Title Talk – from Old Republic Title July 2019

Each spring the population of Tallahassee swells with lawmakers and lobbyists alike working to shape the laws and policies of the State of Florida. Old Republic Title works alongside these legislators and activists to promote legislative initiatives that will benefit the title insurance industry and the public at large. The 2019 Legislative Session resulted in wide ranging beneficial legislation including the elimination of doc stamps on certain intraspousal property transfers, the implementation of a task force to investigate blockchain technology, and the adoption of a framework for remote electronic notarization. The following is a summary of six (6) new Florida laws that may impact you and your clients.

Intraspousal Property Transfers: What we commonly refer to as “doc stamps,” are a tax imposed on deeds and other instruments effecting real property. The obligation to pay this tax is historically triggered when the documents are submitted to the Clerk of Court for recording in the Official Records. Gifts between spouses of mortgaged property has traditionally been viewed as a taxable event. Amendments to §201.02(7)(b), F.S., last year provided for a one-year safe harbor after marriage where new spouses can transfer homestead property without paying doc stamps. Effective May 15, 2019, HB 7123 eliminates the one year limitation, thus allowing all intraspousal transfers of homestead property to be free from doc stamps regardless of when the transfer occurs.

Lis Pendens: Post-foreclosure real estate transactions can present many unique issues for title examiners. One such issue is the attachment of liens, particularly code enforcement and tax liens, during the pendency of the foreclosure process. As any litigator will tell you, the lis pendens is a document designed to protect property in foreclosure from intervening liens. But, when does the protection provided by the lis pendens end? Recent cases out of the lower courts identified a potential gap which may allow intervening liens to attach to property between the entry of the Final Judgment of Foreclosure and the recording of the Certificate of Title transferring title. To avoid the necessity of repeat re-foreclosure efforts to address intervening liens, effective June 7, 2019, HB 91 closes the gap by clarifying that the protections afforded by §48.23, F.S., remain effective through the recording of the Certificate of Title, nullifying the 4th DCA’s decision in Ober v. Town of Lauderdale-by-the-Sea, 218 So.3d 952 (Fla. 4th DCA 2017).

Open/Expired Building Permits: Open and expired building permits have long been a challenge for commercial and residential property owners due to standard FR/BAR contract requirements for disclosing and closing-out such permits. Effective July 1, 2019, HB 447 seeks to address many issues relating to open permits that are designed to assist meeting contractual sales obligations and facilitate closings. The legislation will allow residential property owners to complete the work required under an expired building permit when the contractor that originally pulled the permit “substantially completed the project.,” without pulling a new permit and in accordance with the building code applicable at the time the original permit was pulled. For open building permits, HB 447 encourages new contractors to take over and finish projects by limiting their liability to the work they performed. It also allows local enforcement agencies to close open permits without a final inspection after six (6) years if there are no safety risks to doing so and limits the county to charging one fee per parcel identification number for building permit searches, thus eliminating duplicative costs when multiple permits are found. For new buyers, HB 447 prohibits the local enforcement agency from fining or otherwise penalizing a purchaser of property because the former owner did not close a building permit. Additionally, HB 447 provides that enforcement agencies may send notice to the property owner and contractor at least thirty (30) days prior to the expiration of a building permit which, hopefully, will cause them to act to close the permit before expiration. As open/expired permits can be an impediment to closing on a sale transaction and can cause issues in obtaining construction or permanent financing to complete a project, HB 447 facilitates the process of completing the work under a permit by empowering owners to complete construction themselves, easing the liability concerns of replacement contractors, and lowering costs to resolve building permit issues in accordance with contract requirements.

Redaction of Official Records for Public Servants: In addition to promoting positive legislative changes in Tallahassee, Old Republic also works to combat against, or otherwise amend and supplement legislation which may have negative consequences for the title industry. One such example is the approval of SB 248, a bill written to expand current law protecting certain public officials and law enforcement personnel from having their home addresses available to the public sector. While there is no question that the safety concerns of judges, police officers, and other public servants should be of the utmost concern, the title industry will face new challenges when searching the Official Records as SB 248 provides for the redaction of legal descriptions, parcel identification numbers, and other information which may be extrapolated out by a savvy criminal to find a home address for a public official or law enforcement officer. While SB 248 will certainly create new issues for title examiners, thanks to title industry input, the bill also provides a method by which a protected individual can waive the redaction requirement to facilitate a transaction and allow the title industry to examine unredacted vesting records and the like. We hope to publish more guidance to assist agents confronting redacted records after we learn the details of how the various counties will implement these provisions but anticipate this will vary between counties.

Remote Electronic Notarization: The big news out of the 2019 Legislative Session for the title insurance industry is the adoption and authorization of remote electronic notarization of documents. HB 409 allows for a Florida notary located in Florida to interface in real-time with a signatory in another state or country, for that signatory to electronically sign documents (think deeds, mortgages, etc.), and for the notary to notarize the documents as though the signatory was physically present before them. While HB 409 provides the framework for implementation of remote electronic notarization, many existing administrative rules need to be amended to address this change in the law, and new administrative rules adopted before the bill goes into effect on January 1, 2020. Old Republic is intimately involved in the rule implementation process and will keep you apprised of developments as the effective date of the legislation draws near including how and when you too can become authorized as a remote Florida notary.

Blockchain: Blockchain technology is the wave of the future (at least if you listen to the tech sector). The technology behind the digital currency Bitcoin is now being touted as a possible replacement for the Official Records and a more efficient means of doing business. In overly simplistic terms, blockchain technology seeks to create a permanent and unalterable record of transactions which build upon each other, kind of like the e-mails in an e-mail chain. In theory, it is easy to see how such technology may ultimately benefit the title industry, but there are many unknowns. To appropriately investigate the benefits and impacts of adopting blockchain technology for various purposes in Florida, SB 1024 establishes a task force to study blockchain technology and to make recommendations to the Governor and Legislature. While we are still many years from any kind of implementation of blockchain technology, all indications are that this technology will remain a hot topic for years to come.

Florida law is ever evolving. Staying on the forefront of legislation enables Old Republic to quickly adjust to a changing landscape in order to provide the best possible underwriting support for our agents.

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