A considerable number of weighty subjects were covered during the 2000 NCLTA annual convention at the Park Hotel in Charlotte, NC, August 11-12.

ALTA Update
With impressive speed and comprehension, ALTA legislative counsel Ann vom Eigen introduced convention delegates to "The New World of Banks and Insurance." She briefly reviewed the history leading up to the passage last November of the Gramm-Leach-Bliley Financial Services Modernization Act (GLB) that presents a new regulatory structure and a new legal authority for banks to sell insurance. These new laws affect the title business in that, although state insurance regulation on a functional level remains along with the title product, banks are now in the title insurance business through grandfathering, through a subsidiary such as a holding company, or on parity with state laws for national banks and state chartered banks. Vom Eigen also outlined the timetable for various rule-settings, including structural and bank holding company rules, consumer protections such as privacy rules and Uniform Electronic Transactions Act (UETA), and various state enactments.

Endorsements
Kenneth Jannen, vice president, counsel, and associate senior underwriter of First American Title Insurance Co., spoke about various endorsements used to tailor coverage through insurance provisions in the policy, such as

• Loss by reason of unmarketability of title
• Loss by reason of lack of right of access to and from the land,

Or by insuring over specific Exclusions and Exceptions for

• Fairway, Fairway and Successor Insured
• Non-Imputation
• Going Concern
• Leasehold Improvements
• Limited Partners
• Coinsurance Clause
• Aggregation/Tie-in—Owner
• Aggregation/Tie-in—Lender
• Last Dollar
• Easement, Access to Public Street
• Leasehold Policy Conversion
• Leasehold, Step-Up
• Leasehold—Interference in Use
• Replacement Value
• Synthetic Leases
• Tenant Umbrella Coverage
• Restrictions, Encroachments, and Minerals (Owner's Policy—Improved/Unimproved Land)
• Utility
• Zoning
• Zoning—Completed Structure Endorsement
• Agreement to Provide Future Policies
• Revolving Credit

Unauthorized Practice of Law & Ethics
Ann Winner, the consumer protection attorney for the N.C. Bar Association, described her role with regard to complaints around the unauthorized practice of law. The Bar Association had conducted a survey and found that using the approved attorney system in North Carolina affords consumers the secondest lowest title insurance premiums in the country for first issue and the lowest in the country for re-issues of title insurance. Winner pointed out that the NCBA Consumer Protection Committee has no enforcement authority but assists the State Bar in its investigations. The majority of complaints go to the State Bar's Authorized Practice of Law Committee. If a violation is seen to have harmed the public, the Bar takes action. She noted that not many of the Bar councilors have real property experience and there is a perception that if title insurance is available, "no real harm has occurred." She explained that there are three sanction levels: 1) letter of caution, 2) cease-and-desist letter, and 3) injunction. The petitioners are the Attorney General, the State Bar, and the District Attorneys. She reported cautionary letters have been sent to the following companies who are using non-attorneys to abstract title in NC: Chesapeake, First Carolina, General American, Atlantic Insurance, Data Search, and Realty Insurance. One individual has been sanctioned. Both General American Corp. and Data Search have been sent cease-and-desist letters.

Winner mentioned that other issues the committee has considered are 1) non-attorneys abstracting title, 2) non-attorneys certifying title (supervision is defined as the power to hire and to fire), and the issue of property reports (is this the "practice of law"?). In two-and-a-half years, the committee has received 100 complaints.

Winner also explained the committee's consideration of what is adequate supervision. In the Ray Mathis opinion (March 1999), the issues were a blatant failure to supervise searches and rubberstamping. Since Mathis has no prior record and was cooperative, a consent order was issued and his sanction was a two-year staid suspension. Two opinions were issued with regard to FEO13, the supervision of paralegals in residential closings. The first opinion was that an attorney must be available, but could be withdrawn in the case of multiple offices or available by cell phone. After the Ethics Committee received 100 letters about this first opinion, a second opinion was formulated that the attorney should be present at the closing for the title transfer.

Ethics opinion FEO6, ownership of a title agency, states that it is not sufficient supervision of an independent title abstractor for the attorney to interview the abstractor, conduct a reference check, conduct a performance check, and establish standard procedures. The attorney must work with the abstractor on a daily basis to meet the supervision test.

On the Multidisciplinary Practice (MDP) front, the American Bar Association has disbanded its MDP committee, leaving its ban on fee splitting and the issue of the ownership of a law firm by other than attorneys undecided. The NC Bar Association has an MDP task force which is expected to make a recommendation in October. The biggest concern is around the NCGA statute which defines two levels of consumer: the international market pressing for one-stop shopping and the daily consumer, affected by family laws and confidentiality guarantees.

Case Law
Due to a couple of family emergencies, Pat Hetrick was unable to deliver his rapid-fire review of case law in person. However, the intrepid Hetrick, without any sleep the night before, delivered his usual humorous and highly informative presentation via video-tape. In his introductory comments, Hetrick observed that a) "When all else fails, read the primary source material," and b) "The transactional cost of litigation exceeds the easements, etc., one is fighting over." He also noted that 12 NC statutes "need to go," including NCGS 29-30 (election of a spouse to take one-third of the property statutory dower interest) and NCGA 45-21.38 (purchase money anti-deficinary, seller financing). He gleaned from his review that a number of cases were about environmental river basin protection versus timber cutting rights. He also pointed out the duty of a title insurer to defend when a federal tax lien takes precedence established in Blanchy v. Butcher.
[Ed.Note—All convention manuscripts are available for purchase and Hetrick's video-tape is available for rental, see order form.]

Surveys
Surveyor Andy Zoutewelle presented one of the most popular and informative sessions covering certain key issues of the ALTA/ACSM Land Title Survey standards. He explained that the survey profession concentrates on mathematics and measuring while the legal profession concentrates on conveyance so that there is considerable room for a gap in the interpretation of surveys. He pointed out that precision—the degree of accuracy and/or error—was based on repeatability of the measurement.

Zoutewelle informed the audience of the credentials surveyors may use: PE (Professional Engineer), LS (Land Surveyor), and PLS (Professional Land Surveyor). Statute NCGS 89C only allows Professional Land Surveyors to certify land boundaries in North Carolina. There are no specific instructions for which easements to record, but these are usually indicated in the Notes section of the survey. The ALTA-ACSM survey requires distance to the nearest intersection. North Carolina survey maps relate to three geodic surveys the datum on which the grid work is based: 1927, 1983, and 1990. There are also two datums for elevations. The initials NAD on a survey stand for North American Datum (either 1927 or 1983).

Lien Laws
Construction law attorney Greg Ahlum predicted that as the economy tightens, we will see more mechanics' and materialmen's lien claims. The laws relating to liens differ for General Contractors and Subcontractors. Through a specific example and chart, he illustrated key differences between the laws.

General Contractor—deals directly with owner; lien must be for materials, work, and/or equipment

• Must perfect lien
• File claim of lien
• Strict timeline of 120 days
• Place (county)—if in two counties, must file in both
• Not amendable—must cancel and refile before 120 days of last furnishing
• Enforce within 180 days or file suit
• Relates back to last furnishing

Subcontractor/Supplier—these liens are more complex and one of three types:

1. Lien on Funds
   • Owed to person contractor (who is above the chain of construction)
   • Notice of claim of lien (sent certified, return receipt) including detailed description of lien chain; must serve notice on all those above in the chain of lien; legal obligation to hold all monies owed
   • The work done is for the money owed
2. Lien on Property by Violating Notice of Lien
   • If the owner does not withhold the money, then he is personally liable
   • If owner makes payment despite the notice, then the lien is on the land
   • Sub must send certified notice, prepare file claim of lien (like that of the General Contractor) for the lien on the land
   • Must attach an affidavit regarding the notice service along with copies of the original notice
3. Lien on Property through Subrogation to the General Contractor
   • Linked solely to the General Contractor lien
   • Only relates to the first-, second-, and third-tier Sub
   • Electric Supply v. Swain Electric—A sub can assert the General Contractor's lien rights on the owner. NCGS 44A.23 amendment protects the General Contractor when the General Contractor has paid. (Within 30 days of the building permit, the General Contractor has to file and post notice of contract, then the Sub has to send certified notice to the General Contractor within seven days, notifying Subs that the first Sub has been paid.)

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