NO. 46. AN ACT RELATING TO CREATING A 15-YEAR STATUTE OF LIMITATIONS FOR ENFORCEMENT OF MUNICIPAL LAND USE PERMITS AND PROVIDING THAT NONCOMPLIANCE WITH OR FAILURE TO OBTAIN THESE PERMITS DOES NOT CREATE AN ENCUMBRANCE ON TITLE.
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. LEGISLATIVE FINDINGS AND INTENT
(a) The general assembly finds that:
(1) Purchasers of real estate, as well as mortgage lending institutions, need assurances that title to real estate passing from seller to purchaser is free from any encumbrance or adverse effect on the marketability of the property.
(2) The Vermont Supreme Court held, in Bianchi v. Lorenz (1997), that "an encumbrance [on real estate] exists when the seller can determine from municipal records that the property is in violation of local zoning law at the time of conveyance and the violation substantially impairs the purchaser's use and enjoyment of the property."
(3) Municipalities have historically kept complete and accurate land records, a practice which has accommodated persons searching those records for traditional forms of encumbrances and which has fostered an efficient title search process.
(4) Among the municipalities there is not a uniform process for maintaining various "land development" (as defined by 24 V.S.A. § 4303(3)) records, and in some cases those records are difficult to access.
(5) Due to the Bianchi decision and in order to assure a title is unencumbered, it is now necessary to ascertain whether a seller of real estate has obtained or complied with municipal land use permits.
(6) It is estimated that the costs to purchasers of real estate in Vermont have increased dramatically due to the Bianchi decision, and many real estate transactions have been delayed and even cancelled.
(7) The costs and problems arising from the Bianchi decision have been particularly burdensome for low and moderate income purchasers and first-time purchasers of Vermont real estate.
(8) In 1998, the general assembly passed Act No. 125 which was designed to address the legal issues created by the Bianchi decision and to provide relief for Vermont home purchasers and sellers.
(9) Act No. 125 has not provided the relief envisioned by the general assembly and the act's supporters.
(b) The general assembly intends to:
(1) Establish clearly what constitutes an encumbrance on title to real estate, by returning to the standard commonly accepted prior to the Bianchi decision.
(2) Provide relief to the purchasers and sellers of real estate by eliminating unnecessary delay in real estate transactions.
(3) Reduce the costs of title searches and title insurance by providing for a statute of limitations on enforcement of municipal land use violations and for limited amnesty in regard to state subdivision regulations.
Sec. 2. 24 V.S.A. § 1154 is amended to read:
§ 1154. RECORDS; PHOTOCOPIES
(a) A town clerk shall record in the land records, at length or by accurate, legible photocopy, in books to be furnished by the town:
(2) instruments or evidences respecting real estate,
(3) writs of execution, other writs or the substance thereof, and the returns thereon,*[
(4) hazardous waste site information and hazardous waste storage, treatment and disposal certifications established under 10 V.S.A. chapter 159,
(5) underground storage tank information under 10 V.S.A. chapter 59,
(6) municipal land use permits (as defined in section 4303 of this title) or notices of municipal land use permits, as provided for in subsection (c) of this section, notices of violation of ordinances or bylaws relating to municipal land use, and notices of violation of municipal land use permits,
(7) denials of municipal land use permits,
(8) other instruments delivered to the town clerk for recording.
The town clerk shall record in the land records a memorandum or notice of a municipal permit, or a statement, or a notice of violation, which is delivered for recording as described below:]*
A temporary permit (if defined by the bylaws of the municipality) is not required to be recorded.
If a municipal memorandum or]* A notice of a municipal land use permit or a notice of violation specified in subdivision (a)(6) of this section may be recorded, and if such notice is recorded, it shall list:
(1) as grantor, the owner of record title to the property at the time the municipal land use permit*[
, certificate]* or notice of violation is issued;
(2) as grantee, the municipality issuing the permit, certificate or notice;
(3) the municipal or village office where the original, or a true, legible copy of the municipal land use permit*[
, certificate, statement or notice]* may be examined;
(4) whether an appeal of such permit, certificate, or notice has been taken;
(5) tax map lot number or other description identifying the lot.
(d) The town clerk shall keep in each book of record an index of reference to the instruments or records in that book.
Sec. 3. 24 V.S.A. § 1161(b) is amended to read:
(b) For the purposes of this section, "transactions affecting title to real estate" shall include the instruments described in subsections 1154(a) and (b) of this title. Each owner of record title to the property at the time such an instrument is issued shall be listed as the grantor. The state of Vermont shall be listed as the grantee for instruments described in subdivisions 1154(a)(4) and (5) of this title. The municipality issuing the instrument shall be listed as the grantee for instruments described in *[
subdivisions 1154(b)(1) and (2)]* subdivision 1154(a)(6) of this title.
Sec. 4. 24 V.S.A. § 4303(24) is added to read:
(24) "Municipal land use permit" means any of the following whenever issued:
(A) a zoning, subdivision, site plan, or building permit or approval, any of which relate to "land development" as defined in this section, which has received final approval from the applicable board, commission or officer of the municipality; or
(B) a septic or sewage system permit issued under any municipal ordinance adopted pursuant to chapter 102 of this title; or
(C) final official minutes of meetings which relate to the permits or approvals described in subdivision (24)(A) or (B) of this section which serve as the sole evidence of such permit or approval; or
(D) a certificate of occupancy, certificate of compliance or similar certificate which relates to the permits or approvals described in subdivision (24)(A) or (B) of this section; or
(E) an amendment of any of the documents listed in subdivisions (24)(A) through (D) of this section.
Sec. 5. 24 V.S.A. § 4443 is amended to read:
§ 4443. ZONING PERMITS *[
AND]*, CERTIFICATES OF OCCUPANCY, AND MUNICIPAL LAND USE PERMITS
(a) Within any municipality in which any zoning regulations have been adopted:
(1) No land development may be commenced within the area affected by such zoning regulations without a permit therefor issued by the administrative officer. No zoning permit may be issued by the administrative officer except in conformance with such zoning regulations.
(2) If the zoning regulations so adopted so provide, it shall be unlawful to use or occupy or permit the use or occupancy of any land or structure, or part thereof created, erected, changed, converted, or wholly or partly altered or enlarged in its use or structure after the effective date of this chapter, within the area affected by such zoning regulations, until a certificate of occupancy is issued therefor by the administrative officer stating that the proposed use of the structure or land conforms to the requirements of such zoning regulations.
(3) No zoning permit issued pursuant to this section shall take effect until the time for appeal in section 4464(a) of this title has passed, or in the event that a notice of appeal is properly filed, such permit shall not take effect until final adjudication of said appeal.
(b) Each zoning permit issued under this section shall contain a statement of the period of time within which an appeal may be taken. Within three days following the issuance of a zoning permit, the administrative officer shall:
(1) Deliver a copy of the permit to the listers of the municipality; and
(2) Post a copy of the permit in at least one public place in the municipality until the expiration of *[
fifteen]* 15 days from the date of issuance of the permit.
(c)(1) Within 30 days after a municipal land use permit *[
relating to land, structures, and other improvements to land, including a zoning, planning, subdivision, site plan, health, street, building or other municipal permit, certificate of occupancy, certificate of compliance or similar certificate has become final]* has been issued or within 30 days of the issuance of any notice of violation, the appropriate municipal official shall:
(A) deliver *[
a notice of violation or memorandum or notice of recording]* the original or a legible copy of the municipal land use permit or notice of violation, or a notice of municipal land use permit generally in the form set forth in subsection 1154(c) of this title, to the town clerk for recording as provided in subsection 1154(a) *[ or (b)]* of this title; and
(B) file a copy of that municipal land use permit in the offices of the municipality in a location where all municipal land use permits shall be kept.
(2) The municipal officer may charge the applicant for the cost of the recording fees as required by law.
(d) If a public notice is issued under this chapter with respect to the adoption or amendment of a bylaw, or an amendment to an ordinance adopted under prior enabling laws, the administrative officer shall not issue any permit under section (a)(1) of this section, if the permit is with regard to the bylaw, or amendment to a bylaw or ordinance, for the period commencing upon the date of that public notice and ending upon the effective date of the adoption or rejection of the bylaw or amendment, except with the written consent of the legislative body of the municipality given after public hearing upon public notice.
Sec. 6. 24 V.S.A. § 4444 is amended to read:
§ 4444. ENFORCEMENT; PENALTIES
(a) Any person who violates any by-law after it has been adopted under this chapter or who violates a comparable ordinance or regulation adopted under prior enabling laws shall be fined not more than *[
fifty dollars]* $100.00 for each offense. No action may be brought under this section unless the alleged offender has had at least seven days' warning notice by certified mail. An action may be brought without the seven-day notice and opportunity to cure if the alleged offender repeats the violation of the by-law or ordinance after the seven-day notice period and within the next succeeding *[ twelve]* 12 months. The seven-day warning notice shall state that a violation exists, that the alleged offender has an opportunity to cure the violation within the seven days and that the alleged offender will not be entitled to an additional warning notice for a violation occurring after the seven days. In default of payment of the fine, such person, the members of any partnership, or the principal officers of such corporation shall each pay double the amount of such fine. Each day that a violation is continued shall constitute a separate offense. All fines collected for the violation of by-laws shall be paid over to the municipality whose by-law has been violated.
(b) Any person who, being the owner or agent of the owner of any lot, tract or parcel of land, lays out, constructs, opens or dedicates any street, sanitary sewer, storm sewer, water main, or other improvements for public use, travel, or other purposes or for the common use of occupants of buildings abutting thereon, or sells, transfers, or agrees or enters into an agreement to sell any land in a subdivision or land development whether by reference to or by other use of a plat of such subdivision or land development or otherwise, or erects any structure thereon, unless a final plat has been prepared in full compliance with this chapter and the by-laws adopted under this chapter and has been recorded as provided herein, shall be fined not more than *[
fifty dollars]* $100.00 and each lot or parcel so transferred or sold or agreed or included in a contract to be sold shall be deemed a separate violation. All fines collected for such violations shall be paid over to the municipality whose regulation has been violated. The description by metes and bounds in the instrument of transfer or other document used in the process of selling or transferring shall not exempt the seller or *[ transferrer]* transferor from such penalties or from the remedies herein provided.
Sec. 7. 24 V.S.A. § 4496 is amended to read:
§ 4496. ENFORCEMENT; LIMITATIONS
(a) An action, injunction or other enforcement proceeding relating to any *[
zoning, planning, street, subdivision, site plan, health or building permit or approval, or certificate of occupancy, or certificate of compliance, or other]* municipal land use permit *[ or approval required by statute, ordinance or bylaw]* may be instituted under section 1974a, 4444, or 4445 of this title against the *[ current owner or occupant, or both, of any street, building, structure or land for any violation if:]* alleged offender if the action, injunction, or other enforcement proceeding is instituted within 15 years from the date the alleged violation first occurred and not thereafter. The burden of proving the date the alleged violation first occurred shall be on the person against whom the enforcement action is instituted.
(b) No action, injunction, or other enforcement proceeding may be instituted to enforce an alleged violation of a municipal land use permit which received final approval from the applicable board, commissioner, or officer of the municipality after July 1, 1998, unless the municipal land use permit or a notice of the permit generally in the form provided for in subsection 1154(c) of this title was recorded in the land records of the municipality as required by subsection 4443(c) of this title.*[
* * *
Sec. 8. 27 V.S.A. § 612 is amended to read:
§ 612. MUNICIPAL PERMITS
(a) Notwithstanding the majority decision in Bianchi v. Lorenz (1997), for land development, as defined in 24 V.S.A. § 4303(3), *[
that commenced prior to the effective date of this section,]* no encumbrance on record title to real estate or effect on marketability shall be created*[ :]*
(b) A purchaser shall have the right to terminate a binding contract for the sale of real estate if, prior to closing, the purchaser determines and gives written notice to the seller that land development has occurred on the real estate without a required municipal land use permit or in violation of an existing municipal land use permit. Following the receipt of written notice, the seller shall have 30 days, unless the parties agree to a shorter or longer period, either to obtain the required municipal land use permits or to comply with existing municipal land use permits. If the seller does not obtain the required municipal land use permits or comply with existing municipal land use permits, the purchaser may terminate the contract if, as an owner or occupant of the real estate, the purchaser may be subject to an enforcement action under 24 V.S.A. § 4496.
Sec. 9. STUDY COMMITTEE ON A SIMPLIFIED PROCESS FOR THE RECORDING OF, MAINTENANCE OF, AND ACCESS TO MUNICIPAL LAND USE PERMITS IN VERMONT'S LAND RECORDS
(a) A committee shall be established to study the maintenance of, location of, indexing of, costs relating to, and access to the municipal land use permits issued by municipalities, and to develop and recommend a simplified and standardized process for recording permits in Vermont's land records so that those permits may be more easily, more reliably, and less expensively searched. The committee shall also investigate the use of technology to expand access. The committee shall obtain information on efforts inside and outside Vermont to maintain, index, and make available land use permits.
(b) The committee shall consist of the Vermont secretary of state, or a designee; one representative each of the Vermont League of Cities and Towns and the Vermont Bar Association, selected by the respective organizations; one representative from the Vermont Municipal Clerks and Treasurers' Association, selected by the association; two persons appointed by the governor who are currently serving as zoning administrators or planners, or both, one from a municipality with a population of more than 10,000 persons and one from a municipality with a population of less than 10,000 persons; the commissioner of the department of buildings and general services or his or her designee; and the state archivist. The secretary of state or the secretary's designee shall convene the first meeting of the committee.
(c) The secretary of state shall provide staff support to the committee. The committee shall report its findings and recommendations by January 15, 2000 to the House Committees on Government Operations and on Local Government, and the Senate Committee on Government Operations.
Sec. 10. ASSISTANCE FOR VERY LOW, LOW, AND MODERATE
By January 1, 2000, the secretary of natural resources and the secretary of commerce and community development shall develop and recommend to the general assembly a pilot funding program to assist in remediating failed wastewater systems, particularly those located in mobile home parks. The program shall rely upon existing funding sources, using existing administrative systems, to provide low interest loans, deferred loans, and grants to individuals and to nonprofit housing providers, in order to benefit very low, low, and moderate income homeowners, particularly those residing in mobile home parks, by assisting in the repair or replacement of failed wastewater systems and, under certain circumstances, potable water supplies. The program will ensure that persons of low and very low income shall benefit from at least 50 percent of the funds available under this program.
Sec. 11. 18 V.S.A. § 1218(d) is added to read:
(d)(1) The following subdivided lots shall not require a permit under this section if the specified conditions are met:
(A) a subdivided lot which required a subdivision permit on which a building or structure and its associated potable water supply and wastewater disposal system was substantially constructed as of January 1, 1999 is exempt, provided that:
(i) the wastewater disposal system has not failed;
(ii) the lot is not subsequently subdivided;
(iii) there is no significant modification of the building or structure after January 1, 1999 that would increase design flows;
(iv) there is no significant modification of the potable water supply or wastewater disposal system after January 1, 1999; and
(v) if a subdivision permit had been issued for the lot prior to January 1, 1999, the conditions of such permit concerning actions required to be taken after January 1, 1999 shall remain in effect. Such conditions include ones concerning operation and maintenance and transfer of ownership.
(B) a lot which was subdivided on or before January 1, 1999 which required a subdivision permit and which has not been developed through the construction of a building or structure is exempt, provided that the lot is not subsequently subdivided, and:
(i) prior to the construction of a building or structure on the lot, a subdivision permit is obtained; and
(ii) prior to the transfer of ownership of the lot, unless a permit has been obtained by that time, the following language is inserted into the deed describing the affected property: "Notice of Permit Requirements. In order to comply with applicable state rules concerning potable water supplies and wastewater systems, a person shall not construct or erect any structure or building on the parcel of land described by this deed if the useful occupancy of that structure or building will require the installation of a potable water supply or wastewater system, without first complying with the applicable rules and, if necessary, obtaining the required permit. Any person who owns this property acknowledges that this parcel may not be able to meet state standards for a potable water supply or wastewater system and, therefore, this parcel may not be able to be developed."
(2) For the purposes of this subsection, the subdivision of land shall be deemed to occur upon the recording in the land records of a plat, plan, or deed.
(3) For the purposes of this subsection, a wastewater disposal system has failed when the system is functioning in a manner:
(A) that allows wastewater to be exposed to the open air, pool on the surface of the ground, discharge directly to surface water, or back up into a building or structure, unless the approved design of the system specifically requires the system to function in such a manner;
(B) so that a potable water supply is contaminated or rendered not potable;
(C) that presents an imminent hazard to human health; or
(D) that presents a serious threat to the environment.
(4) If a wastewater disposal system benefiting from the limited amnesty granted under this subsection has failed, the owner of the system shall apply for and obtain a permit, and shall correct the failure in accordance with the permit. Permits issued under this subsection may include permits that include variance provisions if the failed wastewater disposal system cannot be modified or replaced in a way that enables the secretary to issue a permit that fully complies with the rules adopted under subsection (b) of this section. When approving a variance under this subsection, the secretary shall consider the cost of the modification or replacement of the system in addition to the potential impacts on human health and the environment.
Sec. 12. REPEAL
18 V.S.A. § 1221a (Remediation of subdivision violations) is repealed.
Sec. 13. CURATIVE EFFECT OF ACT
(a) If there is compliance with the conditions of the permit exemptions described in subsection 1218(d) of Title 18, the failure to obtain a subdivision permit under section 1218 and the failure to record such permit or comply with the requirements of such permit shall not constitute a violation that adversely affects the marketability of title under 27 V.S.A. chapter 5, subchapter 7.
(b) This section shall retroactively apply to these exempt properties.
Sec. 14. SEPTIC TECHNOLOGY IMPACT STUDY
(a) There is established a committee to study the environmental and land use impacts associated with allowing the use of alternative technologies for the on-site disposal of wastewater.
(b) The committee shall consist of the following: one member of the Senate, appointed by the Committee on Committees, one member of the House, appointed by the Speaker, the secretary of natural resources or a designee, the secretary of commerce and community affairs or a designee, and up to 12 persons appointed by the governor to represent: agricultural interests, home builders, engineers, the environmental community, the real estate sales industry, local governmental officials, land use planning organizations, property owners, and members of the general public.
(c) The committee shall solicit public comment from people located in the various regions of the state and shall report to the general assembly by no later than January 15, 2000 with alternatives, initiatives, and recommendations with respect to the use of alternative technologies for on-site disposal of wastewater and land use impacts associated with them.
Sec. 15. EFFECTIVE DATE AND IMPLEMENTATION
(a) This section, Secs. 1-6 and 8 (subsection 612(b) of Title 27) of this act shall take effect upon passage.
(b) Sec. 8 (subsection 612(a) of Title 27) shall take effect upon passage and shall apply retroactively to April 27, 1998, but shall terminate specified encumbrances that otherwise might have existed at any time before or after that date.
(c)(1) Sec. 7 shall take effect upon passage and shall apply retroactively to July 1, 1998.
(2) If an interest in real estate was transferred after April 27, 1998 but before a date two months after the date of passage of this act, then the appropriate statute of limitations established in 24 V.S.A. § 4496 upon April 27, 1998 shall apply for a period of 10 years from the date the violation first occurred, after which time the 15-year statute of limitations created in this act in the amendments to 24 V.S.A. § 4496 shall apply. In these instances, enforcement actions that would be allowed under a 15-year statute of limitations but were not allowed in the original version of 24 V.S.A. § 4496, as it existed on April 27, 1998, shall not be allowed.
(d) Secs. 11-14 shall take effect July 1, 1999.
(e) Upon passage, the secretary of state shall notify appropriate municipal officials of the requirements of this act.
Approved: May 26, 1999