Volume 4, Issue 19: July 1, 2011

First Session of the 146th General Assembly Adjourns: Thanks to so many active REALTOR® members, DAR saw many successes this session. Special thanks to those REALTORS who responded to calls for action and joined us the last two nights of session at Legislative Hall. After years in the making, revisions to the Delaware Real Estate Commission Statute passed both the Senate and House in the closing days of session. DAR was able to stop a last minute effort to pass a bill regulating auctioneers that did not include specific language limiting the auction to bidders present in person or electronically. DAR amended several mortgage bills which were sent to the Governor for his consideration. DAR successfully sought amendments to comprehensive plan legislation, SB 126, which passed both bodies and prevented SB 149, an endangered species bill with significant problems from moving forward this year.

DREC Statute Revisions Pass:  HB 154, a comprehensive rewrite of the real estate commission statute, passed both bodies with two amendments and is waiting consideration by the Governor. The act takes effect six months after enactment.  To view a copy of the bill and amendments, click here. DAR has been instrumental throughout this process including securing an amendment to clarify that a licensee shall not perform a CMA for the mortgagee on a property that is the subject of a signed agreement of sale.

Auctioneer Legislation Put Off Until Next Session: HB 212 was introduced on June 23rd and reported out of the House Sunset Committee on June 28th. The bill was placed on the House Consent Agenda and pulled after DAR objection. The legislation requires auction firm and auctioneer licensing and creates a commission to license auctioneers and auction firms and to oversee their activities. DAR has no problem with the concept of this bill but is opposed to the language allowing auctioneers to act as licensees for 30 days after the auction.  Specifically, the bill says “a licensed auctioneer must present to a seller of real property a signed contract of sale within 30 days, or the auction is null and void. Special thanks to Representatives Bennett, Scott and Viola who filed and amendment which clarifies that real property which does not sell at an auction may not continue to be advertised for sale by the auctioneer unless another auction is scheduled.  It also requires that if the auctioneer markets the real property to others after the day of auction and another auction is not scheduled, the auctioneer would need to be licensed as a real estate broker. The amendment further clarifies that the auctioneer may only sell real property to a bidder who was registered for and attended the auction. Additionally, auctioneers are required to keep a list of registered bidders. We expect to see further action on this bill next session.

Mortgage Modification Service Providers: SB 42 with SA 1 passed the House and is ready for consideration by the Governor.  Sections 1-8 of this Bill provide that the Mortgage Rescue Fraud Protection Act in 6 Del. C. Chapter 24B will protect homeowners 60 days in default on their mortgage loans. Currently the protections are in effect after an action for foreclosure is filed. Section 9 creates a registration requirement for Mortgage Loan Modification Companies that provide services to Delaware residents. Written contracts with disclosures are required and no fees can be collected in advance. The registration and renewal fees can be used to support foreclosure relief programs. The law is enforced by the Attorney General.  DAR was successful in securing an amendment to the bill which exempts real estate brokers and salespersons who may negotiate a short sale in connection with the listing of a home for sale as long as a fee is not charged. 

Deceptive Foreclosure Practices On Way To Governor: SB 48 prohibits the use of a deceptive or fraudulent record, document, or statement to support an action to foreclose.  The bill passed with DAR supported SA 2 which (1) clarifies the types of acts prohibited by the Bill, (2) makes clear that this section shall be enforced by the Attorney General, but not private attorneys, and (3) makes sure that a claim under this section after confirmation of the sheriff sale will not cloud title of an innocent third party who purchases the property at the sheriff sale solely because of a violation of the bill. SA 1, which failed the Senate attempted to remove the provision defining a willful violation as "should have known", limiting a violation to conduct where the violator “knew” the conduct was prohibited. The bill passed both the Senate and House in the last two days of session and is ready for action by the Governor.

Affidavit of Loss Mitigation: HB 57 which passed the Senate and is ready for consideration by the Governor requires an affidavit of loss mitigation prior to a plaintiff seeking the entry of judgment in a foreclosure action in order to ensure homeowners are considered for loan modifications before a foreclosure action is concluded with respect to their residence. The bill passed the House earlier in the year with two amendments.  HA 1 mandates that a borrower be informed of loss mitigation opportunities in the Notice of Intent to Foreclose prior to foreclosure.  It also clarifies that the Act applies to all pending foreclosures that do not have judgment of foreclosure entered but does not apply to properties that have gone to Sheriff’s sale and often involve rights of innocent third-party purchasers and other persons.  The amendment strengthens borrower’s rights in a foreclosure by providing that if Notice of Intent to Foreclose is done improperly or not sent as required, the foreclosure action is stayed for 90 days during which time the borrower can apply for loss mitigation and the lender must render a decision on that application.  The amendment also mandates that lenders provide the borrower with the due date of the loan in the Notice of Intent to Foreclose and show the borrower the months to which all payments received in the last 12 months were applied.  The amendment permits a lender or lender’s counsel to execute the affidavit required by this Act and keeps certain rule-making authority in Superior Court regarding required information in the Notice of Intent rather than attempting an impermissible delegation of legislative authority to a Superior Court “delegatee”.  Finally, the amendment provides that DSHA make the generic Notice of Intent to Foreclose in English and Spanish available to lenders and their counsel for use in meeting the requirements of the Act.  HA 2 will allow a holder of a Purchase Money Mortgage to bring a foreclosure action under existing procedures and not the new requirements of HB 57.  A Purchase Money Mortgage is a mortgage held by the seller of the subject property.  Such individuals do not have mitigation programs and such additional requirements will be very burdensome to such sellers who do not have the resources of mortgage companies.

Foreclosure Mediation on Way to Governor: HB 58 establishes an Automatic Residential Mortgage Foreclosure Mediation Program in order to ensure homeowners have an opportunity to meet face-to-face with lender representatives and mediate both retention and non-retention options before a judgment is entered or a sheriff’s sale occurs.  This Section codifies an expanded version of the Residential Mortgage Foreclosure Mediation Program currently run by the Superior Court under its Administrative Directive 2011-2, as first established under the Superior Court’s Administrative Directive 2009-3.  The Automatic Residential Mortgage Foreclosure Mediation Program established by Section 1 expands access to mediation to all homeowners of owner-occupied residential one-to-four family properties and eliminates financial qualification rules set forth in the existing mediation program.  Section 1 also requires that plaintiffs pay a court-determined mediation fee in foreclosure actions for which mediation will occur; this fee is to be set by the court in an amount to defray the costs of the mediation program. Section 2 sets out certain requirements for the filing of a complaint or summons in a mortgage foreclosure action, including that the filing be accompanied by certain documentation related to the notices.  Section 2 also extends the period for a defendant to file an answer in mortgage foreclosure actions that are subject to the mediation program established under Section 1 until the date of any scheduled mediation conference. DAR was successful in advocating the bill be amended to ensure that the program was not mandatory for homeowners who are not interesting in pursuing other financial arrangements.

Floodplain and DrainageSB 64 with SA2 passed the House with a technical amendment, was sent back to the Senate and passed and is ready for consideration by the Governor.  SB 64 authorizes the Department of Natural Resources and Environmental Control to adopt guidance and minimum standards to minimize risk from flooding with the input from a stakeholder advisory group. The legislation also authorizes the DNREC Secretary to waive regulatory requirements of the Wetlands and Subaqueous Lands Regulations to protect public health and safety and to prevent catastrophic damage to property. The amendment eliminated the requirement that local governments adopt code changes or ordinances to meet minimum standards and identifies specific membership for the Floodplain and Drainage Advisory Committee to include representatives from municipal and county governments. The Amendment also includes a process by which local governments will assess their existing flood plain and drainage requirements with the assistance of DNREC, if needed, and report their findings to the DNREC. DNREC is required to compile those findings in a report, review such report with the committee for input, and report to the General Assembly by March 15, 2013.

Kent County Sheriff Sales: SB 121 which permits Sheriff sales to be conducted at the Sheriff's Office as the office is no longer located in the Kent County Courthouse, passed the House is ready for consideration by the Governor.

Disabled Person's Real Estate:  SB 81, which passed both chambers, gives the Court of Chancery increased discretion in determining whether it should approve a suggested price for a proposed sale of a disabled person’s real estate. Currently, the Chancery Court is required in most cases to set the minimum price allowable as the price set by the appraiser. This Bill will allow Chancery to take into account all relevant circumstances, including the appraisal and the best interest of the disabled person, in determining whether to approve a proposed sale. SA 1 gives the Chancery Court greater flexibility, through its Court Rules, to adjust its practice.  SB 81 is now awaiting consideration by the Governor.

Seller Financing for Consumer Purpose Properties: SB 104 passed the House and is on the way to the Governor for consideration.  The bill makes changes to give certainty that § 314(c) of Title 25 of the Delaware Code applies only to such residential real property in accordance with the intended purpose of such subsection.

New Castle County Sewer Systems:  HB 173 requires that for any residence that New Castle County Government deems that installation of a grinder pump or any other sewage pump or waste management device is necessary in conjunction with or in relation to the New Castle County Sewer Rehabilitation Project, the County shall pay any expenses, costs, and fees of any form related to maintenance and/or operation of such pump or device and any replacement thereof in perpetuity.  The bill passed the House with HA 1 which makes clear that neither New Castle County nor a representative thereof will incur any liability or any obligation where a grinder pump or any other sewage pump or waste management device was installed on or in a residence by the owner or a representative thereof prior to commencement of or subsequent to completion of the New Castle County Sewer Rehabilitation Project. The bill passed the Senate early this morning and is ready for consideration by the Governor.  DAR testified in support of the bill.

Comprehensive Plans: SB 138 passed both the Senate and House and ready for consideration by the Governor.  The bill increases the maximum time between comprehensive plan updates from 5 to 10 years. Nothing in the bill prohibits a county from acting more often, but experience has shown that five years is too short an amount of time between updates, leaving little time to implement a plan before starting the whole cycle over. SA 1 requires counties to review their comprehensive plans every 5 years, to make it consistent with municipalities.

Cabinet Committee on State Planning: SB 126 with SA1 passed the House and is ready for consideration by the Governor.  SB 126 clarifies the process by which the state shall review and certify county and municipal comprehensive plans. It also corrects several inconsistencies in the Code that have been created over the years as the state’s land use laws have changed and evolved. The bill would eliminate the Governor’s Advisory Council on Planning Coordination and transfer its responsibilities to the Cabinet Committee on State Planning Issues and the Office of State Planning Coordination. In addition, the bill would (1) change to July 1 the deadline by which counties and municipalities must provide annual reports to OSPC, so that information can be included in the Cabinet Committee’s annual report prepared in October; (2) permit (but not require) the Cabinet Committee to develop guidelines for such annual reports; (3) authorize the Cabinet Committee to extend the deadline for counties and municipalities to submit comprehensive plans; and (4) explicitly authorizes OSPC to prepare the State Strategies for Policies and Spending document and maps. DAR met with the Office of State Planning and recommended changes to the initial bill to ensure it would not effect local land use decisions and supported SA 1 which clarifies that notwithstanding that authority, county and municipal governments will retain their existing autonomy with respect to land use designations, such as zoning.

Licensing of Home Inspectors: HB 182, which regulates the practice of inspecting homes by requiring certain licensure qualifications for home inspectors practicing in Delaware, passed the Senate and is ready for consideration by the Governor.  To see the full text of the bill, click here.

Nuisance Abatement: SB 65 with SA 1 passed the Senate and House and is ready for consideration by the Governor.  The bill expands the definition of “nuisance” to include illegal gun crimes, criminal gang activity, recurring violent activity and other public nuisances that cause a tangible injury to the surrounding properties and businesses.  The Act streamlines and clarifies the procedures, parties and proof requirements within the statute.  The Act provides better guidance for the Court to determine whether the health safety or welfare of the community requires an immediate closure of the nuisance property and allows the owner of a property so closed to petition the Court for an expedited schedule for permanent hearing without posting a bond. Finally, the Act changes the civil penalties associated with a nuisance property from the fair market value to a per diem amount to better address the damage inflicted on the community.   Senate Amendment 1 clarified that the term “firearm” only refers to illegal firearm activity and does not affect the right of an individual to lawfully possess and use a firearm. 

Elimination of Kent County Board of Assessment: HB 169 with HA 1 passed the Senate and is ready for consideration by the Governor. This Act eliminates the current Board of Assessment in Kent County and establishes a Board of Assessment Review.  The Board of Assessment Review will consist of seven members that are paid per meeting as opposed to a salary and will perform those functions as established by Levy Court as well as those functions provided in the Code.  The newly established Board of Assessment Review will oversee the appeals process and make additions, alterations or corrections concerning any assessment of property subject to taxation by the County.  The Department of Finance shall exercise the assessment functions previously assigned to the Board of Assessment, which include making the initial assessment of property, maintaining appropriate records, and certifying to the County government the total value of all property in the County and the total value of all property assessed and subject to taxation. HA 1 clarifies that the Board of Assessment Review may designate representatives to sit in its offices and make additions, alterations or corrections.

Traffic Studies: HB 220 was introduced on June 29th and referred to the House Transportation and Infrastructure Committee.  The bill sets a bottom standard for requiring a traffic impact study in what the Department of Transportation calls developed or developing areas—not rural roads. It requires a project that cannot be redeveloped without sending the road and intersection into failure to wait if the engineer cannot figure out a way to improve the situation by designing something different. For the developers, the bill requires the Department to do an internal analysis to see how they can speed up the TIS process "in house."  

Universal Design: HB 227 was introduced and referred to the House Housing and Community Affairs Committee. The bill requires that bids for all newly constructed dwelling units using public financial assistance shall indicate the extent of the universal design standards in the proposal. Public financial assistance includes a contract with a state agency, real estate donated by the State, State tax credits, grant assistance from State funds, State loan guarantees, federal funds administered by the State or its agency, and funding from location governments and their agencies.  In selecting a bid, the extent of universal designs use may form a basis to award the contract based on the best value, rather than lowest bidder.  The bill sets up a 40-point scale covering the key elements of universal design.

Workplace Fraud: HB 221, which makes a number of technical corrections to the Workplace Fraud Act passed by the 145th General Assembly, was introduced and referred to the House Administration Committee. 

What Didn't Happen: Rent Control was defeated and several initiatives stalled including regulatory flexibility legislation, regulatory reform legislation, three-year residency requirement for the State’s Senior School Property Tax Credit, New Castle home improvement contracts, delay of implementation of standards for the licensing and training of county assessors, expanded requirements for traffic analysis, endangered species legislation and legislation dealing with the Delaware Manufactured Home Relocation Trust Fund. The second session of the 146th General Assembly will convene in January 2012.  All legislation not sent to the Governor will carry over to the second session.

Draft Septic Regulations: DAR submitted comments on the draft changes to the regulations governing the design, installation and operation of on-site wastewater treatment and disposal systems.  DAR expressed concern about the lack of time-line for replacement, who is responsible to ensure the replacement is done, the 36 shelf life for inspections and the confusion of adding another layer of regulation over Inland Bays regulation and the upcoming Chesapeake Bay Watershed regulations.

Well Water Testing on the Way: Regulations Governing the Construction and Use of Wells are presently being updated. Wells will need to be tested at point of sale for        Alkalinity, Chloride, Hardness, pH, Iron, Nitrate, Nitrite, Sodium, Sulfate, Total Coliform plus E coli (fecal) indicator.  Results shall be disclosed as a condition of sale. For further information please contact Alan E. Pongratz at DNREC at Alan.Pongratz@state.de.us.

Questions?:  If you have any questions, comments or would like to get more involved in the political process, please contact Charlotte Herbert at DAR at 734-4444 or charlotte@delawarerealtor.com.

 

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