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Legislative Update (March 16, 2009)

March 16, 2009

REAL ESTATE INDUSTRY
LEGISLATIVE UPDATE - 2009

The 2009 Regular Session of the Virginia General Assembly adjourned February 29, 2009. The Reconvened Session will convene on April 8, 2009 for the purpose of considering bills returned by the Governor with recommendations for their amendment or appropriation bills returned by the Governor with objections. The following summary provides an update on some of the bills affecting the real estate industry that were considered during the 2009 legislative session.

Homestead Exemption and Eminent Domain

Two joint resolutions were introduced to the General Assembly that proposed to amend the Constitution of Virginia to establish a “Homestead Exemption” from local real estate taxes (HJR 686 - Brink and SJR 333 - Whipple). The resolutions provided for a constitutional amendment that would authorize the General Assembly to enact legislation to empower localities by ordinance to exempt from local property taxes up to 20 percent of the assessed value of each residential property or residential portion of farm property that is occupied as the primary dwelling of the individual owners and is designed to be lived in continuously. Both of these bills failed to advance from their house of origin.

Legislation that proposed to amend the Virginia Constitution to limit the power of eminent domain also failed to pass both houses of the General Assembly (HJR 725 - Bell and SJR 290 - Obenshain). In 2007, these restrictions on eminent domain were addressed by statute in response to the Kelo decision, but the courts have not yet interpreted these statutory changes.

Environmental

Legislation that would delay the effective date of the proposed stormwater regulations establishing local program criteria and delegation procedures until after July 1, 2010 has passed the House of Delegates and the Senate of Virginia (HB 1991 – Bulova). These proposed stormwater regulations have been strongly criticized by opponents.

Two bills were introduced to the General Assembly that would require state and local governments to construct any new facilities greater than 5,000 square feet and major renovations in accordance with either Green Globes Green Building Initiative standards or LEED standards (HB 2387 – Ebbin and SB 1252 – Petersen). Neither of these bills was approved by the House of Delegates.

Land Use

House Bill 2077 (Oder), which extends the period of validity for certain preliminary and recorded subdivision plats and final site plans until July 1, 2014, was approved by both houses of the General Assembly. This five-year extension of validity would also apply to certain types of proffers and certain special exceptions, special use permits, and conditional use permits related to new residential or commercial development and conditioned upon future development activity. Legislation also passed both houses that would extend until July 1, 2011 the validity period for any special use permit that is valid and outstanding as of January 1, 2009 (SB 1533-Saslaw).

Legislation that would have required a phase-out of cash proffers for residential and commercial development with no replacement of that source of revenue for localities was defeated in the House of Delegates (HB 2613-Hall).

Recordation Taxes and Real Property Taxes

House Bill 2135 (Miller) and Senate Bill 1157 (Saslaw), which would change the criminal penalty for knowingly misrepresenting the consideration for an interest in property conveyed for purposes of recordation and grantor taxes from a Class 2 misdemeanor to a Class 1 misdemeanor, were approved by both houses of the General Assembly. This legislation also provides for a penalty equal to 100% of the tax due on the understatement of the consideration in cases where the understatement is false or fraudulent with intent to evade taxes.

Two joint resolutions were passed by the House of Delegates and the Senate of Virginia that provide for a constitutional amendment directing the General Assembly to exempt from taxation real property used as the principal residence of a veteran, or a widow or widower of a veteran, if the veteran has been determined under federal law to have a 100 percent service-connected, permanent and total disability (HJR 648 – O’Bannon and SJR 304 – Puller and Reynolds).

Legislation has also been approved by both houses of the General Assembly that provides that a party whose interest in tax-delinquent property is secured by a properly recorded deed of trust is not required to file a notice in order to have his claim paid upon the judicial sale of such property (HB 2651 – Griffith).

Mortgage Brokers

House Bill 1776 (McClellan) and Senate Bill 1020 (McEachin), which prohibit a mortgage broker from failing to use reasonable skill, care, and diligence in exercising the broker’s duty to make reasonable efforts to secure a mortgage loan that is in the best interest of the applicant, were approved by the House of Delegates and the Senate of Virginia. These bills also provide that a borrower who suffers a loss as a result of a breach of the above duty may bring an action to recover actual damages.

For more information about the Virginia General Assembly or the legislation considered during the 2009 Regular Session, please visit the General Assembly website: http://legis.state.va.us/.

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