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Legislative Updates: Seven States

Posted By USFN, Tuesday, August 1, 2017
Updated: Monday, August 14, 2017

August 1, 2017

Connecticut

 

by Adrienne Roach
Bendett & McHugh, P.C.
USFN Member (Connecticut, Maine, Vermont)

During the 2017 Connecticut Legislative Session, several bills were proposed, passed, and codified in the Connecticut General Statutes (C.G.S.) that will impact landlord/tenant law in foreclosed properties as of October 1, 2017.

Rent Collection by Former Owner — Public Act 17-26 amends section 53a-128 of the C.G.S. to make a non-owner of real property, who collects rent, subject to criminal penalties: “Any previous mortgagor of real property against whom a final judgment of foreclosure has been entered, who continues to collect rental payments on such property after passage of such mortgagor’s law day, and who has no legal right to do so, shall be subject to the penalties for larceny under sections 53a-122 to 53a-125b, inclusive, of the general statutes depending on the amount involved.” The crimes range from larceny in the first degree (a Class B felony punishable by a term of no greater than twenty years) to larceny in the sixth degree (a Class C misdemeanor punishable by a term not to exceed three months) depending upon the dollar amount in question.

The only remedy previously available was for the occupant to file an action in small claims court to recover the sums paid to the former owner after title vested, because the former owner had no legal right to collect those funds. As of October, the former mortgagor’s conduct will become a criminal offense, and need only be reported to the authorities rather than prosecuted in a separate civil action.

Security Deposits — Public Act 17-236 modifies the existing security deposit statute, C.G.S. section 47a-21, to restrict security deposits for tenants sixty-two years of age or older to no greater than one month’s rent. The statute further requires that when a tenant reaches the age of sixty-two, his or her landlord must return to the tenant the amount of the security deposit that exceeds one month’s rent upon the tenant’s request.

Death of a Tenant — Public Act 17-22 modifies section 47a-11d of the summary process statutes, which deals with the death of a tenant. The new rule requires that the landlord notify both the next of kin (as required previously) as well as the occupant’s designated emergency contact by both regular and certified mail that the occupant has died and the landlord intends to remove any personal property.

The notice must instruct its recipient to immediately contact the landlord or probate court for information as to how to reclaim the property. [If the landlord does not know the next of kin, or no emergency contact is designated by the occupant, the landlord shall file an affidavit with the probate court in accordance with the terms of the statute.]

If property is not reclaimed within sixty days of the date of the notice, property may be disposed of by obtaining a certificate from the probate court, and filing such certificate and an application in the superior court having jurisdiction over the premises (there is no filing fee). Such certificate shall be deemed a summary process judgment of the court, and execution is to be carried out in accordance with the summary process statutes. If the deceased occupant’s estate is opened in probate court within fifty-five days of the filing of the affidavit, any action of the landlord pursuant to this section shall cease.

opened in probate court within fifty-five days of the filing of the affidavit, any action of the landlord pursuant to this section shall cease.

Delaware 

by James Clarke
Orlans PC 
USFN Member (Delaware, Massachusetts, Michigan)

House Bill 76 (which passed the House on 3/30/17 and the Senate on 5/10/17) extends the Office of Foreclosure Prevention and the Automatic Residential Foreclosure Mediation Program until January 18, 2020. Originally scheduled to end on January 18, 2014 (two years after their initial enactment), the sunset date was extended to January 18, 2018 in 2013. The latest bill will now extend the office and the program for two additional years until January 18, 2020; the legislation is expected to be signed into law by the governor.

 

Florida

by Robyn Katz and Jenna Baum
McCalla Raymer Leibert Pierce, LLC 
USFN Member (Connecticut, Florida, Georgia, Illinois)

On June 14, 2017 Governor Scott signed House Bill 483/Senate Bill 398 into law, which provides significant reform in regards to estoppel certificates provided by condominium and homeowners associations, and makes substantial changes to all three of Florida’s community association statutes (chapter 718, 719, and 720). 

The new law provides for a cap in the fees an association can charge for the estoppel certificate as well as providing a standard form for the estoppel certificate. The bill requires that the estoppel certificates be provided to the requester within 10 days after receipt of the written or electronic request — and must be valid for a minimum of 30 days if provided via hand delivery or by electronic means, and 35 days if provided by regular mail. The fee cap is $250 for owners who are current on their assessments; a charge of $150 can be added if the owner is delinquent on the assessments. An expedited charge of up to $100 can be added if the estoppel request asks for delivery within three days.  

Under the new law, effective July 1, 2017, the association may not collect sums beyond the amounts specified in the estoppel certificate from anyone who relies on the certificate in good faith. Additionally, no fee can be charged by the association if the estoppel certificate is delivered to the person (or entity who requested it) more than 10 business days following receipt of the request.

These estoppel certificates are regularly requested post-issuance of Certificate of Title upon conveyance to FHA or VA and in preparation for REO closings. Servicers, investors, law firms, and title companies should review the estoppel certificates for compliance with the statutory language as well as adherence to the time frames and fee caps. [The required language and the final House Bill 483 are linked here.]

The prospective effect of this legislation is that it will be beneficial to meeting closing deadlines as it provides clear standards for the estoppel certificate turnaround times. Additionally, the cap on what associations can charge for preparation of estoppel certificates is anticipated to provide savings; in the past, associations had free range to charge what they considered “reasonable.”

Pursuant to the new house bill, COAs, Co-Ops, and HOAs will have to provide the estoppel certificate within 10 business days. Should the association fail to comply and not provide an estoppel certificate within those 10 business days, then a fee may not be charged for the preparation and delivery of that certificate. Further, should the association still fail to stay in compliance and not waive the estoppel preparation fee, then a summary proceeding (pursuant to Florida statute 51.011) may be brought in court and the prevailing party will be entitled to recover reasonable attorney fees. Therefore, associations can be held accountable by potential loss of estoppel preparation revenue or with the possibility of paying court costs and attorney fees.

Maryland 

by Angie Nasuta
The Alba Law Group, P.A. 
USFN Member (Maryland)

The Maryland legislature has once again been active in regulating the local residential foreclosure process.

New Foreclosure Registration
— The first bills of particular interest are House Bill 1048 and cross-filed Senate Bill 875, which have been approved by the governor but are not effective until October 1, 2018. This legislation requires that within seven days of filing an action to foreclose residential property, the substituted trustees must provide a notice of foreclosure to the Maryland Department of Labor, Licensing and Regulation (DLLR). The notice of foreclosure must contain certain specified information about the property and about the substituted trustees; it must be in the form that the department requires — which has not yet been established. This author’s firm will be closely monitoring DLLR’s activity for its regulations on this new notice/registration, which will hopefully be adopted well in advance of the delayed effective date.

New Foreclosure Notices — Legislation has been enacted to require additional notices in the foreclosure process beginning October 1, 2017. HB26/SB247, which have been approved by the governor, add to Maryland Real Property § 7-105.2(b) that notice of a proposed foreclosure sale under this article must also be sent to a condominium or homeowners association that has recorded a statement of lien against the property at least 30 days before the sale date. Procedurally, though, this change doesn’t really impose anything new upon foreclosure counsel, as Real Property § 7-105.3 (which has been law in one form or another since 1957) already requires notice of foreclosure sale to all holders of subordinate interests of record.

The key addition made by HB26/SB247, however, is the new requirement concerning postponed or canceled foreclosure sales. Within 14 days of sale postponement/cancellation, the substituted trustees must now send notice of the postponement/cancellation to the record owner of the property and any condominium/homeowners association that was sent notice of the proposed sale.

Vacant and Abandoned Properties — As with many states across the country, another Maryland focus in recent years has been to address concerns about vacant and blighted properties through so-called “fast-track” foreclosure options. The underlying mechanics and potential for challenges with these options, however, have limited the interest of mortgage servicers in pursuing what has been made available so far.

Signed by the governor on May 25, 2017, House Bill 702 and cross-filed Senate Bill 1033 provide a new expedited foreclosure process for vacant and abandoned properties — under certain circumstances. HB702/SB1033 (effective October 1, 2017) authorizes a secured party to petition the court to immediately commence foreclosure of its lien instrument if the property meets all of the following criteria:

the loan has been in default for 120 days or more;
no mortgagor has filed a challenge to the foreclosure “setting forth a defense or objection that, if proven, would preclude the entry of a final judgment and a decree of foreclosure”;
no mortgagor has filed a statement with the court that the property is not vacant or abandoned; and
at least three out of a list of eleven specific circumstances regarding the property exist; e.g., status of utilities, condition of windows and doors, vandalism and criminal conduct, junk and hazardous materials, citations, condemnation, vacancy, written statement of intent to abandon, and a catch-all for other “reasonable indicia of abandonment.”

HB702/SB1033 will certainly be Maryland’s strongest attempt thus far at denting the local vacant and blighted properties issue. Unfortunately, the degree of limitations written into even this most recent piece of legislation suggests that there will continue to be limited interest from servicers in actually pursuing this newest option.

On a local note: In April, the County Council for Montgomery County approved Bill No. 38-16 (effective July 24, 2017) concerning “Housing and Building Maintenance Standards – Foreclosed Property Registration Penalty.”

 

Texas

by Ryan Bourgeois
Barrett Daffin Frappier Turner & Engel, LLP
USFN Member (Texas)

The Texas Legislature adjourned its 85th Regular Legislative Session on May 30, 2017. Two bills passed affecting mortgage foreclosures. HB 1470 provides new protections and authorities for foreclosure trustees and auction companies. HB 1128 moves the foreclosure sale date to the first Wednesday in a month when the first Tuesday falls on January 1 or July 4. HB 1217 establishes a framework to allow electronic remote notarizations. Finally, the legislature passed SJR 60. The resolution authorizes a November referendum vote on proposed constitutional amendments to facilitate home equity lending. The changes will become law if a majority of Texas voters approve the initiative. Summaries of these measures are included below.

HB 1470 — HB 1470 modernizes Texas statutes to conform to contemporary foreclosure practices. It clarifies the Texas auctioneer licensing exception to assure that all types of security instruments are included, and that both substitute trustee and auction companies are within the exception. HB 1470 also enacts Texas Business and Commerce Code Chapter 22. Texas security instruments require foreclosure trustees to market and sell the property at the foreclosure sale. After the sale, foreclosure trustees must determine the persons legally entitled to proceeds, the priority of claims, and make corresponding disbursements.

HB 1470 clarifies that auction companies can assist foreclosure trustees in marketing and advertising sales. Foreclosure trustees are authorized to contract with an attorney to perform any of the trustee’s functions. These provisions conform Texas statutes to reflect current practices, resolving ambiguities in Texas law. The bill confirms that foreclosure trustees are entitled to be paid reasonable fees and costs out of sales proceeds. The bill does not specify particular fees, but it does establish that fees not greater than 2.5 percent of the sale price (or $5,000) are conclusively presumed to be reasonable. Trustee’s attorneys’ fees not more than 1.5 percent of the sale price enjoy the same conclusive presumption.

Lastly, HB 1470 also requires a winning bidder at a foreclosure sale to provide a government-issued ID and certain minimum information that will allow the trustee to complete Office of Foreign Assets Control searches.

HB 1128 — Texas sales must, by law, occur on the first Tuesday of the month. Sometimes, the first Tuesday falls on January 1 or July 4. When this happens, HB 1128 amends the Property Code to change the authorized sale date to the first Wednesday (so as not to fall on a national holiday). Because the bill is effective September 1, 2017, the July foreclosure still occurred on July 4, 2017.


HB 1217 — HB 1217 authorizes the use of online notarization. The bill contains guidelines to become a qualified e-notary and sets out rules and guidelines for the e-notarization process. It also requires the secretary of state to establish additional rules to govern the process. The bill takes effect on January 1, 2018.

SJR 60 — The Texas Constitution includes strict protections against placing liens on homestead property and provides stringent requirements for originating home equity loans. SJR 60 proposes to change the Constitution to lower the amount of origination expenses charged to a borrower and remove certain limitations on financing expense ratios. This legislation proposes qualifications for lenders authorized to make home equity loans; changes certain options for refinancing home equity loans and the threshold of a home equity line of credit; and proposes to allow home equity loans on agricultural homesteads. If voters adopt the bill at the November election, it will take effect for all Texas home equity loans originated and/or refinanced after January 1, 2018.

The legislation that did not pass — Bills that failed during the session include an initiative to increase judges’ authority to delay home equity foreclosure applications (HB 4107) and to enact a state law version of the former federal Protecting Tenants at Foreclosure Act (HB 3699).

Utah

by Brigham J. Lundberg
Lundberg & Associates, PC 
USFN Member (Utah)

The 2017 Utah legislature passed a number of bills affecting Utah foreclosures and evictions. The effective date for these bills was May 9, 2017. Senate Bill 0203 (Real Estate Trustee Amendments) slightly expanded the definition of an authorized nonjudicial foreclosure trustee. Senate Bill 0052 (Rental Amendments) and House Bill 0376 (Landlord-Tenant Rights) both made important changes to Utah eviction actions and the rights of the respective parties therein. House Bill 0320 (Notaries Public Amendments) set forth updated definitions and new templates for various acceptable notarial acts. Finally, Utah’s legislature enacted a uniform law with the adoption of House Bill 0013 (Uniform Fiduciary Access to Digital Assets Act).

Nonjudicial Foreclosure Trustee
— Senate Bill 0203 expanded the definition of a nonjudicial foreclosure trustee to include law firms, in addition to individual members of the Utah State Bar and licensed title insurance companies. To be eligible, a law firm must employ at least one active member of the Utah State Bar, be licensed to do business in Utah, and maintain an office in the state where borrowers or other interested parties may meet with the trustee. Further, foreclosure documents signed on behalf of the firm, as trustee, may only be signed by an attorney currently licensed in Utah.

Additionally, the bill imposed a filing fee of $50 for any parties petitioning to receive surplus foreclosure sale proceeds deposited with the court. The bill also extended the time period for filing affidavits or counter-petitions in conjunction with claims for surplus foreclosure sale proceeds deposited with the court from 45 days to 60 days. It is anticipated that this additional provision may help deter the filing of unwarranted claims in excess proceeds matters.

Eviction Amendments — As indicated, two bills enacted this year will affect evictions in Utah. First, Senate Bill 0052 was passed in an effort to reduce the number of bad faith claims being made in eviction actions. The legislation specifically affected fees and costs recoverable in an unlawful detainer action or an action under the Utah Fit Premises Act. Judges now have discretion to award reasonable fees and costs to the prevailing party in those proceedings.

Second, House Bill 0376 amended Utah’s unlawful detainer (eviction) statute. Previously, only certain Utah evictions were eligible for expedited treatment in the courts. This new statute made expedited proceedings available for all types of eviction actions, including those involving commercial tenants. The bill requires the court, upon the request of either party, to schedule an evidentiary hearing to determine who has the right of occupancy during the litigation’s pendency; the hearing must occur within 10 business days of the filing of the defendant’s answer or any other response by the defendant to the complaint. This provision will serve to limit a tenant’s ability to delay eviction proceedings by filing a motion or other pleading simply to avoid the filing of an answer, which heretofore was the only responsive pleading that would trigger the expedited eviction timeline.

Notaries Public — House Bill 0320 amended the Notaries Public Reform Act by altering the statutory definitions of “jurat” and “notarial certificate” while adding “signature witnessing” as a newly available notarial act in Utah. The bill also clarified reapplication procedures and requirements for a notary public whose commission has expired. The bill created a new section within the act with templates of example language for a jurat and an acknowledgement in the state of Utah. Finally, the bill added provisions to permit a licensed escrow agent who is also a notary public to notarize certain documents that the licensed escrow agent signs.

Digital Assets — Utah followed the Uniform Law Commission with its adoption of House Bill 0013 (Uniform Fiduciary Access to Digital Assets Act). This bill created a new chapter within the Utah Uniform Probate Code addressing who has access to the digital assets (i.e., email, social media, and e-commerce accounts and their contents) of an incapacitated or deceased person. Additionally, the bill set out responsibilities for agents and fiduciaries with access to a person’s digital assets. It also stated the responsibilities of the custodian of a digital asset upon request of an agent or fiduciary. Understanding, and compliance with, the provisions of this bill will be important when dealing with representatives of deceased or incapacitated customers.

Vermont 

by Rachel Jones and Eva M. Massimino*
Bendett & McHugh, P.C.
USFN Member (Connecticut, Maine, Vermont)

On May 1, 2017 the Vermont General Assembly Bill H.4 titled “An act relating to calculating time periods in court proceedings” was approved by Governor Scott. The text of the enacted bill is lengthy and impacts more than 60 statutory provisions relating to the calculation of time in court proceedings. The vast majority of these changes have little to no practical effect on calculation of time as they make only minor changes or serve to provide clarification on previous statute versions. One important exception relates to the calculation of time in ejectment proceedings.

H.4 revisions impacted 12 V.S.A. section 4853a, which governs the payment of rent into the court. Previously, the statute provided for an expedited hearing on any motion for payment of rent any time after 10 days’ notice to the parties. H.4 has revised this section to require at least 14 days’ notice to parties for the hearing, and allowing 14 days for submission of a written answer before default may be entered against a party. Any extension of the timeline in an ejectment matter (which is otherwise expedited) is significant and will impact the anticipated time for resolution of Vermont ejectments.

H.4 also enacted revisions to 12 V.S.A. section 4854, providing that a post-judgment lockout may not take place until at least 14 days after the service of the writ of possession upon the defendants. This revision extends the waiting time after service of the writ by four days. A necessary consequence of this change is, again, a longer timeline for completion of an ejectment matter in Vermont — as well as careful revision of notice forms to ensure that correct notice is being provided to all defendants as required by the newly revised section. Servicers and law firms should verify that notices have been properly updated and that timeline expectations for completion of the ejectment action are appropriately adjusted.

Editor’s Note: *Co-author attorney Eva M. Massimino is licensed in CT and ME; she is not licensed in VT.

Copyright © 2017 USFN. All rights reserved.
Summer USFN Report

Note for consideration of the USFN Award of Excellence: This article is a "Feature."

 

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