The North Carolina State House and Senate yesterday both adopted the conference report on SB 42 (Mech. Liens/Pvt Lien Agent), assuring the continued availability of title insurance in North Carolina. The bill was a top legislative priority for the North Carolina Home Builders Association (NCHBA), which was also a key player in the negotiations. SB 42 is expected to be ratified today and sent to the Governor, averting a major crisis for the building industry.
The continued availability of title insurance in North Carolina was threatened by a May 10 letter from the Fidelity companies to significantly curtail their policy writing on June 15. The Fidelity companies control roughly 40% of the title insurance market in the state. Another significant carrier, First American Title, issued a similar threat. Any curtailment in the issuance of new policies by them would have posed significant risks to the continued availability of title insurance generally and thereby threatened the very modest recovery that seems to be taking hold in Charlotte and other housing markets across the state. NCHBA had reason to suspect that the other major writers of title insurance would not have stepping forward to fill the gap had these companies followed through on their threat. Because of earlier progress in the negotiations, both entities extended these “deadlines” until the end of the legislative session.
Both the land title association and Fidelity have assured NCHBA that the enactment of SB 42 satisfies them and that no curtailment coverage will occur. While the legislation will impose new burdens on contractors and owners, the title industry was very accommodating of the industry’s suggestions and, as a result, the final bill is a more practical and less burdensome approach than the one originally offered. Both the title companies and the legislative leadership have credited NCHBA with playing a key role in defusing this crisis.
The negotiations were made even more difficult as a result of the scope of the legislation which included commercial as well as residential projects. This produced significantly more interest in the bill from all sectors of the construction industry (i.e., contractors, subcontractors, suppliers, credit managers, architects, engineers, and lawyers) who were all represented during the negotiations. Much of the credit for the bill’s passage belongs to Rep. Sarah Stevens and Sen. Pete Brunstetter, who were the key legislators in charge, with assistance from Rep. Jonathan Jordan, Rep. Hugh Blackwell, and Rep. Skip Stam.
Apartment communities in targeted business corridor areas can now apply for new Apartment Security Grant and Apartment Façade Improvement Grant programs. Applications for the security grant program will be accepted on a rolling basis and applications for the Façade Improvement Grant will be reviewed quarterly with the next application deadline occurring on August 15th.
The Apartment Façade Improvement Grant Program seeks to remove blight and improve Charlotte’s quality of life by assisting apartment owners with improving the appearance of aging apartment buildings, creating modern entrances with monument signs, landscaping and decorative gates, and by bringing parking and landscaping into conformance with current codes.
The Apartment Security Improvement Grant Program seeks to develop relationships between owners and managers of apartment communities located in priority areas and community police officers, while at the same time reducing the opportunity for crime by creating a safer environment for residents.
Source: City of Charlotte Neighborhood & Business Services
Thanks in large part to the efforts of our local Realtors and commercial brokers, the North Carolina Senate this afternoon overwhelmingly passed SB 521 – Broker Price Opinions, 47 – 1. The bill now heads to Governor Perdue’s desk, where it is expected to be signed.
Under current NC law, a real estate broker is prohibited from providing a client with a Broker Price Opinion (BPO) for a fee unless the broker has a “reasonable expectation” of obtaining the listing on that property. North Carolina is currently one of only 5 states that restrict a real estate broker’s ability to perform Broker Price Opinions. SB 521 will change that by allowing a broker to provide a BPO for a fee under specific conditions.
A BPO typically includes an inspection of the subject property, relevant neighborhood analysis, local and regional market information and trends, and a description of comparable properties and is prepared by a licensed real estate broker with intimate knowledge of their local market. BPOs provide critical information for decision-making and have been widely adopted as a tool in the mortgage industry due to their timeliness, cost effectiveness, and accuracy.
BPOs are commonly used for:
- Fraud check and additional due diligence on a completed appraisal;
- Internal non-lending purposes such as portfolio valuation and review;
- Due diligence of loan portfolios by buyers and sellers in secondary market transactions and to help establish the purchase and sales price of a portfolio; and
- Due diligence and disposition analysis on distressed loans, including short sales, REO sales, and foreclosure avoidance efforts.
Broker Price Opinions are NOT considered a certified appraisal and do not take the place of one. BPOs are intended to estimate a property’s selling or leasing price, while appraisals are estimates of a property’s value. BPOs and CMAs may NOT be used when an appraisal is required by state or federal law.
Some other important aspects of SB 521 include:
- Defines Broker Price Opinions and Comparative Market Analyses as “an estimate … of the probable sellingor leasing price“ of a property or interest in a property, prepared by a licensed real estate broker that provides some detail about the property’s condition, market, neighborhood, and comps.
- Does NOT allow use of an automated valuation model. (This does NOT exclude the use of ARGUS and similar DCF software).
- Allows NCREC to adopt rules governing BPOs that are are consistent with the language in the bill;
- Will also allow certified appraisers to provide BPOs and CMAs, as long as they are also licensed real estate brokers and do not represent themselves as appraisers in the BPO.
- ONLY applies to BPOs and CMAs that are performed or issued for a fee or other compensation.
- Actively licensed real estate brokers, but NOT provisional brokers
- Buyers and sellers;
- Lessors and lessees;
- A third party performing due diligence or making decisions about the potential sale or purchase of a property;
- An existing or potential lienholder or third party (banks, investors, etc.), for any purpose other than the determination of value, or for a loan origination.
- BPOs and CMAs may also be prepared for use in conjunction with or in addition to an appraisal.
- Statement of Purpose;
- Description of the Property;
- Basis of Estimate, including market data of cap computation used;
- Any assumptions or limiting conditions;
- Disclosure of broker’s interest in, or potential interest in, the property;
- Effective date;
- Broker’s name and license number;
- Name of broker’s firm;
- Copy of the assignment request;
- A Disclaimer stating BPO is NOT an appraisal and may NOT be used for underwriting.
- No broker may knowingly prepare a BPO or CMA in lieu of an appraisal, when an appraisal is required by federal or state law.
- BPOs and CMAs MUST produce an estimate of the property’s sale or leasing price, and NOT the property’s value or worth!
- Any estimate of value shall be deemed an appraisal, and may ONLY be prepared by a certified appraiser.
- BPOs and CMAs must NOT be referred to as a valuation or appraisal.
- BPOs and CMAs must NOT report a predetermined result.
- Requesting approval to hire 10 new part-time plan review staff, in addition to the 2 new reviewers who just came on board;
- Considering adding overtime hours for Saturday plan review until the Department is caught up;
- Starting to screen submitted plans for compliance with the 2012 Residential Code before doing a full review;
- Soliciting temporary plan review help from code enforcement departments in Raleigh in Willmington;
- Adding a plan review checklist to the department website showing common code inconsistencies.
Customers should remember they also have the Residential Professional Certification Program available which leads to approval of plans on the submittal day or next day, for projects using qualified designers. A description of Residential Professional Certification Program is located HERE.
Currently the turnaround time for plan reviews are 13 days for paper submittals, 23 days for E-Plan submittals (due to the shortage of fully trained reviewers for this online tool), and 23 days on townhome plan review. These times are well above the department’s targeted goal of five business days, largely because of the recent uptick in permitting activity and the state’s terribly inefficient launch of the 2012 NC Residential Code on March 1. In addition, Code Enforcement Director Jim Bartl says his department has struggled to find qualified third-party plan reviewers to help manage the load.
REBIC is continuing to work with Bartl and his staff to explore additional ways to improve permitting times, including an approach that would allow individual building permits to be issued before a full set of Master Plan drawings is approved. We will continue to keep you posted on any new steps that Mecklenburg County is taking to bring things back in line. In the meantime, we encourage builders to continue to submit plans by paper only, as this is taking significantly less time than E-plan review.
Governor Perdue this week signed into law HB 199 (Metal Theft Prevention Act of 2013), which toughens penalties for the theft of nonferrous metals (mainly copper), helping to address an increasing problem on construction sites across North Carolina. Criminals have discovered that these metals can be sold quickly and easily for a large profit. No one is immune to this theft and it is causing a great deal of property damage and can create serious safety hazards.
REBIC, the North Carolina Association of REALTORS® and the North Carolina Home Builders Association all supported this legislation which will help deter criminals from stealing nonferrous metals as it will cut down on the ease of getting fast money by:
- Requiring metals recyclers to be permitted;
- Adding a penalty for purchasing metals without a permit to go after rogue buyers;
- Requiring only check payment for copper so there is no “fast money”;
- Requiring the metals recycler to take a photo of the seller and the metals being sold; and
- Protecting the innocent property owners by releasing the owner from any reasonable civil liability and requires restitution to property owners for the damage done by the thief.