What's So Funny 'Bout Peace, Love and Notarizing?

Well, plenty.

In Virginia, we have a very low threshold for appointing an individual as a notary public. No test, no certification, no coursework. As long as you have a pulse, no prior felonies, and can read and write English (no joke: it's one of the requirements), your commission will be returned by the Secretary of the Commonwealth in a few short weeks.

The problem is that notaries perform really important tasks. They are empowered to administer oaths, and take acknowledgements, affidavits and depositions. But some just don’t really know the basics of this public office. Even though notaries must swear that they have read the Notary Handbook, many notaries are not familiar with Notary “rules of the road.” Or, they may notarize so infrequently that they have forgotten the finer points (like how to notarize someone who is signing under a power of attorney for someone else.)

In my practice, many a deal has been unnecessarily delayed due to notary error. This means one of two things: 1) the legal document can’t do what it needs to do, and 2) the legal document cannot be recorded in the courthouse because of the defect.

So, to borrow from American Idol’s Randy Jackson:

“Yo, All You Notary Dawgs: Listen up. Here are Four Quick Tips for You, Baby:”

1) Apply Your Notary Seal. (Yeah, that thing in the pouch.) If it’s an old, embossed (raised) seal and the document you are notarizing needs to be recorded, you must rub with ink or pencil over the seal so that it becomes “legible and reproducible.” That's been the law since 2008. Also, the seal needs to be applied near the notary's signature, not floating elsewhere on the page. (And if you are recording in the City of Charlottesville, that seal has to be upright, not sideways, or they won’t record it, and whammo, you’ll be voted off the show.)

2) Get ID. This has been required for many years now. You are required to ascertain the identity of the person whose signature you are acknowledging unless they were already personally known to you. Fraud and forgery happen when notaries are tricked.

3) Don’t Notarize Unless You Saw the Person Sign. Sounds basic. Some notaries think it’s ok for them to notarize something that has already been signed by someone they never meet. See above regarding fraud and forgery. You are the sentinel. Do your notary job.

Finally:

4) Notarize For the Actual Place of Acknowledgement. This means you need to complete the second line in the notary block with the City or County in which you are taking the acknowledgement. Even if it is pre-printed incorrectly with something else! In my experience this is the single biggest notary mistake in notarizing instruments that concern real estate. Notaries want to insert the locale of the property instead of the place where the person is signing before the notary. A person can sign a deed in the City of Staunton conveying property in Henrico County! Be careful and take time to get this right. It’s important.

In Search Of: Charlottesville Planning Commissioners

The City of Charlottesville is in search of candidates for appointment to the Planning Commission. Applications are being accepted now and are due July 16th.

As of August, I will have served 8 years on the Commission (2 terms of 4 years each), which is the term limit for Planning Commissioners in the City. I feel fortunate that I have been able to serve and it has been one of the most rewarding ventures I've had. Two openings on the Commission need to be filled, as my friend and colleague Mike Farruggio has decided not to re-up for a second term.

As I told Sean Tubbs in a recent interview for Charlottesville Tomorrow, my advice to candidates is as follows:

"You must be prepared to work very hard, and to have sufficient time/availability in your professional and personal schedule to learn how to do this important job, especially in the first year. You must be prepared to leave your predispositions, prejudices, agendas and niche expertise at the door of City Hall, have a healthy respect for what you don't know about the job, and be truly willing to be a public servant. You must be willing to make sometimes unpopular decisions based on our ordinances and guidelines and on behalf of all of the citizens of our City. You should not enter the position with any allegiance to any constituency or audience. If you are applying to pad your professional or academic resume, you may want to reconsider because you will not be benefitting Council, your colleagues or the citizens of the City. "

Applicants must be City residents who are “qualified by knowledge and experience to make decisions of community growth and development.” The Commission serves as an advisory body to City Council and makes recommendations to Council on applications for rezonings, special use permits, and major site plans. The Commission oversees design review in the Entrance Corridors. Among other responsibilities, it is also charged with the capital improvement plan and with developing the City’s comprehensive plan, with the next cycle of the comp plan starting in 2010.

The Commission convenes one regular meeting per month and one work session, on the second and fourth Tuesdays respectively . Each member also takes on other committee assignments and serves on advisory bodies throughout City government and in the region. As the PC's delegate, I have had the privilege to serve on the Board of Zoning Appeals, the Board of Architectural Review, the UVa Master Planning Council, the Thomas Jefferson Planning District Commission (TJPDC), the Rt. 250 Interchange Steering Committee, and the Charlottesville Housing Advisory Committee.

Anyone wishing to apply should contact Jeanne Cox, Clerk of City Council, at 970-3113.

If Your Albemarle Property Is Under Land Use, You May Need a Little Validation.

For the first time ever, Albemarle County land owners whose property is under the Land Use Assessment Program need to complete a "Revalidation Application" and undergo an inspection of their property to continue their land use status. The deadline for this is September 1st. Previously, verification of continued use only occurred when property changed hands for value.

Land Use is authorized by Virginia law and provides owners of property in Albemarle and other counties in Virginia with a significant reduction in their annual real estate taxes. Property used for agricultural, horticultural, viticultural, forestry, and open space purposes can be placed under the Program and taxes are abated for that portion of the property on which the use occurs. The downside of Land Use is what happens when the County takes away the status: "Roll Back" taxes, meaning those taxes which were abated while the property had the special status, become due for the previous five (5) years plus interest at 10% a year.

The reason for the County making this change in policy is obvious: under their current revenue strains, they are looking everywhere they can for additional revenue and figure they'll determine that some have been taking advantage of the system. But why has Albemarle decided at this time to breathe down the neck of Farmer Joe, who's just as strained?

Albemarle County has provided some Frequently Asked Questions about the revalidation process and is holding some information sessions at extended hours for public discussion beginning next week.

LandAmerica Ruling Puts 1031 Exchanges in Jeopardy

At the Real Estate Practice Seminar I attended last week, there was a lot of buzz among real estate attorneys across Virginia about the astounding LandAmerica decision rendered May 7th in the bankruptcy court for the Eastern District of Virginia. For those who have not heard about the decision, Judge Huennekens found that none of the 450 claimants who had escrowed a whopping $227 million with LandAmerica as a Qualified Intermediary (QI) for their 1031 exchanges can recover these funds. Instead, the funds are now considered part of the bankrupt company's assets in bankruptcy! The reasoning for the opinion is that no express trusts were created in favor of these claimants, the 1031 exchangors.

This opinion has sent widespread shock throughout the bar because of its far reaching implications. Not only have these claimants/exchangors lost their escrowed profits from their "first leg" transaction, but they now have to pay capital gains on those profits, and may be contractually liable to complete the "second leg" transaction without their monies.

In speaking with one attorney representing 20 claimants (and counting) who will probably be filing appeals of the decision, I learned that LandAmerica began to invest the escrowed funds in securities, not conservative, liquid accounts. When the market went south, the escrowed funds were at risk and then began to lose value. It is my understanding that, as the losses mounted, LandAmerica began to utilize new escrows to fund escrows that were being called upon for the "second leg" transactions, a la a Ponzi scheme. It has been established that LandAmerica took on new 1031 escrows mere days before filing bankruptcy, so it is likely that principals there knew that the house of cards would fall as there would be no more new escrows accepted to provide funding for these "last in" transactions.

Because of this federal judge's far-reaching ruling, real estate practitioners are wondering how funds escrowed for 1031 exchanges can ever be deemed safe and separate from the assets of the QI. I know many of our local title agents and branch offices for title underwriters are preparing various responses and guidance for us, as they all act as QI's for 1031 exchanges.

[In full disclosure, I should mention that I sold my former company, The Closing Company, to LandAmerica in 2004, and was employed there as an Area Manager overseeing the operations I formerly owned. I left one year later in 2005. I was not employed in the Exchange Services division, although I did recommend their services to clients of mine while I was at LandAmerica and on occasion afterwards. Fortunately, I have not done so since ~2006. - Cheri Lewis]

"Change Order"

This month I am presenting a seminar to real estate colleagues in the bar across Virginia. To introduce one of my case studies, I am using this image. It is one of my favorites and highlights the risks of construction law practice. N.B: The small dinghy in front of the larger boat is named "Original Contract."

Flash Pass Meters for Downtown Parking?

The Charlottesville Planning Commission is currently discussing eliminating or significantly scaling back the "Parking Exempt" district in downtown Charlottesville. The issue of parking downtown - in garages, on the street, on site, and alternatives to new parking like transit or shuttles - is a complex one and one that we will continue to discuss.

My idea, as expressed in our April Planning Commission meeting and to Rachana Dixit of the Daily Progress who interviewed me on the subject, is that the City should consider metered parking. If people have to pay to park in the Market Street and Water Street Garages, why is the desirable parking on our downtown streets free? Either make it all free, as Staunton does, or monetize the desirable spaces. My colleague Mike Osteen agrees with me and he's seen it work well with electronic flash passes.

In a great article published March of 2008 in The Hook covering the parking garage issue in our City, Dave McNair quotes George Costanza from Seinfeld on the issue of paying for parking: "My father never paid for parking, my mother, my brother, nobody," George says in one of his characteristic rants. "It's like going to a prostitute. Why should I pay when, if I apply myself, maybe I could get it for free?"

My public admission at our April meeting: I'm a two-hour shuffler. Like George, as long as I can get it for free for a little effort, I will keep shuffling.

It's up to good planning in our City to change the behavior of those like me and George.

What do you think?

Cheri Lewis Recognized With 1st Athena Award by Charlottesville Chamber of Commerce

"Cheri A. Lewis was recognized by the Charlottesville Area Chamber of Commerce with the inaugural Athena Award on February 12, 2009. The Athena Award recognizes professional excellence, service to the community and efforts to help other women achieve their goals. Lewis was cited for her work as a businesswoman, for employing and mentoring other women in their careers, and for her advocacy on home ownership and housing issues. Mayor Dave Norris nominated Lewis for the Award, which was given during the Quadruplicity Conference hosted by the Business Women's Roundtable of the Chamber."

Serve on Your HOA Board? What you need to know about Virginia's new Common Interest Community Act

If you are involved in governance of your HOA or Condo, this is an article that I published in the CAAR Real Estate Weekly last fall about Virginia's Common Interest Community Act of 2008. Portions of the Act became effective January 1, 2009.

The Act made sweeping changes to Virginia laws governing property owners associations, condominiums, and cooperatives. A new state-wide Common Interest Community Board to regulate these associations was created as well as a consumer Ombudsman. Another major initiative of the Act is to create licensing and regulatory requirements for any professional manager of community associations.