TESTIMONY ON HOUSE BILL 1101 RECORDING FEES ON CONDOMINIUM ASSOCIATION TRANSACTIONS PRESENTED TO THE HOUSE URBAN AFFAIRS COMMITTEE BY TERENCE FARRELL CHESTER COUNTY COMMISSIONER July 28, 2016 Doylestown, PA PO Box 60769 Harrisburg, PA 17106-0769 office: (717) 526-1010 fax: (717) 526-1020 www.pacounties.org
On behalf of the County Commissioners Association of Pennsylvania (CCAP), I want to thank Chairman Petri, Chairman Caltagirone and members of the House Urban Affairs Committee for the opportunity to speak to you today regarding House Bill 1101. The CCAP is a non-profit, nonpartisan association providing legislative and regulatory representation, education, research, insurance, technology, and other services on behalf of all of the Commonwealth s 67 counties. By way of background, I am currently serving my third term as commissioner in Chester County, beginning in 2008. Prior to that, however, I also served two terms as the Chester County Recorder of Deeds. 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. We also made significant progress in placing recorded documents online, with most records now accessible on the internet for individuals to search at any time and from any location. Overview 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 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. The recorder of deeds is required to record and affix a seal on all deeds executed, mortgages, condominium declarations, subdivision plans, and other records of property ownership. The office keeps a permanent record of all property deeds, and also records oaths and commissions of all county officers, notaries public and district justices, and makes records of military discharges, property options, leases, rights-of-way and easement agreements. Another function of the office is recording plot plans for developments, as well as highway maps of road construction, and changes and secured transactions attached to real estate, which are all kept in the office of the recorder of deeds. Essentially, the point of the county recorder of deed s 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. Also, I would note that the first source of funds for many business startups comes from accessing the equity in 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 insure it through title companies, is further aided by this unique system of property identification and ownership. The UPI System Under state law, counties may choose to implement a Uniform Parcel Identification (UPI) system, 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 HB 1101 Testimony Page 1 July 28, 2016
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 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. Each type of document typically has its own rules for verification. For instance, in order to determine the accuracy of documents such as deeds, agreements of sale, leases, easements and rights-of-way, the county will verify information such as the name of the grantor, the address, the municipality in which the property is located, and the metes and bounds description against other county records. When all documentation is in proper order, a UPI certification will be granted, and all documents will be submitted to the Recorder of Deeds office for review and recording. Recording Fees The fees involved in recording a document are set in 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 (special county fund) - $2.00 Recorder of Deeds Record Improvement (special county fund) - $3.00 Affordable Housing Fund (special county fund; county option to levy, but capped by state statute) - $11.50 State Writ Tax (goes to the Department of Revenue) - $0.50 Judicial Computer System Augmentation Account (goes to the Department of Revenue) - $35.50 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 is $0.50, and each page over four pages is $2.00. 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. HB 1101 Testimony Page 2 July 28, 2016
House Bill 1101 When a condominium 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. House Bill 1101 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 $13 for four pages, plus the County Record Improvement Fund fee of $2.00, the Recorder of Deeds Record Improvement fee of $3.00, the state Writ Tax of $0.50, notation fee of $2.00 and technical fees totaling $5.00, for a total base fee of $25.50. The $2.00 fee for each page over four applies as well, and if the amendment contains the word easement in the document title, then the $35.50 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 $202 The fourth amendment for the same association, containing five pages and three UPI numbers totaled $110 The third amendment for a different association, with the term easement in the title, containing three pages and 27 UPI numbers totaled $466. One amendment with three pages and 146 UPI, which did not include the state Judicial Computer System fee, totaled $2,230.50. 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 $2,230.50, if the cost was divided among each of the 146 UPIs, the average fee becomes $15.28. However, if each individual property owner had to record this amendment, each would be charged the base fee of $25.50, as well as the $15.00 UPI certification fee, for a total of $40.50 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. Again, the point is that the owner is able to easily find all filings related to his property with his property records, without having to HB 1101 Testimony Page 3 July 28, 2016
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 record, and trace back in time all 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 as well, and then would have to know where to find it, and then take the time to find it. Conclusion As you can see, the county recording process and the associated fee system are far more complex than one might imagine at first glance. Counties have been given the responsibility to maintain a public record that is accurate and accessible 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 commonwealth and its residents. Individuals could no longer engage in real estate transactions with confidence. Further, 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 would be happy to discuss these comments further and answer any questions you may have. HB 1101 Testimony Page 4 July 28, 2016