As Passed by House and Senate S.171

AS PASSED BY HOUSE AND SENATE S.171 2007 Page 1

AN ACT RELATING TO DISCHARGE OF A MORTGAGE BY AN ATTORNEY, ABILITY TO CONVEY HOMESTEAD INTEREST, AND VALIDATION OF MORTGAGE DISCHARGES

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 27 V.S.A. § 141 is amended to read:

§ 141. EXECUTION AND ACKNOWLEDGMENT OF CONVEYANCE

(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.

www.leg.state.vt.us AS PASSED BY HOUSE AND SENATE S.171 2007 Page 2

Sec. 2. 27 V.S.A. § 348 is amended to read:

§ 348. INSTRUMENTS CONCERNING REAL PROPERTY LACKING

STATEMENT OF CONSIDERATION, OR WITNESSES OR

ACKNOWLEDGMENTS, VALIDATED

(a) When 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 sealed, 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

www.leg.state.vt.us AS PASSED BY HOUSE AND SENATE S.171 2007 Page 3 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 three 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. 3. 27 V.S.A. § 464a is amended to read:

§ 464a. DISCHARGE BY LICENSED ATTORNEY

(a) A recorded mortgage on a dwelling of two units or less occupied by the owner as the owner’s principal residence or on farmland may be discharged by an attorney-at-law licensed to practice in this state if:

(1) the mortgagee, after receipt of payment of the mortgage in accordance with the payoff statement furnished to the mortgagor by the mortgagee, or the mortgagee’s agent, fails to make that discharge of the mortgage execute and record a discharge of the mortgage in accordance with section 461, 462, or 463 of this title;

(2) the discharge is executed by, or is in the name of, a purported mortgagee that is not holder of record of the mortgage; or

(3) the discharge of record was not executed in accordance with section

461, 462, or 463 of this title.

(b) The attorney An attorney - at - law who discharges a mortgage under this section shall execute and record with the discharge an affidavit in the record of deeds affirming that:

(1) the affiant is an attorney-at-law in good standing and licensed to practice in Vermont;

(2) the affidavit is made at the request of the mortgagor or the mortgagor’s executor, administrator, successor, assignee, or transferee or the transferee’s mortgagee;

(3) the purported mortgagee has provided a payoff statement with respect to the loan secured by the mortgage;

(4) the purported mortgagee has received payment of the mortgage in accordance with the payoff statement that has been proved by a bank check, certified check, or attorney client funds account check negotiated by the purported mortgagee or by evidence of receipt of payment by the purported mortgagee; and

(5) more than 30 days have elapsed since the payment was received by the purported mortgagee; and

(6) the mortgagee has received written notification by certified mail 15 days in advance, sent to the mortgagee’s last known address, that the affiant intends to execute and record an affidavit in accordance with this section, enclosing a copy of the proposed affidavit; the mortgagee has not delivered a discharge or acknowledgment of satisfaction in response to the notification; and the mortgagee has failed to dispute payoff of the mortgage.

(b)(c) The affidavit must include: the names and addresses of the mortgagor and, the original mortgagee, and the purported mortgagee; the date

www.leg.state.vt.us AS PASSED BY HOUSE AND SENATE S.171 2007 Page 7 of the mortgage,; and the book and page number and similar information with respect to the most recent recorded assignment of the mortgage.

(c)(d) The affiant shall attach to the affidavit the following, certifying that each copy is a true copy of the original document:

(1) photocopies of the documentary evidence that payment has been received by the purported mortgagee, including the purported mortgagee’s endorsement of a the payoff check, provided that the payor’s account number may be redacted from the copy of the payoff check; and

(2) a photocopy of the payoff statement received from the purported mortgagee.

(d)(e) An affidavit recorded under this section has the same effect as discharge under sections 431 section 461, 462, or 463 of this title.

(f) An attorney - at - law who executes and records a discharge of mortgage in accordance with this section shall not be liable to the holder of the mortgage on account of such discharge except in the event of negligence or fraud by the discharging attorney.

Sec. 4. 27 V.S.A. § 470 is added to read:

§ 470. VALIDATION OF MORTGAGE DISCHARGE ON 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

www.leg.state.vt.us AS PASSED BY HOUSE AND SENATE S.171 2007 Page 8 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

www.leg.state.vt.us AS PASSED BY HOUSE AND SENATE S.171 2007 Page 9 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.

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