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UNDERSTANDING HB 2643 SECTIONS 14 & 15 June 4, 2014 Jeffrey Pyle, Martindell, Swearer, Shaffer, Ridenour, LLP P.O. Box 1907 20 Compound Drive Hutchinson,

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Presentation on theme: "UNDERSTANDING HB 2643 SECTIONS 14 & 15 June 4, 2014 Jeffrey Pyle, Martindell, Swearer, Shaffer, Ridenour, LLP P.O. Box 1907 20 Compound Drive Hutchinson,"— Presentation transcript:

1 UNDERSTANDING HB 2643 SECTIONS 14 & 15 June 4, 2014 Jeffrey Pyle, Martindell, Swearer, Shaffer, Ridenour, LLP P.O. Box Compound Drive Hutchinson, KS

2 IMPORTANT NOTICE: All rights are reserved. These materials may not be reproduced in any way without the permission of the author. This publication is designed to provide general information on the seminar topic presented. The written materials and accompanying presentation have been provided exclusively for general educational and informational purposes. They shall not be construed as establishing an attorney-client relationship or furnishing legal advice which may be relied upon by you or anyone else.

3 Total Assessed Recording Fees under Sec. 14 Per Year (1 of 3) 7/1/14 – 12/31/14CY 2015CY 2016CY 2017CY 2018 and thereafter First page of deeds, mortgages, other instruments of writing $ 6.00 $ 8.00 $ $ $ Tech Fees $ 2.00 $ 3.00 Heritage Trust Fund Fees $ - $ 1.00 Total First Page Fees $ 8.00 $ $ $ $ Each additional page of such documents $ 2.00 $ 4.00 $ 7.00 $ $ Tech Fees $ 2.00 $ 3.00 Heritage Trust Fund Fees $ - $ 1.00 Total Additional Page Fees Per Page $ 4.00 $ 8.00 $ $ $ 17.00

4 Total Assessed Recording Fees under Sec. 14 Per Year (2 of 3) 7/1/14 – 12/31/14CY 2015CY 2016CY 2017CY 2018 and thereafter Recording town plats per page $ $ $ $ $ Release/assignment of mortgages $ 5.00 $ 7.00 $ $ $ Tech Fees $ 2.00 $ 3.00 Heritage Trust Fund Fees $ - $ 1.00 Total Release/assignment of mortgages fees $5 + $2 per page $7 + $4 per page $10 + $4 per page $13 + $4 per page $16 + $4 per page

5 Total Assessed Recording Fees under Sec. 14 Per Year (3) 7/1/14 – 12/31/14CY 2015CY 2016CY 2017CY 2018 and thereafter Certifying instruments on record $ 1.00 $ 4.00 $ 7.00 $ $ Signature acknowledgment $ 0.50 $ 3.50 $ 6.50 $ 9.50 $ IRS tax lien filing notices $ 5.00 $ 8.00 $ $ $ IRS / KDOR lien release notices $ 5.00 $ 8.00 $ $ $ Liens for materials/services under K.S.A $ 5.00 $ 8.00 $ $ $ 17.00

6 Sec. 14 Distribution Between County General, Tech Funds, and Heritage Trust by Year (1) 7/1/14 -12/31/14CY 2015CY 2016CY 2017CY 2018 and thereafter Total First Page Fees $ 8.00 $ $ $ $ County General $ 6.00 $ 9.00 $ $ $ Register of Deeds Tech Fund $ 2.00 County Clerk Tech Fund* $ - $ 0.50 County Treasurer Tech Fund $ - $ 0.50 Heritage Trust Fund** $ - **Note that under subsections (h) and (i) the county treasurer is to deposit the heritage trust fund fees into the county general, and then make quarterly payments to the state treasurer up to $30,000 per year. The state treasurer is to credit the payments to the heritage trust fund. The software should earmark $1 per page beginning CY 2015 of mortgages, deeds, or other instruments of writing, and releases or assignments for quarterly payment from county general to the state treasurer for the heritage trust fund. *No payments made to county clerk tech fund, county treasurer tech fund, or heritage trust fund in CY 2014

7 Sec. 14 Immediate Distribution Between County General, Tech Funds, and Heritage Trust by Year (2) 7/1/ /31/14CY 2015CY 2016CY 2017CY 2018 and thereafter Total Additional Page Fees Per Page $ 4.00 $ 8.00 $ $ $ County General $ 2.00 $ 5.00 $ 8.00 $ $ Register of Deeds Tech Fund $ 2.00 County Clerk Tech Fund* $ - $ 0.50 County Treasurer Tech Fund $ - $ 0.50 Heritage Trust Fund** $ -

8 Sec. 14 Immediate Distribution Between County General, Tech Funds, and Heritage Trust by Year (3) 7/1/ /31/14CY 2015CY 2016CY 2017CY 2018 and thereafter Total Release/assignment of mortgages fees $5 + $2 per page $7 + $4 per page $10 + $4 per page $13 + $4 per page $16 + $4 per page County General $ 5.00 $ 8.00 $ $ $ Register of Deeds Tech Fund $ 2.00 County Clerk Tech Fund* $ - $ 0.50 County Treasurer Tech Fund $ - $ 0.50 Heritage Trust Fund** $ -

9 Sec. 15 Registration Tax Fee CY 2014CY 2015CY 2016CY 2017CY 2018CY 2019 Principal Debt0.26%0.20%0.15%0.10%0.05%0.00% $75,001 $ $ $ $ $ $ - $150,000 $ $ $ $ $ $ - $2,000,000 $ 5, $ 4, $ 3, $ 2, $ 1, $ -

10 Effect of Recording Fees and Registration Taxes on Sample Homeowners CY 2014CY 2015CY 2016CY 2017CY 2018CY 2019 Principal Debt with 18 page mortgage0.26%0.20%0.15%0.10%0.05%0.00% $75,001 $ $ $ $ $ $ - Page 1 total fees $ 8.00 $ $ $ $ additional pages total fees $ $ $ $ $ Total recording fees and registration tax $ $ $ $ $ $ CY 2014CY 2015CY 2016CY 2017CY 2018CY 2019 Principal Debt with 18 page mortgage0.26%0.20%0.15%0.10%0.05%0.00% $150,000 $ $ $ $ $ $ - Page 1 total fees $ 8.00 $ $ $ $ additional pages total fees $ $ $ $ $ Total recording fees and registration tax $ $ $ $ $ $

11 Effect of Recording Fees and Registration Taxes on Sample Business CY 2014CY 2015CY 2016CY 2017CY 2018CY 2019 Principal Debt with 18 page mortgage0.26%0.20%0.15%0.10%0.05%0.00% $2,000,000 $ 5, $ 4, $ 3, $ 2, $ 1, $ - Page 1 total fees $ 8.00 $ $ $ $ additional pages total fees $ $ $ $ $ Total recording fees and registration tax $ 5, $ 4, $ 3, $ 2, $ 1, $

12 Page length of bank documents rather than mortgage values determines total fees and taxes CY 2014CY 2015CY 2016CY 2017CY 2018CY 2019 Principal Debt with 18 page mortgage0.26%0.20%0.15%0.10%0.05%0.00% $75,001 $ $ $ $ $ $ - Page 1 total fees $ 8.00 $ $ $ $ additional pages total fees $ $ $ $ $ Total recording fees and registration tax $ $ $ $ $ $ CY 2014CY 2015CY 2016CY 2017CY 2018CY 2019 Principal Debt with 100 page mortgage0.26%0.20%0.15%0.10%0.05%0.00% $75,001 $ $ $ $ $ $ - Page 1 total fees $ 8.00 $ $ $ $ additional pages total fees $ $ $ 1, $ 1, $ 1, Total recording fees and registration tax $ $ $ 1, $ 1, $ 1, $ 1,704.00

13 Sec. 14(j) $125 Cap: Requirements 1  Applies Only to Sec. 14 Recording Fees If: 1. Recording Single Family Mortgages 2. For A Principal Residence, AND 3. Principal Debt or Obligation Secured by Mortgage is $75,000 or Less (Not $75,000.01)

14 Sec. 14(j) $125 Cap: Requirements 2  Filer MUST provide supporting documentation to Register of Deeds to be eligible for $125 cap.  Exemptions are strictly construed against the party claiming the exemption, and the party claiming the exemption must bring themselves clearly within the exemption. Meadowlark Hill, Inc. v. Kearns, 211 Kan. 35, Syl. ¶ 2, 505 P.2d 1127, 1129 (1973)  The documentation MUST be provided by the Filer: the Register of Deeds has no duty to investigate  There is no procedure for investigation by the register of deeds set forth in the statute, thus the burden for showing a qualification for exemption is upon the person claiming the exemption on the basis of the instruments tendered for recording. Id. at 41.

15 Sec. 14(j) $125 Cap: Applicability 1  $125 cap applies to ALL fees under Sec. 14 (K.S.A Supp ).  ALL Fees =  recording fees under subsection (a);  Tech fees under subsection (b); AND  Heritage trust fund fees under subsection

16 Sec. 14(j) $125 Cap: Applicability 1a  $125 cap applies to ALL fees under Sec. 14 (K.S.A Supp ).  Cap applies to “fee” for recording “pursuant to this section” Term “Section” = entire statute (not just subsection (a)) Term “fee” = “fees” See K.S.A Subsections (b) & (i) are fees for recording: “the register of deeds shall charge and collect an additional fee of $1 per page for recording”

17 Sec. 14(j) $125 Cap: Applicability 2  $125 cap DOES NOT apply to any registration tax under Sec. 15 (K.S.A ).  Use of term “section” in Sec. 14(j) means cap only applies to recording fees in Sec. 14  Use of amended term “tax” rather than “fee” in Sec. 15(a) means that cap on “fees” found in Sec. 14 does not apply to “tax” in Sec. 15

18 Sec. 14(j) $125 Cap: Applicability 3  Sec. 14(j) $125 Cap is the ONLY exception to recording fees paid under K.S.A Supp  K.S.A (d) exceptions DO NOT apply to Sec. 14 recording fees No Exception for mortgages correcting or perfecting previous mortgage No Exception for second mortgage or mortgage securing same indebtedness No Affidavit for principal indebtedness covered or included in previously recorded mortgages  K.S.A (d) exceptions apply only to registration tax Even though called “tax” in subsection (a) and “fee” in subsection (d)

19 Sec. 14(j) $125 Cap: In Action Example: Filing fees and registration taxes for 18 page $75, principal debt on single family mortgage on principal residence RuleChargeRuleCharge Subsection (a) Page 1$6 (a)(1)(A) $ 6.00$8 (a)(2)(A) $ pages $2 per page ("pp") (a)(1)(B) $ 34.00$4 pp (a)(2)(B) $ Subsection (b) $2 pp (b)(1) and (2) $ $3 pp (b)(1) and (2) $ Subsection (i) $ 0 pp (i)(1) and (2) N/A $ 1 pp (i)(1) and (2) $ Total $ $ Exceed Cap? N/A Y Page Fees or Cap $ $ Registration Tax.26% 15(a)(1) $ % 15(a)(2) $ Total Charges $ $

20 Sec. 14(j) $125 Cap: In Action Example: Filing fees and registration taxes for 18 page $75, principal debt on single family mortgage on principal residence Continued RuleChargeRuleCharge Subsection (a) Page 1$11 (a)(3)(A) $ 11.00$14 (a)(4)(A) $ pages$7 pp (a)(3)(B) $ $10 pp (a)(4)(B) $ Subsection (b) $3 pp (b)(1) and (2) $ $3 pp (b)(1) and (2) $ Subsection (i) $ 1 pp (i)(1) and (2) $ $ 1 pp (i)(1) and (2) $ Total $ $ Exceed Cap? Y Y Page Fees or Cap $ Registration Tax.15% 15(a)(3) $ % 15(a)(4) $ Total Charges $ $

21 Sec. 14(j) $125 Cap: In Action Example: Filing fees and registration taxes for 18 page $75, principal debt on single family mortgage on principal residence Continued RuleChargeRuleCharge Subsection (a) Page 1$17 (a)(5)(A) $ 17.00$17 (a)(5)(A) $ pages$13 pp (a)(5)(B) $ $13 pp (a)(5)(B) $ Subsection (b) $3 pp (b)(1) and (2) $ $3 pp (b)(1) and (2) $ Subsection (i) $ 1 pp (i)(1) and (2) $ $ 1 pp (i)(1) and (2) $ Total $ Exceed Cap? Y Y Page Fees or Cap $ Registration Tax.05% 15(a)(5) $ % 15(a)(6) $.00 Total Charges $ $

22 Sec. 14(j) $125 Cap: What We Don’t Know (Distribution of Fees 1)  When the $125 cap applies, how should the funds be distributed between county general, the tech funds, and the heritage trust fund?  Option 1: Tech funds are paid first, the remainder goes to county general. Sec. 14(h) “Except as otherwise provided by subsection (b), all fees required to be collected pursuant to this section shall be paid by the register of deeds to the county treasurer and deposited into the general fund of the county. Problem: addresses only received funds, not the manner in which they are received. E.g. when the funds are paid but capped by statute, under which subsection were fees paid?

23 Sec. 14(j) $125 Cap: What We Don’t Know (Distribution of Fees 2)  Option 2: Tech funds and heritage trust funds are paid only after subsection (a) fees have been paid to county general Subsection (b) & (i) fees are “in addition to” subsection (a) fees “In addition to” defined as: an extra person, thing, or circumstance Google Over and aboveWebster as an extra or additional thing (to something else); furthermore, besides Oxford English Dictionary Do these definitions mean “subsequent to”?

24 Sec. 14(j) $125 Cap: What We Don’t Know (Distribution of Fees 3)  Option 3: County general (subsection (a)), tech fund, and heritage trust fund fees are distributed pro rata  Kansas has limited precedent. In Radke Oil Co., Inc. v. Kansas Dep't of Health & Env’t, 23 Kan. App. 2d 774, , 936 P.2d 286, 289 (1997). Appellate claimed that under K.S.A ,113, which imposed civil penalties in addition to criminal conviction, when there was no criminal conviction, there could be no civil penalty.  Court rejected this argument, stating, “in addition to does not, by itself, create a condition precedent.”

25 Sec. 14 Font Size Required for Recording 1  What is the smallest font size permissible on documents to be recorded?  Register of deeds’ relevant duties:  K.S.A (a) The register of deeds shall also record, or cause to be recorded, in a plain and distinct handwriting or in another legible manner... all deeds, mortgages, maps, instruments and writings authorized by law to be recorded in the office of the register of deeds  Fonts that are too small are not legible

26 Sec. 14 Font Size Required for Recording 2  Register’s relevant duties continued  K.S.A General index including names of grantors, grantees, nature of instrument, description of tract These must be ascertainable from the face of the document  K.S.A After recording each instrument, the instrument must be proofread by comparing the instrument filed for record with the record that has been made by the register of deeds from such original instrument. Instrument must be legible to be accurately proofread.

27 Sec. 14 Font Size Required for Recording 3  Register’s relevant duties continued:  K.S.A registration tax based upon amount of principal debt or obligation. Can’t assess tax if amount of debt or obligation not legible  Register of deeds have implied authority to require font sizes large enough to be legible.  “Unless a legislative intent is indicated otherwise an express grant of powers to an officer or governmental board carries with it such implied powers as are necessary for the due and effective exercise of the powers expressly granted and the discharge of the duties imposed.” Bd. of Comm’rs of Edwards Cnty. v. Simmons, 159 Kan. 41, Syl. ¶ 3, 151 P.2d 960, 961 (1944)

28 Sec. 14 Font Size Required for Recording 4 (e) If sufficient space is not provided for the necessary recording information and certification on a document, such recording information shall be placed on an added sheet and such sheet shall be counted as a page. The document shall be of sufficient legibility so as to produce a clear and legible reproduction thereof. If a document is judged not to be of sufficient legibility so as to produce a clear and legible reproduction, such document shall be accompanied by an exact copy thereof which shall be of sufficient legibility so as to produce a clear and legible reproduction thereof and which shall be recorded contemporaneously with the document and shall be counted as additional pages. The register of deeds may reject any document which is not of sufficient legibility so as to produce a clear and legible reproduction thereof. (f) Any document which was filed on or after January 1, 1989, which was of a size print or type smaller than 8-point type but which otherwise was properly filed shall be deemed to be validly filed.

29 Sec. 14 What happens if a person overpays the register of deeds 1  Sec. 14(g) requires that all fees are paid before the register of deeds records anything  Those seeking to fall under the $125 cap must first provide documentation.  Failure to provide adequate documentation means full fees are due.  Register of deeds must reject anything less than full payment

30 Sec. 14 What happens if a person overpays the register of deeds 2  Any potential refunds would be the responsibility of the county treasurer and not the register of deeds:  If recording fees are a “tax,” the filer would be required to protest by sending a written statement to county treasurer under K.S.A  Even if recording fees are not a tax, statute requires all fees collected by register of deeds to be paid to county treasurer  The register of deeds breaches his or her statutory duty if the register does anything other than remit fees to county treasurer (e.g. pay a refund)  Because the statute gives no mechanism for a register of deeds to provide a refund, the register of deeds is without the power to provide a refund.

31 Sec. 14 Can the county adopt and charge fees not covered in K.S.A ?  Yes, under the county’s authority in K.S.A  Because of home rule, counties may enact local law when there is a uniform state law but local action has not been pre-empted by that law and the city or county wants to enact additional or supplemental (i.e., nonconflicting) local laws. Michael R. Heim, Home Rule Power for Cities and Counties in Kansas, 66 J.K.B.A. 26, 28 (1997).  A county has the power to tax or raise revenues under K.S.A  Local action is prohibited only where there is a clear statement of legislative intent to pre-empt local initiative or there is an actual conflict between state and local law.

32 Sec. 14 Can the county adopt and charge fees not covered in K.S.A ?  There is no legislative statement of prohibition in K.S.A  There is no prohibition or exception found in K.S.A a.  “We have consistently rejected the doctrine of implied preemption, reasoning that legislative intent to reserve exclusive jurisdiction must be clear.” Water Dist. No. 1 of Johnson Cnty. v. City Council of City of Kansas City, 255 Kan. 183, , 871 P.2d 1256, 1264 (1994)  Thus, the county may adopt and charge additional or supplemental fees.

33 Sec. 14 Can the county adopt and charge fees not covered in K.S.A ?  Any fees adopted and charged should be reasonable and reasonably related to the costs the register of deeds incurs in performing the service. See City of Beloit v. Lamborn, 182 Kan. 288, , 321 P.2d 177, 182 (1958); Matheny v. City of Hutchinson, 154 Kan. 682, 121 P.2d 227, 232 (1942).  Examples:  handling charges for rejected documents  return postage fees

34 Sec. 14 Permitted Expenditures from Clerk & Treasurer Technology Funds  These funds are modeled after K.S.A a  Provide for acquiring equipment and technological services for storing, recording, archiving, retrieving, maintaining, and handling of data recorded, stored, or generated in the office of clerk (or treasurer)  Salaries may be an appropriate expenditure provided the activities are related to the storing, recording, archiving, retrieving, maintaining, and handling of data recorded or stored (Reasonable Nexus). Attorney General Op. No

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