President's Message

2020 was a year like no other and will definitely go down as a significant and unprecedented time in the history books. We had the global pandemic that dominated the news outlets along with other important events such as Black Lives Matter and a turbulent global economic and political landscape that included a contentious presidential election that has undoubtedly impacted businesses, corporations, and the title industry.

During these unusual times your NCLTA leadership and staff has been continuously working hard to stay abreast of legislative changes that affect our customers and our industry such as the Remote Online Notarization (RON),  information shielding/reaction laws, Good Funds Settlement Act, Corporate Transparency Act (FINCEN Beneficial Ownership filings from Defense Act) and the Uniform Easement Relocation Act . The NCLTA Legislative Committee along with the Real Property Section of the North Carolina Bar Association and ALTA also have been monitoring the ALTA 2021 Policy Form re-draft and new ALTA/NSPS Survey Standards revisions.

As the newly elected president, I was scheduled to attend the American Land Title Association’s 2020 Conference, ALTA ONE in New York but due to the pandemic, the in-person event was cancelled.  ALTA was able to have a great virtual convention that included timely topics such as Face Time to FaceTime: Managing and Growing Your Business in a Virtual World and How the Housing Market Weathered the COVID-19 Storm and Where it Goes from Here.  The 2021 ALTA One Convention is scheduled for October 12 – 15 in New Orleans, LA.

We are excited that we are able to host our 2021 NCLTA Convention at the Omni Oceanfront Resort in Hilton Head on September 16-18, 2021.  After the year we have all experienced with quarantining and social distancing, it will be great to be able to meet in person and fellowship with all of our members.

Thanks to everyone for your continued membership with NCLTA.  I wish continued success in 2021 to all of our members.

Jimmica Cofield
President NCLTA 2020-2021

NCLTA 2021 Convention

Save the Date! The 2021 Convention is planned for September 16-18, 2021 at The Omni Oceanfront Resort in Hilton Head, SC.  We have 6.5 hours of CLE planned with topics including ALTA Update, Ethics, NCBA Real Property Update, Legislative Update, Economic Update and Legal Descriptions. 

Please call the hotel today and book your room 1-800-843-6664. Ask for group code 0915NCLANDTITLE or use the link HERE to book your room online. NC Land Title Association has reserved a block of rooms starting at $259 per night plus tax and $25 resort fee.  All reservations must be guaranteed by a valid major credit card, which will be supplied at the time of reservation. Any guaranteed reservation not cancelled seven (7) days prior to arrival will be subject to one (1) night room and tax cancellation fee.  The cut off-date for room reservations is Monday, August 23, 2021 at 5:00pm.  

Highlights of Changes in the Proposed 2021 ALTA Owner’s and Loan Policies

Anticipated Effective Date 7/1/2021

by:       Nancy Short Ferguson, Chicago Title Insurance Company
            T. Karl Knight, First American Title Insurance Company
            (2/28/2021)

As most of our NCLTA members know, the American Land Title Association (ALTA) Forms Committee has been diligently discussing revisions to the loan and owner policies almost since the ink was dry in 2006.  These are in response to the multitude of continuing changes in the real estate industry and the law since that time, such as the Great Recession and the CFPB, for just a couple of examples.  This relatively brief article is to highlight those changes. 

For more detail, there simply is no substitute for reading the actual policy and commitment provisions.  ALTA has provided redline versions of the draft owner and loan policies and a comparison chart, as well as the commitment, on-line at:  ALTA.org à Business Tools à Policy Forms https://www.alta.org/policy-forms/. 

Some important points:

• All of the other policies (other than the USA policies), and many of the endorsements will be modified as well, in conformity.However, those are not discussed in detail in this article or on the ALTA website at this point.
• ALTA has tried to keep the numbering of the Covered Risks, Exclusions and most Conditions consistent since we use those as industry references, such as the “3(a) Exclusion.”However, the Definitions have been increased substantially and, thus, renumbered, and will be again prior to final adoption.NOTE:Condition numbers referenced herein are based on the 12/31/2020 draft version and may change in the ultimate policy versions approved.Also, references that differ between Owner’s Policy (OP) and Loan Policy (LP) may be indicated; otherwise, the numbering may be the same for both.
• Many of the changes are grammatical or for clarifications, not substantive.
• This is considered a “revision” of 2006 policy.  So, references to “-06” Endorsements will not automatically trigger changes to all endorsements.
• A few endorsements will be revised, primarily because of the definitions changes, including the ALTA Endorsement Series, 6, 10, 11, 14, and 30, and a new ALTA 47 series, discussed briefly below, will be added.
• Conforming changes will be made to the ALTA Commitment as well.
• Capitalized terms are using the new definitions under the proposed policies.
• Bracketed items in the policy forms are, as always, optional.

Most of these issues could entail an entire article on their own.  So, these discussions may be superficial at best, simply highlighting the issues for further reference. Otherwise the forms will be the filed forms, and the only forms approved for use by underwriters in North Carolina other than the forms for which any have provided their own independent filings to and approval by the NCDOI.

The NCLTA Forms Committee is watching these changes closely.  As soon as the forms to be revised are “final” with ALTA (most presumed effective 7/31/2021), the NCLTA will seek approval by the Board and will submit to the NC Department of Insurance for approval on behalf of the member companies.  Most underwriters will presumably be working with their software vendors to implement the applicable changes.

Some Critical Specific Changes:

• Transaction Information Data (primarily loan number and Property Address) do NOT constitute covered matters under the Commitment or the policies.The information has been moved above the Schedule A designation to make this clear and has been reiterated in that introductory header and in the Conditions of the policies (currently 9.d. of the Owner’s Policy and 9.e. of the Loan Policy).

   

• Any applicable ALTA endorsements for which a copyright standard is published so a relatively simple reference is appropriate can be incorporated by reference in the Schedule A of both the proposed loan and owner’s policies, which should further facilitate digitization and reduction of paper and document length.

• A Pro Forma is not an actual policy and/or endorsement unless / until it is signed by issuer and a policy number is assigned.Thus, the Pro Forma does not yet provide the coverages of a policy and is not a contract of insurance itself, but is just an example of the policy provisions once all of the Requirements of the Commitment or Endorsement Pro Forma are met.For example, some underwriters show “Pro Forma” on signature lines and do not give a policy number.Until the final policy number has been assigned and the policy signed by a licensed underwriter, the Proposed Insured’s contract regarding title remains the Commitment, subject to the Requirements and other provisions therein.

   

• Definitions, and related policy provisions with significant changes include the following:
  • “Consumer Protection Law” is more broadly and generally defined in response to the Dodd-Frank Act, creation of the CFPB and other regulatory changes since 2006.
  • “Insured” and “Affiliate” are more broadly and clearly defined, such that the policy coverages will continue into the ownership by not only those who take by operation of law (as before), but also through deed conveyances, including family estate plans, marital dissolutions and business related transfers.Affiliate is limited to those wholly owned by or wholly owning the Insured, or both wholly owned by the same parent.In another new provision, a conveyance from one co-Insured to another co-Insured continues the grantor’s full protection to the grantee.The definitions are, however, very specifically crafted and should be consulted at the time of any conveyance to determine if an endorsement assuring the continued coverage might be appropriate.
  • “Insured” in the loan policy has been extended to include Affiliates who take title through foreclosure or deed in lieu of foreclosure as well as to address the interests of any “Government Mortgage Agency or Instrumentality” who may be or become the owner, insurer or guarantor of the Indebtedness, such as the Secretary of Housing and Urban Development or the Veterans Administration.
  • The revised and expanded definition of the “Indebtedness” now addresses the specific components of the “Indebtedness.” Of critical importance, the definition now includes a component “(3) the construction loan advances made subsequent to the Date of Policy for the purpose of financing, in whole or in part, the construction of an improvement to the Land or related to the Land that the Insured was and continues to be obligated to advance at the Date of Policy and at the date of the advance.”These components are treated separately under Covered Risk #10 (which deletes this construction loan component and is subject to the Exclusion 3(d) for post-policy matters) as compared to Covered Risk #11 (which specifically addresses certain types of construction loan advances which are not excluded as post-policy matters under Exclusion 3(d)), discussed below.
  • A new definition of “Discriminatory Covenants” is anticipated under the revised proposed 2021 policy and commitment forms, to clarify the introductory header to Schedule B Exceptions for each.The definition will replace the need for similar conditional language in exceptions for covenants and restrictions for which the balance of the restrictions may remain enforceable and, thus, relevant exceptions.The definition draft to date is: “Any covenant, condition, restriction, or limitation that under applicable law illegally discriminates against a class of individuals based on personal characteristics such as race, color, religion, sex, sexual orientation, gender identity, familial status, disability, national origin, or other legally protected class.”The Civil Rights Act of 1964 prohibits enforcement and 42 U.S.C. 3604(c) prohibits even recording and instrument with such covenants.And the definition is left broad to allow for any possible additional changes in those which comprise a “legally protected class.”
  • A new definition of “Enforcement Notice” to facilitate the distinction between excluded governmental enforcement actions or PACA/PSA trusts (which could not be found in a title examination) and those that fall under Covered Risks 5-8 (because the Enforcement Notice is recorded in the Public Records).The Enforcement Notice must be by the applicable or party seeking to enforce the PACA/PSA trust.
  • The definition of Public Records has been further clarified to documents that must be filed for constructive notice (as required by our race recording statutes, G.S. 47-18 and G.S. 47-20 among others, for example).In addition, the revised definition clearly carves out other records considered “public” for other purposes (such as the NC public records acts and the federal Freedom of Information Act), to wit:“The term “Public Records” does not include any other recording or filing system, including any pertaining to environmental, planning, permitting, zoning, licensing, building, health, public safety, or national security.”The earlier reference to the U.S. District Court has been deleted since most states, including North Carolina, have long ago adopted the Uniform Federal Lien Registration Act, Article 11A, of Chapter 44 of the North Carolina General Statutes.”

   

• “State” and “Tribe” definitions are being added and will replace “jurisdiction” in many places.While considering the proposed 2021 revisions to the 2006 ALTA Owner and Loan policies a major concern for the ALTA erupted last summer in the form of a U.S. Supreme Court decision entitled McGirt v. Oklahoma, 591 U.S. ____ , 140 S.Ct. 2452 (2020).McGirt presented a challenge to Oklahoma’s exertion of criminal jurisdiction over a Native American (McGirt) on what were previously thought to be non-Tribal lands.If Mr. McGirt were correct, then the law applicable to where his criminal acts allegedly occurred would have been the Federal Major Crimes Act, not the Oklahoma penal code.As it turns out, in a 5-4 decision the Court agreed with Mr. McGirt, overturning his conviction and ruling that large portions of eastern Oklahoma were still tribal lands.We might ask ourselves, “What does a federal criminal case have to do with real estate, let alone insuring it?”Because if tribal law applies, it invokes an entirely different jurisprudence from zoning, to taxes to education … and of utmost concern to our industry, real estate.

   

  The ALTA Forms Committee will be dealing with these jurisdictional issues in the 2021 revisions (not yet on-line at the time of this writing).  Meanwhile, to accommodate continued use of the 2006 policies, the Forms Committee has proposed use of the ALTA 47 series[i] endorsements entitled “Operative Law.” This new series addresses tribal-state jurisdictional concerns by defining what is considered a U.S. state, commonwealth, or territory, and what constitutes an “Indian tribe, band, nation, community, or other organized group recognized as having a government-to-government relationship with the United States or a State[,]” under the existing policies.  The endorsement then re-writes Condition 17 (Choice of Law; Forum) to clarify that the risks covered by the policies as underwritten, are based on the law of the state where the land in located, and that the law to be applied to claims under the policy by any court or arbiter shall be that state’s laws.  Further, any litigation, or other proceeding, brought by the Insured against an Underwriter must be filed in either that state’s courts, or the US federal courts operating in that state. 

   

  Next, the endorsement makes Exclusions 1 and 2 under the 2006 policy, which exclude coverage for governmental “police powers” (i.e., zoning, occupancy, subdivision, and environmental protections), and eminent domain, apply equally to any Tribe’s governmental police powers and rights of eminent domain. 

  Then, lastly, the endorsement adds new Exclusion 6 to the policy terms excluding, “Defects, liens, encumbrances, adverse claims, notices, or other matters not appearing in the Public Records but that would be disclosed by an examination of any records maintained by or on behalf of a Tribe or on behalf of its members.”  Translated, the policy, with this endorsement added, will not cover defects in title that could be found in Tribal records when the searcher does not, or cannot, search such records. 

   

• Acknowledging the new technologies affecting our industry, the policies address remote notarization, validity of e-signatures on docs as well as digital policies, thereby incorporating the ALTA Endorsement Form 39 coverage (though that endorsement will remain available when requested for pre-2021 form policies and endorsements).

   

• Uniform Fraudulent Transfer Act is replaced by the Uniform Voidable Transactions Act, which substituted “voidable transaction” for “fraudulent transfer.” (G.S. Ch. 39, Arts. 3 and 3a, 2014).So, the new Act has been incorporated in the earlier provisions.

   

• New policy Exclusion #7 (OP) and #9 (LP) clarifies that title policies do not insure “[a]ny discrepancy in the quantity of the area, square footage, or acreage of the Land or of any improvement to the Land.”This alleviates the need for an exception to be taken in Schedule B, in hopes that this will reduce the pushback periodically received from proposed insureds hoping to simplify or pare down the Schedule B exceptions.

   

• Like the Commitment, the revised introductory header to Schedule B will include exception to Discriminatory Covenants, as well as the terms and conditions of easement(s) or lease(s) in Schedule A.With regard to the insured easements and leases, the recommended practice (and possibly requirement of some underwriters) is still to include a specific exception to same in Schedule B, identifying the recorded book(s) and page(s), including if they are recorded as part of the transaction documents.Title insurers may insure a title interest in Schedule A, “Land.” But they do not, by doing so, cover related terms and conditions such as payment of rent, compliance with lease or easement terms, rights of others under those documents, as these revisions make clear.

   

• The Loan Policy allows for a Schedule B-II, if needed because of subordinate matters on or before Date of Policy.The introductory header clarifies that Condition #10 priority coverage is still subject to the terms and conditions of any subordination provision in a subordinated item.The classic example would be the Subordination, Non-disturbance and Attornment Agreement provisions of an otherwise subordinated lease.NOTE:This is limited to Condition #10 priority, not extended to Condition #11 construction loan coverage.

   

• Like the Notice at the beginning of the ALTA Commitment, Condition 8 of the policies makes clear that this is a Contract of Indemnity, indemnifying against certain types of loss or damage, possibly defense costs, but subject to all the provisions of the particular policy.It is a contract and governed by its own terms, not in tort (such as malpractice or negligence).It is not an abstract, opinion, or other representation of the actual status of the Title to the identified Land.Thus, under Conditions 18 (OP) and 17 (LP), no class actions are authorized under any particular policy’s coverage since it is specific to the Land, Insureds and terms in the policy itself.

   

• Future advances – Lines of Credit vs. Construction Loans:

  Covered Risk #10 is critically revised to outline the priority of the Insured Mortgage over certain components of the Indebtedness, but to noticeably delete that construction loan component (3) of Indebtedness from its priority coverage; thus, post-policy advances under Exclusion 3(d) are not covered under this provision.  For coverage of future advances (other than the limited Condition #11 construction loan advances), an ALTA Endorsement Form 14 or similar additional endorsement would be needed.

   

• Construction loans and post-policy advances are addressed under Covered Risk #11, which is specifically carved out of the post-policy Exclusion 3(d).Covered Risk #11 provides for the priority of any “advance of proceeds” under the Insured Mortgage over mechanics’ liens if the advance is either:
  • Under 11.a.i.“contracted for or commenced on or before the Date of Policy;” indicating the need for lien waivers and/or subordinations under NC lien law or
  • Under 11.a.ii. “contracted for, commenced, or continued after the Date of Policy if the construction is financed, in whole or in part, by proceeds of the loan secured by the Insured Mortgage that the Insured has advanced [i.e. pre-closing] or is obligated on the Date of Policy to advance …”Thus, subparagraph ii. would also indicate the need for waivers and subordinations.It would be rare that the lender is unconditionally obligated to make advances under the loan documents.

   

  So, the 2021 changes add clarification to Condition #10 and, thus, the distinction and importance of the coverage under Condition #11.  But these make clear the need for the prior analytical requirements to address post-policy advance priorities, including consideration of the factual and legal priorities, the need for applicable waivers and subordinations, and the need for the ALTA 14, ALTA 32 series and ALTA 33, or similar endorsements.  As always, any troubled project should be discussed with the title insurer immediately, whether as a pre-closing discussion or a post-closing workout or default situation.  See Captiva Lake Investments, LLC. V. Fidelity National Title Insurance Company (8^th Cir. 2018) 883 F.3d 1088 and B&B Syndication Services, Inc. v. First American Title Insurance Company (7^th Cir. 2015) 780 F.3d 825.

   

• The Conditions have been changed to address several claims related issues on both the loan policy and the owner’s policy.For each the alternative date of loss calculation has been changed to benefit the Insured, the cure penalties in the event the title company chooses to litigation and cannot cure the title defect has been increased to 15%, and the continuation of coverage provisions have been clarified.For lender Insureds under the loan policy, the earlier perceived ambiguity regarding the loss calculation in the event the lender forecloses and enters a full credit bid have been clarified, -- again, to the benefit of the Insured lender.The loss calculation will be based on fair market value as of date Insured acquires title by foreclosure or deed in lieu OR date Insured’s interest is extinguished and the loss is due to the defect, notwithstanding their having bid more at the foreclosure.And this coverage extends to a lender Affiliate (as defined in the policy) who acquires title through a foreclosure or deed in lieu of foreclosure.

   

• Under the Conditions, the policy and any amendments are the Entire Contract.They are a filed form and no side agreements should be used or relied on unless incorporated into the coverages, exceptions and endorsements of the policy.Similarly, any amendments must be by policy or endorsement; otherwise, the underwriter has reserved defense to any coverage outside the policy and endorsements on the particular transaction.

   

• The Arbitration clauses remain bracketed (optional) items but have been updated and revised in response to the CFPB required consumer protection changes.

• PACA and PSA Trusts are the subject of a new definition as well as a Covered Risk (if an Enforcement Notice was filed in the Public Records) and an exclusion (if no Enforcement Notice, thus an inchoate “hidden” lien).“PACA” stands for the Perishable Agricultural Commodities Act, whereas “PASA” or “PSA” stands for the Packers and Stockyards Act.  The abbreviations are usually melded together and presented as “PACA/PASA” or “PACA/PSA.”The Acts can be found at 7 U.S.C. §§499a, et seq., and 7 U.S.C. §§181 et seq., respectively.Together they each impose a federal statutory lien, not unlike a federal tax lien, for dealers of fresh vegetables, fruits, and other perishable produce (PACA), as well as dealers of livestock and poultry growers (PSA).  Congress passed these acts in the 70s and 80s to provide farmers with protection from what were at the time unfair practices imposed by brokers and middlemen since repossession or foreclosure in such circumstances is impractical.  However, today, with these laws still on the books, the PACA/PASA applies to anyone dealing in the wholesale or retail buying and selling of perishable agricultural good.  (Think high-end grocers and “farm-to-market” restaurants.)In essence, under both PACA and PSA, the retailer holds these goods subject to the seller’s lien so that when the retailer sells the goods the lien shifts to the money the buyer receives, and in turn to any personal and real property the retailer subsequently purchases with that money.As a federal statutory lien, no recording or filing will be found in the Register of Deeds or Clerk’s office.They should be treated as having super-priority status as the lien attaches immediately to any funds received pursuant to the sale of the goods by the retailer.

Thoughts on Underwriting Changes

Underwriters may consider beginning to consider possible underwriting change, such as:

(1) modifying or adding requirements and exceptions related to changes in defined terms or substantive matters in the policy;

(2) re-articulating the affirmative coverages, such as those conditioned on a final decree of a court of “competent jurisdiction”, such as the ALTA 3’s and ALTA 29’s;

(3) considering the use of the ALTA 47’s and other issues with any upcoming endorsements to pre-2021 policy endorsements, such as date downs or modifications.

[i] When perusing the ALTA 47 series, you will note that the endorsements have been written to accompany issuance of all the major ALTA policies, 2006 Owner and Loan, ALTA Homeowner, Extended Coverage Loan (both long and shortform versions), etc.  Discussion here is limited to the ALTA 47[-06] as it best illustrates the overall import of the series. 

Legislative Update

by: David Ferrell
As of March 26, 2021

As bills continue to be filed during a busy week at the General Assembly, Speaker Tim Moore announced the House would be taking a spring break the week of April 5. The House has taken similar breaks during previous sessions. The House will hold skeletal sessions during the week, but no votes will be taken. The Senate is expected to take a similar break but has not made an announcement yet.

The Governor released his budget requests for the next biennium on Wednesday, and his State Budget Director presented the Governor’s Budget to the House and Senate Joint Appropriations Committee on Thursday. The Governor’s budget proposal would give teachers 10% raises over two years, increase education funding and put a bond on voters’ ballots this fall. The Governor’s education funding requests include:

• $485 million in teacher and administrator pay, with an average pay raise of 10% over two years, as well as restoring master’s degree pay and reducing veteran teacher pay plateaus.
• 7.5% raises for school districts’ central office staff and noncertified public school employees.
• $15 an hour minimum wage for noncertified, public school employees including teaching assistants, cafeteria workers and bus drivers.
• $2,000 bonuses for teachers, principals, noncertified public school employees, university employees and community college employees this fiscal year and another $1,000 bonus next year.
• $52 million for educator recruitment, retention and training.
• $80 million for more school nurses, counselors, psychologists and social workers.

Governor Cooper proposed putting a $4.7 billion general obligation bond the ballot this November that would fund $2.5 billion for public schools, $783 million for the UNC System, $500 million for the community college system, $430 million for health and safety projects across state government and $460 million for parks, zoos, museums and state historic sites.

Governor Cooper’s budget proposal also includes a 7.5% raise over two years for UNC and state-funded local community college employees. All other employees would see a 5% raise over two years. The proposal calls for a $1,000 bonus each of the next two years for all state-funded employees. Another $58.3 million is proposed for salary adjustments.

The Governor’s budget would expand Medicaid, which was the sticking point between the Governor and the Republican-led legislature in the 2019 budget negotiations – and which led to Governor Cooper’s veto of the legislature’s 2019 state budget bill. Senate Republican leadership has not supported the Governor’s Medicaid expansion proposals, citing potential long-range costs to the state. In the House, there was some Republican support for expansion that came with a work requirement and payments, but that proposal was not successful. Health care funding could still come up as a key issue this session not part of the overall budget negotiations. Cooper said he is hopeful that given the Biden administration’s American Rescue Plan and other factors there could be a different result this time.

With the Governor’s budget requests in hand, Senate leaders will continue to work on their final budget proposal for the General Assembly. Senate leaders will also consider budget requests from each of the appropriation subcommittees which have been meeting for months. The Senate will have the first opportunity to consider and vote on the budget, and what passes the Senate will then go to the House. House leaders will take the budget through the same process before it is voted on by that chamber. If there are differences between the Senate budget and House budget, leaders from each chamber will meet to work out the differences before the budget goes to each chamber again for a final vote. The last stop for the budget is the Governor’s desk where he can choose to sign it, allow it to become law without his signature, or veto it.

The House and Senate adjourned on Thursday and will reconvene on Monday March 29.

BILLS OF INTEREST

House Bill 344, System Development Fees Update, would clarify the process with which a local governmental unit may impose and collect system development fees. Introduced by Representatives Arp, Hardister, Hanig and Meyer and referred to the House Finance Committee.

House Bill 352, Hotel Safety Issues, would clarify that occupants of accommodations provided by hotels, motels, or similar lodgings do not create a tenancy and are not subject to Chapter 42 of the General Statutes, and would clarify that these occupancies are governed by the statutes relating to inns, hotels, and other transient occupancies. The bill defines "transient occupancy" as the rental of an accommodation by an inn, hotel, motel, or similar lodging to the same guest or occupant for fewer than 90 consecutive days. The bill is intended to address a hotel owner’s ability to remove a guest that is not paying their bill or is causing damage to the premises. 
Introduced by Representatives Bradford, Mills, Moffitt and Richardson and referred to the House Judiciary 1 Committee.

House Bill 357, Gaston County Public Notices, would allowing Gaston County to publish public notices electronically on the county-maintained website and to set reasonable fees to cover the cost of providing electronic notice. Introduced by Representative Torbett and referred to the House Local Government Committee.

House Bill 361, APA Rules Review Definitions, would define the term “guidance document, bulletin, or memorandum in the possession of a state agency as “a document developed by a State agency or staff that provides information or guidance of general applicability to the staff or public to interpret or implement statutes or the agency's rules or regulations, excluding agency minutes or documents that pertain only to the internal management of the agency.” This implication is that these documents would be available to the public or would be required to be provided to the public upon request. Introduced by Representatives Moffitt, Johnson, Pare, and Wray and referred to the House Regulatory Reform Committee.

House Bill 366, Regulatory Reform Act of 2021, would among other things:

-Allow a city to require by ordinance that manufactured homes be installed in accordance with the Set-Up and Installation Standards adopted by the Commissioner of Insurance; provided, however, a city shall not require a masonry curtain wall or masonry skirting for manufactured homes located on land leased to the homeowner.

-Amend G.S. 58-41-15, the insurance statute pertaining to notice of cancellations application to many insurance policies including title insurance policies, to provide that proof of mailing is sufficient proof of notice of cancellation

-Clarify the law regarding recovery of out-of-pocket expenses and litigation costs in summary ejectment actions

-Enact statutory provisions to provide for post-judgment relief agreements between landlords and tenants

-Clarify law related to hotel owners ability to remove people from hotels for not paying their bills etc.; and stating that guests in a hotel for less than 90 days are not tenants under the protections of the landlord-tenant laws.

Introduced by Representatives Yarborough, Bradford, Moffitt, and Riddell and referred to the House Regulatory Reform Committee.

House Bill 366 passed the House Regulatory Reform Committee on Thursday and was referred to the House Rules Committee.

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 toor 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. The bill would allow any cotenant, except the one requesting partition by sale, to give notice to the court no later than 45 days after the notice is sent stating that they elect to buy all interest of the cotenant requesting partition by sale. The bill sets out the process for determining the purchase price. The bill sets out procedures that apply at the end of the 45 days, varying based on how many of the cotenants (including, none) elect to buy the interests of the cotenant requesting partition by sale, including setting deadlines by which the electing cotenants must pay their apportioned price.

The bill would allow a cotenant who is entitled to buy an interest to request, no later than 45 days after the court sends notice to the parties, that the court authorize the sale as part of the pending proceeding of the interests of cotenants named as respondents and served with the complaint but that did not appear in the proceeding; and would allow the court to deny the request or authorize the requested additional sale on fair and reasonable terms, subject to the stated limitations. The bill provides that when all the interests of all cotenants that requested partition by sale are not purchased by other cotenants, or if after conclusion of the buyout, a cotenant remains that has requested partition in kind, the court must order partition in kind unless the court, after consideration of all seven listed factors, finds that partition in kind will result in substantial injury to the cotenants as a group. The bill would require that when the court does not order partition in kind, the court must order partition by sale or, if no cotenant requested partition by sale, the court is required to dismiss the proceeding. The bill sets out the processes to be followed when the court orders partition in kind.

The bill would require that when the court orders a sale of heirs property, the sale must be an open-market sale unless the court finds that a sale by sealed bids or an auction would be more economically advantageous and in the best interest of the cotenants as a group. The bill sets out the procedures to be followed for an open-market sale, including the appointment of a real estate broker when one is not agreed upon; procedures to be followed depending on whether or not the broker receives an offer to purchase in a reasonable time; and requirements for the broker to report to the court. Sets out requirements for when the court orders a sale by sealed bids or an auction. The bill provides that in applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it. The bill sets out how this new Part relates to the Electronic Signature in Global and National Commerce Act. Introduced by Representatives Szoka, K. Hall, White and Turner and referred to the House Judiciary 1 Committee.

House Bill 401 Increase Housing Opportunities, would provide reforms to local government zoning authority to increase housing opportunities and to make various changes and clarifications to the zoning statutes. Introduced by Representatives D. Hall, Moffitt, Brody and Richardson and referred to the House State Government Committee.

House Bill 425, Development Regulations/Multijurisdiction, would establish a default jurisdiction for a parcel of land that lies within the planning and development regulation jurisdiction of more than one local government. The bill provides that in the event no mutual agreement exists, the decision as to which jurisdiction shall control an entire project, including utilities; annexation for utility access; if applicable, all proposed and future phases; and other services offered by the controlling jurisdiction shall be made by the developer. The developer or petitioner may enter into an agreement with multiple jurisdictions for any part of the development subject to the permission of the controlling jurisdiction. This bill would only be applicable to development regulations and shall not affect taxation or other nonregulatory matters. Introduced by Representative Brody.

Senate Bill 329, Building Code Modifications, would exempt certain small projects (generally, commercial projects under $300,000) from architectural building code and building permit requirements. Introduced by Senators Jarvis, Johnson and Davis and referred to the Senate Rules Committee.

Senate Bill 336, Condominium Declaration Requirement Changes, would make certain clarifying changes to the Condominium Act changes from the 2020 legislative session, as recommended by the NC Land Title Association and the Real Property Section of the NC Bar Association. The bill would among other things amend G.S. 47C-2-105, “Contents of

declaration”, subsection (a)(5), to add the following language at the end of the subsection:

“A unit that is not specifically described by an upper limiting boundary with reference to established datum shall be deemed to include so much of the land and air above the unit as would be attributed to a noncondominium parcel of land under the common or statutory law applicable to such noncondominium parcel of land. A unit that is not specifically described by a lower limiting elevation boundary with reference to established datum shall be deemed to include so much of the land and air below the unit as would be attributed to a noncondominium parcel of land under the common or statutory law applicable to such noncondominium parcel of land.”

Introduced by Senator Daniel and referred to the Senate Rules Committee.

Senate Bill 349, Increase Housing Opportunities, would provide reforms to local government zoning authority to increase housing opportunities and to make various changes and clarifications to the zoning statutes. Introduced by Senators Edwards, Newton and Fitch and referred to the Senate Rules Committee.

Senate Bill 354, Restore Funding/State Conservation Purposes, would restore the use of proceeds from the deed stamp excise tax to the original purpose of land conservation. The bill provides that of the funds remitted to it pursuant to this section, the Department of Revenue shall credit 30% to the Parks and Recreation Trust Fund established under G.S. 143B-135.56, 30% to the Land and Water Fund established under G.S. 143B-135.234, 30% to the Coastal Storm Damage Mitigation Fund established under G.S. 143-215.73M, and 10% to the North Carolina Agricultural Development and Farmland Preservation Trust Fund established under G.S. 106- 744. Introduced by Senators Lee, Ballard and Lazzara.

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. The bill would Introduced by Senators Johnson, Lazzara and Woodard.

BILL STATUS

House Bill 271, Eminent Domain, passed the House Judiciary 1 Committee on Tuesday, passed the House Rules Committee on Wednesday, passed the House on Thursday, and was sent to the Senate for consideration.

House Bill 320, Modernize Remote Business Access, passed the House Judiciary 1 Committee on Tuesday, passed the House Rules Committee on Wednesday, passed the House on Thursday, and was sent to the Senate for consideration.

For more information about legislation described in the legislative reports, 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.

Prepared By: David P. Ferrell, Esq. - NCLTA Lobbyist

NEXSEN PRUET PLLC

150 Fayetteville Street, Suite 1140

Raleigh, North Carolina 27601
Telephone: (919) 573-7421
dferrell@nexsenpruet.com
www.nexsenpruet.com

Message from the Editor

Thank you for reading the Spring 2021 edition of our newsletter.  I hope you find it informative and helpful.  I'd like to thank all the NCLTA members who contributed content  Please let us know if you have any questions or comments and if there are any specific topics you'd like to see in future editions. 

Kevin Lockett

State Sales Manager
First American Title Insurance Company
600 Green Valley Rd, Ste 307
Greensboro, NC 27408
Guilford
Phone: (704) 215-0905
Fax: (866) 333-7925
klockett@firstam.com

Editorial Committee Chair

Kevin Lockett
klockett@firstam.com

Executive Staff

Tracy Steadman, Executive Director
exec@nclta.org
(919) 861-5584