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New
Appointments, Promotions Announced
Chicago Title Insurance Company is pleased to announce the following new
appointments and promotions in Chicago Title's New Jersey operations.
Ralph A. Romano has been promoted to New Jersey State Manager for direct
operations. Romano began his career with the Company in 1972 as a sales
representative, and subsequently became manager of Monmouth County operations.
From 1979 until 1990 Romano was a principal in Key Title Agency, a Chicago
Title agent located in Freehold. In 1990 he rejoined the Company, and
was responsible for the consolidation of the Freehold and Toms River off
ices. He served successively as Toms River branch office manager and Southern
New Jersey operations manager. Romano was appointed a Resi dent Vice President
in 1994 and New Jersey State Manager in February of 2002.
Ralph Colasanti recently joined Chicago Title as Office Counsel in the
Roseland branch office. A graduate of Fairleigh Dickinson University (B.A.,
1971) and Seton Hall Law School (J.D., 1975), he was admitted to the bars
of New Jersey and of the United States District Court in 1975. Prior to
joining the Company, Colasanti was engaged in the practice of law in Bloomfield
Richard L. Eland joined the Company in January 2002 as Senior Underwriter
in the East Brunswick branch office. A graduate of the University of Rochester
(B.A.) and of New York Law School (J.D.), he is admitted to practice before
the bars of the States of New Jersey and New York and the United States
District Court. Prior to joining Chicago Title, Eland was associated with
New Jersey Realty Title Insurance Company and Commonwealth Land Title
Insurance Company, and, most recently, with Sharpe Title in Princeton.
He has also been engaged in the practice of law Mercer County. Eland is
a member of the New Jersey State Bar Association (Real Property, Probate
and Trust Law Section) and the Mercer County Bar Association and is a
past president of the Princeton Bar Association.
Martha A. Thill has been appointed Vice President - Commercial Sales for
the State of New Jersey. She Is located in the State Headquarters office
in Iselin. Thill joined Chicago Title in April of 1984 as sales representative
in the Stamford, Connecticut office. In March of 1993 she transferred
to the East Brunswick branch office. Since that time she has served in
a number of capacities, including Mercer County sales representative,
East Brunswick branch manager, and Middlesex county sales representative.
Thill is Vice President of the Mercer County Bar Foundation and chairs
its annual dinnerdance, which raises funds for the KITES (Kids Instructed
in Tolerance through Education and Support) program. KITES funds grants
for schools in Mercer County. She is also past president of ICREW (Industrial/Commercial
Real Estate Women) of New Jersey and currently serves as National Delegate
to CREW Network.
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Proposed
Producer Act Regulations Published
As noted in "Title Talk" No. 53 (Winter, 2002), the Legislature
has enacted the New Jersey Insurance Producer Licensing Act of 2001 ["Producer
Act 2001"], P.L. 2001, c. 210, to be codified as N.J.S.A. 17:22A-26
et seq. Its provisions remain "inoperative" until the earlier
of: (a) the adoption of administrative regulations pursuant thereto; or
(b) November 12, 2002. It will supersede the current Producer Act, N.J.
S.A. 17:22A-1 et seq., which it repeals. The impetus for the adoption
of Producer Act 2001 was the enactment of the GrammLeach-Bliley Financial
Services Modernization Act of 1999 ["GLB"], P.L. 106-102. GLB
seeks to encourage uniformity and reciprocity in the insurance licensing
laws of the various States.
The regulatory scheme of Producer Act 2001 is substantially similar to
the original Producer Act. Producer Act 2001 provides for both individual
and organization licenses, as well as resident and non- resident licenses.
Nevertheless, there are some differences. For example, in place of the
key terms "solicit" " negotiate" and "effect",
the new Act uses "negotiate", "sell" and "solicit".
[N.J.S.A. 17:22A-28.]
The Department of Banking of Insurance ["DOBI"] has recently
published proposed administrative regulations in the New Jersey Register
of July 1, 2002. 34 N.J.R. 2286 at seq. The text is preceded by a "Summary"
which explains the rationale behind the new regulations. It is noted (with
regard to the issue of reciprocity) that:
GLB reciprocity does not permit states to impose any additional requirements
on non-resident producers. ... Before the Act was passed, an applicant
who either resided in New Jersey or maintained an off ice in this State,
was required to obtain a resident producer license. Now, such a producer
may be licensed as a non-resident producer if another State has been designated
as the home state. [34N.J.R. at 2287. ]
Many of the proposed changes deal with pre-licensing education, examination
and continuing education requirements. The Summary states:
It is proposed that educational course credit be based on actual classroom
or self-study hours (one credit equaling one hour) and that the total
number of credits awarded for any one course be 24. fit is proposed that]
24 of the mandated 48 hours of continuing education credit be in the authorities
for which producer is licensed. In addition, it is proposed that all resident
producers be required to complete six credit
hours in approved courses related to insurance fraud, professional ethics
or other required consumer protection topics. Procedures are proposed
to allow for self-study courses and online interactive courses. In keeping
with a nationwide uniformity initiative, acceptance of approved courses
from other states is proposed. Also, it is proposed that the exemption
of attorneys from the continuing education requirement for title insurance
be deleted, which is consistent with the requirement for continuing education
for all producers ... . [34 N.J.R. at 2287.]
In the "Social Impact" portion of the publication, DOBI notes,
with respect to the proposals set forth above, that: The Department further
believes that the new requirement that the majority of continuing education
credits be in the authority for which the producer is licensed will be
beneficial both to the producer and the general public, as the producer
remains knowledgeable of the latest updates in his or her area of expertise.
The same is true concerning the six mandated credits in insurance fraud,
professional ethics or other consumer protection topic. Likewise, imposing
the continuing education requirement on attorneys with producer licenses
for title insurance ensures that they stay abreast of recent developments
in this area. Although this may have a negative impact on those attorneys,
[DOBI] believes that it is beneficial both to the attorney producer and
the general public, as the attorney producer remains knowledgeable of
the latest updates in his or her area of expertise and the title insurance
consumer's interests are safeguarded. [34 N.J.R. at 2289.]
The New Jersey Land Title Association ["NJLTA"] has advocated
in the past that title insurance producers be required to earn a certain
number of continuing education credits from title insurance- related courses.
But DOBI had declined to adopt such a regulation, citing administrative
difficulties.
The proposal regarding attorney licensing is controversial, and is likely
to result in some opposition. However, the most glaring shortcoming appears
to be the lack of a phase-in or transition period regarding attorney licensing,
or, for that matter, continuing education requirements in general. It
is unclear whether this omission was deliberate or unintentional. If a
phase-in or transitional rule is not adopted, persons whose current licenses
expire shortly after the new regulations go into effect will face difficulties
in meeting the new requirements.
Presumably DOBI intends to adopt the new regulations by November 12,2002,
the date Producer Act 2001 is scheduled to become operative. It is unclear
if that deadline will be met.
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New
Jersey Estate Tax Now a Lien
In addition to the Transfer Inheritance Tax, New Jersey also imposes an
Estate Tax on decedent's estates. Recently the Estate Tax statute, N.J.S.A.
54:38-1 et seq., was amended by P.L. 2002, c. 31, effective July 1, 2002,
in order to make several important changes. (Although the law became effective
on July 1, it applies to the estates of decedents dying after December
31, 2001.) The tax is designed to absorb any excess of the maximum credit
allowable under the Federal Estate Tax over the amount of death taxes
paid by the decedent's estate (including the Transfer Inheritance Tax).
For this reason, the tax is sometimes referred to as a "sponge tax".
By its nature, the New Jersey Estate Tax was (in general) originally intended
to be applicable only to estates which were also subject to Federal Estate
Tax. So it an estate was not subject to Federal taxation, it would not
have been subject to New Jersey Estate Tax. But the statutory amendment
is based upon the maximum Federal Estate Tax credit in effect in 2001,
or $675,000 (rather than the $1,000,000 credit which took effect in 2002).
Thus, some estates which are exempt from Federal taxation may nevertheless
be subject to New Jersey taxation. The Fiscal Note attached to A-2303
(the bill which was eventually enacted as P.L.2002, c. 31), noted that
increases in the Federal Estate Tax credit threatened to cause the New
Jersey Estate Tax to be "effectively repealed" by 2005. The
Fiscal Note estimated that the lost tax revenue (unless the law were to
be amended) would be $60,000,000 in 2002 and would gradually increase
to $240,000,000 by 2005.
Prior to the recent statutory amendment, the New Jersey Estate Tax did
not constitute a lien on real estate. Therefore, no waiver was required
when transferring property prior to payment thereof. However, N.J.S.A.
54:38-6 (as amended) now provides:
... taxes imposed under this chapter shall remain a lien on all property
of the decedent as of the date of the decedent's death until paid. No
property owned by the decedent maybe transferred without the written consent
of the director, or pursuant to such rules as the director may prescribe.
Thus, the tax, until paid, is now a lien upon the estates of decedents
dying after December 31,2001. The duration of the lien is not specified;
the statute merely uses the phrase "until paid". So the lien
may be of perpetual duration, or it may persist for 20 years (in accordance
with many liens imposed by the State). It is also possible that administrative
regulations (when adopted) will eff ectively limit it to 15 years (in
accordance with the Transfer Inheritance Tax) or to 10 years (consistent
with the Federal Estate Tax).
From a conveyancing standpoint, title insurers have not previously concerned
themselves with the New Jersey Estate Tax, because (as noted above), it
was not a lien. An affidavit of title from the executor or administrator
to the effect that a given estate was not subject to Federal Estate Tax
was usually acceptable. It is anticipated that the same procedure will
continue to be followed, with the addition of a specific representation
about the New Jersey Estate Tax. Of course, if an estate is exempt from
Federal Estate Tax but is nevertheless subject to New Jersey Estate Tax,
arrangements will have to be made to assure the title company that the
tax will be paid. It both New Jersey and Federal Estate Tax are due in
a particular instance, it will be necessary to arrange for the payment
of both liens.
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Decisions
Construe Real Estate Contracts
Three (3) recent Appellate Division decisions have construed the rights
of parties to contracts for the sale and purchase of real estate: Gross
v. Lasko, 338 N.J. Super. 476 (App. Div. 2001); Peterson v. Estate of
Pursell, 339 N.J. Super. 268 (App. Div. 2001); and Home Properties of
MY v. Ocino, 341 N.J. Super. 604 (App. Div. 2001).
In Gross v. Lasko, the purchasers brought an action for specific performance
after the vendor declined to sell the home to them. The contact contained
a mortgage contingency clause, which permitted either party to avoid the
contract if the purchasers could not obtain mortgage financing. The purchasers
decided to proceed without obtaining mortgage financing (as permitted
by the contract), but neglected to advise the seller in writing of their
election to do so. The seller informed the purchasers that the contract
was canceled, because the purchasers had defaulted in their obligations
under Paragraph 23 of the contract. That section stated that failure "to
fulfill or perform any of the terms and conditions" of the contract
constituted a default by the purchasers.
The Chancery Division granted specific performance to the purchasers.
It appeared from the record that seller had actual knowledge of purchasers'
intention to proceed without mortgage financing, and that she was not
prejudiced by the failure to receive written notice. Furthermore, the
trial court held that, under the terms of the contract, written notice
was not necessary to waive the mortgage contingency clause. The Appellate
Division affirmed in an opinion by Judge Collester. The casein essence
- stands for the proposition that the courts will not assist a party who
seeks, on technical grounds, to avoid his or her contractual obligation
to complete the sale.
Peterson v. Estate of Pursell arose from a specific performance suit filed
by a prospective purchaser against the seller. A cause of action for tortious
interference against the real estate broker was also asserted ' The primary
issue in the case revolved around the computation of the three (3) day
attorney review period. The court held that the broker was not the seller's
fiduciary for the purpose of the review period. Thus, the 3 days began
to run when the fully-executed contract was delivered to the seller herself,
and not when the contract was delivered to the broker.
Furthermore, the prospective purchaser had no right to enforce the contract
within the review period, because the contract could still have been disapproved
within that time. Accordingly, the complaint for specific performance
and tortious interference was dismissed. The opinion reviews the history
of the attorney review period and prior case law construing same. Its
conclusion regarding the computation of time is in accordance with prior
decisions.
In Home Properties of N.Y. v. Ocino, the contingent purchaser of real
estate (Home Properties) brought an action for declaratory relief against
the primary purchaser (Ocino). The Law Division entered judgment in favor
of the plaintiff. The Appellate Division affirmed.
Vaccaro, the seller, contracted to sell the property to Ocino, with the
expectation that it would be developed (at least partially) as "Mt.
Laurel" housing. Vaccaro subsequently sold his interest to
Home Properties, subject to the pre-existing contract with Ocino. After
delays in closing occurred, Home Properties served Ocino with a time-of-the-essence
notice.
In affirming judgment for the plaintiff, the Appellate Division stated:
We conclude that Home's time of the essence notice was reasonable and
lawful and that it did not thereafter waive its right to proceed thereunder.
Consequently, when Ocino failed to close in conformity with that notice,
Home acted properly in declaring the contract terminated and was entitled
to a judgment declaring Ocino's interest in the property terminated. [341
N.J. Super. at 606.]
Much of the court's analysis focuses on what it refers to as "...
the arcane points within the maze which seems to characterize the world
of affordable housing, the functions of the Council on Affordable Housing
[COAH], so-called tax credit construction financing, and the interplay
of those concepts with traditional planning board and municipal site plan
approval". Id.
The decision also provides some guidance as to the circumstances under
which a time-of-the- essence notice will be enforced.
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Notary
Public Fees Increased
The Legislature has enacted a statute which increases the fees
a notary public may charge for acknowledging a deed or mortgage. P.L.
2002, c. 34, § 48, amending N.J.S.A. 22A:4-14 (effective July 1,
2002), permits notaries to charge $15.00 for acknowledging a deed and
$25.00 for acknowledging a mortgage. Thus, in a closing involving a purchase
financed by a purchase- money mortgage, notary fees could be $40.00 ($15.00
+ $25.00). The impact of the increase will principally be felt in southern
New Jersey, where title company personnel conduct settlements. In northern
New Jersey, most acknowledgments are taken by attorneys, who do not usually
charge their clients a separate fee for this service.
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