Tuesday, March 31, 2009

March 31, 2009

On Monday afternoon, Paul Hanlon, Mark Langan, and trust officer Chris Chapman spent nearly three hours with the House Commerce and Economic Development Committee explaining S. 86, the Uniform Trust Code bill. They were well received but only managed to get through five of the twelve sections of this 123 page bill. More testimony is planned for Wednesday morning. This week’s house calendar is pretty fluid as of this writing. The marriage equality bill is due out of committee today; the 2010 budget was voted out of committee yesterday.
According to the rules of the House, those bills will appear on the Notice Calendar on Wednesday and will move to the Action Calendar on Thursday. Today, the transportation bill, which includes a five cent gas tax hits the house floor for debate. I expect the next few days to be taken up with floor debate leaving little, if any, committee time to hear testimony and advance bills.
The Senate Economic Development Committee has released S. 137, the long awaited economic development bill. I advised our Environmental Law Section Chair, Gerry Tarrant, as well as the Environmental Court Judges about some language that they needed to review. I just got a copy of the bill as released from the committee and I’m looking at it to see if those concerns were addressed.
I just learned of another part of that bill that (sec. 109) that amends VRAP 37 by changing the date interest begins to run from the date of judgment to the date the claim was filed. I don’t know the history of why this appears in a stimulus bill and who may have testified (if anyone) either in favor or in opposition. I’ll try to find out.
Finally, for now, the House Appropriations Committee has decided to not follow the governor’s recommendation to cut $1million from the judiciary’s budget. Instead it cut $550,000. I checked in with Bob Greemore this morning who tells me that amount can be made up by a 5% pay cut for all employees earning >$60K. It would still require the half day closings that began in October but the full day furloughs will no longer be necessary. A partial victory I’d say.

Monday, March 30, 2009

Monday March 30th

S. 54, the clean energy assessment districts bill is out of the Senate Finance Committee and on the Senate Notice Calendar. You can read the Natural Resources Committee version along with the Finance Committee amendments here: http://www.leg.state.vt.us/docs/2010/calendar/sc090331.pdf
Go to page 781.
Last Friday afternoon the Judicial Nominating Commission held its organizational meeting in Montpelier. The Commission drafted an application that must be submitted by all applicants, even those that previously applied by submitting letters of interest, CV, etc. Look for an email announcement later this week. It will contain a link to the application that will be posted on our website.
In an unusual move, the House Commerce Committee is convening today at 1 PM to begin testimony on the S. 86, the Uniform Trust Code. I expect Paul Hanlon will be on hand to walk the committee through the senate passed bill. Hearings will continue on Wednesday morning and there is some time also available on Thursday. It’s possible that this major bill, the product of two years of work, will become law this year.
If you haven’t responded to last week’s email asking that you complete a short survey about the VBA and its services please do so as soon as you can. It’s important for us to know what you need the VBA to deliver to you. Thanks.
Later today I’ll be meeting with the Chief Justice to continue our discussions about the current budget crisis as well as the work of the Vermont Commission on Judicial Operation. The Commission is scheduled to meet next Monday at which time I hope we see a plan for its conduct of focus groups throughout the state to hear input from the stakeholders affected by any type of judicial reorganization. I’ll post something as soon as I have it.

Friday, March 27, 2009

March 27, 2009

The Senate Judiciary Committee spent the morning interviewing five candidates for confirmation or reconfirmation to different positions. First, Defender General Matt Valerio was interviewed. He's been nominated by the governor for his third term in that position. I think he is now the longest serving DG. Second up was Joe Benning who was interviewed as part of the confirmation process for his seat on the Human Rights Commission. Then the committee met with three magistrates: Gartner, Hoyt, and Harlow. Each made short presentations, answered a few questions and that was it. The committee is planning to vote on its recommendations to the full Senate next Wednesday.
I'm trying to get witnesses on the schedule for the House Commerce Committee on Monday and Wednesday of next week on S. 86, the Uniform Trust Code. The committee is moving quickly to consideration of the bil the Senate just sent them ealier in the week. Maybe the legislature is saerious about a May 8th adjournment.
Word this is that the House Appropriations Committee is balking at the $1 million cut in the judiciary's budget requested by the governor. But it is still early. I think the hope is that the budget will be ready for debate at the end of next week.

Thursday, March 26, 2009

Thursday 7:30 AM

Well, I spent the better part of the afternoon on Wednesday in the Senate Finance Committee where they were at work on S. 54, a bill relating to clean energy assessment districts. What the bill is about is this: municipalities could ask its voters to designate it as a clean energy assessment district. Should the voters approve, the municipality may incur indebtedness to finance renewable energy projects. Then, if a property owner borrows from the fund created by the municipality and enters into a written agreement, a special assessment will be entered on that property and recorded in the land records.
This assessment, like some others, takes precedence over a mortgage, even an existing one. Here comes the rub: the Vermont Bankers Association has a problem with that! Early this month I asked Hal Miller to look at H. 161, the House version of this bill. The bill was rewritten in the Senate Natural Resources Committee before it went to Finance; so the house bill Hal, Andy and Mark looked at is different from the one that is advancing.
Anyway, the bill can be read on the Senate Calendar beginning on page 643 here:
Take a look at Section 6, 24 VSA 3262 (a)-(f). I found it somewhat confusing when trying to figure out the reserve fund language along with the assessment running with the land in the event of foreclosure or transfer of title. What happens upon a sale of property that has been improved with the use of these funds? If the assessment has an unpaid balance, the obligation runs with the land. OK, so the new owner pays it off. But, didn’t the new owner likely pay a higher price because the improvements were made? Is the new owner paying twice?
Finance is returning to this bill this afternoon at 2; I hope to get back there to hear the rest of the testimony.

Wednesday, March 25, 2009

Retention vote outcome

Here are the numbers:
Judge Crawford: 145-1
Judge Teachout: 137-7
Judge VanBenthuysen: 141-3
Judge Grearson: 143-2

It always surprises me that some legislators will vote No on a judge's retention even though there is no debate and nothing negative in that judge's survey results.

Wednesday March 25th

I just returned from an 8:30 AM joint assembly on judicial retention. The general assembly heard positive reports from committee members on the retention of Judges Crawford, Teachout, VanBenthuysen, and Grearson. The vote in committee to recommend retention of each judge was 8-0. There was no floor debate. The secret ballot was taken but, in an unusual move, the joint assembly was dissolved without the votes being read. Each chamber will learn of the outcome when it convenes, the House today at 1; the Senate on Friday at 8:30 AM. I’ll try to get the vote totals later today and post them.
You may have seen today's Burlington Free Press article about the state budget issues. That article listed the judiciary's "$1 million problem". The administration and the judiciary remain about that much apart in their requests for 2010 funding. Failing to add the $1 million would result in 12 court closing days (furlough days) beginning July 1, 2009. That would include ALL employees of the judicial branch, not just those earning more than $60K per year. Now is the time to talk with your legislators and let them know that justice cannot be administered to Vermonters in that way.

Tuesday, March 24, 2009

Property Transfer Tax Returns

In response to issues that have been raised about the proposal, the Tax Department has prepared the following Q and A. There is another meeting next Monday so any comments would be appreciated. It would particularly helpful if you could think of all the situations where a short form could be used (easements would be the most common).

Liam L. Murphy, Esq.


Issues and Solutions for an On-line Property Transfer Tax System

Issue 1: The new 4 page form is too much paper and requires too much space for storage.

Solution: When we transition to the new on-line system it will be capable of printing out a one or two page document with all required information that could be similar to the old two page Property Transfer Tax Return (PTTR).

Issue 2: Many Town offices are not set up to store electronic information. Also there is a concern by attorneys about how the PTT form would be signed by buyers and sellers.

Solution: Seller’s attorney or closing agent would print a paper version of completed return to bring to the closing and then submit this electronic document to the Department via the on-line system. Buyer(s) and seller(s) would sign form as is presently done and original form would be sent to Town for recording along with Tax Department receipt and deed. Clerk would use this form for recording and municipal records but would fill-out an electronic acknowledgement that would be in that Town’s queue that can be brought up using the document number on the receipt. Clerk’s acknowledgement would use an electronic signature.

Issue 3: Use of the system should not be mandatory.

Solution: At least initially, the use of the system will not be mandatory for any parties until the system had been thoroughly tested including actual field experience. At some point, some requirements for use may be mandated though it is likely that a manual system will remain in place for non-professional preparers.

Issue 4: Use of the ACH credit and wire transfer payments will result in a transfer fee that will have to be borne by the parties to real estate transaction.

Solution: The Department was not proposing ACH Credit or Wire Transfer as payment options. ACH debit / electronic check payments which normally do not have payment fees associated with them is the proposed method of electronic payment. This is the same process as paying your State income tax using an electronic transfer, and there is no charge to the payer under that system as well.

Issue 5: The Department is saying that all fields on the form will be mandatory and a PTTR cannot be electronically submitted unless it is completed in full. This doesn’t make sense as not all the fields are necessarily applicable to some types of transactions so why/how are they to be filled out.

Solution: This may be true so the Department needs to work with preparers to identify the types of transactions where this is the case and identify the unnecessary fields. The system can be set up in a way that will allow a preparer to select a transaction type where selected fields need not be filled out.

Issue 6: While it occurs infrequently, what happens if after the closing the transaction is terminated and the property does not transfer. How does the buyer get the PTT payment back in a timely manner.

Solution: The ACH debit / electronic check would be transmitted to the system at the same time that the electronic form is submitted to the Department but the system will be set up to delay the actual transfer of the funds for PTT payment for 3 to 5 days. If the property does not transfer, the Department should be notified and the ACH debit process will be terminated or if the payment has been made, the Department will process a manual refund.

Issue 7: Will the use of the electronic submission of PTT information to the Department result in the information being immediately added to the Department’s PTT database.

Solution: When the PTT information is electronically submitted it will not immediately be incorporated into the Department’s PTT database. It will remain in a “pending” status until the Department has received the electronic acknowledgement from the appropriate Town clerk. Receipt of the acknowledgement is notice that the transfer has been recorded. At that time, the acknowledgement information will be added to the PTT information submitted earlier and the information will be electronically transferred to the Department’s database. The electronic “capture” of the PTT information will not only create efficiencies for the Department because it will eliminate the need to manually process the information but it will also eliminate data processing errors resulting in more accurate information regarding the transfer.

Issue 8: What happens if the on-line system is “down” and you cannot obtain a receipt.

Solution: Occasionally the system may require maintenance that will prevent people for using it but maintenance activity generally will be scheduled at times (nights and weekends) when there would typically be little activity and would be announced prior to shut-down so users can plan accordingly. There will be little chance that the system will not be available for unannounced, prolonged periods of time. In the event that this does happen, the Department would lift any mandatory use requirements, if any, and all preparers could use hardcopy forms.

Issue 9: If the Department has an electronic database with grand list information for nearly all properties in the State, why can’t some of the fields on the PTTR be automatically completed using the State’s grand list information.

Solution: In most cases, it can and it is our intent to design the system to accommodate this. If the preparer enters the right SPAN (School Property Account Number) associated with the property, the system should be able to pull information such as property location and acreage and complete these fields automatically. Of course, in situations such as subdivisions where no SPAN or grand list entry exists, the preparer would have to complete these fields manually.

Issue 10: If the Department can provide automatic data entry for completing some fields on the PTT form, why can’t the system to set up to do the same things for the acknowledgement section to help the Clerks.

Solution: It can and it is our intent to design the system to do this.

Issue 11: Does the Department intend to link the new PTT system to any other systems.

Solution: Yes. To both assist in correctly completing the PTT form as well as assist buyers of property enrolled in the current use program, we intend to link the Department’s current use database with the new PTT system. Once again, using the SPAN to identify the property, the system can be structured to identify instances where the appropriate current use enrollment designation on the PTT is checked for enrolled properties. This would greatly reduce the relatively frequent error that now occurs where the PTT form does not indicate the correct current use enrollment status. This will benefit not only the preparer but the new owner of a current use property as failure to correctly indicate this status can jeopardize the continued enrollment of the property. Further, the new system also can make available a printable document outlining the statutory current use requirements so that owners can maintain the eligibility of the newly purchased property after the transfer. This document could be given to the new owner as part of the closing process.

Issue 12: Since the form includes the seller’s and buyer’s SSNs, how will the confidentiality of this information be protected.

Solution: The on-line PTT system will offer more protection of confidential information like SSNs than the current system. When the preparer completes the electronic return they will need to provide SSNs for all sellers and buyers. This information will be part of the electronic transmission of information to the Department but when the preparer prints out the form to take to closing, the system will not include any SSN information on the hardcopy form that goes to the closing and then Town. Further, all communication between the user’s PC and PTT on-line system as well as the electronic transmission to the Department of the completed return will be over encrypted connections.

Tuesday March 24th

The Uniform Trust Code (S.86) has passed the Senate and should be introduced in the House on Thursday. Also the Senate advanced to third reading H. 11, the spousal share bill that passed the House in January.
A quick conversation with Peg Flory this morning leads me to believe that H. 328, the foreclosure re-write will probably have to wait until 2010. Tomorrow the Joint Assembly on Judicial Retention will convene at 8:30 in the House to vote on the retention of 4 judges. It is expected to be non controversial.

Friday, March 20, 2009

Friday- the day the Senate Judiciary Committee voted 5-0 to approve the "gay marriage" bill

There has been discussion in the Tax Dept. about electronic filing of property transfer tax returns. Liam Murphy attended the meeting and sent the following email report to the Property Law list serve. In the event you are not on that list, here it is:
As you may have heard the Tax Department is proposing legislation to require electronic filing of the PTTR and electronic payment of the tax directly to the Department. A copy of the proposal legislation is attached and a link to the Department website with the proposal is


The proposal is to make this effective next year in 2010.

The basic reasons for the proposal are: 1) to get the money into the state coffers faster. Currently many town clerks hold onto the checks for a long time before forwarding them to the state; 2) many forms are not currently completed properly or in full. The electronic version will mandate that all appropriate boxes be filled; and 3) electronic filing will mean that the data will be immediately transferred into the state's data base. Until recently the data on the PTTR was retyped into a database. The new electronic forms were designed so that they could be scanned and the information taken from the scanned version (that is why the new forms are 4 pages so that the boxes are big enough for the scanners to read.

I attended a meeting on Monday to hear about the project and provide initial comments. The meeting was attended by Tax Department officials, 3 Town clerks,a representative of the Vt League of Cities and Towns, a representative of the Bankers Association, an assessor and the computer company which is designing and constructing the project.

As I understand the current proposal, upon closing the form would be filed electronically and the tax paid electronically (by an ach transfer or electronic check). A record of filing or a "receipt" would be issued which would be attached to the paper copy filed with the Town Clerk office showing that the tax form was filed. When the deed or document is recorded the Town Clerk would provide recording information electronically to the Tax Dept in connection with the return. In addition an charge of $5 would be made for the privilege of filing electronically.

Some questions raised were

--this system contemplates filing of the form and payment of the tax before recording of the deed and what happens if the deed is not recorded (an intervening lien is found before recording and the deal is stopped) or the deed is rejected. What process will there be to undo the filing and get the tax back in an expeditious manner.

--this system contemplates that a record of filing and payment or receipt be provided to the clerk at the time a document is delivered for recording. Will the clerk be prohibited from recording without such a receipt? If so, what about those without access to a computer system to file electronically, especially those who may not use an attorney? What about transactions where no tax is due? What about Mobile Home transfers which often occur without a PTTR being prepared? What about Timeshares?

--this system contemplates the form being prepared by the Seller's attorney, being filed by the closing agent who would also pay the tax and the town clerk adding recording information to the return after recording. The system will have to provide access by multiple people at different computers at different times. Is this system going to be reasonably and technically possible? What protections would there be to insure the form is not changed between the various steps. Since the forms will include SSN, how will the privacy of such information be protected?

--what will be the additional costs in terms of setting up an electronic payment system?

--what happens if the system is down and therefore you cannot obtain a receipt?

--what about the signing of the electronic form by the sellers and buyers which would be required to obtain the certifications required in the form?

--is this going to be mandatory for everyone? just for closing agents? just for attorneys?

Since this was my introduction to the proposal, I told the group that I am sure my colleagues would have many more questions and issues. Therefore I would appreciate your sharing your thoughts and questions which I will forward to the Department for consideration. Of most immediate concern is the legislation since the Department is trying to get this passed this legislative session.

After receiving further comments from the Bar and the other parties, the Department intends to hold another meeting to discuss the questions and issues and I will keep you informed of the date and time in the event you wish to come and comment.

Fire away!


Now, of course, is the time to weigh in on this if you have an opinion to share.
Also, I want to remind readers that the Commission on Judicial Operations wants to hear from us on our ideas to make the judiciary more efficient. It's no surprise that a 19th century model needs some updating in order to deliver justice in the 21st century. You should have received from the VBA a letter from Eileen Blackwood and me on Tuesday March 10. If you need another copy contact the VBA. Basically it is a call from Eileen and from me for you to contact either of us with your suggestions.
Thanks. Have a nice weekend. I'll be back next week.

Thursday, March 19, 2009

Thursday AM

I'm heading into House Education with the Secretary of State and the Social Studies Coordinator from the Dept. of Education. We've been asked to update the committee on the progress of civic and law related education. As you know the VBA has been very active in this type of outreach. Our President Doug Molde and our Public Education Section Chair Mike Palmer are big supporters. And VBA staff member Kevin Ryan has been nationally recognized for his work. This afternoon I'll be sitting in on House Judiciary's hearing on judicial branch restructuring. Acting Court Administrator Bob Greemore will be updating the committee on the Commission on Judicial Operations work. Take another look at the memo from Eileen Blackwood and me from last week and get involved in this discussion.

Thursday March 19th

Yesterday, even as the statehouse focused its attention on the marriage bill, there were three other events of interest to the VBA. First, Defender General Matt Valerio presented his office's budget to the Senate Appropriations Committee. His request was uncontroversial and actually the conversation drifted off into other areas. As a nice compliment to Matt, the Chair asked him, somewhat facetiously, if he would do a seminar for other agency heads on management of budgets! Matt was followed by Vermont Legal Aid Executive Director Eric Avildsen who spoke about FY 2010 funding for VLA through the Agency of Human Services. VLA doesn't appear directly in the state's budget but AHS contracts with VLA to provide representation to state hospital committed people,etc. The balance of the state funding goes for general poverty law work. VLA has been funded since 2001 at just about $1 million. In the last three years, VLA with VBA support has lobbied for and won small COLAs of $25,000 each year. VLA's state funding is always matched with equal federal funding; so, that meant an increase of $150,000! Then the rescissions of 2008 came and VLA lost a combined total of $170,000; they're now back at 2001 funding. Eric made his most passioned plea to the committee that I've ever seen him make. His most imporatnt point was that the administration made the rescissions without ever consulting with him on caseloads, etc. The committee heard him and said "we'll take care of you". It was some reassuring news in these bad times.
While this was going on, Paul Hanlon was across the hall in Senate Finance witnessing their 7-0 vote to send S. 86, the Uniform Trust Code to the full Senate for passage. It's the beginning of the ennd of a two year project to get our trust laws updated.

Wednesday, March 18, 2009

Wednesday March 18th

For those of you that either worked on or followed the discussion of the foreclosure committee that worked over the summer and fall to draft a bill, it has now been introduced and can be found here:
The bill is in House Judiciary and we hope it gets some attention this year.

Tuesday, March 17, 2009

the legislature returns

It's Tuesday and the general assembly is back in town. By now you've heard that the equal marriage issue is in the spotlight under the golden dome. The Senate Judiciary Committee has nothing but that bill on its calendar all week. The statehouse is full of visitors who want to be heard on both sides of this issue. I just returned from a hearing in Senate Finance where Mark Langan and Paul Hanlon spoke for the fourth time on S. 86, the Uniform Trust Code. This time their presentation addressed two topics. First, since transferring jurisdiction to the probate courts for inter-vivos trusts is new, a fee schedule had to be created. The filing fees proposed to the Acting Court Administrator track those for testamentary trusts. Also, Paul responded to some concerns raised by the Attorney General on charitable trusts. The bill seems to be moving forward despite these issues and Finance hopes to vote it out tomorrow. Then a stop in Senate Judiciary will delay action until it is reviewed there. Hopefully the marriage bill will be in the House by then so trusts aren't slowed down.

Tomorrow I expect to listen to the Defender General and the Executive Director of Vermont Legal Aid make their budget pitches to the Senate Appropriations Committee for FY2010 funding. VLA suffered a big hit in the two rescissions at the end of 2008. Combined with federal matching funds, VLA lost about $170K! I'll report at the end of the day.

Wednesday, March 11, 2009

legislative reports

For those of you that have been readers of my "This Week in the Legislature" reports, you'll see a different format being used when the session resumes next week. We've decided to try a blog and we're calling it, cleverly, VBA Blawg. Check in next week.