skip to main |
skip to sidebar
Attorneys whose practice requires them to rely on the public records in the City of Charlottesville have been talking behind doors for years about the deficiencies of the Circuit Court Clerk's Office. Court records which are mis-indexed so that they cannot be discovered in due diligence , land records which were supposed to be accessed online years ago but still are not in a useful way , and customer service that requires weeks of advance notice and an appointment to probate a will after a family member's death.
Only once every eight (8) years do we have a chance to change this office, and it is this year. The job of Clerk of Court, held by Paul Garrett for over 30 years and yielding a salary of $112,000 plus all the perks of government employment, is up for election. Llezelle Dugger is the candidate who can bring respectability to this public office in the City of Charlottesville.
"There is no reason why the Charlottesville Circuit Court shouldn't be on the cutting edge of not only technology but how we treat the public," Dugger said when announcing her bid for office. Having won election to the Charlottesville School Board in 2007, she is a seasoned candidate who can run a good race for Clerk. (She and her husband Alan have two daughters who are in our public school system.) She also has the credentials for the office, having practiced law in town for over 15 years. Currently an attorney with the Public Defender's Office, she has plenty of opportunity to interact with the Clerk's Office and to know what the issues are as well as opportunities for improvement.
On Saturday, August 20th, the Democrats will vote in a firehouse primary at Burley Middle School from 9am - 7pm to nominate their candidate for this office. The incumbent and another challenger will all be on the ballot. With no other apparent candidate of any party nearly as well qualified by experience and character as she, I am throwing my support behind Dugger. I hope any Democrats in the City will take some time on that Saturday in August to affect a much-needed revolution for all citizens who care about the integrity of our public records and a well-run office.
Under Virginia law, any lender who is secured by a lien against real estate must release that lien within ninety (90) days of the date that the debt is paid off in full. Section 55-66.3(A)(1) of the Code of Virginia (1950, as amended). If they fail to do this, they must pay to the borrower a fee of $500 upon demand.
This rule pertains to any lender, any type of borrower, and any type of real estate. There is no defense that I know of for failure to release. The public policy reason for the law is so that land owners can quickly obtain clear title to their property. If the lender does not pay the $500, they will be liable for court costs and attorneys fees expended to pursue collection of the fee.
The release of a lien is most typically accomplished by the preparation and recording of a Certificate of Satisfaction, which is a one-page form that references the original deed of trust or memo of lien. Sounds pretty simple, but some lenders just don't get around to it.
With interest rates at 50-year lows, many smart borrowers are choosing to refinance their mortgages to take advantage of lower payments. And are paying off old loans.
Just last week, I settled a client's claim against a lender whom I shall call Behemoth Bank. The Bank did not release the lien in the 90 days and refused to cough up the $500 when we sent them a demand letter for it. Even after we filed suit against them in General District Court and reiterated our demand, they proceeded to defend the claim all the way to the day before trial. They ended up paying my client the $500 and significant legal fees incurred to perpetuate their mistake. I have another two claims against Behometh Bank that I am handling for another client who refinanced and did not have their old liens released anywhere near the 90-day period.
If you are paying off a lien for any reason, mark your calendar for 90 days after the lender receives your funds. If there is no release, you can make an easy $500 from your lender. Now, how often does that happen?UPDATED AUGUST 27, 2010: Today, I settled another two cases against Bank of America based on their failure to release liens against my client's property within the 90 day period after they refinanced.
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]
