Good news has recently emerged out of the title industry.  The American Land Title Association Board of Governors has adopted significant revisions to its basic model title insurance policy form.  The revised ALTA 2006 title insurance policy constitutes a significant upgrade of the basic policy template that has been relied upon in the vast majority of real estate transactions occurring in this country for well over a decade.  The 2006 policy form is much clearer in its terms, logical in its format and, expresses a meaningful expansion of available coverage and benefits.  ALTA has, through the issuance of the new policy, provided a tool that is responsive to the demands and expectations of the contemporary real estate market consistent with the increased pace and sophistication of modern real estate transactional practice.

     It is not surprising that the ALTA policy currently in use, revised and adopted in 1992, has been met with considerable criticism since its inception.  In recent years, it has become apparent that provisions needed to be redrafted so as to comport with the demand of consumers as well as interpretations of judges in a number of litigated cases. [view article in it's entirety]

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     The Legislative Liaison Committee of the Real Property Planning and Zoning Section, Chaired by Theresa B. Shea, will be considering several issues in advance of the upcoming legislative session, which will begin in mid-January, 2007.

1. Successors and assigns clauses. The Court of Appeals addressed the applicability of catch-all “successors and assigns” provisions in Park Station v. Bosse, 378 Md. 122 (2003). That case dealt with the attempted enforcement of a right of first refusal on property that was donated and not sold. The blanket “successor and assigns” term found in the agreement at issue was held to apply to day-to-day use and governance provisions, such as use restrictions, but not to the right of first refusal term, which concerned future vesting. As a result, the right of first refusal was considered “personal” to the holder and held to not violate the Rule Against Perpetuities.  The Court was not asked to (and did not) consider the effect of Section 1-103 of the Real Property Article, which  provides that “[u]nless otherwise expressly provided, any obligation imposed on or right granted to any person automatically is binding on or inures to the benefit of his assigns, successors, heirs, legatees, and personal representatives.” On the surface, Section 1-103 appears to be a “gap-filler” provision, intended to apply to private agreements. But ABA Real Property Chair Kevin Shepherd discovered that legislative history supports the idea that Section 1-103 was intended only to apply to the statutory provisions of the Real Property Article and not to private agreements. The Committee will consider legislation to clarify that Section-103 applies only to provisions in the Real Property Article. [view article in it's entirety]

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     Before property is sold at a foreclosure sale, due process requires that an interested party be sent notice. The United States Supreme Court, in Jones v. Flowers, recently examined the requirements for sufficient notice. 

     The court relied on the following facts when making its decision: Mr. Jones dutifully paid his mortgage while he was married and living in the residence and continued to pay after separating from his wife and moving elsewhere in the City.  Once the mortgage was satisfied, the property taxes, which had been paid by the mortgage company through the escrow, went unpaid and the property was certified delinquent by the taxing official.  Thereafter, the tax office sent notice of the delinquency to the homeowner at the property address.  No one was present at the residence to sign for the letter, nor was it retrieved from the post office. Therefore it was returned marked “unclaimed”.  Later, another notice was sent notifying the homeowner of the impending tax sale.  That notice was also returned to the sender because no one was present to sign for the letter and no one retrieved it from the post office. A private sale was thereafter conducted pursuant to Arkansas law.  Flowers purchased the home and quickly instituted eviction proceedings.  The eviction papers were properly served.  Mr. Jones’s daughter received the papers and provided them to her father. Upon learning that the home was sold, Mr. Jones appealed the taking alleging that the Commissioner’s failure to provide adequate notice, constituted an unconstitutional taking in deprivation of his due process rights.  The Supreme Court ultimately agreed with Mr. Jones and found that there had been an unconstitutional taking of his property.

     In resolving the issues, the court stated, that notice is constitutionally sufficient if it is sent in a manner that is reasonably calculated to reach the intended recipient.  The key words here are “sent” as receipt is not required. The court further stated that the adequacy of a particular form of notice is assessed by balancing the State’s interest against the individual interest sought to be protected.   In this case, the court reasoned that when the registered letter was sent and not claimed, it could then be inferred that either Jones no longer lived at the property or was not home at the time the postman delivered the letter.  As such, due process requires additional reasonable steps be taken.  One reasonable step the court stated would be to re-send the letter notice by regular mail as well as certified mail.  Regular mail can be left until the person returns home.  Another reasonable step would include posting the notice on the front door or address a letter to “occupant”.  Either approach would increase the likelihood that the occupant would alert the owner.  The court stated that searching telephone books or income tax records is an unreasonable burden and therefore, not required. Moreover, the Court agreed that Jones’s failure to comply with the statutory obligation to keep his address updated does not cause the forfeiture of his constitutional rights. Additionally, a legal advertisement in a newspaper is insufficient alone and is only adequate where it is not reasonably possible or practical to give more adequate warning.  As such the foreclosing party should have taken additional reasonable steps to provide notice to the affected party.

     This decision increases the burden on parties handling foreclosures.  Specifically, when notice of a sale is mailed to an owner and returned undelivered, additional steps to provide notice must be taken, if time permits, before divesting an owner of his interest.  That said, the Supreme Court’s decision supports Maryland law, which provides for publication and the forwarding of notice by certified and regular mail, without requiring.  This procedure is constitutionally sufficient although practitioners receiving a notice returned before the sale, with a note of a forwarding address, should, if time permits, re-send the notice prior to sale.  Most importantly, the Supreme Court has reiterated that there is no requirement that receipt must be assured, but merely that sufficient reasonable steps are taken to provide notice to the intended party. 

Ronald S. Deustch is a Partner at the law firm of Cohn, Goldberg & Deutsch, LLC.  He specializes in foreclosures and spearheaded the creation of the Foreclosure Committee of the Real Property, Planning and Zoning Section.  He currently is a member of the Section Council and Editor of Ground Rules.

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Background

     The catalyst for the new Uniform Power of Attorney Act (“UPOAA”) was a national study in 2002, which revealed growing divergence in state power of attorney legislation.  The original Uniform Durable Power of Attorney Act, last amended in 1987, was at one time followed by all but a few jurisdictions.  Despite initial uniformity, the study found that a majority of states had enacted non-uniform provisions to deal with specific matters upon which the Uniform Durable Power of Attorney Act is silent.  The topics about which there was increasing divergence included: 1) the authority of multiple agents; 2) the authority of a later-appointed fiduciary or guardian; 3) the impact of dissolution or annulment of the principal’s marriage to the agent; 4) activation of contingent powers; 5) the authority to make gifts; and 6) standards for agent conduct and liability.  Other topics about which states had legislated, although not necessarily in a divergent manner, included: successor agents, execution requirements, portability, sanctions for dishonor of a power of attorney, and restrictions on powers that have the potential to dissipate a principal’s property or alter a principal’s estate plan.

     To ascertain whether there was actual divergence of opinion about default rules for powers of attorney or only the lack of a detailed uniform model, the Joint Editorial Board for Uniform Trust and Estate Acts conducted a national survey.  The survey was distributed to probate and elder law sections of all state bar associations, to the fellows of the American College of Trust and Estate Counsel, the leadership of the ABA Section of Real Property, Probate and Trust Law and the National Academy of Elder Law Attorneys, as well as to special interest list serves of the ABA Commission on Law and Aging.  The survey responses demonstrated a high degree of consensus about the need to improve portability and acceptance of powers of attorney as well as the need to better protect incapacitated principals (see Linda S. Whitton, National Durable Power of Attorney Survey Results and Analysis, National Conference of Commissioners on Uniform State Laws (2002), available at http://www.law.upenn.edu/bll/ulc/dpoaa/surveyoct2002.htm).

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