PENNSYLVANIA HOUSE OF REPRESENTATIVES URBAN AFFAIRS COMMITTEE PUBLIC INFORMATIONAL HEARING. Administration Building, Commissioners' Meeting Room, 55

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1 Page: PENNSYLVANIA HOUSE OF REPRESENTATIVES URBAN AFFAIRS COMMITTEE PUBLIC INFORMATIONAL HEARING 0 Public Hearing held at the Bucks County Administration Building, Commissioners' Meeting Room, East Court Street, Doylestown, Pennsylvania, held on Thursday, July, 0, commencing at 0:0 a.m., before Suzanne Walinsky, a Court Reporter and Notary Public, pursuant to notice. 0

2 Page: APPEARANCES: Chairman Scott Petri Chairman Thomas R. Caltagirone Representative Kate Harper Representative Martina White Representative Harry Lewis Robert E. Ribic, III, Executive Director of Urban Affairs and Housing 0 0

3 Page: CHAIRMAN PETRI: Thank you for attending today. I'm going to officially call the Pennsylvania House of Representative Urban Affairs Committee Public Informational Hearing to order. First order of business is to thank our host, the County of Bucks, for allowing us to use this fantastic facility and our local host, our own Recorder of Deeds, Joe Szafran. Thank you for all your arrangements 0 and your hospitality to Committee Members. For those in the audience and those listening at home, this is a very important hearing that we're having. This hearing involves probably the primary asset of most families: their home. And we should recognize from the outset that the Recorder of Deeds performs an essential function with regard to home ownership. They are charged with the responsibility of making sure that they keep records of ownership and 0 liens and easements. And the ease in which the Recorder performs that function should certainly be noted. Most people don't realize how complicated an issue that is. I'm sure by the end of the hearing, people will understand how complicated it is. We're going to discuss today a particular

4 Page: issue with regard to recording fees associated with planned communities. We recognize that we have issues with regard to oil and gas leases. We also have issues in the state that make this a different issue for some communities. Here in Bucks County, and in many of the 0 contiguous counties in the southeast, the Recorders use a Uniform Parcel Number system. And they do that because it makes the searching of liens and easements easier for title companies, for banks, for attorneys who are representing buyers and sellers. But most of the state currently does not use the Uniform Parcel Number system. It's something I 0 personally believe that should be conducted statewide. But recognizing that Pennsylvania is a diverse state and there's many opinions, we will hear those opinions today. So with that brief introduction in recognizing the importance of the Recorder of Deeds' function and the sense of everyone in this room that we want a system that is proper, that is accurate and that is respective of property rights, we can start the presentation. I'm going to turn over for brief comments,

5 Page: and then we'll do self-introductions up here, to my colleague, Chairman Caltagirone, who is the author of this bill, for some brief comments. Thank you. CHAIRMAN CALTAGIRONE: Thank you, Mr. Chairman. It's an honor to be here. You have a beautiful, beautiful community here and I'm looking forward to the testimony today. CHAIRMAN PETRI: Thank you. Why don't we start with 0 introductions so everybody in the room knows who we are. And we'll start at my right with the chairman. REPRESENTATIVE HARPER: Hi. My name's Kate Harper. I'm Chairman of House Local Government Committee which also deals with issues regarding counties and Recorders of Deed. And I'm here by the grace of the Chairman who invited me to come. Club is in my district. I'm happy to say the Blue Bell Country 0 CHAIRMAN CALTAGIRONE: Caltagirone, Urban Affairs Committee. closely with Chairman Scott Petri here. forward to listening to the testimony. I'm Chairman Tom And I work very And I look Thank you. CHAIRMAN PETRI: I failed to introduce myself at the beginning. I'm Representative Scott Petri. I'm one of ten state representatives that

6 cover Bucks County. Page: I am chairman of the Urban Affairs Committee and also the chairman of the Ethics Committee. REPRESENTATIVE LEWIS: Good morning. My name is Harry Lewis. I am a legislator from the th District in Chester County. MR. RIBIC: Good morning. My name is Bobby Ribic. I'm the Executive Director of the Senate 0 Urban Affairs and Housing Committee for Chairman Scott Wagner, who is also the companion sponsor of this legislation as well, Senate Bill. Senator Wagner apologizes for not being able to attend the hearing, and we'll have the chairman studying this issue. Thank you. CHAIRMAN PETRI: And I'll mention just before we start with our first testifier. We have two bills, the one that's sponsored by Chairman Caltagirone and the other one that's sponsored in the Senate by Senator Wagner. They are both very similar. They're both in the Urban Affairs, House of 0 Urban Affairs Committee at this time. So without further ado, we'll get to our first panel, which is Terence Farrell, Chester County Commissioner, County Commissioners Association of Pennsylvania; Joseph Szafran, Bucks County Recorder of Deeds, President of the Pennsylvania Recorder of Deeds

7 Page: Association; and Jim Zugay, Dauphin County Recorder of Deeds. You want to come up front? And whenever you're ready, go ahead and proceed. MR. FARRELL: Good morning. My name is Terence Farrell. And on behalf of the Chester County 0 0 Commissioners Association of Pennsylvania, I want to thank Chairman Petri and Chairman Caltagirone and the Members of the House Urban Affairs Committee for the opportunity to speak to you today regarding House Bill 0. The CCAP is a non-profit, non-partisan association providing legislative and regulatory representation, education, research, insurance, technology, and other services on behalf of all of the Commonwealth's counties. By way of background, I am currently serving my third term as Commissioner in Chester County, beginning in 00. Prior to that, however, I also served two terms as the Chester County Recorder of Deeds. And under my leadership as Recorder of Deeds, Chester County implemented the UPI, which is critical going forward in identifying all documents associated with a particular parcel.

8 Page: 0 0 We also made significant process in placing recorded documents online, with most records now accessible on the Internet for individuals to search at any time and from any location. A little general note about the Chester County Recorder of Deeds office and its mission: The mission of the Chester County Recorder of Deeds office is to preserve the integrity, accuracy, and continuity of the designated public land records of the county so that the public and the businesses who work with these records can obtain accurate, timely information as efficiently as possible and thus can secure property ownership and engage in business involving real estate with confidence now and in the future. There's some more detailed explanation in your -- in my written testimony, but I don't think I need to go into that right now. Essentially the point of the county Recorder of Deeds office is to enable any owner and the public to find the full set of filings that have occurred on a particular piece of property. This minimizes confusion when property owners have questions regarding their deeds and promotes a uniform understanding of what information can be found in which records, no matter what county one is in.

9 Page: 0 Also, I would note that the first source of funds for many business start-ups comes from accessing the equity and personally-held real estate. And banks will lend to property owners knowing that the real estate offered as collateral is indeed held by the individual who says he or she holds it. The presumption of clear title and the ability to ensure it through title companies is further aided by this unique system of property identification and ownership. Let's talk about the UPI system. Under 0 state law, counties may choose to implement a Uniform Parcel Identification system, UPI, and about half of Pennsylvania's counties have moved forward with this investment. In this system, a UPI number is assigned to each separate tract, lot, or parcel of real estate to allow the identification of a particular parcel of real estate by number instead of by legal description. This process offers better interconnectivity between the multiple offices that work with land records and makes it easier to identify the connections between multiple instruments with a given UPI and the county records that they reference. Once the Recorder of Deeds office receives

10 Page: a document, a UPI number is certified in order to ensure that the number on the deed or other instruments matches the county's records for the specified parcel of real estate. This involves working with the county's assessment office and mapping offices to compare several pieces of information found in the document to existing county records and to determine the accuracy of the information attempting to be recorded so that errors can be addressed prior to recording. There is some more documentation in my written comments, but I'll skip them. In terms of recording fees, the fees involved in recording a document are set in the state statute, and a large proportion of the fees do not return to the county. The following fees are required to be levied on many types of document recordings: County Record Improvement Fund, it's a special county fund, $; Recorder of Deeds Record Improvement, a special county fund, $; Affordable Housing Fund, special county fund, with the county having an option to levy, but capped by state statute, $.0; State Writ Tax, this goes to the Department of Revenue, 0 cents -- this account is swiped by the state each day; Judicial Computer System

11 Page: Augmentation Account, it goes to the Department Of Revenue, $.0. The base fee to record a document typically applies per instrument for up to four names and four pages, exclusive of notations. Each name over four 0 is 0 cents and each page over four pages is $. A county that has adopted a UPI system may also charge a separate fee for the certification of each UPI number affected by the recording by ordinance of the county commissioners. The UPI fee is the only fee over which the county has discretion; all other recording fees would require state legislation to change the statutory fee structure. House Bill 0. When a condominium 0 association files an amendment to its declaration with the Recorder's office, each parcel needs to be indexed to reflect the change in the parcel history in addition to the filing of the amendment. For instance, these amendments often reflect changes to the association's bylaws as adopted by the property owners, such as requirements for lighting, setbacks, or other property appearances or in one recent amendment in my county, allowing the residents to disable their sprinkler systems if they meet certain requirements.

12 Page: 0 0 House Bill 0 would prohibit the county Recorder of Deeds from levying fees for indexing the information to each individual parcel. CCAP opposes this legislation because it creates a disincentive for counties to index this information. In Chester County, the base fee for recording an amendment to a declaration is $ for four pages plus the County Record Improvement Fund fee of $, the Recorder of Deeds Record Improvement fee of $, the State Writ Tax of 0 cents, notation fee of $, and technical fees totaling $, for a total base fee of $.0. The $ fee for each page over four applies as well and if the amendment contains the word "easement" in the document title, then the $.0 state fee for the Judicial Computer System Augmentation Account would also be applied. Some recent examples from our office: The second amendment for an association containing six pages and nine UPI numbers totaled $0. The fourth amendment for the same association containing five pages and three UPI numbers totaled $0. The third amendment for a different association with the term "easement" in the title

13 Page: 0 0 containing three pages and UPI numbers totaled $. One amendment with three pages and UPI, which did not include the State Judicial Computer System fee, totaled $,0.0. While an aggregate bill may be large, the indexing fee is the same fee per parcel that would be assessed on a parcel in a condominium association as on anyone else who needs to file a change to their individual deed. If counties are prohibited from assessing the fee per parcel to index the amendment to each property, in reality, it creates a fairness issue whereby other property owners that are not in communities are forced to pay the per-parcel fee while those in communities are not. In fact, those parcels in a condominium association are likely to be paying less per parcel to record the amendment than an individual who does not live in a community. Considering the example above with the aggregate bill of $,0.0, if the cost were divided among each of the UPIs, the average fee becomes $.. However, if each individual property owner had to record this amendment, each would be charged the

14 Page: 0 0 base fee of $.0 as well as the $ UPI certification fee, for a total of $0.0 per parcel. I would also note that the individual certification fees are not duplicative of the fee assessed on the condominium association to record the amendment to the declaration, as that amendment memorializes the change to the overall regulations for the community, but does not change the record of each individual property within that community. Going back to the amendment examples I offered earlier, the amendments regarding lighting or sprinkler systems are filed against the official association bylaws, but that condition on the property would not be recorded against all of the lots in the community unless it was also indexed against the UPIs of the individual lot. So if an individual wanted to buy a property in that community and pulled up the deed, if it is properly indexed, he would see, for instance, that there is a provision allowing the current owner to disable his sprinkler system. Likely, the potential buyer would want to know whether it has been disabled. If that information is not within the individual property deed, the potential buyer would have to know that he needs to look up the UPIs associated with

15 Page: 0 0 the HOA as well as the UPI for that property. Again, the point is that the owner is able to easily find all filings related to his property within his property records without having to separately research the filings pertaining to the community. If the information is not indexed, an individual would need to research the name of the owner of the record, trace back in time all of the other owners and other documents to see the history of all transactions related to a particular piece of property. Individuals researching a property would have to know that they have to find the association's information in addition to the property's and then would also have to know where to find it and then take the time to find it. In conclusion, as you can see, the county recording process and the associated fee system are far more complex than one might imagine at first. Counties have been given the responsibility to maintain a public record that is accurate and accessible to all -- to our communities and we take that responsibility seriously. Thus, counties would oppose any attempt to weaken the standards to which record and document maintenance are held as it would be a disservice to the

16 Page: Commonwealth and its residents. Individuals could no longer engage in real estate transactions with confidence. Further, 0 understanding the effort that goes into assuring the public record is accurately maintained, we would further oppose any efforts to reduce the fees which counties are authorized to collect for this purpose. I'd be happy to discuss these comments further and answer any questions for -- that you may have. Thank you for allowing me to make these comments. CHAIRMAN PETRI: Thank you for your testimony. Before we move to the next testifier, I want to recognize the presence and attendance of Representative Martina White from Philadelphia. for joining us. Thank you Who wants to go next? Mr. Szafran or Mr. Zugay? MR. SZAFRAN: I'm going to. 0 First, I want to thank you for this opportunity - CHAIRMAN PETRI: Make sure your mic's on. MR. SZAFRAN: Okay. Good morning, Mr. Chairman and Members of the House. I want to welcome you to Bucks County, of course, and glad to see you here

17 Page: this morning. I'm here as the President of the Pennsylvania Recorders Association. And my colleague along with me, Mr. Zugay, is the Recorder of Deeds of Dauphin County. We had a flip of the coin and Mr. Zugay is going to present this testimony from the Pennsylvania Recorder of Deeds Association. So I'm going to yield to him now. And I'll be available after for any questions if 0 you might have some. CHAIRMAN PETRI: Well, thank you, Joe. And we may have questions for you. I will say and I want to say publicly, Joe's been very, very helpful as far as organizing his association and allowing us to get together. And I want 0 to thank you on behalf of the Chairman -- the Chairman and I for being able to be available and discuss this bill. And we're looking forward to your assistance in trying to get this issue resolved, so thank you. MR. SZAFRAN: MR. ZUGAY: and Committee Members. Thank you. Good morning, Chairman Petri If you noticed when Joe was saying we flipped a coin, he didn't say who won or lost that coin

18 flip. flip. Page: So we'll keep that secret who won or lost that coin Thank you very much for allowing us to present our views regarding House Bill 0. The 0 Pennsylvania Recorder of Deeds Association supports the principles of fairness in the recording of fees. The collection by a county of a 0- to a $0 ordinance-set UPI fee from each individual property owner for the recording of a transaction impacting their own property advances those principles of fairness, we believe. My name is Jim Zugay and I'm here on behalf of the Pennsylvania Recorder of Deeds Association, commonly known as PRODA. And I serve in the capacity on the PRODA committee as an executive committee member and have done so with privilege for the last ten years. an elected Recorder of Deeds from Dauphin County. I'm 0 The association membership includes the recorder from each one of the counties in Pennsylvania. Recorders are charged with the statutory duties to maintain the system of land records and related recordings in each county. PRODA's interests are always to focus on its statutory duties in the preservation and the orderly recording of historical and legally authoritative open

19 Page: public land records. Recorders are the single official repository of documents or instruments touching upon an interest of real estate in each county. It is from those records that the ever-important chain of title can be determined. Our offices are open to the public; our records are open to the public. They allow a reliable, transparent review of 0 each property in the county. The offices provide efficient and a live person which guides people to those records. These people 0 include homeowners, lawyers, title searchers, title abstracters, as well as title insurance agents. The importance of maintaining reliable and accurate records cannot be understated, as we live in a transactional world where banks and lenders rely on real property as collateral. The buying and selling of real estate and other related transactions and loans associated with those transactions are often characterized as an engine of economic activity in country. Our association hosts a number of educational seminars for its members and reviews and comments upon relevant legislation impacting our office, keeping in mind we're elected or appointed to serve the

20 Page: 0 public. PRODA believes that House Bill 0 creates winners and losers. By that I mean with its passage, there will be some that are charged the UPI fee and that some are not. PRODA feels that that system is a little unfair to the recording public. To be clear, the Recorder 0 0 does not set the UPI certification indexing fee, rather the fee is established by county ordinance when a county converts from a traditional recording system to the modern UPI system. House Bill 0 provides an industry-specific carve out resulting in the waiver of a nominated fee pursuant to the Uniform Parcel Identifier Law, commonly known as the UPI Law. The result of House Bill 0 is a law which only some folks that record are charged a recording fee while others are not charged to support a modern system of recording that is open and accessible to everyone. The UPI system is an advanced mapping of real estate for the purpose of identifying every property uniquely. And it also serves for orderly and accurate tax assessments. There are other uses of the advanced

21 mapping system. Page: One county relies extensively on its 0 0 mapping system to pinpoint properties for responders within their county. PRODA is suggesting to the Committee that in considering House Bill 0, the Members be mindful of the following: No., fees imposed upon the general public are tied to each unique parcel and the enactment of the UPI system in confirms this approach. Two, the UPI law allows the county governing body a choice, a choice to adopt or not, by ordinance to establish a UPI system of recording real estate, therefore and thereby, modernizing its way of recording documents. Three, fees or costs imposed upon the recording public are set by statute or ordinance and are assessed and should be assessed upon each unique parcel identified for recording. Four, PRODA, on behalf of its members, welcomes the opportunity to continue to discuss recording fees and the management of land records with all parties in interest to study and develop practices and processes within the law to better serve the public. At issue, as you are aware, House Bill 0 is the very system of recording and the corresponding fees and costs imposed by a county that this General

22 Page: 0 Assembly enacted in. In Pennsylvania, the Association is aware that about one-half of our counties have adopted and operate this UPI system. The membership of PRODA was last surveyed on this question a few years ago and we actually believe even more counties than half are considering converting to a UPI system. This modern recording system identifies every piece or parcel of real estate within a county with a specific number. The recorder maintains every recording related to each property and ties such recording to a unique number. That's called the UPI number. The public can expect -- and this is the 0 most important part, we feel about the UPI law -- in 00 years or even 0 years from now, we will be able to look at that unique parcel identifier and we'll be able to track all transactions that happened with that parcel identifier. This Committee can certainly appreciate the need for such a system when searching titles, using real estate as collateral for mortgages and resolving any dispute as to ownerships, to name a few benefits of this modern indexing system. Recording in a manner that ties all

23 Page: 0 0 documents to a unique property identification is done through a process known as indexing, meaning each recording is indexed to a unique number that creates a searchable public record to obtain important information about each parcel in the county. The other counties, the ones that don't have UPI, while perhaps considering the enactment of the UPI system, operate under the traditional form of recording, but nevertheless one requiring Recorders to maintain and service a system of established public indexes providing for an orderly, open, and searchable system of land records. In these counties, searching of properties is done by examining the grantor or the grantee; in other words, who's selling, who's buying, tracing the title to a property in this name. It is our opinion that the Uniform Parcel Identifier System is one that actually makes more sense in that it allows someone, who, whether or not they are a title searcher or someone who is a member of the general public, now doesn't have to know the name of the person who owned the -- the property, they just need to know the number. And in 0 years from now, you would plug in the number in our databases and every transaction

24 Page: regarding that property, whether or not it be a deed transaction, a mortgage transaction, an order from the Court of Common Pleas regarding that transaction, an easement, all very important parts regarding that property, would be under one number. We wouldn't have to 0 go from person's name to person's name to person's name. Moreover, by ordinance and recognizing the importance of the UPI system when it's adopted, the Recorder of Deeds is not to record or accept for recording any document unless the Uniform Parcel Identifier number on the county tax map maintained for tax assessment purposes is contained in the body of the recording. There's a reason for this. In order to 0 properly index a system when a county adopts the use of a UPI, it must be followed and used by the entire recording public, just not those who choose to do so. We must keep in mind how the UPI is designed to work and remember its benefits when we examine the complaint of the condominium industry that House Bill 0 is intended to address. The UPI fee collected on a condominium document is not duplicative. There appears to be no dispute that when a condominium association adopts an amendment to its declarations, that amendment is important, not to the whole community of condo

25 Page: associations, it's important to every condo owner within that -- within that system. The UPI recording fee is waived pursuant to House Bill 0. It's unclear to PRODA why this one 0 industry is entitled to a fee waiver when individuals, our constituents and yours, must pay the UPI fee imposed when recording documents related to their own property when it's outside of a condominium association. The fact that a condominium association is a collection of individual units does not supplant -- and we don't believe it should supplant -- the recording laws and statutes and ordinances imposing the UPI system in this one incidence. The slope on which House Bill 0 cite, it's a slippery one. Providing a carve out for one group will no doubt result in a long line of other groups asking for the same legislative consideration. We believe the oil and gas industry comes to mind. We often see in certain counties Oil and Gas 0 Company X assigning hundreds of leases at one time to sell Oil and Gas Company Y. Developers may wish to record corrective deeds that touch upon each parcel of real estate in a subdivision, each parcel having a unique UPI number to which the document is indexed.

26 Page: 0 In UPI counties, the UPI fee is charged on each UPI number assigned and if the waiver of the UPI fee for condominiums is provided upon passage of 0, there is no doubt that the oil and gas industry will be knocking on your door next, asking for that same consideration. PRODA suspects other groups will follow. It is a myth to believe that the Recorder sets the fees charged upon recorded documents or the Recorder's entitled to collect and keep these fees except for a small part of the Record Improvement Fee, which the Recorder is required to continue and use to modernize and enhance their systems. In the case of the UPI fee, that fee is set by the county in its ordinance by the county commissioners. And it varies across the state, somewhere between the range of $0 and $0 between each UPI number. Each ordinance is unique with its own nuances imposed in a county upon the adoption of the UPI recording system. This system of recording nevertheless 0 requires certification of the UPI number. It's a process requiring the use of county resources. We are required to work within a modern UPI recording system and the public demands, and should demand, accuracy in recording and indexing. As part of our written testimony, we have

27 Page: 0 submitted an example in Bucks County for the typical recording fee regarding a document, whether it be a UPI fee or the State Judicial Computer System Fee, the State Judicial Computer System Fee is a fee that costs $.0. That State Judicial Computer System Fee is what we call as the JCS, that fee has no relation to any documents or land records. We are asking this Committee to appreciate the fees imposed and collected on recordings are set by laws and ordinances, many of which that they don't support county government. That.0 doesn't support the Recorder of Deeds office and the recording of documents. The JCS fees go to the court system. The 0 UPI fee is but a small part of standard recording costs and reasonably provides resources for performing the important services of certification of the UPI and indexing. A document presented for recording with multiple and lengthy UPI numbers touches many parcels of real estate. The UPI fee is not cumulative nor is it duplicative, but rather it's assessed on each individual parcel. In an environment in which the General Assembly has not addressed the Recorder's Fee Law in any

28 Page: meaningful way since, some counties have exercised their authority by ordinance to impose the UPI fee. The Pennsylvania Recorder of Deeds office is not ignoring concerns expressed. We are hopeful that 0 within the additional testimony that's presented today, the Committee has gained a better appreciation of how the UPI system works and the need to support this system of land records management. We appreciate the complexity of recording and the legal ramifications related to this important process. We understand that we serve the public, both in a ministerial manner and a substantive way when it comes to folks' property. Custom and practice results in some variation between some counties and House Bill 0 highlights one example where some counties operate under a UPI system and some do not. This is not an easy resolution. The 0 concept of a study committee to review and examine those issues has been suggested. PRODA and its members welcome the opportunity to participate in such a study committee to provide meaningful insight in structuring fees to the extent legally permitted in a manner that is fair to

29 Page: 0 everyone in the recording public and move towards the possible but very difficult goal in uniforming practice and fees throughout the Commonwealth. We are aware that this Committee has another bill in its Committee on the same subject, Senate Bill, and our concerns are similar to those as House Bill 0. It is my distinct privilege to have been able to present this on behalf of the Pennsylvania Recorder of Deeds Association, Mr. Chairman. I appreciate the opportunity to be here and look forward to discussion on this bill, this companion bill under the Senate to all parties here. And I would defer to any questions the Committee Members would have regarding this. CHAIRMAN PETRI: Okay. Well, now it's going to get interesting. That certainly, from both presenters, was fantastic testimony. Probably unless 0 you're a real estate lawyer, over most people's heads, but. Anyway, let's start with questions. of the Committee Members and guests up here have any questions they'd like to ask? Any MR. SZAFRAN: Is this where the county commissioner gets to come back and face the firing line

30 Page: 0 too, Mr. Chairman, or... included. CHAIRMAN PETRI: Oh, he's definitely CHAIRMAN CALTAGIRONE: Just a little bit of quick history. It was kind of interesting on the Judicial Computerization System. I was the author that wrote that legislation back -- consulting with the Chief Justice Zappala at the time. years. It goes back quite a few 0 But I was kind of surprised at the fee that's being charged. But just to share this with you all and the public, the courts last year -- and I've been a strong defender of the courts, I've been Chairman of the Judicial Committee for quite a number of years -- they took in $ million. They get back to operate the courts in all the judicial districts in this state a little - somewhere around 00-, $0 million. It's a half of percent of the total budget. But they do, I think, an extraordinary job in our 0 judicial system. But I must say -- and you pointed it out and rightfully so -- that.0, I didn't realize that those fees are sandwiched in. And I guess it's throughout the entire system with all the varying layers of offices in the courthouses where they collect those kind of fees.

31 Page: So I'm kind of sensitive to that, but I just really didn't realize that it was that high and it's spills over into these particular areas with the filings that go on. I appreciate your testimony. know, we're open to trying to work with you. And, you 0 You know, in all my years in the legislature, and this is my 0th year, I'm the second longest serving and probably going to break the record next term since the 00s, if I'm still alive, thank God, the Good Lord's been good to me -- we all feel very strongly about trying to work together with legislation to make sure that we don't hurt anybody. And we certainly don't want to hurt our counties and the money that I'm sure probably goes into the county general fund to help pay the bills. So, you know, I'm sensitive to that. And I'm sure we'd like to 0 work with you to see if there's an accommodation, if need be. MR. ZUGAY: Thank you, Representative. We really appreciate that. I'm glad this diagram that's submitted as part of the written comments can depict that at $.0 transaction for recording a deed, the $.0 goes to the JCS fund. And, you know, that figure, since I started

32 Page: years ago in the Recorder of Deeds office, was a lot less than it is now and has been increased over the past several years. CHAIRMAN PETRI: Chairman Harper? REPRESENTATIVE HARPER: Theoretically, at least, a fee -- and the commissioner's off the hook on this one -- this is a nuts-and-bolts question. Okay? MR. ZUGAY: Yes. REPRESENTATIVE HARPER: Theoretically, a 0 fee as opposed to a tax is a payment for a service that the government offers. So in this case, they pay you the fee, you guys record the deed or the easement or the amendment to the declaration. MR. ZUGAY: Yes. REPRESENTATIVE HARPER: Right? MR. ZUGAY: That's correct. REPRESENTATIVE HARPER: And as the 0 testimony showed, it's a lot of work to check and make sure that the instrument, the deed or whatever it is, gets recorded against the right tax parcel number. MR. ZUGAY: That's correct. nuts-and-bolts question. REPRESENTATIVE HARPER: So here's my MR. ZUGAY: Okay. REPRESENTATIVE HARPER: Does it take as

33 Page: 0 0 much time to record the same document against 00 units in a homeowners association as it does to record 00 different documents all over your county? And if it does, why does it? It seems like there should be some economies of scale there. MR. ZUGAY: Agreed. And that's a great question. In each document, each parcel, mainly within associations or, let's just say -- and I want to talk about it in a sense where there is multiple parcels, each parcel is looked at mainly by the tax assessment department. They're the folks in most counties who actually look over the tax parcel ID and certify that it's the correct parcel ID number associated with each unit. Let's just take the condo association unit. So they have to actually individually look at that tax parcel ID to make sure it's correct and that it matches the confines of the particular condominium that is it's representing to do. I can't tell you enough times that there are a lot of documents that are submitted to us as Recorders that the tax parcel ID is totally incorrect. So each one of those tax parcel IDs needs to be checked to make sure it matches the tax assessment

34 Page: records of each county to make sure it's referring to that tax parcel. REPRESENTATIVE HARPER: Right. But you - MR. ZUGAY: So I understand -- you know, so there is an economy of scale because it comes under one document. REPRESENTATIVE HARPER: Right. MR. ZUGAY: But the work is the same in 0 that if it was one document - four - REPRESENTATIVE HARPER: But the first MR. ZUGAY: -- and one parcel - REPRESENTATIVE HARPER: -- numbers are going to be the same -- right? -- or the first six numbers are going to be the same? MR. ZUGAY: It usually, in our county, is a two number, dash three number, dash three number. REPRESENTATIVE HARPER: Right. MR. ZUGAY: And so apparently, you can 0 obviously see that the first two usually refers to the municipality. REPRESENTATIVE HARPER: Right. MR. ZUGAY: And so that's easy. But each one is looked up by the tax assessment department, at least in our county, or in the county Recorder of Deeds to

35 Page: 0 make sure the last three, which are usually the most important because it identifies a particular parcel within the municipality and a plan map, that those actually match and are correct. Invariably, I can go back and today - we're recording documents today -- I can probably get three to four to maybe five to ten documents in which the parcel ID, if and when checked, is incorrect. And so each parcel ID needs to be looked at to make sure it's correct. REPRESENTATIVE HARPER: So it does take maybe not exactly the same amount of work, but a lot of work to do each number in a 00-unit condo association. MR. ZUGAY: MR. SZAFRAN: That's correct. And you've got to remember, Representative, that every document comes in with 00 numbers on it, the system we have, you punch in the number and then you've got to start again and then you've got to go back and put another -- everyone of them's got to be 0 one at a time. numbers. You just can't go and list all the REPRESENTATIVE HARPER: All right. MR. SZAFRAN: It might be a good idea to maybe look at the IT department and see if you can come up --

36 Page: REPRESENTATIVE HARPER: Fix that. MR. SZAFRAN: -- once you hit that number, that master number, you could -- all the numbers would pop up. That might be a solution to the problem. But now they have to do it individually. They have to do 0 it in the Recorders office and they also, as Jim just said, they have to do it up in the Boards of Assessments. REPRESENTATIVE HARPER: All right. So just one follow-up, if I might, Mr. Chairman. If you had only one number, you know, if you the Blue Bell Country Club had a number, a general number. MR. SZAFRAN: Master. REPRESENTATIVE HARPER: Master number. MR. SZAFRAN: Master number. only have to look up one. REPRESENTATIVE HARPER: Whatever. You'd 0 Now, here's my question, though: look up an individual condominium unit in that If I development, does it say that it's part of an association? MR. SZAFRAN: MR. ZUGAY: No. Well, depending on the document. MR. SZAFRAN: Not --

37 Page: MR. ZUGAY: So we would hope that in 0 years from now -- let me try to do it with example, Representative. If a condominium association agreement, the initial one - REPRESENTATIVE HARPER: Right. MR. ZUGAY: -- is filed - REPRESENTATIVE HARPER: The declaration. MR. ZUGAY: assigned to the 00 parcels. -- the declaration, is So when I go to plug in a 0 search by parcel number, that declaration would pop up on my database and for the public to see as to, okay, here's the declaration. Now, sometimes in an association, some things might touch other parts than others. For example, 0 if you're purchasing the piece of property in an association that's next to a water basin or an area, you have certainly different worries than you do with somebody maybe three acres away the same as part of the association as you do as a person's whose property is bordering the water basin and it's -- and the sewer type of issues that they have there. So that's why we believe it's important to say each parcel affects different pieces. And so there might be a court case that comes down with an order that orders something to do with

38 Page: 0 that sewer basin, that might not have anything to do with the folks over here, although if it affects the association, we still believe it should be indexed under each one because really the association has to worry about all parts of its association. So you might have some documents that aren't necessarily connected, but they all are as part of the association. REPRESENTATIVE HARPER: Okay. Thank you. MR. ZUGAY: I hope that answers your questions, Representative. MR. SZAFRAN: In the perfect -- in a perfect world, it would be where they come in with a master document or a master parcel number and once that master parcel number is put into the system, all units or all property within the condominium or within the PUD, they would all pop up or it would automatically go -- feed into the -- that unit number. world. That would be the perfect 0 REPRESENTATIVE HARPER: Exactly. Then you would record it against one number so you'd have all the work that's required for that. But the public, to your testimony, would then be able to find it under - MR. SZAFRAN: Well, that would be the

39 Page: idea. REPRESENTATIVE HARPER: They would pull up their own unit number, but it would pop up that they're connected to this other - MR. SZAFRAN: It would become a - REPRESENTATIVE HARPER: -- master number. MR. SZAFRAN: -- master number. REPRESENTATIVE HARPER: Okay. MR. ZUGAY: If I may, and Chairman, with 0 0 the discretion, although you are going -- if you do do that -- and I think that's a great idea -- you're going to possibly have documents that wouldn't apply to one towards the other. So if a court order was -- was enacted against a particular individual in the condo unit -- all right? -- and say it's Jim Zugay, and that court order came down affecting me and my piece of sliver throughout that, that's not going to affect the other members in that 00-member district. So that document, if you did a master, that document's going to show up. So in essence what you're going to have is a system in which there will be a lot of -- if you do it under that - REPRESENTATIVE HARPER: No, but I was thinking we do a master number for declarations, bylaws,

40 Page: 0 and amendments that affect the entire -- the entire community. MR. ZUGAY: Right. REPRESENTATIVE HARPER: And then you'd have your individual parcel for your mortgage foreclosure action. MR. ZUGAY: That's correct. REPRESENTATIVE HARPER: Okay? MR. ZUGAY: And as long as they can speak 0 to each other because you'd want one under - I'm asking. REPRESENTATIVE HARPER: Right. That's all MR. ZUGAY: Right. REPRESENTATIVE HARPER: Is it possible to tie them so that if I was looking at my own property, I know where to find the other documents? MR. ZUGAY: Right. I believe it is. CHAIRMAN PETRI: Mr. Ribic? MR. RIBIC: Thank you guys very much for 0 your testimony. Dauphin County's very fortunate to have Jim as our recorder -- VIDEOGRAPHER: Can you get a microphone. MR. RIBIC: Oh, I'm sorry. CHAIRMAN PETRI: Say that part about Jim Zugay being --

41 Page: MR. RIBIC: Dauphin County's very fortunate to have Jim Zugay as our Recorder. My question is more in regards to the planned communities, condominiums and such. They're 0 0 required by federal, state law court cases to amend their declaration, from my account, more than the normal parcel holder. Could you give us or give the Committee an example of where a non-association would have to change their declaration, change their amendments as many times as, you know, a condo may because of a federal mandate or a state mandate? MR. ZUGAY: No. I mean, you're -- I couldn't give you that example because they're not there. You hit the nail on the head. A person who lives in a non-communal or association environment wouldn't have to make those changes like they do in an association. I will tell you as a practical aspect, we don't see that, too many amendments to condo association agreements. Why that is not occurring, I don't know. You might have more associations, and hopefully we'll hear from some present today, that actually care more about following the law while others may not necessarily be as

42 Page: organized and do that. MR. RIBIC: Okay. Thank you very much. CHAIRMAN PETRI: Okay. And I get some of the tougher questions, I guess, at least in my mind. So would both panel representatives agree that the UPI system is something that we should either mandate or at least encourage for all counties? I mean, I don't want to put you on the spot, but... MR. FARRELL: I don't have a microphone at 0 this point. CHAIRMAN PETRI: Mr. Farrell, we'll get you a spot. MR. FARRELL: Well, the essence of the UPI number is that it is necessary for the computer to be able to actually find that parcel. And in the computer age, I think it's - it's key that that number be there. Title searchers who had previously searched, as Jim said, via grantor or grantee, mortgagor or mortgagee, relied on an 0 alphabetical system and sometimes names were misspelled so that the title searcher actually could not find that. Title searchers realized that the records were imperfect. So going to the UPI number means that if it's actually accurately indexed, the computer will find that unique number.

43 Page: So my tendency would be that it is a system that promotes confidence in our land record system, which is the basis of so much of the value in America in terms of businesses who are able to access their equity in the property. So I would lean toward making that - MR. SZAFRAN: Mandatory. MR. FARRELL: Mandatory. Yeah. CHAIRMAN PETRI: And I would just note, 0 you know, obviously that's probably when you consider mandating, an easier vote for those of us up here because you're already doing it. But for those communities that aren't, that don't want to do it, it could be a little more difficult. The last question I have is for anyone who wants to answer it. Obviously, I handed out the case. The 0 lawsuit involves an oil and gas lease issue which is a little different than what we're talking about today, and I'm not so sure we're really ready to deal with that issue because we need to hear from those counties where they have these oil and gas leases. The lawsuit filed never resulted in a a decision, so it's open-ended issue, but clearly raises the issue of if your cost doesn't equal your charge, it could

44 Page: 0 be interpreted to be a tax and if it -- and there's a long-standing set of cases that a tax is not something you're allowed to collect. So, you know, how do you recommend we deal with that issue? And I would observe this: Being a long-time practicing lawyer, I don't want the Recorders office to have to have everybody going around with slips of paper writing down whose file they worked on and how long. But in the end, isn't it true that if someone sues over a fee, in this case I think it was somewhere around $0,000 to record oil and gas leases - and I'm not saying it's an unfair fee, I have no idea - but does that Recorder then, in a courtroom, have to come in and say, Well, here's exactly how much time we spent and who did it and what their hourly rate was and here are their benefits. I mean, we don't want to get there. MR. ZUGAY: I agree. 0 CHAIRMAN PETRI: thoughts or solutions there? So do you have any MR. ZUGAY: Well, and we can -- going back to the JCS fee, we've never been sued and said, Hey, are you doing $.0 worth of work on behalf of the courts? No, we aren't. And so different counties approach this

45 Page: very differently. Dauphin County is one that says, We take this -- this cost very seriously. We try to tie it with our EMA and try - and we have a GIS system. So you have different counties that do not have a GIS system. ability to do this. They don't have the So I want to answer a prior question. we believe, as the Recorder of Deeds Association, this should be mandated? Do 0 I would say not necessarily as long as the mandate, if it is given, allows smaller counties that don't have the funding to maybe create a GIS system or a tax assessment department, in which Dauphin County had to hire two additional employees to do the searching of these PIN numbers. If there's a mandate or a bill that comes out and becomes law where it says, Hey, we need to do UPI, that the resources are then provided to those small counties. 0 economic environment. CHAIRMAN PETRI: Not likely in this Okay. Unless there's anything further, let's move on to the next panel, which is Steven Sugarman, Steven Brumfield, who is -- I should, I guess, give titles.

46 Page: Steve Sugarman is chair of the Community Association's Pennsylvania Legislative Affairs Committee. Steven Brumfield is the National Director of the Community Association of Toll Brothers, Incorporated. Carl Weiner, an attorney with Hamburg, Rubin, Mullin, Maxwell & Lupin. And Ed Richman, former president of Blue Bell's Country Club. Welcome, all of you, and we'll find a way 0 to get you all seated near a mic. first may do so. And whoever wants to go I will note for the audience and those listening at home that I know most of these individuals very well. They appear in front of our committee all the time, because we are charged, as Urban Affairs, with dealing with communities, homeowners association groups and they are a panel of experts who know this area of the law inside and out. Thank you. Whoever wants to proceed first. 0 MR. SUGARMAN: CHAIRMAN PETRI: MR. SUGARMAN: Thank you. Mr. Sugarman. I'll begin. Good morning, Mr. Chairman, Members of the Committee and the House and distinguished guests. My name is Steven L. Sugarman. I am an

47 Page: 0 0 attorney with my principal office located in Berwyn, Chester County, and licensed to practice law within this Commonwealth since 0. I'm actively involved in the field of community association law and currently serve as Chairman of the Pennsylvania Legislative Action Committee of the Community Associations Institute, that's referred to as CAI. I am a past president of the Pennsylvania and Delaware Valley chapter of CAI and a member of CAI's College of Community Association Lawyers. CAI is the only national membership organization dedicated to fostering vibrant, responsive, and competent community associations. The nearly,00 member Pennsylvania and Delaware Valley chapter represents managers, community association volunteer leaders, management companies and other professionals, including lawyers, architects, engineers and those vendors who provide services to association-governed communities. It is currently estimated that between 0,000 and,000 community associations exist in the Commonwealth today. The Pennsylvania Legislative Action Committee of CAI is expressly authorized to address