|HOUSE PROPOSAL OF AMENDMENT||2007-2008|
An act relating to discharge of a mortgage by an attorney
The House proposes to the Senate to amend the bill by striking all after the enacting clause and inserting in lieu thereof the following:
Sec. 1. 27 V.S.A. § 470 is added to read:
§ 470. VALIDATION OF MORTGAGE
ONE-TO-FOUR-FAMILY RESIDENTIAL PROPERTY
(a) Subject to the provisions of subsection (b) of this section, a mortgage discharge executed on behalf of a banking or lending institution with respect to a mortgage encumbering a one-to-four-family residential real property, including a residential unit in a condominium or in a common interest community as defined in Title 27A, that is not valid because it is not executed by or is not issued by or in the name of the record holder of the mortgage, shall be valid as if it had been issued or executed by the record holder of the mortgage if:
(1) No person has within three years after the discharge is recorded brought an action challenging the validity of the discharge and recorded a copy of the complaint in the land records of the town where the discharge is recorded; and
(2) An affidavit is recorded that is dated more than three years after the recording date of the mortgage discharge and contains the following:
(A) A statement that the affiant has been the record owner of the real property described in the mortgage for at least two years prior to the date of the affidavit.
(B) The recording information for the mortgage, any assignments, and the release.
(C) A statement that, since the date of the recording of the release, the affiant has received no demand for payment of all or any portion of the debt secured by the mortgage and has received no notice or communication that would indicate that all or any portion of the mortgage debt remains due or owing.
(D) A statement that, to the best of the affiant’s knowledge and belief, the mortgage has been paid in full.
(b) The provisions of this section shall not apply to any release obtained by fraud or forgery.
Sec. 2. 27 V.S.A. § 141 is amended to read:
§ 141. EXECUTION AND ACKNOWLEDGMENT OF CONVEYANCE
(a) A homestead or an interest therein shall not be conveyed by the owner thereof, if married, except by way of mortgage for the purchase money thereof given at the time of such purchase, unless the wife or husband joins in the execution and acknowledgment of such conveyance. A conveyance thereof, or of an interest therein, not so made and acknowledged, shall be inoperative so far only as relates to the homestead provided for in this chapter.
(b) When a mortgagee takes an accruing mortgage, the only debt which shall be secured thereby or become a lien upon the property described therein shall be the debt described in the mortgage and existing at the time of its execution, and any subsequent direct indebtedness of the mortgagor to such mortgagee; provided, that when the mortgage includes a homestead, the written consent of the wife or husband of the mortgagor to the creation of such subsequent direct indebtedness shall be required.
(c) If a mortgaged property includes a homestead, any amendment to the mortgage which increases the amount of the indebtedness secured thereby or extends the date of maturity thereof, shall be executed and acknowledged by both spouses. The failure to obtain the written spousal consent shall not affect the validity or priority of such amendment, but the lien created thereby shall be inoperative so far only as relates to the rights of homestead of such spouse in the mortgaged premises under chapter 3 of this title, provided the amendment is challenged by such spouse before his or her homestead interest is otherwise extinguished.
(d) Notwithstanding anything to the contrary in this section, a spouse or civil union partner may convey his or her respective homestead interest to the other spouse or civil union partner prior to the time the homestead right vests, thereby divesting the grantor of any homestead interest in the property. A conveyance of homestead property between spouses or civil union partners shall be deemed to include a conveyance of any homestead interest. This section shall apply retroactively, except that it shall not affect a suit begun or pending as of July 1, 2008.
Sec. 3. 27 V.S.A. § 348 is amended to read:
§ 348. INSTRUMENTS CONCERNING
STATEMENT OF CONSIDERATION, OR WITNESSES OR
an instrument of writing shall have been on record in the office of the clerk
in the proper town for a period of 15 years, and there is a defect in the
instrument because it omitted to state any consideration therefor or was not
witnessed, acknowledged, validly acknowledged, or because a
license to sell was not validly issued or is defective, the
instrument shall, from and after the expiration of 15 years from the filing
thereof for record, be valid. Nothing herein shall be construed to affect any
rights acquired by grantees, assignees or encumbrancers under the instruments
described in the preceding sentence, nor shall this section apply to
conveyances or other instruments of writing, the validity of which is brought
in question in any suit now pending in any courts of the state.
(b) Notwithstanding subsection (a) of this section, any deed, mortgage, lease, power of attorney, release, discharge, assignment, or other instrument made for the purpose of conveying, leasing, mortgaging, or affecting any interest in real property which contains any one or more of the following errors is valid unless, within three years after the instrument is recorded, an action challenging its validity is commenced, and a copy of the complaint is recorded in the land records of the town where the instrument is recorded:
(1) The instrument contains a defective acknowledgment.
(2) In the case of a conveyance by a corporation, limited liability company, partnership, limited partnership, or limited liability partnership, or by any other entity authorized to hold and convey title to real property within this state, the instrument designated such entity as the grantor but was signed or acknowledged by an individual in the individual capacity of such person, or fails to disclose the authority of the individual who executes and acknowledges the instrument.
(3) The instrument contains an incorrect statement of the date of execution, or contains an execution date or other date that is later than the date of the recording. In case of such conflict the date of recording prevails.
(4) The instrument does not contain a statement of consideration.
(c) Notwithstanding the provisions of subsection (a) of this section, any deed, mortgage, lease, power of attorney, release, discharge, assignment, or other instrument made for the purpose of conveying, leasing, mortgaging, or affecting any interest in real property which is executed pursuant to a recorded power of attorney and contains one or more of the following errors or omissions is valid as if it had been executed without the error or omission:
(1) The instrument was executed by an attorney-in-fact but was signed or acknowledged by the attorney-in-fact without reference to his or her capacity.
(2) The instrument was executed by an attorney-in-fact but does not reference the power of attorney.
(3) The power of attorney was effective at the time the instrument was executed but is recorded after the instrument is recorded.
(d) A release, discharge, or assignment of mortgage interest executed by a commercial lender with respect to a one-to-four-family residential real property, including a residential unit in a condominium or in a common interest community as defined in Title 27A, which recites authority to act on behalf of the record holder of the mortgage under a power of attorney but where the power of attorney is not of record, shall have the same effect as if executed by the record holder of the mortgage unless, within two years after the instrument is recorded, an action challenging the release, discharge or assignment is commenced and a copy of the complaint is recorded in the land records of the town where the release, discharge, or assignment is recorded. This subsection shall not apply to releases, discharges, or assignments obtained by fraud or forgery.
Sec. 4. 9 V.S.A. § 4005a is added to read:
§ 4005a. FUND HELD IN TRUST; COMMINGLING; NO EFFECT ON
TITLE TO REAL PROPERTY
(a) For the purposes of this section:
(1) “Claim” means any valid claim for materials furnished or services rendered in the construction, repair, remodeling, improvement, or renovation of any building or structure for which the claimant has a lien or the right to claim a lien.
(2) “Express trust” means funds that have been paid by an owner, for or in connection with services, labor, or materials used in an improvement of real property, which are to be held by a contractor or subcontractor, in express trust, for those services, labor, or materials. Any such contractor or subcontractor who accepts money from any owner or contractor shall become the trustee of the express trust that is created pursuant to this section. The amounts received by such contractor or subcontractor under or in connection with each building project shall be a separate trust and the contractor or subcontractor, or any successor or assign or both of such contractor or subcontractor that hold such trust funds, shall be a trustee thereof. These funds are not required to be held in any separate account by a contractor or subcontractor. Such trust shall be effective against and shall have priority over any unsecured interest of a party seeking payment from such contractor or subcontractor for claims other than those that are due and owing by reason of the specific building project for which the trust was created, whether such creditors are foreign attachment or other judicial lien creditors, a trustee in bankruptcy or similar creditors or representatives or creditors of the contractor or subcontractor.
(b) Funds held in express trust are not required to be held in any separate account by a contractor or subcontractor.
(c) No express trust shall be required for a federal, state, or municipal project.
(d) The amount payable to any contractor or subcontractor under any contract for the construction, repair, remodeling, improvement, or renovation of any building or structure shall, upon receipt by such contractor or subcontractor, be held in express trust by such contractor or subcontractor for the payment of all claims that are due and owing, or to become due and owing, by such contractor or subcontractor by reason of such construction, repair, remodeling, improvement, or renovation.
(e) Any amount required to be held in express trust under this section shall be applied to the payment of the corresponding claims specified in this section.
(f) Nothing herein shall be construed to create a lien on real property. The existence of an express trust under this section shall not prohibit the filing or enforcement of a lien against the affected real property pursuant to chapter 51 of Title 9 by any claimant. A priority lien of a secured lender shall not be subordinate to an express trust.
(g) In the case of an express trust which is not held by a corporation, limited liability partnership, or limited liability company, liability for sums due under this section shall only attach to the principal or head of the company which holds the funds under the express trust.
The Vermont General Assembly
115 State Street