Legislature(2001 - 2002)
03/27/2002 01:40 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 263-AFTER ACQUIRED TITLE IN REAL PROPERTY CHAIRMAN TAYLOR asked Ms. Annette Kreitzer if she had any further testimony to provide on SB 263. MS. ANNETTE KREITZER, Staff to Senator Loren Leman, sponsor of SB 263, said she had completed her remarks. She said Chairman Taylor was going to speak with a gentleman who testified at the previous meeting. CHAIRMAN TAYLOR said he had heard from the gentleman but had been unable to come to any conclusions regarding his concerns. He did not have any amendments to offer. He asked if there was anybody who wished to testify on SB 263. MR. BRYAN MERRELL, First American Title Company of Alaska, said he was the gentleman they were speaking of. He said he had a lengthy conversation with Mr. Jon Tillinghast and others from Sealaska and they weren't able to come to a resolution to answer his concerns. He said they could attempt to fashion the bill so that it only applied to the situation facing Sealaska but he had concerns regarding the constitutionality of doing so. He said others in his industry were concerned as well. He said the Land Title Association for the state of Alaska, which was made up of underwriters and title insurance agents throughout the state, voted at its board meeting to oppose SB 263 because of those concerns. He said those concerns had not changed and he hadn't seen any suggestions which would alleviate those concerns. CHAIRMAN TAYLOR asked Mr. Merrell to reiterate his concerns. MR. MERRELL said his concerns came from changing an aspect of the common law to address one particular situation that had arisen with Sealaska. He was also concerned with the exception to the rule for state-related entities, which meant the rule wouldn't apply uniformly. He said that would cause anomalies in attempting to examine and produce a title report or title policy related to a piece of property and make it difficult for an examiner to make a determination of the intent of the parties. He said the situation might arise where a quitclaim deed would be issued involving formerly state-owned property. He said there was confusion and concern about how far it could go and when it would stop automatic pass through a title when a quitclaim deed was used rather than a warranty deed. He couldn't find any other state that had made a similar exception. He said many times quitclaim deeds were used to transfer titles in and amongst family members, not realizing the potential effect of passing after-acquired interest and whether or not that would continue passing through family members. He said there were no stopping points and nothing to indicate when that would or wouldn't happen. CHAIRMAN TAYLOR asked if he had discussed amending the bill to more narrowly constrain it. He said SB 263 as written would apply to people and corporations that may have conveyed by quitclaim deed. He said it specifically excluded the Legislature, a state agency, the executive branch, the judicial branch, the University of Alaska and the Alaska Railroad Corporation. He said if the railroad granted a quitclaim deed to somebody, they wouldn't be required to convey any after-acquired interest. But if he as a private person conveyed by quitclaim deed, any after-acquired interest would be conveyed. He suggested removing subsection (b) on page 2 and rewriting subsection (a) on page 1 so it would specifically apply to Native corporations. MR. MERRELL said they had not discussed that solution. He said the concept was somewhat attractive. He said subsection (b) was added at the request of the administration because they didn't want the new rule to apply to them. CHAIRMAN TAYLOR said the State had tentatively selected certain lands, some of which had been sold. He said some might have been issued a quitclaim deed because the State didn't have full title or final patent or because the State cannot convey subsurface rights. He said a change in the law by Congress could cause Alaskans to own subsurface rights, just as Native corporations did. He noted that Congress had said it was permissible to own subsurface rights for one type of owner but not another. He said instead of trying to figure out who should be excluded, they should try to figure out who wanted to be included. MR. JON TILLINGHAST, Sealaska Corporation, said he drafted an amendment to that end that would work for them. He said subsection (a) could read something like, "In addition to any estate passed by the grantor under AS 34.15.070, whenever a person purports by either (1) a warranty deed or (2) in the case of real property conveyed under the Alaska Native Claims Settlement Act, a quitclaim deed to grant real property and then subsequently acquired interest then the title passes." He said the new rule would apply in two situations: the warranty deed for everybody; and the quitclaim deed for property conveyed under the Alaska Native Claims Settlement Act (ANSCA). He said subsection (b) could be deleted entirely. CHAIRMAN TAYLOR liked that solution because it limited the new rule enough so that the title companies would know that would be the only situation they would have to worry about in their search for defects in title. MR. TILLINGHAST was confident it would withstand special legislation criticism. CHAIRMAN TAYLOR moved Amendment #1 to insert Mr. Tillinghast's words into subsection (a) beginning on page 1 and delete subsection (b) on page 2. He asked if Sec. 3 and Sec. 4 were still necessary. MR. TILLINGHAST said they were. CHAIRMAN TAYLOR asked if there was any objection to Amendment #1. There being no objection, Amendment #1 was adopted. CHAIRMAN TAYLOR asked if Mr. Tillinghast had anything further to provide. He did not. He asked Mr. Merrell if he understood the amendment. MR. MERRELL believed he did and believed it would alleviate their concerns. He noted that he would like to see the language. CHAIRMAN TAYLOR thanked Mr. Merrell and Mr. Tillinghast for their participation. He asked if there was anybody else who wished to provide testimony on SB 263. There was nobody. SENATOR ELLIS moved CSSB 263(JUD) out of committee with attached zero fiscal note and individual recommendations. There being no objection, CSSB 263(JUD) moved out of committee with attached fiscal note and individual recommendations.
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