Carolina Update

The most recent issue of the Carolina Update newsletter issued by the North Carolina Land Title Association.

Summer 2013

NCLTA Carolina Update

Summer 2013

President’s Message - Matt Powers             

As I begin my comments for our last newsletter before the convention, I find myself reflecting on how quickly the year has passed.  It seems like just yesterday that we arrived home from last year’s annual conference at Wild Dunes in South Carolina.   Despite how quickly time has gone by, it has been another incredibly busy year for the NCLTA and we have been fortunate to have accomplished additional key objectives for the title industry and our members. 

               NCLTA accomplished several major legislative objectives during the last 18 months with the enactment of Session Law 2012-158 in June 2012 in which the North Carolina legislature passed the new mechanics lien agent statute to protect innocent purchasers and lenders from the “hidden” lien problem in North Carolina.   The NCLTA then worked closely with our lobbyist, David Ferrell and our underwriter members this past winter and spring to successfully protect the new law and make improvements to enhance the same during the technical corrections period in the North Carolina Legislature.   Everyone has now had many opportunities to help guide your clients and business partners on the nuances of the new mechanics lien law; assist them with the process of appointing a mechanics lien agent and using the new www.liensnc.com website to file notices; and educate your clients on the proper selection and use of the revised and new lien waiver forms adopted by the NCLTA.   While NCLTA, our member underwriters, and LiensNC, LLC accomplished so much in just a few short months working diligently to meet the April 1, 2013 implementation date, our collective organizations have listened to comments of our members and their clients, shared the information we have received and assembled a list of lessons learned and enhancements needed to help make improvements to the new website and forms used in underwriting transactions.

               One of the most important developments that followed the enactment of the new mechanics lien law was the formation of the LiensNC, LLC Joint Venture by the major underwriters doing business in North Carolina and the subsequent development and implementation of the www.liensnc.com online system for the appointment of mechanics lien agents and filing of lien notices.   LiensNC leadership did a fantastic job getting the website online to meet the April 1, 2013 date and the superb job they did on the new site was recognized when they received national recognition for the same.  The LiensNC.com website was awarded the Outstanding Achievement Award announced by Interactive Media Awards (IMA) for the site’s design, usability, and innovation in technical features, standards and content.   Congratulations to Nancy Ferguson, Kim Tanner, and all involved with making LiensNC.com such a valuable business partner with our membership.  Building on that success, LiensNC leadership is working to further improve the end user’s experience by incorporating enhancements that were not part of the site’s initial launch.  According to Ferguson, LiensNC President, many significant changes are planned over the next year which will improve the usability and address statutory requirements.    While it is important to note that these enhancements will take substantial time to design,  develop, test, and implement, she has advised that as currently scheduled, some of the of the planned upgrades to the on-line application include (1) The Appointment of Lien Agent page will be changed to offer more appropriate questions and responses according to the answers; (2)  The search feature will drive to Appointments only, so that a user will be required to locate then Appointment, and then request the report for all related filings; (3) a "Comment" feature is planned so that if additional or corrective information is desired, it can be entered as a Comment but will not change the original information already entered and posted; (4)  a Related Filings Report is also in process which will include ALL information input for a particular Appointment; (5)  The user system will be rebuilt so that a user-company administrator will be able to  determine security levels of authority for entering information into the system; and (6)  Waiver and Subordinations will be capable of being entered in the system by user-company administrator authorized personnel only.

NCLTA Forms Committee has also been working diligently to improve the new Commitment Requirements and Lien Waiver Forms adopted in late March of this year to further bring clarity to each form and confirm the statutory language of the new mechanics lien statute is followed as closely as possible.  Please be on the lookout in the near future for the new and improved Commitment Requirements and Lien Waiver Forms that provide additional direction and instructions on what Forms are appropriate under what circumstances while addressing timing issues on when a mechanics lien agent must be appointed.   I want to acknowledge and thank everyone who has participated in the preparation and editing of these Forms.  I want to note the dedicated work of NCLTA Legislative Chair Nick Long in addition to Jay Williams; Ryan Wainio; Taby Cruden; Lisa Shields; Karl Knight, and Nancy Ferguson for their individual efforts as we work to further improve these requirements and forms for use by our members and their business partners.

As the end of my term as President approaches, I realize that with all that we have accomplished, new and challenging obstacles have emerged for our Association and the attorneys we work with.  Concerns highlighted by the recent Consumer Financial Protection Bureau (CFPB) Bulletins about vetting of third-party settlement providers raises deep concerns for our members and those of the Real Property Section of the North Carolina Bar Association.   NCLTA is collaborating with leadership at the Real Property Section, RELANC, and our colleagues with the American Land Title Association (ALTA) to help educate our respective members about the concerns raised by the CFPB Bulletins and the Best Practices developed by ALTA.  These Best Practices are important as they are likely to weigh heavily by lenders in making decisions on which settlement providers they wish to work with.   At the last Real Property Section meeting, a task force committee was initiated with representatives from the Real Property Section, RELANC, and NCLTA to work together to create guidelines comparable to ALTA’s best practices for use by our attorney customers.  Jay Williams will be leading us in this initiative as he takes over our leadership next month.  He is already busy working on fostering the discussion within the NCLTA and assembling a brain trust among our members to be a part of this task force.

I think it is important to note that with all the hard work behind us and on our calendar in the months and year ahead, it is equally critical to remember to take the time to meet with our colleagues to discuss the issues that are facing us, learn from one another, and have some fun as well.  Attending the NCLTA Annual Conference is a great way to meet with your peers and to get to know them outside of our business relationships as well.  Jay, Nicole and Holly have put together a superb Annual Convention this year at The Homestead Resort in Hot Springs, Virginia.   If you have not already registered, it is not too late to do so.  I hope to see you there!  

Finally, I am humbled to have had the opportunity to work with so many dedicated, loyal and incredibly knowledgeable people this past year on the executive committee and with our member underwriters and agencies.   I plan to stay very involved with Jay and the rest of the executive committee during the year ahead.  Thanks again for placing your confidence in me and the wonderful opportunity to serve the members of the NCLTA.

Best wishes,

Matt Powers


ALTA Update - Nick Long

Rob Chapman, President-Elect of the ALTA, will be one of the featured speakers at the NCLTA’s annual meeting at the Homestead, Hot Springs, VA, September 5 -7th.  Chapman currently serves as executive vice president and chief information officer (CIO) for Old Republic National Title Insurance Company and is the Chair of the Underwriting Section of ALTA.  He is expected to report on a number of important national issues which will impact title insurance in North Carolina in the coming years.

Chapman will provide an overview of the market and regulatory issues which face the title insurance industry.  His background in information management and technology will give him a different perspective on the challenges title companies will face in dealing with the CFPB and its requirement for lenders to more closely monitor the service providers with whom they do business.  He will discuss the best practices recommendations which ALTA has developed.  These recommendations should help members develop procedures to protect lenders and consumers, while ensuring a positive and compliant real estate settlement experience.  He will advise the NCLTA of upcoming opportunities to develop resources for our attorney clients to assist them in meeting the likely demands of banks and other lenders for increased security from their settlement providers.  They should also reduce the demands from lenders that closing attorneys participate in third party vetting services in order to continue to close loans.

As President-elect of ALTA, Chapman will be able to share some ideas of what important new initiatives our national title organization is likely to undertake in the next couple of years.  As a member of the ALTA Executive Committee, Mr. Chapman can provide insight into the challenges facing the industry on a national basis, and the organization’s plans to meet those challenges.

If you haven’t decided to come to the Homestead for the annual meeting, Chapman’s remarks are one more reason you should consider making the trip.

back to the top


Currently Approved ALTA Forms Now Online -

Did you know that all currently approved ALTA forms available for use in North Carolina are now accessible at: http://www.nclta.org/alta-forms?   That’s right.  The web site is not historical in that it does not report older forms withdrawn or no longer approved for use.  However, NCLTA believes that having access to the approved existing forms approved by the Department of Insurance would be a nice benefit to the membership.  The forms are current through to those last adopted by ALTA on April 2 this year.  Enjoy!

 


Around the State –

Congratulations to Candice Williams (former NCLTA President 2008-09) on her promotion to State Manager of Old Republic National Title Insurance Company and President and CEO of The Title Company of North Carolina.  Candice can be reached at 201 S. College Street; Suite 1930, Charlotte, NC 28244, Phone 704-342-4278 ext. 13101, fax 704-342-4269, or cwilliams@tcnc.biz.

 

Congratulation to Kevin Lockett.  Kevin recently joined First American Title Insurance Company as its Senior Account Manager.  Kevin will be working out of Charlotte and can be reached at 704-215-0905 (cell), 336-668-7233 (office), 866-333-7925 (fax), or klockett@firstam.com

 

 

 

[Ed.Note: If you have information concerning hiring, promotions, office address and staffing changes for any of our members that you would like to announce or make us aware of please report them to Nicole Shore at Exec@nclta.org, or 919-861-5584.]

back to the top


Excited About The Homestead? 

We have a great lineup of anticipated speakers covering the following topics:

Real Estate Economic Update: Tim Quinlan

This session will provide a general overview of the U.S. economy and examine the various drivers of growth at the present stage of the economic cycle.

Claims Update:  Rob McNeil

This session will provide an overview of current claims as affected by the economic environment, including recurring issues and case studies of interest.

The Ethics of Business in a Digital Age: Kit Anderson

This will be an hour-long ethical discussion regarding the use of technology in a title business or a law practice and the integration and implications of social media and communication via the internet. The   presentation will also address the ALTA Best Practices with regard to computing, the internet and digital media.

Mechanics Lien Agent Update: Nick Long
Nick Long will examine the Mechanics Lien Agent system, LiensNC and underwriting of Mechanics Liens coverage in the first six months since the implementation of the new act.

Legislative Update: David Ferrell
This session will explore the 2013 NCLTA legislative activities.

Real Property Section Update: David Woods
This session will update attendees on the activities of the North Carolina Bar Association’s Real Property Section. His topics will include current legislative issues, Section initiatives, and activities of the Section’s various committees.

ALTA Update: Rob Chapman
This session will focus on the unprecedented market and regulatory issues the title industry faces. This session will provide an overview of these issues and what ALTA is doing to protect your interests.

ALTA Forms Update: Marjorie Bardwell
This session will review the many new ALTA Endorsement forms and the many changes to existing forms over the past year. There will be explanation of why the new forms and changes were necessary together with thoughts on proper underwriting of the coverages.

Case Law Update:  Chris Burti

See more information on the website at http://www.nclta.org/content/convention, And check out the location … The Homestead in beautiful Hot Springs, Virginia!  Relax in the pool or spa, enjoy golf, tennis, hiking, archery, horseback riding, or afternoon tea.  Our Friday Pre-dinner Reception will feature a Falconry demonstration.  We look forward to seeing you there. 

back to the top


A few notables in preparation for the NCLTA Annual Convention….

See you at The Homestead September 5-7!

Activities

NCLTA Guests will receive a 20% discount on any on-site activities at the Homestead.  The Homestead has an array of activities that you will enjoy during your time there.  Please think ahead and make plans for your activities now.  Activities fill quickly and may not be available if you wait till you are on property. 

Once you have made your room reservation you may make reservations for activities.  Please 800-838-1766 and select option #4 for activity reservation as well as any dining reservations.   The Homestead strongly suggests that you make these reservations ASAP. 

The Homestead

Please see a property map of the Homestead – it’s a big place!  We will of course have this available for you onsite as well.

Omni Loyalty Program

Sign Up for Omni Loyalty Program – As you may know The Homestead has been purchased by Omni.  Omni has a loyalty program for guests.  One key benefit to this is that you can specify room preferences such as: foam or feather pillows, high or low floor, near or far from the elevator etc.  With the loyalty program membership you will receive complementary morning beverage vouchers.  You will receive this upon check in and you may redeem it at Martha’s Market at The Homestead each morning for a non-alcoholic beverage.  http://www.omnihotels.com/SelectGuestProgram/MemberBenefits.aspx

NCLTA Final Program – please review – a printed copy will be available for you onsite.

Friday Night Banquet

The Friday Night Annual Banquet will be a casual affair featuring a Falconry Demonstration for our entertainment starting at 6:45 pm.  Following this unique experience we will continue with festivities and enjoy a scrumptious buffet.  Lawn games such as corn hole and shuffle board will be available for post dinner entertainment.  Please plan for a fun night of camaraderie.  We will be outside so please plan to dress appropriately casual. 

Paperless

Reminder that we will not have handouts for presentations.  Download the available presentations today! http://www.nclta.org/content/2013-convention-presentations

back to the top


Watch For New Lien Forms and Suggested Requirement –

The forms committee for NCLTA, as mentioned in Matt Powers’ President’s message, is working on changes to both the lien waiver forms and the suggested lien form requirement for inclusion in binders.  Watch for changes to be posted soon www.nclta.org

back to the top


MECHANIC’S LIEN CHANGES – 2013 LEGISLATIVE SESSION

By: David P. Ferrell, Esq.  NCLTA Legislative Counsel

The General Assembly adjourned the 2013 “long session” on July 26. The focus of the session was the passage of a $20.6 billion budget that cut spending and made policy changes to education, health care and economic development. The legislature passed a number of significant pieces of legislation this session, including a tax reform plan which lowers and flattens the personal income rate to 5.75 percent and phases down the corporate tax over the next four years to as low as 3 percent; an election reform bill that requires voters to show photo identification at the polls; and a bill which allows the Governor to make appointments to fill vacant District Court seats without choosing from nominees from the local judicial district bar where the vacancy exists.

The 2014 “short session” is scheduled to begin on Wednesday May 14 at 12 noon. Various study committees will meet before the start of the short session to consider possible legislation for introduction in the 2014 session.

The legislature passed NCLTA’s top legislative priorities in 2013, two bills to make technical corrections to the private mechanic’s lien agent bill passed in 2012, House Bill 180, Mechanic’s Liens/Technical Corrections, and House Bill 88, Lien Agents/Technical Corrections

Last year, with the help of primary sponsor Representative Sarah Stevens (R-Surry), Senate Bill 42, Mech. Liens/PVT Lien Agent [Session Law 2012 – 158] was enacted and signed into law on July 12, 2012.  As a brief recap, Senate Bill 42 was passed to address the “hidden mechanic’s lien” issue that was a pervasive problem in commercial and residential real estate transactions.  Prior to the passage of Senate Bill 42, contractors, subcontractors, or material suppliers could file a claim of lien on real property within 120 days of completion of work; however, the priority of the claim of lien related back to the first furnishing of labor, services or material by the contractor or subcontractor.  Thus, an innocent purchaser for value taking title or a lender making a mortgage loan at any time during this period took title subject to the potential lien even though it was not on public record—hence, “hidden lien.” 

 Senate Bill 42 was proposed, and eventually passed, to confront the notice issue that created these so called “hidden liens.”  The provisions of Senate Bill 42 were effective April 1, 2013.  After passage, the title industry immediately began investigating an online web based lien agent system. Ultimately vendor NIC was chosen to host the system, and “LiensNC” was created.

As predicted, in the time leading up to the implementation of the private lien agent (“MLA”) system, it became clear that certain technical corrections and clarifications to the law would be needed.  NCLTA, as well as other interested parties, submitted a number of technical and clarifying changes to legislation staff for consideration.

As you may know, the Carolinas Associated General Contractors (CAGC) initially opposed the application of the MLA provisions to commercial projects.  Ultimately, no action was taken to include a commercial carve-out in the legislation considered in 2013. CAGC later softened their opposition once it became clear that the title industry would implement an online filing system for notices to lien agents.

In order to create a forum for discussion of proposed changes to the law, as well as to introduce the stakeholders to LiensNC, Representative Stevens organized a legislative stakeholders meeting on February 21, 2013, shortly after the 2013 session began.  The stakeholders meeting not only served as an opportunity to discuss technical changes to the new law, but also allowed me to present an introductory video of the online, web-based LiensNC system.  Feedback regarding the system was positive, and I made the same presentation to the NC Bar Association Construction Law Section to similar reviews later that afternoon.

On February 27, House Bill 180, Mechanic’s Liens/Technical Corrections, was introduced by Representative Sarah Stevens (R-Surry) to make various technical changes to the mechanic’s lien agent law enacted in 2012.  The bill contains many of the suggested changes NCLTA submitted to legislative staff in the Fall of 2012, as well as changes submitted by other construction stakeholders. 

 

House Bill 180 makes the following changes to the MLA law:

  • Clarifies that the MLA provisions apply to all projects, including those where there is no building permit;
  • Provides that for non-permitted projects, the $30,000 determination will occur at the time the owner enters the contract for the improvement;
  • Clarifies that the MLA is not an agent of the owner for service of a Claim of Lien on Real Property;
  • Specifically authorizes the use of an online web-based system for receiving and maintaining the notices to the MLA (LiensNC);
  • Amends the “custom homebuilder” exemption to clarify the language so the provision would have its intended effect;
  • Addresses the discrepancy that was created between House Bill 1052 and  Senate Bill 42 enacted in 2012 regarding a contractor’s ability to waive the lien rights of subcontractors who work under them;
  • Requires the MLA to notify a design professional of their receipt of the design professional’s information within 3 business days of receiving the information from the owner;
  • Sets the fees a MLA can charge at $25 for one and two family residential projects and $50 for all other projects (was, no more than $25 or $50); and
  • Makes other clarifying changes. 

House Bill 180 was considered in the House Judiciary Subcommittee C. It was unanimously approved with little debate. The bill was approved by the full House by a vote of 114-0 and was sent to the Senate and referred to the Senate Judiciary I Committee.

 

Prior to the Committee meeting, representatives of the contractors, subcontractors and supplier associations met and agreed to an amendment to revise the process for when a contractor can waive the lien rights of their subcontractors. Under the MLA law, if the subcontractor serves a notice to lien agent, serves a notice of claim of lien on funds on the owner, contractor, etc., and serves the notice of claim of lien on funds on the MLA, the contractor could not waive their lien rights without consent. The construction stakeholders agreed to replace this 3 step process with a 1 step process, the filing of a claim of lien on real property. So under the amendment, if the subcontractor files a notice of claim of lien on real property, the contractor could not waive their lien rights without consent. NCLTA did not have a position on this amendment.

At the Senate Judiciary I Committee hearing, Representative Stevens presented the bill and the amendment described above, and the Chair of the committee recognized me to show the video of the online system. With little or no debate, the Senate Judiciary I Committee added the amendment and unanimously approved the bill. The Senate then approved House Bill 180 by a vote of 50-0.

The House approved House Bill 180, along with the Senate amendments, by a vote of 114-0.  Having been enacted by the General Assembly, House Bill 180 was sent to the Governor for his signature.  Governor McCrory signed the bill into law on March 28th (Session Law 201-16).  Representative Stevens, Bill Patterson of legislative staff, and I attended a bill signing ceremony with the Governor for this legislation.

The provisions of House Bill 180 took effect April 1, 2013 coincide with the effective date of Senate Bill 42.

After April 1, we began receiving feedback that further technical corrections may be necessary to respond to varying interpretations by some local permitting offices of various provisions of the MLA law, including the exemption from MLA provision for improvements to an owner’s existing residence. Representative Stevens, Representative Jonathan Jordan (R-Ashe) and other legislators interested in addressing these issues agreed to find a legislative “vehicle” to make additional changes.

On April 9, the original provisions of House Bill 88 were removed and replaced with various technical corrections to the private lien agent law. House Bill 88, Lien Agents/Technical Corrections, was considered and approved by the House Judiciary Subcommittee B on April 10 with no discussion or debate.

The provisions of House Bill 88, as considered in the House on April 10, amend the lien law in the following manner:

  • Amends 44A-11.2(g)(7) to delete a reference to notice of claim of lien on funds from the description of the on-line system and filings, since this notice is no longer tied to the lien agent.
  • Amends 44A-11.2(d) to replace the word "labor" with the more descriptive phrase that is used elsewhere: "labor, materials, rental equipment, or professional design or surveying services".
  • Deletes the word "dies" from 44A-11.1(d).
  • Amends 44A-11.1(a), and the three (3) permitting statutes, to clarify that the exemption for renovations to a residential dwelling occupied by the owner applies regardless of whether the owner serves as his own general contractor or hires a third party contractor to perform the improvements. This change is to address the varying interpretations of this provision by local permitting offices.
  • Deletes the requirement that the lien agent notify the contractor and design professional under the special provisions in the law for the custom home builder exemption and for design professionals [GS 58-26-45(b)(6) & (6a)].

House Bill 88 was considered by the full House on April 15. After Representative Jordan explained the bill, and with hardly any discussion or debate, the House approved House Bill 88 by a vote of 112 to 0, sent it to the Senate for consideration, and referred to the Senate Judiciary I Committee. 

Additional questions were raised about the existing language of the custom homebuilder exemption.  Concerns remained about whether the language of this exemption actually accomplished what was intended. Questions were raised by permit offices as well. NCLTA raised this issue with the NC Homebuilders Association and they agreed the issue should be addressed. The NC Homebuilders Association and NCLTA agreed on suggested language to address the custom builder exemption issue with the MLA law.  This language was submitted to the bill sponsors and legislative staff to be added before the Senate considered the bill.  In addition to the agreed upon changes to the custom homebuilder exception, an amendment was added to clarify that accessory structures and buildings to an owner’s residence (detached garages, pool houses, etc.) are included in the renovation exemption to the MLA law. The Senate Judiciary I Committee approved this amended version of House Bill 88 with little or no debate.

The Senate passed House Bill 88 on June 4, 2013, and the House agreed to the amendments proposed in Senate subcommittee and passed the bill 97-2.  Governor McCrory signed House Bill 88 (Session Law 2013-117) in law on June 19, 2013 (without a bill signing ceremony), and its provisions became effective three (3) days later, on June 22. 

Prior to the start of the 2014 legislative session, we expect a few issues related to the MLA law to be studied, whether formally through the study committee process, or informally through the stakeholder process. They include:

  • Study the need to modify existing law to better protect the right of contractors, subcontractors, and suppliers to be paid for furnishing labor, materials, rental equipment, or professional design or surveying services under a contract with the tenant who holds a leasehold interest in the improved real property.
  • Study mechanisms by which a potential lien claimant who has provided a notice to the lien agent would be required to notify the lien agent of receiving payment in full for the labor, materials, rental equipment, or professional design or surveying services provided.

_______________________________

 

For more information about this mechanic’s lien agent legislation, or any other legislation from the 2013 legislative session, feel free to contact me at dferrell@vanblk.com or (919) 754-1171.  Information is also available on the General Assembly’s website:  www.ncga.state.nc.us.

back to the top


LEGISLATIVE UPDATE – 2013 LEGISLATIVE SESSION

By: David P. Ferrell, Esq.

NCLTA Legislative Counsel

The General Assembly adjourned the 2013 “long session” on July 26. The focus of the session was the passage of a $20.6 billion budget that cut spending and made policy changes to education, health care and economic development. The legislature passed a number of significant pieces of legislation this session. The legislature approved a new tax plan which lowers and flattens the personal income rate to 5.75 percent and phases down the corporate tax over the next four years to as low as 3 percent. In addition, it eliminates the death tax and caps the gas tax. Deductions for charitable contributions remain, but a cap of $20,000 applies to mortgage interest and property tax deductions. The plan also expands the sales tax to cover service warranties and amusements including movies but does not extend the sales tax to professional services including legal services.

The legislature changed how voting is conducted in North Carolina, passing a bill that requires voters to show photo identification at the polls. The bill reduces the early voting period from 17 to 10 days, prohibits counties from extending early voting hours on the Saturday before Election Day, and eliminates same-day voter registration during early voting. The bill repeals the publicly funded election program for appellate court judge elections. The legislature considered a return to partisan elections for appellate court judges, but ultimately did not approve that provision.

Governor McCrory recently vetoed two bills enacted by the legislature this year, one that would require those that receive TANF and FNS public benefits to submit to drug screens (House Bill 392, Warrant Status/Drug Screen Public Assist), and one that would require the Department of Public Safety to study measures for addressing the problem of illegal immigration in North Carolina and which would clarify which employers are subject to the State's e-verify laws.  (House Bill 786, RECLAIM NC Act). The legislature will convene on September 3 for a brief legislative session to consider whether to override the Governor’s vetoes.

The legislature enacted several bills that affect the legal profession generally. The legislature approved a bill which allows the Governor to make appointments to fill vacant District Court seats without choosing from nominees from the local judicial district bar where the vacancy exists. The law requires the Governor to "give due consideration" to as many as five nominations from the local bar, but does not require the Governor to select one of those nominees. The law previously required the Governor to choose from a list of up to three candidates nominated by the local bar.

The legislature passed a bill to allow the Judicial Standards Commission to issue public reprimands and vest all forms of public discipline of judges in the Supreme Court (House Bill 652). The bill makes such disciplinary hearings private, and keeps all case records confidential unless and until the Supreme Court decides to take disciplinary action.

Of interest to NCLTA, the legislature passed our top legislative priorities in 2013, two bills to make technical corrections to the private mechanic’s lien agent bill passed in 2012, House Bill 180, Mechanic’s Liens/Technical Corrections, and House Bill 88, Lien Agents/Technical Corrections

 

The 2014 “short session” is scheduled to begin on Wednesday May 14 at 12 noon. Various study committees will meet before the start of the short session to consider possible legislation for introduction in the 2014 session.

 

This final legislative report contains a summary of the legislation of interest from the 2013 Legislative Session.  For more information about legislation described in this legislative report, feel free to contact me at dferrell@vanblk.com or (919) 754-1171.  Information is also available on the General Assembly’s website:  www.ncga.state.nc.us.

 

 

MECHANICS LIEN AGENT – TECHNICAL CORRECTIONS

 

            Last year, with the help of primary sponsor Representative Sarah Stevens (R-Surry), Senate Bill 42, Mech. Liens/PVT Lien Agent [Session Law 2012 – 158] was enacted and signed into law on July 12, 2012.  As a brief recap, Senate Bill 42 was passed to address the “hidden mechanic’s lien” issue that was a pervasive problem in commercial and residential real estate transactions.  Prior to the passage of Senate Bill 42, contractors, subcontractors, or material suppliers could file a claim of lien on real property within 120 days of completion of work; however, the priority of the claim of lien related back to the first furnishing of labor, services or material by the contractor or subcontractor.  Thus, an innocent purchaser for value taking title or a lender making a mortgage loan at any time during this period took title subject to the potential lien even though it was not on public record—hence, “hidden lien.” 

 

            Senate Bill 42 was proposed, and eventually passed, to confront the notice issue that created these so called “hidden liens.”  The provisions of Senate Bill 42 were effective April 1, 2013.  After passage, the title industry immediately began investigating an online web based lien agent system. Ultimately vendor NIC was chosen to host the system, and “LiensNC” was created.

 

            As predicted, in the time leading up to the implementation of the private lien agent (“MLA”) system, it became clear that certain technical corrections and clarifications to the law would be needed.  NCLTA, as well as other interested parties, submitted a number of technical and clarifying changes to legislation staff for consideration.

 

As you may know, the Carolinas Associated General Contractors (CAGC) initially opposed the application of the MLA provisions to commercial projects.  Ultimately, no action was taken to include a commercial carve-out in the legislation considered in 2013. CAGC later softened their opposition once it became clear that the title industry would implement an online filing system for notices to lien agents.

 

In order to create a forum for discussion of proposed changes to the law, as well as to introduce the stakeholders to LiensNC, Representative Stevens organized a legislative stakeholders meeting on February 21, 2013, shortly after the 2013 session began.  The stakeholders meeting not only served as an opportunity to discuss technical changes to the new law, but also allowed me to present an introductory video of the online, web-based LiensNC system.  Feedback regarding the system was positive, and I made the same presentation to the NC Bar Association Construction Law Section to similar reviews later that afternoon.

 

On February 27, House Bill 180, Mechanic’s Liens/Technical Corrections, was introduced by Representative Sarah Stevens (R-Surry) to make various technical changes to the mechanic’s lien agent law enacted in 2012.  The bill contains many of the suggested changes NCLTA submitted to legislative staff in the Fall of 2012, as well as changes submitted by other construction stakeholders. 

 

House Bill 180 makes the following changes to the MLA law:

 

  • Clarifies that the MLA provisions apply to all projects, including those where there is no building permit;
  • Provides that for non-permitted projects, the $30,000 determination will occur at the time the owner enters the contract for the improvement;
  • Clarifies that the MLA is not an agent of the owner for service of a Claim of Lien on Real Property;
  • Specifically authorizes the use of an online web-based system for receiving and maintaining the notices to the MLA (LiensNC);
  • Amends the “custom homebuilder” exemption to clarify the language so the provision would have its intended effect;
  • Addresses the discrepancy that was created between House Bill 1052 and  Senate Bill 42 enacted in 2012 regarding a contractor’s ability to waive the lien rights of subcontractors who work under them;
  • Requires the MLA to notify a design professional of their receipt of the design professional’s information within 3 business days of receiving the information from the owner;
  • Sets the fees a MLA can charge at $25 for one and two family residential projects and $50 for all other projects (was, no more than $25 or $50); and
  • Makes other clarifying changes. 

House Bill 180 was considered in the House Judiciary Subcommittee C. It was unanimously approved with little debate. The bill was approved by the full House by a vote of 114-0 and was sent to the Senate and referred to the Senate Judiciary I Committee.

 

            Prior to the Committee meeting, representatives of the contractors, subcontractors and supplier associations met and agreed to an amendment to revise the process for when a contractor can waive the lien rights of their subcontractors. Under the MLA law, if the subcontractor serves a notice to lien agent, serves a notice of claim of lien on funds on the owner, contractor, etc., and serves the notice of claim of lien on funds on the MLA, the contractor could not waive their lien rights without consent. The construction stakeholders agreed to replace this 3 step process with a 1 step process, the filing of a claim of lien on real property. So under the amendment, if the subcontractor files a notice of claim of lien on real property, the contractor could not waive their lien rights without consent. NCLTA did not have a position on this amendment.

 

At the Senate Judiciary I Committee hearing, Representative Stevens presented the bill and the amendment described above, and the Chair of the committee recognized me to show the video of the online system. With little or no debate, the Senate Judiciary I Committee added the amendment and unanimously approved the bill. The Senate then approved House Bill 180 by a vote of 50-0.

 

The House approved House Bill 180, along with the Senate amendments, by a vote of 114-0.  Having been enacted by the General Assembly, House Bill 180 was sent to the Governor for his signature.  Governor McCrory signed the bill into law on March 28th (Session Law 201-16).  Representative Stevens, Bill Patterson of legislative staff, and I attended a bill signing ceremony with the Governor for this legislation.

 

The provisions of House Bill 180 took effect April 1, 2013 coincide with the effective date of Senate Bill 42.

 

After April 1, we began receiving feedback that further technical corrections may be necessary to respond to varying interpretations by some local permitting offices of various provisions of the MLA law, including the exemption from MLA provision for improvements to an owner’s existing residence. Representative Stevens, Representative Jonathan Jordan (R-Ashe) and other legislators interested in addressing these issues agreed to find a legislative “vehicle” to make additional changes.

On April 9, the original provisions of House Bill 88 were removed and replaced with various technical corrections to the private lien agent law. House Bill 88, Lien Agents/Technical Corrections, was considered and approved by the House Judiciary Subcommittee B on April 10 with no discussion or debate.

The provisions of House Bill 88, as considered in the House on April 10, amend the lien law in the following manner:

  • Amends 44A-11.2(g)(7) to delete a reference to notice of claim of lien on funds from the description of the on-line system and filings, since this notice is no longer tied to the lien agent.

 

  • Amends 44A-11.2(d) to replace the word "labor" with the more descriptive phrase that is used elsewhere: "labor, materials, rental equipment, or professional design or surveying services".

 

  • Deletes the word "dies" from 44A-11.1(d).

 

  • Amends 44A-11.1(a), and the three (3) permitting statutes, to clarify that the exemption for renovations to a residential dwelling occupied by the owner applies regardless of whether the owner serves as his own general contractor or hires a third party contractor to perform the improvements. This change is to address the varying interpretations of this provision by local permitting offices.

 

  • Deletes the requirement that the lien agent notify the contractor and design professional under the special provisions in the law for the custom home builder exemption and for design professionals [GS 58-26-45(b)(6) & (6a)].

 

House Bill 88 was considered by the full House on April 15. After Representative Jordan explained the bill, and with hardly any discussion or debate, the House approved House Bill 88 by a vote of 112 to 0, sent it to the Senate for consideration, and referred to the Senate Judiciary I Committee. 

 

Additional questions were raised about the existing language of the custom homebuilder exemption.  Concerns remained about whether the language of this exemption actually accomplished what was intended. Questions were raised by permit offices as well. NCLTA raised this issue with the NC Homebuilders Association and they agreed the issue should be addressed. The NC Homebuilders Association and NCLTA agreed on suggested language to address the custom builder exemption issue with the MLA law.  This language was submitted to the bill sponsors and legislative staff to be added before the Senate considered the bill.  In addition to the agreed upon changes to the custom homebuilder exception, an amendment was added to clarify that accessory structures and buildings to an owner’s residence (detached garages, pool houses, etc.) are included in the renovation exemption to the MLA law. The Senate Judiciary I Committee approved this amended version of House Bill 88 with little or no debate.

 

The Senate passed House Bill 88 on June 4, 2013, and the House agreed to the amendments proposed in Senate subcommittee and passed the bill 97-2.  Governor McCrory signed House Bill 88 (Session Law 2013-117) in law on June 19, 2013 (without a bill signing ceremony), and its provisions became effective three (3) days later, on June 22. 

 

Prior to the start of the 2014 legislative session, we expect a few issues related to the MLA law to be studied, whether formally through the study committee process, or informally through the stakeholder process. They include:

 

  • Study the need to modify existing law to better protect the right of contractors, subcontractors, and suppliers to be paid for furnishing labor, materials, rental equipment, or professional design or surveying services under a contract with the tenant who holds a leasehold interest in the improved real property.
  • Study mechanisms by which a potential lien claimant who has provided a notice to the lien agent would be required to notify the lien agent of receiving payment in full for the labor, materials, rental equipment, or professional design or surveying services provided.

 

 

BILLS OF INTEREST ENACTED INTO LAW

 

House Bill 92, GSC Technical Corrections 2013, is the 2013 technical corrections bill. The following provisions may be of interest to NCLTA:

 

  • Provides that electronic notices of public hearings given by Apex, Cary, Garner, and Knightdale may be in lieu of other methods of giving notice, except that where another State law requires notice by mail to certain classes of people or the posting of signs on the property.

 

  • Clarifies that when a lien is rejected by the Register of Deeds pursuant to GS 14-118.6 (Filing false lien or encumbrance), if the attempted lienor succeeds in having the rejection overturned by filing a Notice of Denied Lien or Encumbrance and commencing a special proceeding as permitted under this section, the lienor is not required to pay another fee to then file the lien or encumbrance. Apparently some Registers of Deeds are not currently charging the fee since the lienor had previously paid a filing fee for the notice, but the statutes are not clear on this point. This provision clarifies that a fee should not be charged.

 

Effective: August 23, 2013. Session Law: 2013-410.

 

House Bill 278, HOAS/Voluntary Prelitigation Mediation, establishes a procedure for HOAs and their members to participate in voluntary prelitigation mediation over certain disputes related to the HOA. The bill provides that disputes related solely to a member's failure to timely pay an association assessment or any fines or fees associated with the levying or collection of an association assessment are not covered under the mediation provisions. The bill provides that the time periods relating to the filing of a civil action, including any applicable statutes of limitations or statutes of repose, with respect to a dispute covered by this subsection shall be tolled upon the initiation of mediation until 30 days after the date on which the mediation is concluded as set forth in the mediator's certification.

Effective: July 1, 2013.  Session Law: 2013-127.

 

House Bill 293, Mortgages/S.A.F.E. Act, amends the Secure and Fair Enforcement Mortgage Licensing Act to reduce regulatory burdens, making clarifying and technical changes, and modifying certain foreclosure proceedings.  The bill repeals and/or amends various statutes that allowed the Commissioner of Banks to contact the Clerk of Superior Court and have a foreclosure proceeding suspended for 60 days.

Effective: August 23, 2013. Session Law: 2013-412.

 

 

House Bill 331, HOAs/Uniform Lien Procedure, provides a uniform procedure to enforce claims of lien securing sums due condominium and planned community associations. The bill establishes when a lien for unpaid assessments is created, the procedures for filing a lien, and the amounts the lien may secure.

 

The bill provides that the HOA lien is prior to all liens and encumbrances on a unit except (i) liens and encumbrances, specifically including but not limited to a mortgage or deed of trust on the unit, recorded before the filing of the HOA claim of lien in the office of the clerk of superior court and (ii) liens for real estate taxes and other governmental assessments and charges against the unit. This provision does not affect the priority of mechanics’ or materialmen’s liens. The bill provides that the HOA is entitled to recover the reasonable attorney’s fees and costs it incurs in connection with collection efforts.

 

The bill establishes a HOA lien foreclosure procedure that is similar to the foreclosure procedure of a mortgage or deed of trust on real estate under power of sale. The bill states the provisions of this Act control and may differ from the power of sale provisions of Article 2A of Ch. 45. The bill provides for a HOA to appoint a trustee to conduct nonjudicial foreclosure proceedings and sales. The HOA is required to provide notice to unit owners of their intent to commence nonjudicial foreclosure; dismiss the foreclosure procedure if the debt plus costs, attorneys' fees, and trustee’s commission is satisfied before upset period expires; bid at foreclosure proceeding; and compensate the trustee for her service. The bill requires that service under Rule 4(j) of the Rules of Civil Procedure must be attempted.  If actual service is not achieved, but was attempted, the requirements of Rule 4(j) will be deemed satisfied if the association mails a copy of the lien by regular, first-class mail, postage prepaid to the physical address of the unit and the unit owner’s address of record with the association . The bill validates  nonjudicial foreclosure proceedings commenced by HOAs before July 1, 2013, and all sales and transfers of property as part of those proceedings, unless an action to set aside foreclosure is commenced by July 1, 2013, or within one year of sale, whichever is later.

 

The bill provides that where the holder of a first mortgage or first deed of trust of record or other purchaser of a unit obtains title to the unit as a result of foreclosure of a first mortgage or first deed of trust, the purchaser and its heirs, successors, and assigns shall not be liable for the assessments against the unit which became due prior to the acquisition of title to the unit by the purchaser. The bill provides that unpaid assessments are deemed to be common expenses collectible from all the unit owners, including the purchaser, its heirs, successors, and assigns. For purposes of this subsection, the term "acquisition of title" means and refers to the recording of a deed conveying title or the time at which the rights of the parties are fixed following the foreclosure of a mortgage or deed of trust, whichever occurs first.

Effective Date: October 1, 2013, Session Law 2013-202.

 

House Bill 332, Notary Act/Satisfaction of Security Instruments, makes various corrections and other amendments to the Notary Public Act, makes other conforming changes, and provides for an alternative procedure for satisfaction of security instruments.  The bill amends GS 10B-20(c5) to clarify that notaries are not disqualified from performing their duties because of their employment by a party to the record or because they own stock in a party of the record to be notarized.  The bill amends GS 10B-65(b) to add a new subsection (5) which states that documents that contain certain notarial errors such as date of acknowledgment, verification or proof, or the oath or affirmation states the correct day and month but lacks a year or states an incorrect year, will be given legal effect as if the errors had not occurred.  The bill would validate all notary acknowledgments performed before December 1, 2005 (was, January 1, 1953). 

The bill amends GS 10B-68 (Technical defects cured), to make technical changes and expand the types of technical changes that are cured automatically and do not affect the validity of a document: affixation of the notary’s seal near the signature of the principal or subscribing witness rather than near the notary’s signature; minor typographical mistakes in the spelling of the principal’s name; the failure to acknowledge the principal’s name exactly as signed by including or omitting initials.

 

The bill adds new subsection GS 41-2(a1) which provides that upon conveyance to the trustee of a deed of trust by any or all of the joint tenants holding property in joint tenancy with right of survivorship to secure a loan, the joint tenancy will not be deemed to be severed.  Upon satisfaction of the deed of trust, legal title to the property would revert to the grantors as joint tenants with right of survivorship in the respective shares as owned by respective grantors.

 

The bill amends GS 47-28 (Powers of Attorney), to provide that before any transfers of real property executed by an attorney-in-fact empowered by a power of attorney, the power of attorney must be registered.  The bill provides what steps an attorney-in-fact must take depending on the different types of real property transaction taking place, as well as the requirements to record certain powers-of-attorney.

 

The bill amends GS 47-36.1 (Correction of errors in recorded instruments), to provide that when a correction is inconsistent with the original, notice of the correction is deemed to have been given as of the time of registering the corrective affidavit.  The bill would limit the need for an affidavit in times where an instrument is unchanged but re-recorded. A notary public can complete a corrective affidavit identifying the correction and may attach a new acknowledgment, with no change in priority occurring.

 

The bill enacts new sections GS 47-108.18A (Registration of certain instruments containing a notarial acknowledgment) and GS 47-108.18B (Registration of certain instruments containing a notarial jurat), to provide that notarial acknowledgments constitute a jurat in due form for all instruments that have so far been accepted for filing and registration or are now accepted for filing and registration under this Chapter or which relate to real estate in this state. In addition, a notarial jurat would constitute an acknowledgment in due form for all instruments that have so far been accepted for filing and registration or are now accepted for filing and registration under this Chapter or which relate to real estate in this state.

 

Regarding satisfactions of security instruments, the bill amends GS45-36.15 (Affidavit of satisfaction: authorization to submit for recording) to make certain technical and clarifying changes. The bill expands the situations in which a satisfaction agent may sign and submit an affidavit of satisfaction --- when the agent has reasonable grounds to believe the secured creditor has received full payment or performance and one of the following apply: (1) the secured creditor has not submitted for a recording a satisfaction of a security instrument within the specified time frame; (2) the secured creditor has authorized the satisfaction agent to sign and submit an affidavit of satisfaction; (3) the satisfaction agent has in his or her possession the original security instrument and the original bond, note, or other instrument secured thereby with an endorsement of payment and satisfaction by one of the specified entities; (4) the satisfaction agent has in his or her possession the original security instrument intended to secure payment of money or the performance of any other obligation, together with the original instrument secured, or the original security instrument only if it sets forth the obligation and does not call for another instrument secured by it, if the instruments are more than 10 years old at the time the affidavit of satisfaction is to be signed; (5) the satisfaction agent has in his or her possession the original security instrument given to secure the bearer or holder of any negotiable instruments transferable solely by delivery, marked paid and satisfied in full and signed by the bearer or holder thereof; (6) after diligent inquiry, the satisfaction agent has been unable to determine the identity of the secured creditor.

 

The bill amends GS 45-36.16 (Affidavit of satisfaction: content), providing several new requirements that an affidavit of satisfaction's content can or must meet in order for it to be deemed a valid affidavit of satisfaction.  The bill modifies the affidavit of satisfaction form contained in GS 45-36-17.  The bill amends GS 45-36.19 (Liability of satisfaction agent) to provide that a satisfaction agent that erroneously records or submits for recording an affidavit of satisfaction of a security instrument is not liable if the agent properly complied with this Article, gave notification to the secured creditor in the manner prescribed by GS 45-36.14, and responded to the notification in a timely manner.

 

Lastly, the bill repeals the requirement that a notary public obtain a recommendation from a North Carolina elected official in order to qualify.

Effective Date: June 26, 2013. Session Law 2013-204.

 

House Bill 343, Courts/Procedure and Fee Amendments, removes the July 1, 2013 sunset in Session Law 2011-296, which established the existing fee structure for the Register of Deeds.  The fee structure under S.L. 2011-296 was set to expire July 1, 2013, but House Bill 343 continues that fee structure indefinitely. 

Effective Date: July 1, 2013. Session Law: 2013-225.

 

House Bill 399, Amend Laws Pertaining to DHHS, amends G.S. 108A-70.5(b)(2) to give the Department of Health and Human Services all rights available to estate creditors, including the right to qualify as personal representative or collector of an estate.  The bill amends G.S. 28A-14-1(b) to provide that a personal representative must give notice, in addition to other creditors, to the Department of Health and Human Services if the decedent was receiving medical assistance under Medicaid.

 

            Finally, the bill declares the Department of Health and Human Services a “sixth-class creditor” for purposes of determining the order of claims against the estate, provided, however, that judgments in favor of other sixth-class creditors docketed and in force before the Department seeks recovery for medical assistance shall be paid prior to recovery by the Department.

Effective: October 1, 2013.  Session Law: 2013-378.

 

House Bill 407, Trustee-Attorney Fee/Foreclosures/Clerk Approval, authorizes clerks of superior court to determine the reasonableness of counsel fees paid to an attorney serving as a trustee in a power of sale foreclosure proceeding.  The bill provides that the clerk may exercise discretion to allow reasonable counsel fees to an attorney serving as a trustee (in addition to the compensation allowed to the attorney as a trustee) where the attorney, on behalf of the trustee, renders professional services as an attorney that are different from the services normally performed by a trustee and of a type which would reasonably justify the retention of legal counsel by a trustee who is not licensed to practice law.  The clerk’s award of attorney and/or counsel fees is presumed reasonable if they are in compliance with G.S. 6-21.2(1) and (2).

Effective Date: June 6, 2013. Session Law: 2013-104.

 

House Bill 410, Cancel Title to Manufactured Home, allows the Division of Motor Vehicles to cancel a certificate of title to a manufactured home when the person requesting cancellation does not have the certificate of title. The bill provides that if a certificate of title has been issued for a manufactured home, no issued title is available, and the manufactured home qualifies as real property as defined in G.S. 105-273(13), the owner listed on the title shall be deemed to have surrendered the title to the Division if the owner of the real property on which the manufactured home is affixed (i) submits an affidavit to the Division that the manufactured home meets this definition and (ii) submits a tax record showing the manufactured home listed for ad valorem taxes as real property pursuant to Article 17 of Chapter 105 of the General Statutes in the name of the record owner of the real property on which the manufactured home is affixed.

Effective Date: July 1, 2013.  Session Law: 2013-79.

 

House Bill 565, Amend Real Estate Appraisers Laws/Fees, establishes new categories of real estate appraisers. The bill establishes “licensed” real estate appraisers – required to hold an associate’s degree from a college, community college or university; and maintains the “certified” real estate appraiser designation, who must now have a bachelor’s degree (was, associate’s degree) from a college or university. The bill establishes the background check and fingerprinting requirements for appraisers. The bill also requires appraisers to maintain a surety bond of at least $25,000.

Effective Date: January 1, 2014. Session Law: 2013-403.

 

House Bill 616, Transitional Mortgage Loan Originator, creates and regulates “transitional mortgage loan originators”, which is defined as an individual who is authorized to act as a mortgage loan originator subject to a transitional mortgage loan originator license which is limited to a term of no more than 120 days and is not subject to reapplication, renewal, or extension by the Commissioner. The bill provides that a transitional mortgage loan originator license may be granted to an individual who has an active license to originate mortgage loans pursuant to the laws of another state provided the individual registers, is fingerprinted, and maintains a unique identifier with the Nationwide Mortgage Licensing System and Registry at the time the individual submits a transitional mortgage loan originator to the Commissioner. The bill would make other conforming changes to various mortgage banking statutes.

Effective: September 1, 2013. Session Law: 2013-327.

 

House Bill 692, Amend Predatory Lending Laws, amends the North Carolina anti-predatory lending law, and provides that the provisions of North Carolina’s mortgage lending laws can be no more restrictive than federal law.

Effective: October 1, 2013. Session Law 2013-399.

 

House Bill 857, Public Contracts/Construction Methods/DB/P3, authorizes public entities to utilize the design-build method or public-private partnership method in construction contracts. The bill provides that the design-builder shall provide a performance and payment bond to the governmental entity in accordance with the provisions of Article 3 of Chapter 44A of the General Statutes.

 

            Regarding design build contracts, the bill provides that the private developer could be hired and responsible for construction of the entire public-private project, reconstruction or repair of the public-private project or any part thereof subsequent to construction, construction of any addition to the project, renovation of the project, and purchase of equipment for the project.

 

Regarding the public-private partnership construction contracts, the bill establishes the bonding requirements, and the process for claimants to file and enforce claims against the bonds. The bill provides that the obligations and lien rights set forth in Article 2 of Chapter 44A of the General Statutes shall apply to a project awarded under this section to the extent of any property interests held by the private developer in the project. For purposes of applying the provisions of Article 2 of Chapter 44A of the General Statutes, the bill provides that the private developer shall be deemed the owner to the extent of that private developer's ownership interest. The bill states that this subdivision shall not be construed as making the provisions of Article 2 of Chapter 44A of the General Statutes apply to governmental entities or public buildings to the extent of any property interest held by the governmental entity in the building.

Effective: September 22, 2013. Session Law: 2013-401.

 

Senate Bill 76, Domestic Energy Jobs Act, makes various changes to the law enacted in 2012 to allow for “fracking” for natural gas on private property in North Carolina. The bill, among other things, directs the Mining and Energy Commission, with the assistance of the Department of Environment and Natural Resources, to study issues related to establishment and implementation of the registration requirements for landmen (a person who bargains with landowners for the mineral rights to their land). The Mining and Energy Commission shall report its findings and recommendations to the Environmental Review Commission and the Joint Legislative Commission on Energy Policy on or before April 1, 2015.

Effective: July 29, 2013. Session Law: 2013-365.

 

Senate Bill 151, Coastal Policy Reform Act of 2013, clarifies that cities may enforce ordinances within the State’s public trust areas. The bill provides that a city may, by ordinance, define, prohibit, regulate, or abate acts, omissions, or conditions upon the State's ocean beaches and prevent or abate any unreasonable restriction of the public's rights to use the State's ocean beaches. In addition, a city may, in the interest of promoting the health, safety, and welfare of the public, regulate, restrict, or prohibit the placement, maintenance, location, or use of equipment, personal property, or debris upon the State's ocean beaches. This provision does not apply to the removal of permanent residential or commercial structures and appurtenances thereto from the State's ocean beaches.

Effective: August 23, 2013. Session Law: 2013-384.

 

Senate Bill 228, HOAs/Limited Common Elements, provides that a unit owner in a condominium community and a lot owner in a planned community shall afford access through the limited common elements assigned or allocated to the owner’s unit or lot to the association and, when necessary, to other unit or lot owners for the purpose of conducting maintenance, repair, or replacement activities.  The bill provides that a unit or lot owner is legally responsible for damage to a limited common element caused by the unit or lot owner.

Effective Date: April 24, 2013. Session Law: 2013-34.

 

Senate Bill 321, Inmate Costs/Ct.Appt./ROD/Notaries, originally contained a provision providing for a private cause of action against notaries if they violate the Notary Public Act, where the notary could be liable for damages. This provision was introduced at the request of RELANC. Due to opposition, the private right of action provision was removed.

 

A provision was included that provides that a party to a notary’s transaction may file an affidavit with the Secretary of State, setting forth the actions which the affiant alleges constitute violations of the Notary Public Act. Upon receipt of the affidavit, law enforcement agents of the Secretary of State’s Office shall investigate the alleged violation of the Notary Public Act.

 

Also, as discussed in the introduction of this report, this bill allows the Governor to make appointments to fill vacant District Court seats without choosing from nominees from the local judicial district bar where the vacancy exists.

Effective: August 23 Session Law: 2013-387.

 

Senate Bill 402, 2013 Appropriations Act, is the 2013 state budget bill. The provisions that may be of interest to NCLTA are as follows:

  • Funding for the judicial branch is now at $456.9 million for fiscal year 2013-2014 and $456.4 million for fiscal year 2014-2015. This is an approximate $4 million operational decrease from the previous budget.
  • The judicial department shall begin implementation of a cost-effective system for the acceptance of credit card payments for court costs by clerks of court. The judicial department shall select five (5) counties that are not currently accepting credit card payments and implement a system to accept such payments by January 1, 2014. The department shall report to the Joint Oversight Committee on Justice and Public Safety by February 1, 2014.
  • Currently, parties to litigation must file a $20 fee when they file a motion in a case. This bill amends that provision to provide that the $20 fee is paid when a notice of hearing is filed for a motion. The provision also provides that no more than one fee shall be assessed for any motion for which a notice of hearing is filed, regardless of whether the hearing is continued, rescheduled, or otherwise delayed.
  • The insurance regulatory charge is set at six percent (6%) for the 2013 and 2014 calendar years.         

Senate Bill 584, Amend False Liens Law. During the 2012 legislative session, House Bill 203 was enacted to address false liens, judgments and court proceedings filed against public officials and public employees by “Freemen” and other groups or individuals that do not acknowledge state and local governments. House Bill 203 bill made it unlawful for any person to present for filing in a public record a false lien or encumbrance against the real or personal property of a public officer or public employee on account of the performance of the public officer or public employee's official duties, knowing or having reason to know that the lien or encumbrance is false or contains a materially false, fictitious, or fraudulent statement. In the case of a lien or encumbrance presented to the register of deeds for filing, if the register of deeds has a “reasonable suspicion” that the lien or encumbrance is false, the register of deeds may refuse to file the lien or encumbrance. Neither the register of deeds nor any other entity shall be liable for filing or refusing to file a lien or encumbrance under this section.

 

Senate Bill 584 extends the protections of this “false lien” statute to the immediate family of a public officer or public employee. The bill defines “immediate family” as a spouse or child.

Effective Date: December 1, 2013. Session Law: 2013 - 170.

 

 

BILLS OF INTEREST THAT WERE NOT ENACTED

BUT MADE THE CROSSOVER DEADLINE

 

House Bill 203, Revisions/Homeowner/Homebuyer Protection Act, would amend the Homeowner and Homebuyer Protection Act passed a few years ago.  Regarding option contracts, the bill would add language to the definition of “Option contract or contract” to clarify that the “term does not include a contract which obligates the buyer to purchase the property even though the obligation may be subject to one or more contingencies or unilateral rights to terminate the contract.”  The bill would further amend G.S. 47G-7 to delete the provision that a violation of any provision of Chapter 47G constitutes an unfair and deceptive trade practice.

 

            Regarding contracts for deeds, the bill would also amend G.S. 47H-2 to add that the minimum content for a deed contract must also contain a completed residential property disclosure statement as provided in Chapter 47E. The bill would further amend G.S. 47H-8 to delete the provision that a violation of any provision of Chapter 47H-8 constitutes an unfair and deceptive trade practice.

 

            The bill would amend G.S. 75-120 to delete the current definition of “default,” which was defined as “whenever a property owner is more than 60 days delinquent on any loan or debt that is secured by the property, including real estate taxes.”

 

            Finally, the bill would amend the foreclosure rescue transaction statutes to require the appraisal to be performed no more than 120 days (was 90 days) prior to the transfer. This bill was not enacted, but it eligible for consideration in the 2014 legislative session.

 

House Bill 272, DOT Condemnation Cases, would amend G.S. 136-113 to provide that the interest added to an award by the commissioners, judge, or jury in a DOT condemnation should be calculated from the date of taking to the date judgment is paid.

 

            Further, the bill would authorize the defendant in a DOT condemnation action to recover reasonable costs and attorney fees if the final judgment exceeds the amount of the initial deposit by 25% or more.  The attorneys’ fees awarded pursuant to this bill cannot exceed one-third of the difference between the judgment award, plus interest, and the initial deposit. This bill was not enacted, but it eligible for consideration in the 2014 legislative session.

 

House Bill 330, Planned Community Act/Declarant Rights, would amend the North Carolina Planned Community Act regarding the transfer of special declarant rights. The bill would amend the definitions section, G.S. 47F-1-103, by adding additional terms and definitions to be used in this Act, including “affiliate of declarant” and “development rights”. The bill would enact new G.S. 47F-3- 104(b) to provide for and explain the liability that a transferor declarant assumes upon transfer of any special declarant rights. The bill would enact new G.S. 47F-3-104(c) to provide that, unless otherwise provided for, a person acquiring title of property being foreclosed or sold succeeds to all special declarant rights related to that property, held by the declarant, or those rights stated and reserved in the declaration, if requested in a recorded instrument. The bill would enact new G.S. 47F-3-104(d) to provide for what occurs to special declarant rights after a foreclosure of a security interest, sale by trustee, tax sale, judicial sale, bankruptcy sale, or receivership proceedings of all interests in a planned community.

 

The bill would enact new G.S. 47F-3-104(e) to provide for the liabilities and obligations of a person who succeeds to special declarant rights. The bill would enact new G.S. 47F-3-104(f) to provide that nothing in this section subjects any successor to a special declarant right to any claims against or other obligations of a transferor declarant other than claims and obligations arising under this Chapter or declaration. The bill would enact new G.S. 47F-3-104(g) to clarify that, for the purposes of this section, "assignment of declarant rights" includes any assignment by the declarant of special declarant rights to a person, including an assignment pursuant to this section. This bill was not enacted, but it eligible for consideration in the 2014 legislative session.

 

House Bill 793, HOAs/Fidelity Bonds, would require any unit owners' association with annual assessments for common expenses of $100,000 or more to obtain and maintain a fidelity bond insuring the unit owners' association against losses resulting from theft or dishonesty committed by the officers and members of the executive board or persons employed by the unit owners' association. The bond would provide coverage in the amount of $1 million. The bill provides that any management agent or company hired by an association shall at all times be covered by a fidelity bond.

 

            The bill would require the executive board of the unit owners’ association to provide for an annual independent financial audit of the association if: (1) the declaration, bylaws, or other documents expressly require conducting an audit, (2) the unit owners' association has annual assessments for common expenses of $250,000 or more, or (3) an audit is requested by a vote of a majority of the board or by a vote of a majority of the lot owners, present and voting in person or by proxy at any annual meeting or special meeting duly called for that purpose. The audit would be completed no later than one year after the end of the association's fiscal year and shall be made available upon request to the unit owners within 30 days after its completion.  If the association has annual revenues or expenditures of at least $150,000, the executive board shall provide for an annual independent financial review, which shall be complete no later than one year after the end of the association’s fiscal year and shall be made available on request to the lot owners within 30 days after its completion. This bill was not enacted, but it eligible for consideration in the 2014 legislative session.

 

House Bill 871, Regulate Community Association Managers, would establish a process by which the Real Estate Commission would regulate community association managers. Although this bill did not make the crossover deadline, some legislators have indicated that they believe the provisions of the bill will receive consideration in the 2014 legislative session.

 

House Bill 883, Education Required/Community Assoc Bd Members, would require the board members of a community association to receive a minimum of four hours of education from the Real Estate Commission on the laws, management, and functions of community associations, within 60 days of their election to a board.  Although this bill did not make the crossover deadline, some legislators have indicated that they believe the provisions of the bill will receive consideration in the 2014 legislative session.

 

House Bill 593, Register of Deeds Hours, would require the register of deeds office to be open for the conduct of public business during county office workdays and hours as set by the board of county commissioners pursuant to G.S. 153A-94(b).  The bill would allow the register of deeds to set the hours for registration of real estate instruments to begin not more than 30 minutes after the office opens to the public, and end not more than 30 minutes before the office closes.

 

            The bill would also require the Secretary of State to establish a Web site and procedures for the posting of the workdays, holidays, and office hours of each county register of deeds office.  The Web site must prominently display the hours of real estate instrument registration and any changes in the schedule or closings. This bill was not enacted, but it eligible for consideration in the 2014 legislative session.

 

Senate Bill 287, Notice Publication by Some Local Governments, would enact new GS 153A-52.2, Electronic notice, allowing governing boards of Burke, Graham, Guilford, Haywood, Jackson, Macon, Mecklenburg, Swain, Union, and Wake counties to adopt an ordinance that will allow them to electronically publish any notice they are otherwise required to publish by law.

 

Any notice published under the above ordinance must comply with the following conditions:

 

  1. The notice is published on the website of the governing board no later than the time required for publication under applicable law or act.
  2. The website contains, on its main page or index, links to all notices or a link to another page with links to all notices.
  3. Notices and links must be maintained on the website for at least one year after publication.
  4. A copy of the notice must be filed in a notice book, separately maintained and apart from the ordinance book or minutes of the governing board. The notice books must also be indexed and maintained for public inspection.
  5. A copy of the notice must be mailed or emailed to a person that has filed a written request for notice with the clerk or secretary of the governing board.  The governing board may require each person submitting a written request for notice renew the request annually.

 

Such ordinances that allow electronic publication would not supersede any general law or local act that requires notice by mail to certain persons or classes of persons or the posting of signs on certain property. The bill would only apply to the local governments listed above. This bill was not enacted, but it eligible for consideration in the 2014 legislative session. [See House Bill 92 above for a bill enacted to allow electronic notices of public hearings for certain cities].

 

POSSIBLE STUDIES BEFORE THE 2014 LEGISLATIVE SESSION

 

            In the last days of the legislative session, the House considered a bill containing all studies to occur before the 2014 legislative session proposed by any House member during the 2013 session. The bill was not considered by the Senate and was not enacted. The Senate’s approach to studies this session was to empower the Legislative Research Commission (“LRC”) to decide what issues are to be studied, under the Commission’s inherent power. The State Budget Bill (Senate Bill 402) limits the number of study committees that can be established by the LRC to thirteen (13). 

 

Although any issue could be studied by the LRC at the Chairs’ discretion, here are the studies of interest in the House list of possible studies:

 

  • Mechanic’s Liens/Leasehold Improvements (HB 901) - study the need to modify existing law to better protect the right of contractors, subcontractors, and suppliers to be paid for furnishing labor, materials, rental equipment, or professional design or surveying services under a contract with the tenant who holds a leasehold interest in the improved real property.
  • Liens/Notice of Payment (HB 925) – study mechanisms by which any potential lien claimant (PLC) who has provided a notice to the lien agent would be required to notify the lien agent within 10 days of receiving payment in full for the labor, materials, rental equipment, or professional design or surveying services furnished by the PLC. The LRC may examine use of the existing online system as a method for notification, but shall also examine other methods. The LRC would also consider the consequences of failure to comply with the notification request and the extent to which the notification may be relied upon for purposes of title work.
  • Property Owners Protection Act (HB 632) - study the establishment of a property owners protection act that would favor the free use of land.  The Commission may examine awarding attorney’s fees incurred by a property own in an action challenging land-use regulations and prohibiting the enforcement of penalties against a property own for acts not committed by the property owner.
  • Banking Law Amendments (HB 776) – study various banking laws.
  • Foreclosed Property (HB 779) - study issues related to responsibility for carrying out the obligations imposed on owners of subdivided real property, including the need to provide for contingencies resulting from abandonment or foreclosure of the property.
  • Business Court (HB 882) - study the process of designating cases as complex business cases and assigning them to business court judges, including the possibility of providing that appeals from complex business cases go directly to the Supreme Court.
  • The State Banking Commission may study access to credit for low income individuals (HB 678).

It is expected that legislative leaders will determine what issues the LRC will study by late September/early October.

back to the top


PAC Raffle

Please plan to participate in the PAC Raffle.  Raffle tickets will be available at the convention, but even if you are unable to join us for this great convention you can still participate.  Help the NCLTA PAC!

Download the PAC Raffle Form!

back to the top

AttachmentSize
NCLTA PAC Raffle 2013 Flyer.pdf70.03 KB
Kevin-Lockett.JPG1.92 MB

Copyright ©2014 North Carolina Land Title Association