It is time for our annual convention!!  This year it is being held September 22-24, 2022 at the Embassy Suites on the Wilmington Riverfront. It will be a fun and informative event with great speakers, wonderful food and a chance to network with colleagues you may not have seen in a while.  I hope to see you all there!

The legislative session was a busy one this year, and perhaps one of the most noteworthy items to come from it was the RON (Remote Online Notary) legislation.  NCLTA worked hand in hand with other stakeholders to help the legislature craft this bill and though it does not take effect for nearly a year and it does not do all we had hoped it would, it is a step forward.  We have included an article in this newsletter to provide you with an overview of this new legislation.

This year we have also been working to revise NCLTA’s bylaws to expand our board to include additional board positions outside of the officer track that would serve for only 3 years.  We are hopeful that this change will allow for more voices at the table and a more diverse and inclusive NCLTA.  Please reach out to me with any suggestions or concerns you have regarding this change. We are hoping to have the revisions presented to the membership later in the year. 

There are many other issues and projects that we have worked on this year and hope to complete shortly, updating the study guide, filing amicus briefs in support of the Marketable Title Act and revisions to the Condo Act, just to name a few.  We are very fortunate to have experienced, brilliant title industry individuals that work tirelessly on behalf of NCLTA to be sure that our interests are protected, and our industry is made better.

It has been a pleasure to serve as your president this year, I have met so many wonderful people and learned so much about the inner workings of the title industry, I will forever be grateful for this experience.  As the real estate industry is in a constant state of change, NCLTA is staying at the forefront of those changes, ensuring that we all have a voice at the table and that the industry continues to move forward in a way that best serves North Carolina.

Sincerely,

Sharon F. Schlachter, NCLTA President 2021-2022

Legislative Update

Legislators adjourned the 2022 legislative “short” session on July 1, although the adjournment was not “sine die.” This essentially means the legislature has adjourned to a date certain in 2022 and can call themselves back into session if they decide it is necessary to do so. The adjournment resolution adopted on July 1 provides that the legislature will reconvene on July 26, and once a month for the rest of the year. Whether the legislature takes up legislation at these sessions is to be determined. For instance, there has been talk that the legislature will tweak the regulatory reform bill approved on July 1, and may convene a legislative session after the November elections to address Congressional redistricting and various other issues. But for all practical purposes, it appears the 2022 legislative session has concluded until after the November elections.

The 2022 “short” session began in late May, shortly after the legislature adjourned the 2021 legislative session, that lasted well into 2022. The highlight of the session was the passage of the $27.8 billion state budget bill on July 1. Leaders of the North Carolina House and Senate reached a deal on the state budget the weekend before the last week of the legislative session. North Carolina has two-year budget cycles. The main budget is approved in odd-numbered years, with only minor changes typically made in even-numbered years like 2022. The 2022 state budget bill, which is House Bill 103, was approved by the House by a vote of 84 to 28, and was approved by the Senate by a vote of 38 to 9. The Governor signed the budget bill on July 11, 2022.

The state budget bill includes higher raises for state employees and teachers, money to build a new government complex in downtown Raleigh; and pay for new school safety measures in the wake of mass shootings. Legislators made a point in this state budget to prepare for an economic recession. Much of the state’s recent surplus tax collections, due in part to an economy that has outperformed predictions throughout the pandemic, will go to the bottom line, including $1 billion lawmakers set aside for an “inflationary reserve.” There are no new tax cuts in the state budget bill. Previously planned cuts in both business and personal income tax rates, which were agreed to last year, will continue. The budget does not include a number of policy initiatives lawmakers discussed as this legislative session approached adjournment, such as Medicaid expansion, medical marijuana, and online sports betting. These issues will likely be revisited during the 2023 legislative session.

The legislature is expected to convene the 2023 legislative “long” session in mid-January 2023.

REMOTE ONLINE NOTARIZATION LEGISLATION

House Bill 776, Remote Notarization/Gov’t Transparency, contains the legislature’s remote online notarization (RON) legislation. The North Carolina Land Title Association, as well as other stakeholders, worked on this bill before session, helped move the bill through the legislative process, and had input as the House and Senate negotiated a compromise bill in June 2022. Although not all of NCLTA’s suggestions were included in the bill, the legislative sponsors of the RON legislation accepted many of NCLTA’s suggestions and appreciated our providing practical information and examples about how RON would be implemented in the industry. NCLTA is still reviewing the bill, examining the operational aspects of how this process will work, etc. The RON process will not be “live” until July 1, 2023, so there is time to address any issues with the RON legislation in the 2023 session.

The final version of the bill contains the following (including but not limited to):

• Territory is limited to the US, US territories, US embassies, and military bases. 10B-134.1(10)

• The list of prohibited items remains, but importantly powers of attorney, trust certificates, and medical directives were removed from the prohibited list. However, estate planning, adoption, and voting documents remain. 10B-134.3(c)

• Exemption includes military spouses and dependents. 10B-134.3(d)

• The limitation on the use of a POA signed with RON remains but exempts RONs done for those outside the US. 10B-134.3(e).

• Includes the use of geolocating the remotely located principal to corroborate the location of the principal. 10B-134.5(a)(7)

• There is a curative provision for non-material failure of compliance with the bill. (10B-134.9(e)

• Vendor Fee provisions: 

• Vendor Liability is restructured, and still remains but is not as onerous as the prior version of the bill. 10B-134.23(e)

• The unauthorized practice of law provision was strengthened.  10B-134.25

• Notary Fees 10B-31:

• Temporary emergency video notarization (10B-25) is extended retroactively from December 31, 2021 to June 30, 2023. It also protects anything that has happened in the interim.

• Papering out section was moved from 10B and placed in Chapter 47. Section 4(a)

Also, the Government Transparency provision that was added in the Senate was removed.

The Secretary of State’s office can begin immediately adopting rules to implement the provisions of the RON legislation. The ability to use RON in North Carolina would begin on July 1, 2022. Session Law 2022-54.

CONDO ACT AND MARKETABLE TITLE ACT CHANGES

Senate Bill 278, Entireties Property Expense Reimbursement/Condo Act Changes/Marketable Title Act Changes, contains the Condo Act and Marketable Title Act changes that NCLTA worked on during the 2021 and 2022 legislative sessions. The bill:

• Clarifies the right of one spouse to reimbursement from the other spouse for expenditures made with respect to property during the time that the property is held as tenants by the entirety, as recommended by the Family Law Section of the North Carolina Bar Association.
• Requires certain information to be included in a condominium declaration before recordation.
• Clarifies the applicability of certain provisions of the Condominium Act to condominiums created on or before October 1, 1986
• Amends the Marketable Title Act to exempt provisions contained in a declaration applicable to certain condominium, cooperatives, and planned communities.

   

              Regarding the Marketable Title Act, Section 4 of the bill enacts a new subdivision G.S. 47B-3(14) that would exempt from the Marketable Title Act provisions contained in a declaration of covenants applicable to any of the following:

   

  1. A condominium created under Chapter 47A or Chapter 47C;

  2. A cooperative as defined in Chapter 47F;1 or

  3. A planned community, other than one in which all lots are restricted to nonresidential purposes, whenever created, to which any provisions in Chapter 47F apply. For a planned community created before January 1, 1999, the exemption would only apply if the community is governed by an owners' association that is in existence as of July 1, 2022.

   

  The Marketable Title Act provisions were effective July 1, 2022.    Session Law 2022-12.

   

  OTHER BILLS OF INTEREST ENACTED INTO LAW IN 2022

  House Bill 1018, GSC Bar Ass'n Proposals/Landmark Designation, contains technical changes requested by the Real Property Section of the NC Bar Association, to include:

  Section 1 amends G.S. 47-18.1 to correct the section catchline so that it accurately reflects the substance of the statute. It also corrects the catchline and makes a corresponding change in subsections (a) and (b) to align certain language in this statute with the language in G.S. 55D-26, so that both statutes are consistent. G.S. 55D-26 requires business entities to record with the register of deeds certain certificates issued to them by the Secretary of State. This section makes additional technical changes to replace legalese with plain English and to remove unnecessary language.

  Section 2(a) amends G.S. 47-119 to clarify that a memorandum may be used to register numerous types of instruments described in G.S. 47-18, in conformity with changes S.L. 2021-91 made to G.S. 47-18. Under current law, G.S. 47-119 applies only to a memorandum for an option to purchase real estate. This section also makes stylistic changes to clearly identify the required components of a memorandum, including which parties must sign the memorandum, and to remove the statutory form. It also makes technical changes to replace legalese with plain English, to modernize the format of a list, to fix relative pronouns, and to replace the term "property" with "real estate" for consistency with the rest of the statute.

  Section 2(b) amends G.S. 47-119.1 to clearly identify the required components for a memorandum for contract to purchase real estate, including which parties must sign the memorandum, and to remove the statutory form. It makes stylistic changes to accomplish this purpose and makes technical changes to replace legalese with plain English, to fix relative pronouns, and to replace the term "property" with "real estate" for consistency with the rest of the statute.

  Section 2(c) amends G.S. 47-120 to conform to the changes made in the PCS to G.S. 47-119 and G.S. 47-119.1. It also makes technical changes to replace legalese with plain English, to eliminate unnecessary language, to fix a relative pronoun, to make stylistic changes for clarity, and to update language to use the term "notary public."

  Section 3(a) adds a new G.S. 41-6.5 to abolish the common-law rule against perpetuities. G.S. 41-22 currently provides that the Uniform Statutory Rule Against Perpetuities "supersedes" the common-law rule against perpetuities. Section 3(c) provides that this section is effective when it becomes law and does not affect any rights adjudicated in a final court decision entered on or before that date.

  Effective: July 8, 2022. Session Law 2022-64.

  Senate Bill 762, NC Farm Act of 2022, among other things, provides that in the event of a tax foreclosure on property encumbered by a conservation agreement as defined in G.S. 121-35(1), the conservation agreement is not extinguished upon the sale of the property. Effective July 8, 2022. Session Law 2022-55.

  Senate Bill 769, GSC Postponement/Judicial & Amp Execution Sales. This bill, recommended by the General Statutes Commission, allows judicial sales and execution sales to be postponed up to 90 days, aligning the postponement authority for judicial and execution sales with that of sales under a contractual power of sale clause. The bill also makes conforming, clarifying, and numerous technical changes to each statute amended. Effective: October 1, 2022. Session Law 2022-60.

   

  BILLS OF INTEREST NOT ENACTED INTO LAW

   

              There were a number of bills of interest introduced this legislative session that either did not receive consideration, or did not make it through both chambers:

   

• House Bill 304, Protect Personal Info/LEOs, Judges, DAs, would require cities and counties to remove personal information from websites maintained by counties and cities when requested by certain law enforcement personnel, prosecutors, and judicial officers. The bill would require cities and counties to develop a process to govern the removal. The information would remain in any paper files maintained by the city or county. This bill was not enacted into law.

   

• House Bill 367, Uniform Partition of Heirs Property Act, would enact the Uniform Partition of Heirs Property Act. The bill would define “heirs property” as real property held in tenancy in common that satisfies all of the following as of the filing of a partition proceeding:(1) there is no agreement in a record binding all the cotenants which governs the partition of the property; (2) one or more of the cotenants acquired title from a relative, whether living or deceased; and (3) 20% or more of the interests are held by cotenants who are relatives, 20% or more of the interests are held by an individual who acquired title from a relative, or 20%or more of the cotenants are relatives. The bill would require a court, in a proceeding to partition real property under Article 2 of GS Chapter 46A to determine whether the property is heirs property; if such a determination is made, then the property must be partitioned under this Part unless all of the cotenants agree otherwise in a record. Sets out the procedure for notice by posting when a petitioner in a partition proceeding seeks authorization for notice by publication and the court decides that the property may be heirs property. The bill would require any commissioners appointed to partition the property by the court to be disinterested and impartial and not a party to or a participant in the proceeding. The bill would require the court, if it determines that the property that is the subject of a partition proceeding is heirs property, to determine the fair market value of the property by ordering an appraisal. The bill would require the court, however, to adopt a valuation or use another method of valuation when it has been agreed to by all cotenants. The bill provides that if the court determines that the evidentiary value of an appraisal is outweighed by the cost of the appraisal, the court must determine the fair market value of the property, after an evidentiary hearing, and send notice to the parties. The bill sets out the procedure to be followed when an appraisal is conducted. The bill would require the court, when any cotenant requested partition by sale, after the determination of value, to send notice that any cotenant except one requesting partition by sale, may buy all of the interests of the cotenants making the request. This bill was not enacted into law.

   

• Senate Bill 314, Local Gov Commission Assistance. An earlier version of the bill addressed when register of deeds offices must be open – by stating that “except for official state holidays, the office of the register of deeds shall be open for business Monday through Friday, at least 40 hours per week. The office shall not close before 5:00 p.m.” Current law allows county commissioners to determine the office hours of the register of deeds office. Although this bill ultimately was enacted, the provisions described herein were not included in the bill enacted by the legislature.

   

• Senate Bill 358, C-PACE Program, would advance building resiliency and utility efficiency in North Carolina by authorizing a statewide program to utilize assessments to repay nonpublic financing of commercial building improvements that will promote economic development, reduce utility bill costs, and harden commercial buildings against storm and flood damage. This bill was not enacted into law.
• Senate Bill 368, Transfer on Death Deeds, would enact the Uniform Real Property Transfer on Death Act and to allow for the designation of a beneficiary on vehicular certificates of title. This bill is substantially similar to the bill with the same title introduced during the 2019 legislative session. Due to concerns raised by NCLTA and the Administrative Office of the Courts (AOC), the bill was not considered in committee. This bill was not enacted into law.
• Senate Bill 378, Eminent Domain, would amend the North Carolina constitution to prohibit condemnation of private property except for a public use (deletes reference to public benefit), and make other technical and conforming changes. This bill was not enacted into law.

   

• Senate Bill 427, Discharge of Discriminatory Covenants, would establish a process for the discharge of discriminatory covenants in the chain of title for real property. The bill would create a new Article 4 of Chapter 22B titled "Discriminatory Real Property Restrictions” and provides that no written instrument shall contain any provision (i) restricting in any manner the conveyance, lease, use, mortgage, or encumbrance of real property or (ii) otherwise discriminating against any person's or class of persons' status as a protected class. The bill provides that a provision within a written instrument that is commonly understood as describing or referring to a protected class shall also be prohibited under this section. The bill defines “written instrument” an instrument relating to or affecting real property, including a deed, plat, will, or trust. The bill would establish a statutory form that may be used to discharge and release a prohibited covenant under this Article. This bill was not enacted into law.

For more information about legislation described in this article, feel free to contact me at dferrell@nexsenpruet.com or (919) 573-7421.  Information is also available on the General Assembly’s website: www.ncleg.gov.