President’s Message

Forms Committee

Annual Convention

Legislative Update

The Loan Estimate - It is Not My Job....Or Is It?

From the Editor


President's Message

This has been a busy Spring and start of the second quarter of the year!  Some housing markets appear to be picking up steam, and the economic forecasts tell us that this is the year that the housing market will recover.  These conditions, along with longer days and more sunshine, bring some long awaited optimism to our business while the long Legislative session brings stress, excitement and adrenaline rushes—not unlike that new roller coaster ride at Carowinds!

No sooner had the ink dried on my last President’s address, professing that our Legislative Committee was taking “a passive yet watchful stance” for the long legislative session, when matters started to heat up.  Some might even say that I jinxed us by even thinking we were going to have an uneventful long legislative session.  There have been numerous bills hitting our radar for review or comment, but likely the two most urgent and most time consuming for our legislative committee and lobbyist have been the Manufactured Housing Legislation (H.B. 870) and a Curative Statute (H.B. 375).

Through the Association’s involvement with the North Carolina Land Records Task Force, we recruited a very qualified legislation drafter who volunteered to take on a complete re-write of the Manufactured Housing Statute.  The Manufactured Housing bill was introduced on our Association’s initiative.  For practical purposes associated with a successful passage through the legislature, the original draft of the bill, composed with considerable effort and expertise by Jim Creekman of the Land Records Task Force, was shortened and simplified.  Compromise is the nature of the legislative process.  We owe Jim Creekman a big “thank you” for this thoughtful and thorough draft.  The proposed legislation would require lien expiration dates to be placed on manufactured housing titles, create a renewal process for the liens shown on the title, and create an automatic expiration where no renewal has been filed.   This legislation is H.B. 870, if readers would like to review in detail.  The Association appreciates the efforts of Jim Creekman as well as Steve Brown for their hard work on the drafting of this legislation as well as the feedback, time and energy of our entire Legislative committee. 

Just as we were getting our final draft of the Manufactured Housing Legislation finished up, some Curative Statute legislation popped onto the Committee’s radar.  (H.B. 375)   This bill was introduced by Investor’s Title Insurance Company without the Association’s knowledge or input.   After the initial surprise, our legislative committee quickly responded with feedback and suggestions.  The Committee has had multiple conference calls and debates on the legislation and has participated in at least one stakeholders meeting.  We will continue to participate with additional stakeholders meetings and offer suggestions and feedback as this Bill continues to evolve.    This legislation was based on a recently enacted Virginia curative statute and would provide a way to correct certain errors in recorded documents which previously often required a reformation action.  The bill was originally intended to replace NCGS 47-36.1 but now is being considered as in addition to.  In its current form, the legislation, if passed, would allow a licensed NC attorney to give notice to certain parties and then file an affidavit of correction which would relate back in time to the recording of the original instrument with the error in it.  The general consensus seems to see the value with the proposition, but the devil is in the details.  The sponsoring member has been amenable to feedback from all interested parties and continues to work towards getting everyone comfortable with the process and the content for the legislation.  Many thanks to all of our Legislative Committee Members for their constant attention to this legislation as well as the constant monitoring of the other legislation that continues to come to our attention and need a timely response.

Our members continue to participate in the CFPB Task Force which was organized by the NCBA Real Property Section.  The free webinars continue to be made available and well attended by those attorneys who are working to get their practices ready for the changes that are coming.  These webinars cover many different facets of the changes that are coming and are available at the website after the live presentation for those who might need to reference the material at a later date or who might not have been able to attend the original presentation.

Since our last newsletter, our Executive Director has been busy with the Association’s events—the North Carolina Bar Association Real Property Section Annual Meeting Sponsorship and the planning of our Association’s Annual Meeting.  Each year the Association, through its participating members, sponsors a cocktail reception at the NCBA RPS meeting and organizes the membership’s ability to exhibit at the meeting.  This year we had seven members sponsor the event:  Fidelity National Title, Chicago Title, Investors Title, First American Title, Old Republic/Title Company of North Carolina, and Attorneys Title.  Our cocktail reception held on Friday evening was a success—despite the moving of the event indoors due to the threat of rain—with about 150 people in attendance!

Karl Knight, our current Vice-President, is in middle of planning the NCLTA Annual Convention which will be held September 10-12, 2015 at the Grand Bohemian in the Biltmore Village area of Asheville, NC.  He and Anita Turlington have secured this awesome venue for the meeting and they are working on coming up with some CLE topics and events to educate our attendees and entertain them as well.  There are lots of ideas being discussed, and there is even some talk of Saturday afternoon activities which might entice an extra night’s stay in the Beer City.  So mark your calendars and plan to attend.   Looking forward to seeing you there!

All the best,


Lisa Shields-Cook, President

North Carolina Land Title Association

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 Forms Committee

ALTA Adopts and NCDOI Approves New Policies and Endorsements

In February this year the ALTA Board of Governors approved nine new forms (three endorsements, five policies, one notice) and made them available for comment until Friday, March 27, 2015.  Published in final form, the forms were posted to the ALTA website located at, with an adoption or revision date of April 2, 2015.

Then on April 3rd, the forms were submitted by Anita Turlington, Executive Director for NCLTA, to the North Carolina Department of Insurance for approval and use by the title underwriter members of the NCLTA.  The forms were approved on April 9th, and were immediately available for use as of that date.   In turn, they have been incorporated with permission into our website and can be found at:

The forms consist of the:

1.       ALTA® Expanded Coverage Residential Loan Policy - Current Assessments (04-02-15)

2.       ALTA® Short Form Expanded Coverage Residential Loan Policy - Current Assessments (04-02-15)

3.       ALTA® Expanded Coverage Residential Loan Policy - Assessments Priority (04-02-15)

4.       ALTA® Short Form Expanded Coverage Residential Loan Policy - Assessments Priority (04-02-15)

5.       ALTA® Short Form Residential Loan Policy - Current Violations (04-02-15)

6.       ALTA® Endorsement 9.6.1-06 Private Rights - Current Assessments - Loan Policy (04-02-15)

7.       ALTA® Endorsement 19.2-06 Contiguity - Specified Parcels (04-02-15)

8.       ALTA® Endorsement 28.3-06 Encroachments - Boundaries and Easements - Described Improvements and Land Under Development (04-02-15)

9.       ALTA® Notice of Availability of Owner's Title Insurance (04-02-15)

[NOTE: The following descriptions borrow heavily from the Official Comments of the ALTA which were filed in conjunction with NCLTA’s Form Filing made on April 3rd.  This reporter expresses no pride of authorship with regard to these comments.]

The ALTA Board saw a market need for an alternate Expanded Coverage Residential Loan Policy, since the existing ALTA Expanded Coverage Residential Loan Policy incorporates bracketed choices for the ALTA Endorsements 4-06 and 4.1-06, 5-06 and 5.1-06, but only provided for the automatic incorporation of the ALTA Endorsement 9-06.  Since the Board saw that the national market would be better served by providing forms which did not depend on bracketed selections for the benefit of the customer, the ALTA Forms Committee recommended the adoption of the ALTA Expanded Coverage Residential Loan Policy – Current Assessments, which incorporates ALTA Endorsements 4.1-06, 5.1-06, and 9.10-06, to provide insurance with respect to assessments that are due and unpaid on the Date of Policy or violations of covenants at Date of Policy.

The ALTA Forms Committee also recommended adoption of the ALTA Short Form Expanded Coverage Residential Loan Policy – Current Assessments, which incorporates the ALTA Expanded Coverage Residential Loan Policy – Current  Assessments and the same ALTA Endorsements 4.1-06, 5.1-06, and 9.10-06. This policy includes a modified Schedule B, item 2 to provide consistent coverage for covenants, conditions, and restrictions with respect to assessments due and unpaid at Date of Policy.

Also newly adopted were the new ALTA Expanded Coverage Residential Loan Policy - Assessments Priority and the ALTA Short Form Expanded Coverage Residential Loan Policy - Assessments Priority.  Again, the Board saw a market need for an alternative ALTA Expanded Coverage Residential Loan Policy, since the current ALTA Expanded Coverage Residential Loan Policy incorporates bracketed choices for the ALTA Endorsements 4-06 and 4.1-06, 5-06 and 5.1-06, but only provides for the automatic incorporation of the ALTA Endorsement 9-06. They felt the market would be better served by providing forms that were not dependent on bracketed selections to benefit the insured. With that need in mind, the Forms Committee recommended the adoption of the ALTA Expanded Coverage Residential Loan Policy – Assessments Priority, which incorporates ALTA Endorsements 4-06, 5-06, and 9-06, to insure the priority of the Insured Mortgage over assessment liens before foreclosure.

The Forms Committee also recommended adoption of the ALTA Short Form Expanded Coverage Residential Loan Policy – Assessments Priority, which incorporates the ALTA Expanded Coverage Residential Loan Policy – Assessments Priority and the same ALTA Endorsements 4-06, 5-06, and 9-06.

Lastly, with regard to new policies, the Forms Committee recommended the adoption of a Short Form Residential Loan Policy – Current Violations, which includes the optional selection of ALTA Endorsements 4.1-06, 5.1-06, and  9.10-06, and provides insurance in Schedule B, item 2(c) with respect to: "the invalidation, subordination, or other impairment of the lien of the Insured Mortgage because of a violation at Date of Policy of any provisions in those covenants, conditions, or restrictions, including those relating to environmental protection."

Next, the Forms Committee recommended adoption of three new endorsements:  the ALTA Endorsement 9.6.1-06 (Private Rights – Current Assessments – Loan Policy); the ALTA Endorsement 19.2-06 (Contiguity - Specified Parcels); and the ALTA Forms Committee recommended adoption of the ALTA Endorsement 28.3-06 (Encroachments – Boundaries and Easements – Described Improvements and Land Under Development). 

The existing ALTA Endorsement 9.6-06 insures against loss or damage "if enforcement of a Private Right in a Covenant affecting the Title at Date of Policy (a) results in the invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage, or (b) causes a loss of the Insured's Title acquired in satisfaction or partial satisfaction of the Indebtedness."  A "Private Right" includes a private charge or assessment. The ALTA Endorsement 9.6.1-06 differs in that it insures as to "a private charge or assessment due and payable at Date of Policy." This is consistent with the existing ALTA 4.1-06 (Condominium), 5.1-06 (Planned Unit Development), and 9.10-06 (Restrictions, Encroachments, Minerals --- Current Violations – Loan Policy). 

The existing ALTA Contiguity Endorsements generally call for reference to a specific call or boundary for insurance of contiguity, and this approach can be burdensome because of the number of parcels or irregularity of boundary descriptions. There are existing non-ALTA forms that provide more flexibility in insuring contiguity, and the adoption of such an approach enhances the ability of customers to secure the coverage they desire on commercial transactions.  Consequently, the ALTA Forms Committee recommended the adoption of ALTA Endorsement 19.2-06 (Contiguity – Specified Parcels), which calls only for reference to parcels that are insured as contiguous and to the applicable survey, by providing: “The Company insures against loss or damage sustained by the Insured by reason of there being any gaps, strips, or gores lying within or between [Example: Parcel A, B, C or Tract 1, 2, 3] of the Land [except as depicted on the survey made by ____________________ dated _____________________, and designated Job No. ____________].”  The Forms Committee lastly recommended adoption of the ALTA Endorsement 28.3-06 (Encroachments – Boundaries and Easements – Described Improvements and Land Under Development). The adoption of a new ALTA Endorsement 28.3-06 provides a uniform, predictable form that would satisfy existing demand for coverage consistent with other Land Under Development Endorsements.  This endorsement will insure against loss because of: 1. An encroachment of any Improvement or Future Improvement located on the Land onto adjoining land or onto that portion of the Land subject to an easement, unless an exception in Schedule B of the policy identifies the encroachment; 2. An encroachment of any Improvement located on adjoining land onto the Land at Date of Policy, unless an exception in Schedule B of the policy identifies the encroachment; 3. Enforced removal of any Improvement or Future Improvement as a result of an encroachment by the Improvement or Future Improvement onto any portion of the Land subject to any easement; or 4. Enforced removal of any Improvement or Future Improvement located on the Land that encroaches onto adjoining land.

Lastly, the Forms Committee recommended and the Board approved a new Notice of Availability of Owner’s Title Insurance.  This notice explains to consumers which matters are covered by an Owner’s Policy and the value of the insurer’s duty to defend; how title commitments differ from representations of title in those jurisdictions where commitments are regularly relied upon for title information; that there is an option to buy a Homeowner’s Policy with greater coverage for the consumer; how they can request a sample owner’s policy and quote; and it includes a signature line where an election to purchase or decline either a Homeowner’s Policy or standard Owner’s Policy can be made.  This form may prove helpful at the closing table in explaining how owner’s policies are “optional” (depending of the level of risk a homeowner is willing to take) under the new Integrated Mortgage Disclosure rules that go into effect August 1st.  

Karl Knight, Vice President

North Carolina Land Title Association

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Legislative Update

The General Assembly has been busy over the last few months. March 26 marked the Senate deadline to introduce public bills, and the House deadline was April 14.  There was a flurry of activity leading up to these deadlines, as legislators and legislative staff rushed to get all bills ready for introduction.  There have been a total of 716 bills introduced in the Senate and 942 bills introduced in the House, for a total of 1,658 bills this session.

The busy legislative schedule did not keep House and Senate leaders from agreeing to a “spring break” from legislative activities the week of April 6. Legislative leaders agreed that their chambers would not take recorded votes that week in part to give members time off after the Easter weekend.

The activity level at the General Assembly increased after the “spring break” week leading up to the April 30th bill crossover deadline. More than 500 bills passed the House, Senate or both at the crossover deadline. The House along passed roughly 70 bills during 10 hours of floor debate in the days leading up to the crossover deadline.

After the legislative crossover deadline, the legislature turned its attention to the State budget. The House debated and adopted the State budget first this year and sent it to the Senate. On the heels of news of a state revenue surplus as opposed to the expected revenue shortfall, the House passed a $21.2 billion state budget on May 22 and sent it to the Senate for consideration. The House budget provided a 2% raise to teachers and state employees, put $200 million each in savings and repair and renovation accounts, and provided, among other things, funding enrollment growth in the public schools, universities and Medicaid. The budget did not raise taxes, but it did increase most Division of Motor Vehicles fees by 30% to pay for improvements to roads and the state ports.

The Senate adopted their version of the State budget bill on June 18. The Senate budget would spend nearly $21.5 billion next year, or nearly $700 million less than the House, on operating government, and proposes more significant policy changes to health care, taxes and education. Senators set aside $400 million more than what the House earmarked for two government reserve funds in the new fiscal year. The Senate also incorporated additional individual income and business franchise tax cuts beyond the 2013 tax law changes already taking effect, leaving Senators less revenues with which to work. Overall spending in the Senate plan would increase 1.8% compared to the current year.

As expected, the House voted unanimously not to accept the Senate budget bill, and a conference committee of Senate and House budget negotiators will be appointed to negotiate the differences between the two budget bills. Given that it is unlikely House and Senate budget negotiators will work out their differences and pass a state budget bill by June 30, the end of the fiscal year, the legislature is expected to adopt a continuing budget resolution that would allow state government to continue while budget negotiators work out their differences.

 Governor Pat McCrory has vetoed two bills this session. First, House Bill 405 gives businesses the right to sue employees who expose trade secrets or take pictures of their workplaces. "While I support the purpose of this bill, I believe it does not adequately protect or give clear guidance to honest employees who uncover criminal activity," McCrory wrote in his veto message. Proponents of the bill say it protects private property rights, but opponents say the bill muzzles whistleblowers. Second, Governor McCrory vetoed Senate Bill 2, which exempts magistrates from performing same sex marriage ceremonies if they have religious objections. After the vetoes, both the House and Senate voted with a three-fifths majority to override Governor McCrory’s veto of both bills. Therefore, the bills became law despite the Governor’s vetoes.

The following bills introduced or considered to date may be of interest to title insurance companies, title agents, and real estate attorneys:

Senate Bill 83, Criminal Law/Filing False Document. The original contents of the bill were removed prior to the crossover deadline and replaced with language to provide a process for the Clerk of Superior Court to have liens and other similar filings reviewed by a judge if the clerk believes the filings to be fraudulent. This section of the statute does not apply to liens filed under Chapter 44A of the General Statutes.  The bill also makes changes to the existing process for register of deeds to dispute possible fraudulent filings. These changes are in section (b) of G.S. 14-118.6, and seem to be clarifying changes that do not cause any title issues.

Unlike the existing process for registers of deeds, based on the original changes, the clerk would not be required to file or index a “placeholder” which provides notice that there is a potential claim existing that could relate back. The bill provided that the clerk would file-stamp the filing, but would not index or file it, and present it to a judge to review and approve. If it is ultimately approved (no time limit specified), then it would be filed and indexed, and take effect as of the original filing date. This would create a gap on the public record, since the effectiveness of the filing would relate back to the date it was originally file stamped.

I pointed out this issue with relation back to the bill sponsor and proposed some changes to the bill to address this issue. I worked with the Clerks of Superior Court to make sure our changes were workable. My suggested changes were added to the bill. So the bill as amended provides that the suspected “fraudulent” filing would not relate back to the date it was originally submitted, but, if approved for filing by a judge, would be effective as of the date it is indexed by the Clerk. So there is no “relation back” with this filing.

With these changes, the legislature approved Senate Bill 83 and Governor McCrory signed the bill into law. Effective: October 1, 2015. Session Law 2015-87.

Senate Bill 159, Transferred Properties in Corrected Revals. This bill was amended in the Senate to replace the original bill with a bill to give Mecklenburg County property owners who owe more than $1,000 in back property taxes from 2011 to 2014 five (5) years to pay the debt off without interest. Various provisions of the bill are opposed by the Mecklenburg County commissioners, for they favor raising the back-tax threshold to more than $1,500, lower the pay-back time to two (2) years, and charging an interest rate of approximately 9 percent. Further, questions were raised as to whether the bill is constitutional. A member of the Mecklenburg County Commissioners has stated that he is informed by attorneys that giving one set of taxpayers a tax break and not others is unconstitutional; for eliminating the interest would violate the N.C. Constitution as it would be a tax break to one set of taxpayers. The bill was approved by the Senate but has not yet been scheduled for a hearing in the House.

Senate Bill 311, Register of Deeds/Filing False Marriage Docs, provides that prior to recording a document or instrument that (i) purports to impact an official record of marriage and (ii) is not a marriage license, a return, or an amendment or correction of a marriage license, the register of deeds shall conspicuously mark the first page of the document or instrument with the following statement:  “THIS DOCUMENT IS NOT AN OFFICIAL MARRIAGE DOCUMENT.”  The bill does not apply to instruments or documents that are attached as exhibits to land records, orders or judgments issued by a court of this State or another state, or separation agreements presented for registration.  Effective: June 4, 2015. Session Law 2015-53.

Senate Bill 332, Register of Deeds - POA Indexing Fees, would enable Registers of Deeds to collect additional fees for indexing instruments that contain exhibits with multiple enterable parties.  The bill provides that for an instrument that contains excessive recording data, the fee would be an additional $2.00 for each entity listed in the instrument.  The bill states that an instrument contains excessive recording data when there are more than 20 distinct entities listed in the instrument, including any attachments and exhibits that require indexing. Senate Bill 332 has passed the Senate and was referred to the House Rules Committee.

Senate Bill 336, Estate Planning/Uniform Trust Code, would amend the law governing estate planning and fiduciaries, would amend the uniform trust code, and would establish a uniform powers of appointment act.  This bill was introduced at the request of the Estate Planning Section of the North Carolina Bar Association. The bill would, among other things, clarify the law regarding the authority of a personal representative to sell or take action with respect to real property of a decedent. The bill would enact G.S. 28A–13-3.1 to 3.3 to allow a personal representative to deal with real property without a court order.  The bill provides that a personal representative may, without court order, take possession, custody, and control of the decedent's real property and sell, exchange, give options upon, partition, lease, mortgage, or otherwise dispose of the property to the extent that the will expressly grants any of these powers to the personal representative. The bill passed the Senate, was amended and then passed the House, and was returned to the Senate to consider the House changes. The bill was referred to the Senate Rules Committee.

Senate Bill 386, Register of Deeds/UCC Recording Fees, would establish the following filing fees for UCC financing statements or other records: (a) for filing and indexing financing statements or records with two or fewer pages - $38; (b) for filing and indexing financing statements or records with more than two pages - $45 for the first 10 pages, $2 for each additional page; (c) for responding to an information request, including a communication with respect to requests for financing statement information for a particular debtor - $38. This provision would not apply to the recording or satisfaction of deeds of trust or mortgages that act as a fixture filing, or as a financing statement covering as-extracted collateral or timber to be cut as provided under G.S. 25-9-502(c). The Register of Deeds Association reports that the bill does not raise any fee, just clarifies that the filing fee for UCC financing statements filed electronically are the same as the fee for filing a physical copy. Senate Bill 386 passed the Senate and is currently in the House Finance Committee.

Senate Bill 575, NC/SC Original Boarder Confirmation, would make legislative changes to facilitate the work of the boundary commission in confirming and re-establishing the original boundary existing between the states of North and South Carolina. The bill provides that title to real property previously treated as being subject to the jurisdiction South Carolina, but that is recognized as being within the boundaries of North Carolina as a result of the certification of the boundary shall remain in full force, effect, and priority as if the title had been originally registered in North Carolina. Notwithstanding G.S. 161-14, for any portion of real property that is recognized as being within the boundaries of North Carolina as a result of certification of the boundary, and that previously has not been registered and indexed in North Carolina, the register of deeds shall register, index, and cross-index any instruments presented for registration retroactive to the effective registration date and time, as reflected by an original or certified copy of an instrument duly registered in South Carolina. In lieu of assigning a retroactive registration date and time in the index, the register of deeds may affix a statement, on a separate sheet of paper, immediately preceding the instrument presented for registration that cites this act and provides notice that the instrument shall have full force and effect as of the date of registration assigned by the South Carolina registry. The bill provides that notwithstanding any other provision of law, the register of deeds shall not collect any fees or taxes for instruments registered, indexed, or cross-indexed pursuant to this act.

The bill provides that foreclosure actions initiated on real property encumbered by a lien recorded in South Carolina wherein the real property is situated, in whole or in part, within the certified North Carolina boundaries shall be governed by the terms of the security instrument sought to be enforced. If the security instrument contains a power of sale clause, the party seeking to enforce the terms of the security instrument may initiate a foreclosure action in the county where the real property is situated pursuant to Chapter 45 of the General Statutes. A party seeking to enforce the terms of the security instrument may also resort to judicial foreclosure, pursuant to Article 29A of Chapter 1 of the General Statutes, in accordance with the terms within the security interest. Judgments or orders of foreclosure entered by courts of North Carolina are binding and effective only with respect to the portion of real property situated within North Carolina. Prior to initiating an action to enforce a security instrument, the security instrument shall be recorded in the office of the register of deeds for the county where the subject property is situated.

The bill contains various other provisions to address tax liability, licenses, permits, school enrollment, and other issues that may affect citizens who will shift into another state due to the re-establishment of the North Carolina/South Carolina boundary. The bill is identical to House Bill 834. Neither bill has been considered yet this session.

House Bill 97, 2015 Appropriations Act, contains the State Budget Bill. The House and Senate versions of the budget bill would, among other things: (1) Set the percentage rate used in calculation the insurance regulatory charge under G.S. §58-6-25 at 6.5% for the 2016 calendar year; (2)  Require the State Chief Information Officer to implement an online digital program for State agencies that includes secure electronic signature capabilities. The state budget bill has passed both the House and Senate, and will now be considered by a conference committee of House and Senate negotiators to work out the differences between the two spending plans.

House Bill 222, Retention Elections/Supreme Court, would establish "retention elections" for Supreme Court justices beginning with the elections in 2016. Effective: June 11, 2015. Session Law 2015-66.

House Bill 289, NC Money Transmitters Act, would enact the North Carolina Money Transmitters Act as requested by the Office of the North Carolina Commission of Banks to regulate those in the business of transferring currency for third parties. Some concerns have been raised that this bill may have an unintended consequence by applying to real estate transactions or wire transfers received by title insurance companies. The attorney for the Commissioner of Banks has assured us that the Money Transmitters Act does not apply to real estate closings and related escrow services. I am working with the lobbyist and attorney for the Commissioner of Banks to address this concern. The bill passed the House and is currently in the Senate Commerce Committee.

House Bill 346, Counties/Public Trust Areas, would clarify that counties may enforce ordinances within the State’s public trust areas and regulate, restrict, or prohibit the placement, maintenance, location, or use of equipment, personal property, or debris upon the State's ocean beaches. The bill allows cities and counties to adopt ordinances to regulate these topics. Effective June 11, 2015. Session Law 2015-70.

House Bill 375, Real Property/Error Correction & Title Curative, would amend the procedures for correcting typographical, obvious description, or other minor errors in recorded instruments and to create a ten-year curative provision for certain defects in recorded instruments. This bill contains a proposal presented by Investors Title. The bill passed the House and is currently pending in the Senate Rules Committee. 

House Bill 436, Unauthorized Practice of Law Changes, would amend the definition of the practice of law in G.S. 84-2.1(b) by creating a new subsection that lists the items that would not be considered the practice of the law. The bill would define "production" and "materials." The bill provides that prior to issuing a demand to cease and desist or bringing an injunction action, the State Bar Council ("Council") may submit the proposed demand to cease and desist or action and an explanation of why regulatory action by the Council is needed for review by the Attorney General. The Attorney General would review the proposed demand to cease and desist or action to ensure that the Council is acting to protect the public interest and is consistent with State policy and with the Council's authority as set forth in this Chapter. The Council may forgo review by the Attorney General when seeking injunctive relief is necessary to prevent ongoing fraud or imminent harm to consumers or when the Council has made a specific determination in writing that the relief sought is not likely to have a material adverse effect on competition. The bill clarifies that in a private cause of action pursuant to GS 84-10.1, injunctive relief is an available remedy.

            This bill was introduced at the request of the State Bar to address the State Bar’s pending dispute and lawsuit with LegalZoom. The bill passed the House at the request of both the State Bar and LegalZoom, and is pending in the Senate Rules Committee. Disagreements have developed between the State Bar and LegalZoom regarding whether current LegalZoom products and services can continue to be provided in North Carolina under the language of the bill. Given these disagreements, it is unclear whether this bill will be considered in the Senate.

House Bill 477, LEO Privacy Protection, would require cities and counties to remove personal information, including address and telephone number, from records available on internet web sites maintained by counties and cities, including local tax records, when requested by certain law enforcement personnel, prosecutors, and judicial officers. This bill is substantially similar to the bill introduced but not enacted in 2014.

I spoke with the bill sponsor and expressed NCLTA’s concern. He said he would remove the Register of Deeds from the bill, which is a good development but did not cure the concerns NCLTA had with the bill. I spoke with other members of the committee regarding the bill and NCLTA’s concerns. When the bill was considered in the House Judiciary II Committee, a number of members raised concerns. As a result, it was suggested that the bill be turned into a mandatory study so the issues can receive further examination. Of course, this study must be listed in the year-end legislative study bill to be enacted later this session, but it sounds like that is going to be the House position. With this change, the bill passed the House, was sent to the Senate, and referred to the Senate Rules Committee.

House Bill 513, Real Property/Technical Corrections, makes technical corrections and other conforming changes to the General Statutes concerning real property. This bill was introduced at the request of the Real Property Section of the North Carolina Bar Association. The bill would amend G.S. 45-35.10(c) to provide that “unless the satisfaction expressly states that the underlying obligation secured by the security instrument has been extinguished,” the recording of a satisfaction of a security instrument does not by itself extinguish any liability of a person for payment or performance of the secured obligation.

The bill makes various changes to G.S. 47C-3-104, transfer of special declarant rights. The bill provides that the mortgage, deed of trust, tax lien, or other conveyance to be foreclosed under this subsection shall not be required to contain specific reference to an assignment of special declarant rights but shall be deemed to include the special declarant rights as part of the right, title, and interest encumbered by the mortgage, deed of trust, tax lien, or other conveyance. The bill provides that upon foreclosure of a security interest, sale by a trustee under an agreement creating a security interest, tax sale, judicial sale, or sale under Bankruptcy Code or receivership proceedings of all units and other real estate in a condominium owned by a declarant, the declarant ceases to have any special declarant rights and the period of declarant control terminates unless either of the following applies: (1) The judgment or instrument conveying title provides for transfer of all special declarant rights held by that declarant to a successor declarant; (2) The declarant transferred special declarant rights related to the appointment of executive board members to another person pursuant to this section prior to the foreclosure or sale. Effective: June 4, 2015. Session Law 2015-56.

House Bill 870, Cert. of Title/Manuf. Home Changes, would clarify the renewal, release, and cancellation process for security interests on a certificate of title for a manufactured home. The bill would clarify the calculation of the cost of the undertaking for the installation of a manufactured home. This bill was introduced at the request of NCLTA.

The bill would enact new subsection GS 20-58(c), concerning perfection of security interests, to provide that an application of a security interest on a certificate of title for a manufactured home must state the maturity date of the secured obligation. The bill sets out requirements for DMV to implement concerning the maturity date.  This bill provides that, with a few specified exceptions, a security interest in a manufactured home, which is perfected by a notation on the certificate of title, would automatically expire 30 years after the date of issuance of the original certificate of title containing the notation of the security interest. The bill provides that, with a few specified exceptions, a security interest in a manufactured home, which is perfected by a notion on the certificate of title pursuant to GS 20-58(c), will automatically expire in accordance with the specified time frames.

            The bill outlines the processes and procedures for renewal of the perfection of the secured party’s security interest prior to automatic expiration, including requiring an application to be submitted to DMV containing specified information, such as the secured party’s signature and the existing certificate of title. The bill sets out the requirements of DMV once an application for renewal has been received, depending on the status of the existing certificate of title. This bill provides that once issued, the renewal is effective to renew the perfection of the security interest as of the date of the application is delivered to DMV.

The bill would amend GS 20-58.4, concerning the release of a security interest, providing procedure to secure a release of a security interest by way of a sworn affidavit by the owner stating that the debt has been satisfied and they are either (1) the owner has not been able to determine the identity or current location of the secured creditor or (2) the secured creditor has not responded within 30 days to a written request for release. The bill provides that DMV cannot cancel a security interest if a secured party responds to DMV within 15 days of DMV’s notice, stating the security interest remains in effect. The bill would add a new subsection (f) providing that the owner of the manufactured home or the owner of the real property on which the home is located can affect the satisfaction and release of a security interest as provided in GS 20-109.2.

The bill would enact GS 44A-11.1(a1) concerning mechanic’s lien agents, to provide that when improvements to a real property leasehold are limited to the purchase, transportation or setup of a manufactured home, with a current certificate of title, the purchase price of the manufactured home must be excluded in determining if the costs of the undertaking are $30,000 or more. 

The bill passed the House by the legislative crossover deadline, and is currently awaiting consideration in the Senate Judiciary II Committee.

House Bill 882, Comm. Mgr. Licensing & Planned Comm. Act Chgs., would make the follow changes to HOA statutes: (1) Lists the items that must be included in the declaration for a planned community (name, real estate description, maximum number of lots, common elements,

development rights, conditions or limitations on rights, etc.); (2) Provides that an association cannot require more than an 80% majority vote to amend the declaration.; (3) Extends the time period to challenge the validity of an amendment to a declaration from 1 year to 3 years; (4)  Clarifies that amendments are not presumed valid and enforceable if they conflict with the requirement of the Planned Community Act or violate specific provisions of the Act; (5)   Specifically lists 10 types of records that must be kept by the association and must be made available for inspection and copying by a lot owner. The bill is currently pending in the House Finance Committee.

For more information about legislation described in the legislative reports, feel free to contact me at or (919) 754-1171. Information is also available on the General Assembly’s website:



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



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Annual Convention

Registration for the 2015 Annual Convention to be held September 10th through the 12th at the Grand Bohemian Hotel in Asheville, North Carolina is now open!

Located in the heart of Biltmore Village, with the lush Blue Ridge Mountains as a backdrop, the European hunting lodge inspired Grand Bohemian was designated a “World’s Best Hotel” by Travel + Leisure and a “Top 40 Hotel in the South” by Conde Naste. In addition to the luxurious accomodations and the opportunity to network and reconnect with friends, NCLTA is planning to offer six CLE credits for attending our educational sessions.  Join us for what is going to prove to be one of the best NCLTA conventions yet!  Make your room reservations now by calling 1-888-717-8756 and identify North Carolina Land Title Association as your affiliation to receive your $289 rate in the room block.  

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The Loan Estimate Myth - It Is Not My Job....Or Is It?

The new Loan Estimate, that goes into effect for lenders on October 1st of this year, has provoked a new and interesting dialogue across the country, which has evolved like a Greek myth.  Walter Burkert, a German scholar on Greek myths, tells us that "Myth is a traditional tale with secondary, partial reference to something of collective importance."  The truth of the matter is that the Loan Estimate is something of great collective importance that has developed multiple myths that have tried to diminish its uses and importance in the consumer real estate mortgage transaction.  We will dispel some myths about the Loan Estimate for you today.

As I travel the state and talk to many real estate attorneys preparing for the upcoming TILA-RESPA Integrated Disclosures (“TRID”), I see many people that are only concerned with the Closing Disclosure.  The Closing Disclosure is the TRID combination of the Final Truth-in-Lending Disclosure and the HUD-1 Settlement Statement.  Many have discounted the Loan Estimate as a bank document that is prepared and delivered to the consumer long before the title is examined, the closing package prepared and the closing in your conference room.  Take heed to the sentiments of H. L. Mencken, an early twentieth century journalist and satirist known as the “American Nietzsche”, when he said,” For every complex problem there is an answer that is clear, simple, and wrong.”  As with a lot of myths, if you follow the clear and simple answers without investigating and understanding TRID, you may wind up being wrong.  Let’s take a look at some of the myths that have been repeated to me by real estate practitioners; to wit:

·         Myth #1 – TRID Is Only About A New HUD-1

·         Myth #2 - Loan Estimate is Only For Comparison Shopping

·         Myth #3 - Loan Estimate is a Bank Document and Does Not Affect Closing

·         Myth #4 – The Loan Estimate Is Easily Compared to the Closing Disclosure

·         Myth #5 – A Business Day Is A Business Day               

Myth #1 – TRID Is Only About A New HUD-1

The new term for the Integrated Disclosures which will become pervasive in our everyday dialogue, is TRID.  The TILA-RESPA Integrated Disclosure Rule (“TRID”) encompasses the majority of closed-end consumer residential mortgage loan transactions.  TRID includes purchase transactions, refinance transactions, many construction loans and home equity loans.  The home equity loans must, however, be distinguished from the home equity lines of credit. The home equity lines of credit are specifically excluded from the coverage of TRID, along with reverse mortgages, and mortgages secured by mobile homes (which are not affixed to the property in accordance with state law).

The TRID is the combination of many things, including but not limited to the new Loan Estimate, the new Closing Disclosure and many new definitions and timing rules.  For example, the Loan Estimate is triggered by the “Application,” which has a new definition under the TRID rule.  The Loan Estimate must be delivered to the consumer within 3 “business days” (as defined in the rule) of the Application.  In this simple example, you will see that you need to know: (1) the new definition for Application, (2) how many business days are allowed for delivery; (3) both definitions for “business day” {see below} and (4) what is contained in the Loan Estimate.

For the first time, TRID provides us a definitive definition for term “Application,” which is the combination of (1) Consumer’s name; (2) Consumer’s Income; (3) Consumer’s Social Security Number; (4) Property Address; (5) Estimated Value of Property; and (6) Amount of Mortgage Loan Sought.  At any point after Application is received – which could happen in an office, in a restaurant, in a bar or on a golf course – you may be asked to explain the contents of a Loan Estimate.  This is new to everyone.  Even the savviest homeowner will have questions.  You must understand the new definitions, the new timing elements and the new disclosure forms.  While it is true that the Closing Disclosure has gotten a lot more press than the other elements of the rule, it would be “clear, simple and wrong” to presume that the TRID rule is just like the 2010 changes to the HUD-1.

Myth #2 – The Loan Estimate is Only For Comparison Shopping

Since the government jumped into regulating residential mortgage loans, the Federal Reserve Board (“Fed”) had the initial Truth in Lending Disclosure (hereinafter “TIL”) and the Department of Housing and Urban Development (“HUD”) had the Good Faith Estimate (“GFE”) for initial disclosure by the lender within three (3) days of the receipt of the application.  Both of these documents provided the consumer with key loan terms and financial responsibilities.  The Consumer Financial Protection Bureau (“CFPB”) is discontinuing both of these documents in favor of the new Loan Estimate.  Congress and the CFPB saw these disclosures as competing with each other and potentially confusing to the consumer.   The goal of the Loan Estimate is to provide the consumer with one document per lender for the purpose of comparison shopping.  Each lender will have to produce the Loan Estimate within three days of application, so that they consumer may lay them side by side and choose the most appropriate financial decision for their household.

While it is true that a primary goal of the Loan Estimate is for comparison shopping among available loan products, it is also true that the Loan Estimate will show up at your closing table.  At that point, you will be expected to explain it and compare it to the Closing Disclosure.  If you are unfamiliar with its format and contents, you will do so at the risk of appearing unprepared in front of your clients.   As with all myths, there is some truth to them and they seem to develop a life and story of their own.  Myth #2 has a lot of truth in it, but is not the entire story.  In fact, the Loan Estimate is the definition of a myth, “partial and secondary to something of collective importance” {the Closing Disclosure}.

Myth #3 - Loan Estimate is a Bank Document and Does Not Affect Me or Closing

If you follow the clear and simple belief that the Loan Estimate is only a bank generated document and of no concern to you, then you would be wrong.  We have already seen how the Loan Estimate will show up in your client’s hands and could find its way to you prior to closing.  While it is true that the Closing Disclosure has been perceived as the main event; has received more press than the Loan Estimate and has developed a sense of mythical importance beyond the remainder of the TRID rule, it remains only a piece of the puzzle.  The first piece of the puzzle is the application and the second piece is the Loan Estimate.  You will not get to the Closing Disclosure (or a closing for that matter) without these two essential predecessor puzzle pieces.  Still the Loan Estimate, like the Rodney Dangerfield of disclosure documents, does not get any respect.

I have heard practitioners tell me each of the following quotes:

·         “After all, how important can it be – it is just an estimate. “

·         “The real numbers come at closing the transaction.  That is ALL that is important to me.” 

·         “It is the banker’s job to explain the Loan Estimate, I will explain the Closing Disclosure.”

·         “It is generated and delivered by the bank, I will never see the Loan Estimate.”

The truth of the matter is that the top of the Loan Estimate contains the following words: “SAVE THIS LOAN ESTIMATE TO COMPARE TO YOUR CLOSING DISCLOSURE.”  The CFPB is directing the consumer, your client, to bring the Loan Estimate to your office and have you explain the differences between the Loan Estimate and the Closing Disclosure.  If you have not seen the Loan Estimate in advance of the closing table, then you run the risk of not being able to answer the questions asked by your client, who merely wants your professional expertise and advice. 

Myth #4 – The Loan Estimate Is Easily Compared to the Closing Statement

The Loan Estimate and the Closing Disclosure have very similar tables and should be easy to compare.  In fact, the CFPB designed the forms for such a comparison.  The CFPB made one executive decision in the preparation of the Loan Estimate that makes it difficult for comparison – rounding.  Since the Loan Estimate is, in fact, an “estimate,” many (but not all) of the numbers contained therein are rounded to the nearest dollar.  This is a logical assumption, as the Loan Estimate would generally be different from the Closing Disclosure by a matter of pennies.  Inherently, the consumer will round in their collective heads anyway.  There is one catch that sets a trap for the unprepared and/or unaware practitioner – the comparison of a rounded number to an actual number. 

At the top of page 3 of the Closing Disclosure, there is a table entitled “Calculating Cash To Close.”  It has the caption, “USE THIS TABLE TO SEE WHAT HAS CHANGED FROM YOUR LOAN ESTIMATE.”  In a very convenient layout.  This table puts the Loan Estimate figure (rounded) next to the final (actual and unrounded) figures in the Closing Disclosure for comparison.  The third column of this table is even entitled “Did This Change?”  This table, at first glance, appears to do a lot of the work for you on the explanation.  However, rounded numbers are NOT the same as actual numbers. In the example below, you can see that the rounded number from the Loan Estimate may have an underlying actual number that is anywhere in the range of $12,500.00 to $12,500.49.  In this case the “rounded” number is displayed and not the “actual” number.  You are expected to know the underlying “actual” number from the Loan Estimate in order to explain what changed, when this underlying actual number is not the exact same thing as the final number.  Sounds confusing?  It is.

For Example:                                                                                     As Shown On Closing Disclosure

Loan Estimate Total Closing Costs:                                                $12,500.00    (Rounded figure)

Final Total Closing Costs:                                                               $12,500.35     (Actual figure)

If actual figure from Loan Estimate is $12,500.35                         Did This Change?  = No

If actual figure from Loan Estimate is $12,500.36                         Did This Change?  = Yes

In this example, even though $12,500 is not the same thing as $12,500.35, the Closing Disclosure will say that the number did not change if the underlying actual number from the Loan Estimate (before being rounded) is actually $12,500.35.  Move that underlying actual number from the Loan Estimate (before being rounded) by as little as one penny and the Closing Disclosure will indicate that the number has changed.  This will be the case on the Closing Disclosure even though the numbers will remain disclosed as $12,500 and $12,500.35.  We all know how much fun it is to go look for that penny.  However, in the old days it was at least visible somewhere on the HUD-1.  Now the number is rounded and hidden somewhere on a separate document, the Loan Estimate.  Not only do you want to see the Loan Estimate prior to closing, you want to STUDY the Loan Estimate prior to closing. 

Myth #5 – A Business Day Is A Business Day

In an effort to clarify the definitions of competing terms, the CFPB gave us new definitions for the “Application” and “Consummation” of the transaction.   The “Consummation” of the transaction is the point in time, according to the appropriate state law, that the “consumer is financially obligated on the credit transaction.”  In addition to those two definitions, we are the beneficiary of two definitions for the term “Business Day;” one of which applies to Loan Estimates and the other applies to most other scenarios in the TRID Rule.

When we are discussing the Loan Estimate, “Business Day” is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. “Substantially all of its business functions” includes the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries.  If they are not open to make loans and accept applications, then they are not open for substantially all of their business functions. 

For the remainder of the TRID rule, the definition of a “Business Day” is a carry-over from TILA when we count days for the “Right of Recission” period.  Therefore, in these instances, a “Business Day” includes all calendar days except Sundays and legal public holidays.  Those legal public holidays are defined as:  New Year’s Day, Martin Luther King Day, President’s Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas.

So you thought a business day - was a business day - was a business day.  Unfortunately, that assumption would be “Clear, Simple and Wrong.”


Anyone who thought that the new TRID was simply a new flavor of the 2010 RESPA amendments to the HUD-1, should rethink that position.  Hereinabove, we have discussed the five most prevalent “myths” about the Loan Estimate.  To exhaust all of the falsehoods, incorrect rumors and myths that I have heard about the TRID and the Loan Estimate would take much more time and space than this article would allow;  and would exceed my capacity to write and would surpass your patience to read.  Save that study time for the Loan Estimate, the Closing Disclosure, the TRID and all of its definitions and timing elements.  You want your explanations of these documents to be clear, simple and correct!

Jon Biggs

Jon Biggs oversees risk management functions related to Investors Title’s approved provider system. In this role, he oversees the approval process, develops educational seminars and communications-based initiatives involving approved providers and agents, and manages provider data and analysis related to the company's risk management efforts. Prior to joining Investors Title in 2012, he was partner at a firm in Durham, North Carolina where he practiced residential and commercial real estate law for more than 20 years. Mr. Biggs holds a bachelor’s degree from Duke University and a Juris Doctor from Wake Forest University School of Law.



From The Editor


We apologize that we are a little late in getting our Spring Newsletter out to you.  We wanted to have our registration brochure completed upon the newsletter's publishing and are happy to announce that convention registration is now open!  We hope you will be able to join us this year in Asheville.

I hope this newsletter will be informative and of some use to you in your practice.  Please remember that we are always in need of articles for the newsletter.  It is a great way for you to get some good exposure in the legal community and would be very much appreciated by those of us at NCLTA.  Please let me know if you have any suggestions or questions.






Marc Garren

VP-Title Attorney
Investors Title Insurance Company
121 North Columbia Street
Chapel Hill, North Carolina 27514
Phone:  (919) 968-2200
Fax:  (919) 968-2219

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