Jackson & Campbell P.C. Update
	April 23, 2007
	Dear Real Estate Professional: DC: Title Insurance Legislation will be proposed soon. Until now, D.C. had no licensing plan for title agents. The D.C. Department of Insurance, Securities and Banking ("DISB") has made it clear that it wants that to change. The office is proposing sweeping and lengthy legislation based upon a model act drafted by the National Association of Insurance Commissioners. The proposed legislation has aspects dealing both with insurers and agents. There is a second component to DISB's proposal: to modify the existing insurance Producer's Act to include title insurance. Under this dual proposal, title agents will need two licenses: a) an agent's license under the Title Insurance Act and b) a producer's license under the Producer's Act. One of D.C. Land Title Association's (DCLTA) suggestions will be to combine both statutes into a single Title Insurance Act for simplicity, to avoid duplication and possible inconsistencies. Perhaps in response to the recent GAO report that was critical of certain aspects of the title industry (see below for a copy of the GAO report), there are many provisions in the proposed Act that are similar to the already-existing RESPA law. Apart from that, there is a specific provision in the proposed law that would incorporate, by reference, the RESPA laws and would authorize the District to enforce federal RESPA violations. DCLTA takes the position that it is sufficient to incorporate RESPA by reference and inadvisable to restate the provisions in the proposed law. As RESPA evolves to meet changes and issues in the marketplace, incorporating those statues by reference would obviate the need to constantly amend the District's law to parallel the changing federal law. There are many provisions of great interest to the industry. This is the most comprehensive and important legislation to affect the title and real estate industries in the District's history and it merits close attention. The DISB has invited the industry to submit comments on the proposed legislation. DCLTA members and advisors have prepared a red-line of both proposed statutes and, courtesy of the DCLTA, you will find them here. Redline of Title Insurance Act and Redline of Producers Act Keep in mind that, although the current structure is two statutes, the DCLTA has suggested combining them into a single, stand-alone statute. If anyone has any written comments to submit at this time, please cite the section of the statute of concern and forward the comments to Roy L. Kaufmann at RKaufmann@Jackscamp.com who acts as the lobbyist for DCLTA by April 25 (DCLTA's comments are due to the DISB on April 26). Also, for those interested in the recent GAO report, referenced above: GAO Report Highlights of GAO Report Abstract of GAO Report DC: Warning: Do you have a Deed of Trust Modification in the pipeline? If so, be very careful about how much you collect for recordation tax! 42-1102(5) instructs that a purchase money deed of trust that is recorded simultaneously with a deed is exempt from recordation tax. Thus, when a Deed of Trust modification is filed that increases the amount of the loan, traditionally, the recordation tax is based on the increased in the loan amount (the "delta") because that is the consideration for the modification. Recently, the Recorder of Deeds ("ROD") has taken the position that tax is based, not on the delta, but upon the full amount of the loan, including the amount of the original deed of trust. ROD bases this position on the fact that no "tax" was paid on the original deed of trust, therefor the tax has to be paid when the modification is filed. Perhaps there is misreliance upon 42-1102(11) which exempts the original D/T amount "if tax has been timely and properly paid"; but, that interpretation ignores the fact that the legislature fully intended the original amount of the D/T to be exempt. It also would permit the ROD to assess a tax, not on the consideration reflected in the document being recorded, but upon an earlier document which was clearly exempt. DCLTA members are scheduled to meet with the Recorder of Deeds and with the General Counsel of the Office of Tax and Revenue tomorrow. At this juncture, ROD does not dispute that a "work-around" could be simply the filing of a second deed of trust, and perhaps a Supplemental document thereafter (exempt under 42-1102(6), but, time will tell if lenders will be willing to alter their nationwide practices to accommodate this strained reading of the statute. Note that this issue does not appear to apply to Class 1 property which may still be exempt under 42-1102(21) dealing with 5 or fewer dwelling units. ROD advises that deeds of trust modifications already recorded will not reviewed for complaince with this reading of the statute. DC: Joinder of Non-Titled Spouses: The quirk in the DC law has been fixed. Act 16-626 clarifies that 15 D.C. Code 502 "does not apply to deeds of trust, mortgage, mechanic's liens or tax liens". Therefore, unless a spouse or domestic party is an owner of record, his/her joinder on a deed of trust is no longer required under law. DC: No more retroactive assessments for homestead. Many sellers (and title professionals) received an unwelcome surprise when a homesteader sold to a non-homesteader. Temporary legislation that will expire in October fixes this problem. The deduction will no longer be retroactive. Instead, the deduction will disappear on the first day of the half year that follows the sale. DCLTA is working on making sure that the permanent legislation includes a similar correction of the deductions for senior citizens, low-income, and the "caps". DC: Click here for a spreadsheet showing status of various bills of interest to the real estate and title industries. Please feel free to circulate this newsletter to others in the industry, both within and outside your office. The contents of this Update are intended for general informational purposes only and should not be relied upon as legal advice or as a substitute for consultation with a qualified attorney. Moreover, the mailing hereof is not intended to create nor does it constitute an attorney-client relationship. Sincerely, Roy L. Kaufmann of the Real Property and Asset Management Group Jackson & Campbell P.C. email: rkaufmann@jackscamp.com voice: (202) 457-1600 web: http://www.JacksCamp.com

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