Bulletin: NE2013002

Dear Associates:

The First Session of the 103rd Nebraska Legislature adjourned sine die on June 5, 2013. Legislative Bills (LBs) that become law have effective dates of either (1) the date signed by the Governor if the Bill contains an emergency clause; or, (2) 90 calendar days following adjournment. Several bills that affect title company operations are described below:

COMMON LAW LIENS: 

            The Unicameral passed two bills that are meant to beat back the lunatic fringe folks who file spurious documents in order to cloud title to real estate of government officials or ordinary citizens.

            Legislative Bill (LB) 3: Provides for criminal penalties for fraudulently filing a financing statement, lien, or other document. The bill requires notification of the property owner, by the filing party/claimant, if a nonconsensual lien is recorded. The claimant must cause the Sheriff to serve notice of the lien on the property owner within 10 days following the recording of the “lien,” and the Sheriff’s return must be recorded with the Register of Deeds. The language of the statute is somewhat confusing in that it provides, first, that such a “lien” is not binding or enforceable at law or in equity. Next, the above provision for service of notice provides that a proceeding to enforce the “lien” must be instituted within 10 days after recording of the “lien.” Passed with an emergency clause, LB 3 became effective on May 16, 2013, the date on which the Governor signed the Bill.

            Existing law and LB 3 define a common law lien as a document that purports to create a lien against the property of any person or entity and (1) is not expressly provided for by state or federal statute; (2) does not depend on the consent of the owner of the property; and, (3) is not an equitable or constructive lien imposed by a state or federal court of competent jurisdiction.

            Legislative Bill 210: Allows filing of an affidavit with the Secretary of State stating that a financing statement was filed by a person not entitled to do so. Once the affidavit is filed a termination statement may be filed which takes effect 30 days after filed. Notice of the termination is to be mailed to the second (secured) party. This Bill was passed without an emergency clause and will therefore become effective 90 calendars following the June 5, 2013, adjournment of the Unicameral.

DOCUMENTARY STAMP TAX:

            Legislative Bill 36: Clarifies that death certificates filed with the Register of Deeds are not subject to documentary stamp tax. An emergency clause was included in the Bill as passed and became effective on March 7, 2013.

MUNICIPAL LAND BANK:

            Legislative Bill 97: This Bill creates a Municipal Land Bank in Omaha and in cities in Sarpy County. The Municipal Land Bank is a tool to acquire vacant, abandoned, and tax-delinquent properties for the purpose of facilitating the properties’ return to productive use. The Bill provides for the makeup, structure, powers, and functions of a governing Board of a Municipal Land Bank. By its terms, LB 97 will become effective on October 1, 2013.

TRANSFER ON DEATH DEEDS:

            Legislative Bill 345: The Nebraska version of the Uniform Transfer on Death Deeds Act required that a transfer on death deed be witnessed by two disinterested witnesses. However, the Act failed to define “disinterested.” LB 345 sought to rectify that by defining a disinterested witness as a witness who, at the date of execution of the deed, is not a designated beneficiary, heir, child, or spouse of a designated beneficiary.

            This enactment also provides a 90-day period following the death of the transferor during which a transfer on death deed may be challenged for failure to comply with the disinterested witness requirement. In all likelihood, any title of a beneficiary of a transfer on death deed in Nebraska will be uninsurable during this 90-day period.

            LB 345 also requires that a cover sheet be attached to a death certificate that is tendered for recording to provide evidence of the transferor of a transfer on death deed.

            An emergency clause embedded in this Bill caused it to become effective on May 7, 2013.

ACCESS TO PUBLIC RECORDS:

            Legislative Bill 363: Restricts a public body from charging more than the “added cost” of finding and producing a copy of a record requested by a member of the public; items that can be included in the “added cost” are specified in the Bill. This Bill will become effective 90 calendar days following the Unicameral’s June 5, 2013, adjournment.

HOMEOWNERS ASSOCIATIONS:

            Legislative Bill 442: Relates to homeowner’s association liens. The bill permits a homeowners association to require a purchaser to make payments into an escrow account until the balance in the account is enough to cover six months of assessments. It remains to be seen whether this will cause a reduction in claims for unpaid homeowners association dues, assessments, fines, and liens. Unfortunately, a provision that would have granted priority to all prior recorded mortgages or deeds of trust was amended out of the Bill. With no emergency clause, this Bill will become effective 90 calendar days following the Unicameral’s adjournment on June 5, 2013.

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