in other states that allows greater public access than we currently have in North Carolina. The bill would require five members of the House of Representatives to be appointed by the Speaker of the House and five members of the Senate to be appointed by the President Pro Tem of the Senate. The bill would require an interim report to the 2018 legislature, and require a final report be delivered to the 2019 General Assembly. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
House Bill 709, Solicitation for Copies/Register of Deeds Fees, would regulate the process and actions of persons, firms, or corporations who solicit a fee in exchange for providing a copy of a record available at the register of deeds office. The bill would prohibit a document used for solicitation governed by this statute from containing deadline dates or be in a form or contain language designed to make the document appear to be issued by a State agency or local unit of government, or appear to impose a legal duty on the person being solicited. The bill would prohibit a person, firm, or corporation soliciting a fee in exchange for providing a copy of a record from charging a fee that is greater than four times the amount the register of deeds with custody of the record would charge for a copy of the same record. The bill would establish that a violation of the statute constitutes an unfair trade practice under G.S. 751.1. The bill would define “solicit” to mean to advertise or market to a person with whom the solicitor has no preexisting business relationship. This provision would be effective July 1, 2017.
The bill would amend G.S. 16110 (Uniform fees of registers of deeds) to establish that the fees detailed in subdivision (1) of subsection (a) of the statute apply to the registration or filing of any subsequent instrument that relates to a previously recorded deed of trust or mortgage. The bill adds a new subsection (d) to define subsequent instrument to have the same meaning as set forth in G.S. 16114.1(a)(3).
The bill would amend G.S. 16114.1(a)(3) and the examples set forth for “subsequent instruments” to include an “amended and restated instrument.”
The last two provisions described herein would be effective October 1, 2017, and apply to instruments submitted for registration on or after that date. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 755, Bankruptcy and Receivership Amendments, would amend G.S. 44A12(a), concerning the filing of a statutory lien on real property, to require a copy of the claim of lien on real property to be filed with any receiver, bankruptcy trustee, debtor in possession, or assignee (previously, with any receiver, referee in bankruptcy, or assignee) for benefit of creditors who obtain legal authority over the real property. The bill would amend G.S. 44A13(a) to add the filing of a proof of claim pursuant to 11 USC 501 to the specified filings that satisfy the requirement for the commencement of the action if filed within the time required.
The original version of the bill would not have required the filing of the claim of lien on the land records with the register of deeds. We worked with the bill sponsor and he agreed to amend the bill to continue to require the filing to be with the register of deeds office. The bill provides that a copy of the petition with the schedules omitted beginning a proceeding under Title 11 of the US Code or of any form, order, or certificate of a US Bankruptcy Court in the proceeding must be recorded in the office of any register of deeds in North Carolina. It would be the duty of the register of deeds, on request, to record the form, order, or certificate. The register of deeds would be entitled to the same fees for this registration as the register of deeds is now entitled to for recording conveyances. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 814, Planned Community Act Changes, would amend the Planned Community Act and the Condominium Act for the purpose of creating consistency and enhancing consumer protections. The bill contains a number of control and management provisions, including: would require certain information be contained in the community’s declaration, provides for how common expenses must be allocated, provides for how and when declarant control will cease, addresses tort and contract liability of the association, provides for certain records that must be maintained by the association and the duration for maintenance of records, and provides for non-binding alternative dispute resolution for disputes arising under this law, or an association's declaration, bylaws, or rules and regulations.
The bill provides that a claim of lien against a lot that is the primary residence of the owner may only be foreclosed by judicial foreclosure. A claim of lien against a lot that is not the primary residence of the owner may continue to be foreclosed in like manner as a mortgage or deed of trust on real estate under power of sale.
The bill would create Article 4 of Chapter 47 titled “Protection of Purchasers”, which would require a disclosure certificate be delivered to a purchaser of a lot in a planned community. The bill states that this article applies to the disposition of all lots that are part of a planned community subject to this Chapter, except as exempted by this Act or as modified or waived by agreement of purchasers of lots in a planned community in which all lots are restricted to nonresidential use. The Act would not apply to dispositions of lots that are classified as: gratuitous, pursuant to court order, by foreclosure or deed in lieu of foreclosure, to a dealer, or property restricted to nonresidential purposes.
The bill would require a purchaser to be provided with a copy of the certificate before conveyance of the lot, and not later than the date of any contract of sale. The bill provides that unless a purchaser is given the disclosure certificate more than five days before execution of a contract for the purchase of the lot, the purchase contract is voidable by the purchaser until the certificate has been provided and for five days thereafter or until conveyance, whichever occurs first. The bill lists the information to be provided in the disclosure. This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 852, Real Property Technical Corrections, would make corrections and other amendments to various statutes impacting real property ownership and to make other conforming changes, as recommended by the Real Property Section of the North Carolina Bar Association. This bill includes NCLTA’s proposed clarifying changes to G.S. 39-13 as follows:
"§ 39‑13. Spouse need not join in purchase‑money mortgage.
The purchaser of real estate who does not pay the whole of the purchase money at the time when he or she takes a deed for title may make a mortgage or deed of trust for securing the payment of such purchase money, or such part thereof as may remain unpaid, which A mortgage or deed of trust given by the purchaser of real property to secure a loan, the proceeds of which were used to pay all or a portion of the purchase price of the encumbered real property, regardless of whether the secured party is the seller of the real property or a third‑party lender, shall be good and effectual against his or her the purchaser's spouse as well as the purchaser, without requiring the spouse to join in the execution of such the mortgage or deed of trust."
The bill amends G.S. 161-10(a)(1), Deeds of Trust, Mortgages, and Cancellation of Deeds of Trust and Mortgages, to provide that in all other cases, the fees provided in subdivision (1) of this subsection would apply to the registration or filing of any subsequent instrument that relates to a previously recorded deed of trust or mortgage. The bill states that for the purposes of this section, the term "subsequent instrument" has the same meaning as set forth in G.S. 161‑14.1(a)(3).
The bill amends G.S. 47‑17.1, Documents registered or ordered to be registered in certain counties to designate draftsman; exceptions, by adding the following underlined text to the statue:
“The register of deeds of any county in North Carolina shall not accept for registration, nor shall any judge order registration pursuant to G.S. 47‑14, of any deeds or deeds of trust, executed after January 1, 1980, unless the first page of the deeds or deeds of trust bears an entry showing the name of either the person or law firm who drafted the instrument. This section shall not apply to other instruments presented for registration. For the purposes of this section, the register of deeds shall accept the verbal or written representation of the individual presenting the deed or deed of trust for registration, or any individual reasonably related to the transaction, including, but not limited to, any employee of a title insurance company or agency purporting to be involved with the transaction, that the individual or law firm listed on the first page is a validly licensed attorney or validly existing law firm in this State or another jurisdiction within the United States.".
This bill was not enacted into law, but is eligible for consideration in the 2018 legislative session.
House Bill 865, Community Association Property Management Act, would regulate the practice of community association property management by creating a licensure process with the North Carolina Real Estate Commission, and to provide education and training for board members of community associations. This bill was not enacted into law and is not eligible for consideration in the 2018 legislative session.
For more information about legislation described in the legislative reports, feel free to contact me at email@example.com or (919) 573-7421. Information is also available on the General Assembly’s website: www.ncga.state.nc.us
Prepared By: David P. Ferrell, Esq. - NCLTA Lobbyist
NEXSEN PRUET PLLC
150 Fayetteville Street, Suite 1140
Raleigh, North Carolina 27601
Telephone: (919) 573-7421
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by: Troy Crawford, Lawyers Mutual
One Thursday morning a few months ago, my boss sat across the desk listening intently to a call on my speakerphone. On the other end of the call was a real estate attorney and her trusted long-time paralegal, both clearly frazzled and experiencing the worst two days either imagined possible.
We first spoke the afternoon before, and the purpose the current conference was to update us on numerous calls to banks, their clients and the FBI. Over our 30-minute conversation, the collective mood of all participants swung from panic, to hopeful, to elated, only to conclude with full-fledged panic once again.
The attorney’s clients, a retired couple from the mid-west, wired a large majority of their life savings the Tuesday before, intent on purchasing a dream retirement home in the North Carolina mountains. Only they didn’t send the wire to their attorney. Instead, the majority of the nearly $750,000 purchase price was directed to a Wells Fargo account in San Francisco.
The fraud was only discovered early Wednesday afternoon when the paralegal realized the buyers never called to verify previously transmitted wiring instructions. As a courtesy, she sent an email reminding the clients to call before sending the wire for Thursday’s closing. The unnerved clients called to discuss, as not only had they already transmitted the wire, but this same paralegal confirmed receipt via email the afternoon before. It soon became apparent a spoofed email account had been used by a criminal hacker to send fraudulent instructions and to later confirm their receipt. Our insured immediately contacted us, and we worked with everyone involved to freeze the account and reverse the wire.
Over the last two years, we unfortunately gained a great deal of experience developing emergency response plans assisting our insureds and their clients recovering stolen funds. Victims are remarkably successful if the fraud is discovered and reported to the receiving bank early enough. Our anecdotal rule of thumb is a near full recovery is possible if the theft is reported within 24 hours. Fraud discovered after 2 business days rarely ends with a significant recovery. The period in the middle is difficult to accurately predict.
This case fell in the middle range. The buyers, a sophisticated couple, admitted they ignored several red flags and should have never sent the wire. While naïve, this couple was fortunate enough to have a fair amount of influence, both with their local mid-west bank and, through business contacts, Wells Fargo. In reporting the fraud, they bypassed lower level branch employees and were able to get a head start in the recall process. After hearing all of our recommendations were followed, my boss and I were cautiously optimistic funds would be recovered.
As our phone conversation was winding down, great news arrived in the paralegal’s email inbox. She read an auto-generated email from the wiring department of the firm’s bank. It verified receipt of funds from the clients’ bank in Indiana. Apparently, the client’s influence and hurried efforts paid off in record time – the fraudulent wire was reversed and then forwarded to the correct account.
Everyone on the telephone call briefly celebrated, breathing a second sigh of relief. We switched thought processes from recovery efforts to planning a forensic investigation to determine the source of the attack.
We did not know where the infiltration came from, but it was obvious the fraudsters monitored extensive email communication on this transaction and were very familiar with the real estate closing process in North Carolina. The outfit running this scam was not a group of fake Nigerian princes butchering the English language. Rather they had industry-specific knowledge and appropriate syntax in their communication – one of the spoofed emails even used “y’all” appropriately. (This contraction requires a fair amount of nuance - my in-laws relocated to North Carolina from the North 13 years ago and still butcher the colloquialism.)
The afternoon before, the attorney prophylactically changed all passwords in her office, including her email accounts, system logins and particularly bank account logins. We now explained to the attorney she needed to engage her IT vendor to look for evidence of infiltration – if our insured had been compromised, she had a duty notify affected clients and determine the extent of the compromise.
In the interim, the parties in other closings would need to be contacted to make sure they also had not received fraudulent instructions and knew the correct account information. We advised the attorney to work under the assumption that it was her system that had been compromised until we could prove otherwise.
The more I thought about the quick return of funds, the more abnormal it seemed. Eventually I concluded the assumption the law firm had been hacked was a near certainty. Most likely, the wire confirmation was not legitimate but instead designed to delay the discovery and wire recall process.
I asked the law firm to call the local branch manager and confirm whether the wire was actually received. While we waited on hold for the results, I looked at the forwarded email confirmation in detail.
The auto-generated email used appropriate bank logos and looked identical to other confirming emails recently received by the attorney. The local community bank in question had recently been acquired by a regional bank, and the IT departments were still merging their online systems. The sending email domain was listed as the new parent bank, but the account information was listed under the name of the old bank. This was the exact way all other wire confirmations were received by the attorney in the six weeks since the acquisition. This detail was encouraging, as only someone familiar with the recent operations of the financial institution would know this detail. However, the early return of the funds was just too soon for me to have any confidence this confirmation was legitimate.
Shortly thereafter, the attorney and paralegal returned and confirmed the wire had not been received. We examined the extended headers in the email, which revealed the actual sender was not the regional bank but a free email provider based in Germany. After a little more effort, it soon became obvious the hackers gained access to the paralegal’s email account and had monitored it for weeks. They passed on other opportunities to divert wires, waiting until this large transaction was in the pipeline.
Luckily for everyone involved, Wells Fargo was able to freeze the account and all funds were eventually returned, actually in record time. However, this record was not hours, but a couple of days.
Considering wire reversals sometimes can take months and require consistent pestering and extensive paperwork, the buyers were very fortunate. They were able to purchase their dream vacation home the following week and used the same law office to complete the transaction.
Currently unsettled legal issues of liability for the theft, contributory negligence, and insurance coverage did not have to be explored. Those issues will eventually work their way through the appellate court system, but, for now, we took the opportunity to update our best practices recommendations to reflect a new lesson learned.
The twist on this transaction was the hacker sending a spoofed wire confirmation. Had it been sent the day before, the paralegal would have found no reason to email the clients reminding them to confirm the instructions. Firm personnel would have read the email, assumed all funds were properly received and closed the transaction the following day. The office would have then wired the seller’s loan payoff and net proceeds as normal. The most likely scenario is the missing funds would not have been discovered until the trust account was reconciled or when the shortfall caused checks to bounce in the interim. By then, the stolen funds would have been long gone and unrecoverable.
The real hero in this story is the paralegal, whose diligence and client service stopped a crime. Unfortunately, the story doesn’t end here. The subsequent forensic investigation revealed our hero was the cause – this same paralegal clicked on an emailed malware a few weeks earlier and allowed her computer and email to be compromised.
Everyone was fortunate and disaster was narrowly avoided, though others in our industry have not been as lucky. We now recommend our insureds not accept (or even receive) wire confirmations via email or fax, but rather securely logon to their bank’s online portal to confirm receipt. Of course, the scams will continue to evolve and increase in sophistication and the industry can only attempt to respond.
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The Summer 2017 Edition of the NCLTA Newsletter is attached. I hope you will find the information informative and useful in your firms and businesses. Our contributors have dedicated a great deal of time and energy in providing topics of interest to NCLTA members and we thank them. Your questions and comments are welcomed.
Please look for the NCLTA mailing regarding the 2017 NCLTA Convention to be held at The Greenbrier in White Sulphur Springs, WV, September 14-16. Early Bird Registration ends August 25. There is also information in the Newsletter above and a link to registration information. Please plan to join us!
D. Donovan Merritt
Vice President and State Underwriting Counsel - Chicago Title
Direct: 919.719.5243 | Cell: 919.609.8620
Wells Fargo Capitol Center
150 Fayetteville Street, Suite 1120
Raleigh, NC 27601
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Editorial Committee Chair
D. Donovan Merritt
Tracy Steadman, Executive Director