Just one question, and I think you raised in the very beginning of your testimony I thought a very important point. Basically right now to get a deed filed, as long as the paperwork is right and the fee is there, it pretty much goes through, right? Am I pretty much stating that correctly?
It doesn't even really have to be right. 103 5/21/08 - LAW & GOV'T - BILL 080424
Well, when I say "right," on the face, I guess, is the best way to say it.
Yes. But unbeknownst to me, I filed a document -- once I had a deed transferred from the estate that my attorney was opening. I tried -- actually, before the document was filed, I notified the folks in the Records Department. I know them. They're nice people. They're nice people down there. I like talking to them. But I wrote a letter to them and let them know to be on the lookout for a deed that may be showing up. Well, as it turned out, the deed had actually been recorded a few days prior. But subsequent to that, I went down and I filed a lis pendens on a property. Now, any attorney worth their salt, as my attorney has let me know, that I shouldn't have been able to file a lis pendens and the recording document without an action at law. I didn't know that. I filed a lis pendens. 104 5/21/08 - LAW & GOV'T - BILL 080424 So, yes. On the face of it, you would think that if the document looks and smells right, it gets recorded. But the folks that are looking at the documents, as far as I know, they're not attorneys, they're not title insurance companies. There's really no 9 accountability in terms of the content of that document, and that's, in my mind, where the real breakdown is, is that there is no accountability between putting a piece of paper at a window with a fee and the legal transaction that that signifies. I don't know what the answer is and we're all working hard on it, but I don't think it should be the case that anyone that wants to file a document can file it. I think there needs to be a lot of safeguards around that.
And certain documentation accompanying it would help.
An abstract 105 5/21/08 - LAW & GOV'T - BILL 080424 company, sure. A title company, they file documents all the time. Maybe this imposes a financial burden on folks who can't afford it. That's an issue that I don't know how to --
And the whole issue of title insurance has been brought up and whether it should be mandatory for everybody. But you're right, it does raise some economic issues, so we're not ready to go right there yet, but it's something that has been discussed, to be honest with you. Any other questions? (No response.)
I'm sorry, Ms. Williams. We've kept you for a while.
That's all right. He has another question. 106 5/21/08 - LAW & GOV'T - BILL 080424
Good morning. My name is Janise Williams and I'm a real estate agent. On March the 10th, 2008, Mr. Roscoe C. Campbell asked me to sell his property at 2215 Wharton Street. It belonged to his father and stepmother. It had been vacant for well over years 15 or more. On March the 11th, I went to the Records Department to get a clearer copy of the deed. At that time, I was informed that another deed had been recorded just the prior week on March the 6th by one Lanita Williams. The deed was dated December the 2nd, 2007 and it was signed by Roscoe C. Campbell and Margaret Campbell, his wife. Both of these signers have been deceased for over 30 107 5/21/08 - LAW & GOV'T - BILL 080424 years. I asked to speak to the Commissioner of Records. Ms. Linda F. Townsel, the Executive Secretary, came out and talked to me about what you can do when this happens. They would not put a hold on the deed because they said they don't know who I was, so how can they do anything to the deed, because I may be somebody trying to do the same thing that Lanita did. Someone in the Records Department told me to file another deed on top of that. That way it would be in our name again, the name of the original owners. But that's like not too cool. Okay? I went to the DA's Office and I was directed to a Yvonne Ruiz to report the fraudulent deed. However, she and another referral were not available to speak to me. So I left my name, and later that day, Ms. Ruiz called me and stated that they can take the report, but 108 5/21/08 - LAW & GOV'T - BILL 080424 no activity will come from it because they're understaffed and only take on cases that have multiple fraud cases, like 30 properties involved. I also went back to the Records Department to ask about the pictures. I said somebody told me in my going back and forth that the Records Department took pictures. So I went there and I asked them about that. They didn't have any pictures of those persons. They looked in their file and they couldn't find anything. That same day I went to Councilperson Donna Reed Miller. Her office was -- the reason why I went to her office, because I read someplace in the newspaper that she was active in this, and I said, cool, I'm going to go and talk to her. Besides, I know her sister. They listened to my concerns and they referred me to Court President Judge Darnell Jones. He's spearheading 109 5/21/08 - LAW & GOV'T - BILL 080424 this type of fraud, they told me, with the filing of an action to quiet title. His program assures that this type of case will be listed immediately for a hearing. I went to his office, and they referred me to the Prothonotary's Office to speak to Mr. Kevin Daly. On March 12th, I met with Mr. Campbell, the son, who has -- I'm going to just say that -- at the Prothonotary's Office to enter a civil action as a lis pendens against the real property, and this action involved a motion to quiet title for the fraudulent conveyance by forged deed. Mr. Kevin Daly advised that we should remember to file an Affidavit of Service. On March the 26th, Ms. Townsel followed up and called me and sent me an additional letter saying here's some other things and don't forget to report the crime to the police. Verbally she told me she was going to take a copy of the lis pendens and attach it to the 110 5/21/08 - LAW & GOV'T - BILL 080424 deed. I thought that was really cool, because that way if another deed comes in, it would be right there. On April the 23rd, I called the notary that had notarized the deed and asked him how could he do that and if he had any evidence identifying the defendant. He called back after a few days and stated he didn't sign the deed and that his seal had been compromised by someone at the office where his notary seal is. He works at an automobile place where they do note the titles on the cars. On May the 1st, I identified the property addressed other defendant on 2211 Leak Street as a vacant lot.
This was substantiated by the Board of Revision, information that indicated the property was vacant. I took pictures of the lot and posted a sign on the Wharton Street property requesting that Lanita Williams appear in court, scheduled date was May the 14th. 111 5/21/08 - LAW & GOV'T - BILL 080424 On May the 14th, the court date was before Judge Esther Sylvester, and she at this time -- the only thing she wants me to do now is send out a ten-day letter, and the Affidavit of Service was already filed that same day. So I'm here to just let you know what I went through to make this happen.
Thank you. And just a quick question on that. How was the deed originally put in the fraudulent person's name? I mean, was there forgeries on signatures?
In fact, Lanita when she signed her name didn't even -- forgot to put the "I" in when she signed it. One place was spelled wrong. Go ahead.
No. I'm raising it because I've heard this before. That's why I'm saying about -- and I'm not trying to upstage the Commissioner's testimony, but I know that is a concern, and that's why we think 112 5/21/08 - LAW & GOV'T - BILL 080424 matching names and all are very important in this. Because people often times -- some thieves are smart and some are not. Some never learn how to spell or read or whatever well enough and they make mistakes, and if we can pick up those mistakes early...
The recital on the deed was wrong. It didn't even pick up everything. It wasn't even correct as far as the reading. So we were fortunate in the fact that I found it within one week and we were able to file the lis pendens the next day.
And for the record, if some of those things had been detected early and rejected, we wouldn't be talking right now, right, because it would have been turned back?
Mr. 113 5/21/08 - LAW & GOV'T - BILL 080424 Massaro.
Excuse me. Number one, I think something that might be amended to your bill would require the Finance Department to report to Council on their process for reviewing these requests to be exempted from the real estate transfer tax. On the face of it, when one person has family members from four different continents, six different countries, it might call it into question. Number two, one of the problems the District Attorney reports was she can't enforce -- the scope has grown. The people in the DA's Office were very responsive, Ms. Gordon and Detective Stan 114 5/21/08 - LAW & GOV'T - BILL 080424 Brown, but the three times I was asked to come to the District Attorney's Office, in each and every instance the detective sat down with me in a conference room, took out a legal pad, wrote out in long hand the question and wrote out my response long hand. Now, that's primitive, and it really diminished all the enthusiastic, determined work of Ms. Gordon and her staff. It wasted three hours of my time. Literally, he wrote it out "what is your name. My name is," and all three times. They certainly should have laptops for those computers. They should have tape recorders. And so I think we could do better with existing resources if we had the technology that the DA's Office has. And when you review the DA's budget, you should make sure they have the tools that they have, because they're wasting the time of the limited personnel that they have by that. And, again, I don't mean that as a criticism of them. They've been very 115 5/21/08 - LAW & GOV'T - BILL 080424 responsive, but their time is being wasted by working in the stone ages.
Thank you. I note that Councilman Jones is here and I believe he has a question. Councilman Jones.
Yes. Thank you, Mr. Chairman. Ms. Massaro, I had an opportunity to hear this before a number of times from you, but I'm guessing based on when you brought it to my attention to this time and when Donna Reed Miller actually had to chase someone, as I recall, as a result of these types of crimes, one of you or your staff were trying to apprehend them physically yourself.
Right. Well, that is absolutely correct. When the gentleman came to our office and we called and got Tom there, we didn't know at the time there was somebody hiding in 116 5/21/08 - LAW & GOV'T - BILL 080424 the stairwell who was the actual Tom Massaro.
Well, the one -- the brother -- well, it was the Tom Massaro that the brother was the brother of, not this --
Not the real Tom Massaro. So he was hiding in the stairwell and suddenly he realized that we were about to confine him, and he started running. And when he started running, I asked my staff -- because Tom and I, this Tom Massaro and I, were standing in the hallway, and I asked my staff to go -- because Tom started running, and I knew he was sick and I didn't want him -- I thought him running through the halls was really going to impact his health and I wanted to make 117 5/21/08 - LAW & GOV'T - BILL 080424 sure that we could slow him down, and I had, what, about three or four male staff, and they all jumped up and ran and chased him. Fortunately, he ran on the second floor. So then the Mayor's security detail got involved in the chase also. So, yes, we had a chase through City Hall.
One of the things that came out of that example was that this was not just happening to you but a lot of other people, and I understand the methodology of the crime is as insidious people going into emergency care wards, critical care wards and taking names of people who are projected not to make it and then in the shadow of their illness, try to defraud them out of their property. Is that correct?
I was literally in a coma the day they stole my property, but that did not prevent me from going to the closings. 118 5/21/08 - LAW & GOV'T - BILL 080424
So he presented himself at the closing. You were in cardiac --
Right, and the notary signed that she knew me personally, she had ID from me and she witnessed my signature at the closing. So I was taken out of intensive care a week later and they said that was the start of my recovery, but apparently that day when I left the coma and the intensive care unit to go to the closing was the actual start of the recovery.
So their methodology is to go to these hospital wards, look at --
One of the reasons that Chris Drumm, who is Senior Vice-President of Mercy, has been helpful is, we haven't been able to prove that yet, but if you look at when the houses were stolen from the people, there's a correlation between being in intensive care and being judged to be terminal. So 119 5/21/08 - LAW & GOV'T - BILL 080424 if you took the grave condition of cardiac intensive care, if you took the list of people that have been given the last rights, if you skew that from being over 70, not being able to survive statistically, you'll see there's an overlap. It's a template. So it could be a nurse. It could be someone in billing in the hospital. It could be someone in the health insurance company that's across the country that could just type in. We don't know, but there's definitely a pattern where there appears to be an overlap.
Thank you, Councilman. Any other questions, comments? (No response.)
Thank you all very much. Thank you for your patience and time. The next panel is going to be 120 5/21/08 - LAW & GOV'T - BILL 080424 Commissioner Decker and Lance Haver and whoever is here from the Law Department. (Witnesses approached witness table.)
Commissioner, do you have copies of your testimony? COMMISSIONER DECKER: You have it.
We have it already? I'm sorry. I know I had it. And if I could just say, because I know you're running late, Commissioner, I know your testimony is lengthy. If there was a way to sort of paraphrase it -- I know you have a lot of concerns about this bill, and I understand that -- just so we can get moving, I'd appreciate that. COMMISSIONER DECKER: Sure. Good morning, Chairman Greenlee and members of the Committee on Law and Government. My name is Joan Decker, Commissioner of Records, and I am here 121 5/21/08 - LAW & GOV'T - BILL 080424 today to testify on Bill 080424, which adds a new chapter to Title 2, "City-County Consolidation," mandating new requirements surrounding the recording of deeds. And I will summarize some of it. There's some I would like to read, if you would bear with me.
Sure. COMMISSIONER DECKER: First, I would like to thank Councilman Greenlee for taking the opportunity to meet with me prior to this legislation. I appreciate that time very much. I understand that this measure is seeking to address the issue of real property fraud, which is a serious problem that affects those individuals who can least afford it, the elderly on fixed incomes and those who do not have title insurance. However, I think that it is important to caution City Council to proceed carefully and to fully understand the likely unintended consequences of the 122 5/21/08 - LAW & GOV'T - BILL 080424 proposed legislation before taking action on this measure. As far as document recording is concerned, to the extent that state law places certain legal duties on the Department and its recording function, the Law Department will provide legal advice with respect to those obligations and Council's ability to legislate in this area. And I think you have distributed before you copies of my testimony, as well as a copy of the letter from the Law Department concerning this matter. The impact of this legislation: My testimony will focus on the requirements set forth in the proposed legislation in the sequence in which they appear in the bill. It will also provide some information about the variety of customers that we service, as well as how documents are presented to the Department. And I'll just quickly mention 123 5/21/08 - LAW & GOV'T - BILL 080424 those. We service -- the bill covers or excludes title companies and deeds presented that are sheriff's deeds. It does not exclude other types of companies, such as small and large law firms, a variety of servicing companies --
If I could just interrupt for a second, Commissioner. I will be putting in or there will be an amendment put in including -- or excluding attorneys and law firms. COMMISSIONER DECKER: Okay. And also individuals. As far as the deed match is concerned, this proposed legislation requires a deed name match for every deed presented for recording, with the exception of those deeds presented by title companies or those that are sheriff's deeds. This would mean that the Department would need to check the grantor name on the deed presented for 124 5/21/08 - LAW & GOV'T - BILL 080424 recording with the grantee on the last deed of record for a particular property in the records maintained by the Department to ensure that they match. Approximately -- I have some figures here, but I want you to bear in mind that they are simply estimates. We have not tracked -- had no need to track some of this information previously, so we're just basing this information on our estimates of what these numbers would be. Approximately 30 percent of the documents or deeds presented for recording each year are not presented by title companies nor are they sheriff's deeds, and this represents approximately 20,000 of the deeds. What we want to make you aware of is that if we perform this name match, very simple, perhaps incomplete names -- in other words, situations like a Joe Smith may not match to a Joseph Smith. Likewise to use a couple other examples, a maiden name may not match to a woman's married name that 125 5/21/08 - LAW & GOV'T - BILL 080424 may appear on the deed, a title or like a junior or senior may appear and may not totally match. So what we would want you to be aware of is that this deed match/name match would probably result in a lot of legitimate owners who are trying to sell their property and find out that these documents, these deeds, would then be rejected. We took a sample of approximately 3,538 deeds, just a small sample from documents that were recorded in the fall, and we found 1,344 false positives, or approximately 38 percent of the deeds presented for recording would not have matched and would, therefore, be rejected. In other words, this would result in additional cost and delay to perform this check and would most likely pass on additional costs and inconvenience some of the other individuals who are attempting to record their documents. Additionally, many criminals, 126 5/21/08 - LAW & GOV'T - BILL 080424 if the intent is to capture criminals, with few exceptions, the criminals generally forge the names on a deed. And for those who don't, it probably will not take very much time for them to learn how this new system is working, because the notices will be posted and then to learn from that and to correct their errors. The legislation also provides for the submission of documentation, and though in certain cases such as in estates, trusts, in articles of corporation, and while we don't expect that documentation will be very lengthy, we do think that it will add some time to the recording process, but, most importantly, that document will be incorporated as part of the recorded instrument, which will then become part of the public record, and that makes it very easy for criminals just to simply copy, replicate and change what they need to change to submit their documents the next time up. So we're not sure that 127 5/21/08 - LAW & GOV'T - BILL 080424 spending your resources in that way will really accomplish what you're trying to accomplish here. And, again, it will extend the turn-around time to process the deed and return it to the rightful owner. There is another requirement on personal delivery, and on that, that would mean -- again, we do receive mail from a variety of customers, including individuals, large and small law firms, as well as a variety of servicing companies who prepare deeds and then submit them for recording. This also would increase foot traffic in the Department.
And I think it was mentioned that we do take some additional measures to capture photographs, capture signatures in a logbook and also to make copies of photo ID. We estimate that -- and I think I'll get to that soon. But anyway, as far as mail is concerned, to my knowledge, there is no other recorder's office in the country that 128 5/21/08 - LAW & GOV'T - BILL 080424 does not accept recordings by mail. Now, how would this process work in the Records Department? Under this bill, first, as I had mentioned, without the ability to accept mail, we would increase the foot traffic into the Department, and we estimate that that foot traffic would increase by about 8,500 individuals a year. That would mean also that we would take the time to take photographs, take the time to capture signatures in a signature logbook and also take the time to ask for photo ID and to maintain a file of that identification. Again, the title companies would be exempted from that, but, again, that would increase our foot traffic. Again, I think I mentioned the documentation would be part of the public record and, therefore, be very easily replicated by perpetrators of crime. As far as the name search would be concerned, the first check would be 129 5/21/08 - LAW & GOV'T - BILL 080424 done for the match by the staff who is actually examining the document. And currently documents back to 1976 appear in an automated system. That is searchable by names and addresses, and the staff at that point could check for that name match. However, there are in many cases these fraudulent deeds, as you've heard this morning, sometimes referred to a property that was recorded many years ago, and for those documents that may have been recorded before 1976, we would have to refer those individuals to another part of the Department where we would conduct a separate -- part of the Department staff would conduct a separate search. Although the records there are computerized, they are not easily searched by address and there would be a little bit lengthier search that would have to be conducted to satisfy that particular name match requirement. Any documents that were really older, the former deeds I'm 130 5/21/08 - LAW & GOV'T - BILL 080424 referring to, may have to be referred to the City archives, which is in another location, and that, again, would extend the turn-around time for individuals who may be legitimate owners of property and willing to legally transfer them to a new owner. The deed name matches would result, again, as I mentioned, in rejections. Just in terms of how this would impact the Department and ultimately the customer, the legitimate customer, it would extend the turn-around time. Any of the deeds that are rejected then are returned presumably to the Department, and that means that we handle the documents twice. So we'd expect that there would be a little bit greater impact on the work as well in that respect. I'd like to point out some of the proactive measures that are in place that have been taken by the Records Department, and this is without 131 5/21/08 - LAW & GOV'T - BILL 080424 legislation. As I stated in the beginning of my testimony, this bill 4 seeks to address the serious problem of property fraud, and I would like to for the record mention the proactive measures that the Department has taken to address property fraud, while conscious of the fact that state law governs many aspects of the recording process. So what we've tried to do is to implement those measures which we do not believe would conflict with state law. In February 2004, the Document Notice Program was implemented. This notice letter is sent to the seller and borrower each time a deed or a mortgage is recorded. In the event of fraud, this notice provides the opportunity to start immediate action to address the fraud rather than incurring years of delay before the victim discovers a problem. Addressing the problems of fraud immediately is essential.
As time passes, the problem becomes more 132 5/21/08 - LAW & GOV'T - BILL 080424 difficult to correct. The letter is written in both English and Spanish, and as of May 14th of this year, 657,944 letters have been mailed. To the extent that the proposed legislation establishes existing practices, there will not be any effect on our resources because we already are doing this process. The Department also works with the Philadelphia Bar Association, which established the Fraudulent Conveyance Committee comprised of real estate lawyers, representatives of non-profit organizations such as the Senior Law Center and Philly VIP, as well as representatives from the District Attorney's Office and other City agencies with land records. Over the past several years, this group has met periodically to gather additional information about the incidents of real property fraud and to assemble resources to address it. Through the Lawyer's Referral and Information Service, LRIS, a list of 133 5/21/08 - LAW & GOV'T - BILL 080424 approximately "for fee" attorneys who will work on such cases was established. The LRIS also refers cases to the various non-profit organizations for individuals who are unable to pay. Other departmental measures include capturing the photograph of individuals who walk in documents for recording, as well as signatures and photo ID, all of which are retained in our files. This information is presented to law enforcement as requested. The Department provides assistance to victims by researching documents and providing certified copies of them at no charge. The Department also refers victims and makes them aware of the various non-profit agencies that may be able to assist them. Over the past several years, the Department has worked to revise the notary public legislation and have it introduced in the General Assembly. With the assistance of the Law Department, the 134 5/21/08 - LAW & GOV'T - BILL 080424 proposed legislation was drafted several years ago. Last year Representative Jewell Williams agreed to support this effort and is committed to introducing the legislation in the General Assembly. Notaries perform a key role in confirming the identity of individuals by acknowledging their identity on documents presented for recording. Under the existing law, anyone can purchase notary equipment even if he or she is not a duly commissioned notary public. This would change under the new law. The proposed revision also requires that many individuals requesting notarization provide a thumbprint to be affixed in the notary's journal. This provides for traceability and identity for law enforcement should the transaction turn out to be fraudulent. In closing, the Department of Records has introduced programs and policies to deter and detect fraudulent recordings. There are legal limits to 135 5/21/08 - LAW & GOV'T - BILL 080424 what we can locally do within the state-regulated area. And while the bill 4 is clearly well intentioned, in practice the bill may create many unintended consequences, will significantly increase staffing needs and resources to ensure compliance and may not really truly deter fraudulent document recording of deeds. Thank you for the opportunity to present this testimony, and I'd be happy to answer any questions you may have.
Thank you. COMMISSIONER DECKER: I would like to point out one other thing. I did submit with the testimony copies of the cameras that we have at the front counter, as well as copies of the signature log and as well as copies of the photo IDs which we retain in our files, a copy of the document notice letter which we send and also a copy of several maps we have drafted onto map 136 5/21/08 - LAW & GOV'T - BILL 080424 coverage the incidents of suspected fraud that are reported to the Department. Now, we don't know whether those incidents that are reported to us are in fact fraudulent. We do not know what the outcome of them are, but, again, these are the addresses and the properties that are affected. And you will notice that we took them and matched them to a list that we received, a vacant property list, and you will notice that there is a great deal of commonality in the appearance of vacant properties with the incidents of reported fraud. Thank you.
Thank you, Commissioner. I note Councilman Goode has a question. I just wanted to ask one and then we'll go back a little bit. Obviously one of the main issues that was raised by this and, quite frankly, when we had conversation, we talked about this. There's a lot of 137 5/21/08 - LAW & GOV'T - BILL 080424 people that just can't believe that there is not a check to see that the person selling the property is the same name that's on the deed. And just for the record -- and we can get into a debate later, I guess -- right now is it true that there's no check to see that the name of the seller matches the name of the owner on record right now? COMMISSIONER DECKER: Right now there is no check to do that, and as we have explained previously, we do what we can do under what our understanding of the state law is. Again, this is an area that is regulated by state law. We've implemented measures which we believe do not conflict with state law. However, we don't want to do anything that is not permitted by state law and, therefore, we do not perform that check.
And just a follow-up on that. But there is nothing in the state law that says you cannot check the names, correct? 138 5/21/08 - LAW & GOV'T - BILL 080424 COMMISSIONER DECKER: The state law provides -- and our attorney can explain more, but I will explain to the best of my ability what I understand state law requires us to do. For those of you who may have been members of Council previously, you will recall that there was a lawsuit filed against the Department of Record, and that lawsuit dealt with the backlog of documents that needed to be recorded. There was great effort through that suit and a number of claims were filed, which the City continues to pay, that required us to move the documents quickly. There is a provision in state law that tells us to look for a certain number of items. If those items are present on the document, we are to record it. There is a section of state law that tells us to record and index immediately. We look for the list of those items, which are simply a form of information that is made to be available on the public record. 139 5/21/08 - LAW & GOV'T - BILL 080424 The recording laws, as I understand them, are centuries old. The objective of the recording law is not to prevent recordings, but it is to provide public notice of the owners of properties and also of liens, various types of liens, including mortgages which may be filed against that particular property, so that a creditor understands the lien priority in which they can collect on that debt. So the whole intent of the law is really to make these public records and, again, not to screen them for other than the elements which are listed in the state law to be checked.
Again, and I know we've had this debate before and I don't want to belabor the record, but it's one thing to say you don't want to hold up the process, but it's hard for me and I think it's hard for a lot of people to tell the public that somebody can sell a property and there's no check 140 5/21/08 - LAW & GOV'T - BILL 080424 to see that they're the owner of the property. And I can't believe there's anything in the state law that would prohibit you from doing that, and I can't believe that it would take that long to do. I don't want to hold up the process. I don't want us back to where you were. And you did a terrific job in cutting down that time frame, and you did a good job on a lot of things, but the basic premise that I could come in and sell Councilman Goode's property and it wouldn't be checked borders on ludicrous to me. COMMISSIONER DECKER: Well, again, we follow what we believe are the mandates of state law. It's not something that we prefer to do. This is what our understanding of state law. It's not a personal thing. We have great sympathy for the victims of fraud. They do come into our department, and we understand how burdensome it is for them 141 5/21/08 - LAW & GOV'T - BILL 080424 and how difficult a process it is for them to have the property returned. I don't -- it's not a personal thing. It's not an emotional thing. Again, we are doing what we understand the state law requires us to do. And we did distribute as part of the testimony the letter from the Law Department which explains more the legal background of these various issues that are raised in this meeting this morning and also by this legislation.
I understand that, but there have been lawyers who have looked at the same thing and think that the state law does not conflict. But I guess we can go back and forth on this forever. I think Councilman Goode --
Yes. 142 5/21/08 - LAW & GOV'T - BILL 080424 Hi. Good afternoon. COMMISSIONER DECKER: Good afternoon.
Does the state govern when owners are notified? Isn't there some way you could notify the owner of the potential sale prior to the recording and make that a step that's on the seller and not on you? COMMISSIONER DECKER: I believe that would be in conflict with state law, but I'm not the lawyer, so our attorney would have to respond to that. But, again, we follow what the law tells us to look for. If those elements are present, we record. If they are not present, we reject. That means that in some cases a document can be fraudulent and it will recorded. In some cases it may be a perfectly legitimate transfer, but there is some technicality in the form in which it's presented and it will be rejected. We do send the document notice letter after the document is recorded to 143 5/21/08 - LAW & GOV'T - BILL 080424 provide notice. It is my understanding we can do that. I don't believe we would be permitted by law to hold the document that came into the office until we sent the notice. Many of these cases, I might point out, from what we see -- again, this is nothing that I can provide to you concrete information. It's just our sense of what comes in. Many of the letters that we send -- not many, but letters that we send, we match to the Revenue Department's real estate files, and the strategy in doing that is because the Revenue Department theoretically should have the latest, if it's an off-property address, should have the latest and most current off-property address if there is one. So we send to an off-property address. We check for that. If that is not present, we send it to the address of the property itself. Some of the documents, the letters, come back because 144 5/21/08 - LAW & GOV'T - BILL 080424 they're undeliverable. My sense is that you would probably be establishing an inordinate delay to the many individuals who are legitimately trying to have their documents recorded, and there would be no 7 guarantee that the property owner would actually receive it. If they haven't notified the City that they are not residing in the property and have neglected to notify the Revenue Real Estate Unit that they have changed their off-property mailing address, there really would be no way to notify them. And, again, our experience is that many of these properties that are involved in this are not owner occupied and the owner is living elsewhere. So I understand the concern. I'm just trying to point out what we observe and what our experience is in dealing with these cases and also what our understanding of the law is.
How many of these cases where someone has acquired 145 5/21/08 - LAW & GOV'T - BILL 080424 the property fraudulently has been reversed? Because I can't believe how long it takes to get it undone. And I thought maybe if we could figure out a way to do prevention from having the deed recorded, then -- and even if it does take another 30 days, that's what I'd like to know. And this is not my turn for questioning. It's actually Councilman Goode's, but I'd also like to hear from the Department on your ideas for prevention. I don't need to hear it right now, but I do want to hear it, because I'm going to let Councilman Goode get to his questions.
Councilman, if I could just interrupt one second and just point out, Commissioner, when we were talking before about the state law, my office checked, and most of the surrounding counties have some check, and they do it a little bit differently, but they have some check that it's actually the owner that's selling that 146 5/21/08 - LAW & GOV'T - BILL 080424 property, the owner of record. So they do it and I don't think the state is stopping them from doing it. Now, I know they're smaller and I know it would take more time, but unfortunately, when there's illegal acts done, sometimes it takes longer as a result for innocent people. We wait longer in airport lines now. We have to wait longer at concerts. It takes longer to do a lot of things. Us innocent people are victimized also by illegal activity, but I got to think the majority of people would understand that, just like we understand it takes longer to get through the airport now because of obviously what -- for obvious reasons. I think most people would understand that it's going to take a little while longer because all these properties are getting stolen. Not one or two. Lots of them. We can debate the number, but lots of them. And I just -- I have to just put that on the record. 147 5/21/08 - LAW & GOV'T - BILL 080424 Sorry, Councilman Goode. Councilman.
Thank you, Mr. Chairman. Good afternoon, Commissioner. COMMISSIONER DECKER: Good afternoon.
Thank you for your testimony. A lot of your testimony relied upon legal opinion from the Law Department on the thought that there is automatically some state preemption involved in this matter, and I asked the Chair if I could question the gentleman from the Law Department before he proceeds with testimony, before we move any further in the hearing, for several reasons. And for the record, within your testimony you stated that the gentleman from the Law Department could explain to us the legal issues here. With all due respect, a legal opinion is just that, it's a legal opinion. It is meant to advise us of an opinion, and it 148 5/21/08 - LAW & GOV'T - BILL 080424 is what it is, and most times it's extremely helpful, which is particularly why I like to question the Law Department on several issues, not even jumping directly into the issue of state preemption, which is broad in this matter, but more specifically. Has the Law Department seen the proposed amendments to this bill?
John Mondlak from the City Philadelphia Law Department. Councilman, yes, we have seen the amendments. Councilman Greenlee has been kind enough to meet with us on several occasions to discuss not only the amendments that he put forward but ideas that we may have to try to amend the bill.
And do you believe that the proposed amendments clarify some of the issues that were addressed in the legal opinion?
I think that they do clarify some of the issues that were 149 5/21/08 - LAW & GOV'T - BILL 080424 addressed in the memorandum.
Even before the bill is amended, which takes some of the issues off the table, the bill itself in a number of different places, starting with Subsection 2-202, Requirements, states, "The requirements of this Section 13 are in addition to any requirements provided by state law, local law or regulations promulgated by the Department." Doesn't that, in and of itself, provide some cover, the fact that the bill as it's talking about requirements begins with the discussion of state law, moves to local law, then actually allows for the Department to create its own regulations within the context of state law?
In my opinion, I 150 5/21/08 - LAW & GOV'T - BILL 080424 think it creates some ambiguity because --
I don't know if I agree with that. The state law that's most relevant is the law that says all deeds presented to the recorder must be recorded immediately, and a lot of that stems from that analysis where you're rejecting deeds and telling people that, look, there's a typo or there's a missing letter in your name and you need to go get a deed reexecuted. I don't think that's what the law was intended, and I think a lot of --
It says that the match -- the grantor on the deed presented must match the grantor on the -- I'm sorry. The grantee --
I'm asking could you specifically reference what 151 5/21/08 - LAW & GOV'T - BILL 080424 part of the bill you're referring to?
Section 202 -- 2-202, Subsection (1), "No deed shall be recorded in the Record Department unless a records check, conducted by the Department, verifies that the named grantor on the deed is the record owner of the real estate identified therein, with exceptions," except for --
Exactly. It's with exceptions, and then it lists four exceptions. The fourth exception it lists is (1)(d), which says, "Any deed where, pursuant to regulations promulgated by the Department, a grantor, other than the record owner of the real estate identified in the deed, may be appropriate." In other words, the Department can come up with its own regulations within the context of state law, and that is an exception to that first part of the requirement. Is that not correct?
Well, I think you 152 5/21/08 - LAW & GOV'T - BILL 080424 have to start from the fundamental question about whether or not the requirement set forth in 202(1) conflicts with state law.
Well, if the Commissioner were to accept all of what was set forth in 202(1), then possibly there wouldn't be a conflict, but I don't know that that would achieve anything that the Councilman is trying to achieve.
It was not my understanding that you were speaking to the legislative intent. It's my understanding you were speaking to whether there was a legal preemption, and my question is whether that legal preemption is actually valid given that there are exceptions presented within the context of the bill and essentially the drafting of the bill allows that the Department can create its own regulations in the context of state law. 153 5/21/08 - LAW & GOV'T - BILL 080424
Then I would agree that if she drafted a regulation that indicated that she should not follow Section 202(1), that there would be no 6 conflict, if that's your question.
No. If she drafted regulations that basically created Department regulations under that section in the context of state law.
As long as the regulations the Department is adhering to. And that's not the only place in the bill that allows for the Department to do it. At the end of it, in Section 2-204, Regulations, it says, "The Department is authorized to promulgate such regulations as are necessary or appropriate to implement the provisions of this Chapter." In other words, a lot of this is placed back in the hands of the Department to create their own 154 5/21/08 - LAW & GOV'T - BILL 080424 regulations in the context of state law. Is that not correct, or is that at least debatable?
It's certainly debatable, and I think your characterization is correct.
So there is not direct conflict, but simply, as you've stated, ambiguity?
Well, without regulations, there's a conflict, but a conflict that can be cleared up through regulation on a local level --
-- within the authority of the Department as given by this bill. So if the Commissioner chose to set up regulations that were purely in line with the state law, then there would be no conflict.
There would be no 155 5/21/08 - LAW & GOV'T - BILL 080424 conflict. I'm not sure there would be a purpose to the bill at that point.
Well, as I said, I'm not sure the purpose of your opinion is to discuss the legislative intent. I think at the end of the day Councilman Greenlee, if this is the bill 9 he's comfortable with, along with the amendments, and the amendments take some of the issues off the table, that's for us to decide whether we pass it, whether it fulfills our legislative intent and whether as we believe those ambiguities, which do not conflict with state law, can be resolved by the Department.
Again, Councilman, I think that if she passes a regulation that essentially says not to do what was set forth in 202(1) --
That suggests that the Commissioner chooses to do that, but we will not have done that by our action.
Correct, you 156 5/21/08 - LAW & GOV'T - BILL 080424 would not have done that.
As long as we gave the Commissioner the authority to create her own regulations that are not in conflict with state law.
She is free to create her own regulations that do not conflict with state law, and we have given her that authority under this bill.
Yeah. I mean, you're still asking her to make a determination then about whether or not this law conflicts and whether or not to follow it. If you're saying that that was built --
No. We're asking her to create regulations. I mean, this is part of a legislative process. As part of the legislative process, she's come before this Council, says she doesn't want to do anything that conflicts with state law. We're not going to ask her to do anything that 157 5/21/08 - LAW & GOV'T - BILL 080424 conflicts with state law. We're going to ask her to create regulations within the context of state law, and essentially that's it in a nutshell. At the end of the day, there is no conflict and there is no ambiguity as long as she does what she's testified that she intends to do, which is not do anything that conflicts with state law, creating regulations that conflict with state law. In essence, another way of interpreting this bill is that we are asking the Commissioner to create regulations that do not conflict with state law.
Again, if her regulations were to say state law says I must record a deed immediately and Section 202-1 asks her to review and match it against the prior deed and she doesn't do that, would she be violating state law? No. But would she be giving any effect whatsoever to this ordinance? No. But I understand that's not your question nor your point. 158 5/21/08 - LAW & GOV'T - BILL 080424
Well, it's not my question or my point. As long as we are satisfied with the legislation that we pass, as long as it does not legally conflict with state law, as long as we have given the Commissioner authority to create regulations that do not conflict with state law, then the bill is clean.
Well, I still think the bill as written is not, because the bill as written conflicts. Now, you're saying if she passes a regulation, can she bring it into compliance with state law, then maybe, but she hasn't. There aren't any regulations.
That's an extremely rigid interpretation. I mean, in essence, what you're saying is that we couldn't pass any bill in this issue. Is that what you're saying?
I think that you are limited in what you could do in the area of recorded documents. 159 5/21/08 - LAW & GOV'T - BILL 080424
Limited to the confines of state law, which has set up a system to provide for a records department to immediately take in documents and record them. That was the goal when it was set up.
That affects that, the ability to record documents immediately or soon thereafter? I think you're very limited in that area.
And you believe that this bill does that at the same time that it leaves the authority in the hands of the Department?
Yeah, I think it does, because it's not written with regulations adopted that should be promulgated. As written as passed, it does ask her to do something that -- now, 160 5/21/08 - LAW & GOV'T - BILL 080424 the Law Department is -- I didn't author the memorandum that's before you and I'm not sure --
So the last question, because I promised the Chair I would be as brief as possible. So this bill is amendable to the point that it does not conflict with state law?
Amendable to the point that it does not conflict with state law. Is the bill amendable to the point to which it does not conflict with state law?
Are you asking me for an amendment that will make it not conflict?
No. I'm asking is the bill amendable to a point in which it does not conflict with state law?
I don't think I fully understand your question. 161 5/21/08 - LAW & GOV'T - BILL 080424
Can we amend the bill to a point in which you're satisfied that it does not conflict with state law?
I wasn't asking for a suggestion. I'm asking in your legal opinion whether you believe the bill is amendable to the point that it does not conflict with state law.
The requirements where the Commissioner is asked to do checks and reject documents based on criteria.
So you're assuming that's not amendable? 162 5/21/08 - LAW & GOV'T - BILL 080424
I'm asking you, are you assuming that's not amendable in some way?
Sure, you could amend it and take out those requirements, but I don't know what you have left. You may not have a bill left.
We may not have a bill left? What exactly does that mean?
If you amend it to remove everything, I don't know -- you're asking me if you could take out the things that were identified as problematic.
Don't take this the wrong way. How long have you been with the Law Department?
Have you not seen bills amended substantially as long as they don't change the title?
I'm sorry. Your question has to do with whether or not you could change the bill without changing the title?
No. My question is whether we can change the bill in a way in which you would be comfortable it does not conflict with state law.
By removing the requirements on the Records Department, sure, yes.
By removing the requirements on the Records Department?
I'm sorry. Tell me specifically what part of the bill you're referring to again.
Section 202, 164 5/21/08 - LAW & GOV'T - BILL 080424 Subsection (1).
And where you stopped at the comma rather than go on to include the exceptions?
Well, without that section, I don't know what the point of the exceptions would be.
Well, I don't understand why you stopped at the 165 5/21/08 - LAW & GOV'T - BILL 080424 comma rather than include the exceptions.
No. I'm asking you why you stopped at the comma rather than include the exceptions.
Before? Just to make the point of what section I was referring to.
Well, or because clearly I think (1)(d) allows the Commissioner to create regulations that do not conflict with state law and would not make the bill invalid. But thank you for your testimony. Thank you, Mr. Chair.
Thank you. Actually, I have a follow-up to that, but I know Councilman Kelly has been waiting. Councilman Kelly.
Thank you, Mr. Chairman. 166 5/21/08 - LAW & GOV'T - BILL 080424 I just have more or less a comment that I'd like to make. Commissioner, I know that you're working within the guidelines of state law, but common sense tells you that state law is not doing anything, anything to help us solve the problems that we're experiencing in Philadelphia. And it's a little frustrating to this Council to see that the Law Department and the Records Department is sort of, I think, being obstacles to any improvements that we could make to state law. And this bill, I think, is just trying to, in my opinion, it's trying to put more methods in place to prevent this activity that's currently been taking place over the last few years, and I'm just bewildered of why you're not supporting this bill and future bills really. As Councilman Greenlee has said, this is only one part of it. It's not a cure all. It's only going to help. And we're trying to help your department to 167 5/21/08 - LAW & GOV'T - BILL 080424 prevent this type of activity, and I'm just frustrated to know that you're not supporting this bill. COMMISSIONER DECKER: Councilman, I think we've been very careful in the testimony to make it clear that we're not providing or presenting obstacles. If you looked at some of the language that I used in my testimony, I'm merely trying to point out that there may be unintended consequences to what this bill -- what the impact of this legislation will be. I don't believe that the Law Department is trying to set up any flags or obstacles either. We're just trying to give you, in the case of the Law Department, the best legal interpretation.
Well, it's interpretation. COMMISSIONER DECKER: Well, I'm just talking about the experience that the Records Department has been through. 168 5/21/08 - LAW & GOV'T - BILL 080424 A lot of companies and individuals like to bring suit against the City. We're trying to provide some advice and guidance on what past history and past experience with the Department in this respect has been and perhaps to, again, just to provide some additional information about the unintended consequences and some of the experience that we've had in dealing with state law and in some of the cases that have been presented to the Records Department, which the City Records Department has lost and for which we continue to pay claims. So all we're trying to do is not to provide any obstacles. We are very sympathetic to the victims of fraudulent recordings. We've implemented as many measures as we can which we believe are within the confines of state law, and, again, we're not here to support or oppose the legislation. We are trying to provide information that 169 5/21/08 - LAW & GOV'T - BILL 080424 will help Council to make an informed decision and understand the consequences and the impacts of this legislation if it is passed.
Well, I hope you realize that we're just trying to be more specific. We're trying to really help law enforcement and a lot of other -- and, of course, your department to try to prevent this activity from taking place. And please, that's all I'm asking for, is that you open up your minds to accepting some of this legislation that we're about to propose. COMMISSIONER DECKER: Again, we're not here to provide obstacles to support or not to support the legislation. Again, the testimony was crafted to simply provide information which helps Councilmembers to make an informed decision.
You have to remember that state law itself doesn't help us in Philadelphia in many cases. 170 5/21/08 - LAW & GOV'T - BILL 080424 Currently we have our Mayor and Police Commissioner fighting for additional policies or --
-- bills about weapons in Philadelphia. So I don't think the state has a cure all either for a lot of different reasons, and they may not be aware of the problems that we face here in Philadelphia about these properties being stolen or whatever from underneath people. So what we're trying to do is trying to do everything we can possibly to give relief to those people who have their properties stolen and to prevent this activity from happening in the future. Please bear in mind that this Council is not against your department or the Law Department or anything, but what we want to do is give relief to people who are experiencing this terrible, terrible situation. Thank you. 171 5/21/08 - LAW & GOV'T - BILL 080424 Thank you, Mr. Chairman.
Yes. Thank you. I'd like to know an example of an unintended consequence that's more than delaying the system, delaying the process. When people -- you gave an example of sometimes people filing lawsuits. Lawsuits against the City for what? COMMISSIONER DECKER: Well, I mentioned as unintended consequences if we perform a deed name match, there will be, we believe, many cases in which legitimate transactions will be rejected because the name does not match exactly. Some of the examples of that would be if a prior deed had Joe Smith's name and the current deed presented has Joseph Smith or a prior deed had John T. Smith and the current deed has John Smith. There would be no way for the staff who process these documents to be able to discern whether that is in fact the same person and 172 5/21/08 - LAW & GOV'T - BILL 080424 whether that is a legitimate name. So we would reject that transaction. Based on the sample that we took, we believe there might be as many as 38 percent --
Commissioner, why would you reject it? COMMISSIONER DECKER: Because it wouldn't match -- the names would not match, so we couldn't accept it under the provisions of this legislation.
Under the provisions of this legislation you are allowed to create your own regulations that can deal with that matter. COMMISSIONER DECKER: My understanding of that legislation is that the ability to implement and create regulations come under that section. My understanding is that we might be able to look for or eliminate or accept certain things, but definitely not everything. So I don't know where we would draw the line.
I believe 173 5/21/08 - LAW & GOV'T - BILL 080424 that's one matter you definitely could deal with directly within your own regulations.
And that's why I think that sitting down with the Councilmembers that are interested in this and figure out a way we can work together to come up with some legislation, because our bottom line is to help prevent people from fraudulently taking other people's homes, period. And if it would add some more time to the process or maybe there's some waiver system that has to happen, then let's figure it out, work together on this, not against it. COMMISSIONER DECKER: We're not working against anybody, I can assure you.
Okay. So we just have to figure out how we can prevent it, and if it takes longer to process a deed, then so be it. COMMISSIONER DECKER: We are 174 5/21/08 - LAW & GOV'T - BILL 080424 trying to make you aware of that, that it may in some cases and it may pass on additional costs to those who are presenting documents to the Department. If they're no longer able to send it by mail, they have to walk in, they may have to incur additional costs to make that happen.
Well, maybe that's some of what we can work on, figure out ways that we can do this that's cost effective and doesn't cost some of our constituents a lot of undue stress. We don't want to put a heavy financial burden on people, but the bottom line is -- because it takes too long to undo. I believe that that gentleman that took -- that Tom described as being the owner of impacting four different continents, I think his house is still -- Tom's house is still in his name. So when we're talking about time, it takes too long to undo what these folks are doing. So if we can figure out 175 5/21/08 - LAW & GOV'T - BILL 080424 a way to prevent it and even if we have to add time on the front end rather than on the back end, then that's what we, I think, need to be looking at. Thank you.
Thank you, Councilwoman. I totally agree, because it was pointed out, I think, at our meetings -- and Julia O'Connell from my office has gone to a lot of these hearings lately -- once you get in that hearing process, it's ugly. There's no 14 way to do it neatly. There's no way to do it friendly. When there's a second victim or alleged second victim involved, it's a mess. And it seems to me that to take the little extra time -- and I would argue it's a little extra time -- to try to stop it from going from step one to step two is important. And I would still maintain and as not a lawyer, as I always say, I can use logic more than law, but I can't believe that what we're doing is a conflict of state law. I just don't 176 5/21/08 - LAW & GOV'T - BILL 080424 believe that. And I think there's a difference between conflicting and complementing, and I think we're complementing. Councilman Jones.
Just a question. How long does it take for a deed to show up registered today? COMMISSIONER DECKER: Two to three days.
And that's down from? COMMISSIONER DECKER: At one time -- two to three days to be recorded and approximately two weeks to be returned. At one time, it took 12 months to be recorded and returned.
I remember those days, actually. And if somehow we meet the state challenges and implement this on a practical management day-to-day level, what is your estimate of time added to the process if we do these checks? What is your guesstimate? 177 5/21/08 - LAW & GOV'T - BILL 080424 COMMISSIONER DECKER: Councilman, I don't have an estimate for you because the situations that we would deal with when presented with these different rules to check we've never encountered, and I can't give you -- I can't come up with a number of the number of items that would not match. I have the sample which gives me some information, but it's not complete. I don't know exactly how many documents will be submitted that will require these additional pieces of documentation which we'll have to scan and process, nor do I know how many will be rejected, which will take additional time, nor do I know how many will have to be researched at these three different steps. So it is information that we certainly will collect, but I'm not in a position to be able to anticipate. I do know that it will add time, but I couldn't tell you how long. 178 5/21/08 - LAW & GOV'T - BILL 080424
So in the total universe of deeds that you get on average is how many? COMMISSIONER DECKER: Sixty thousand a year, and we process about, all told, about 250,000 documents a year. Sometimes a little bit less; sometimes a little bit more.
So in a compromise, is there a way to do a sampling, a number of deeds that could go through a process like that, just so that the perpetrators of these crimes would know that we are checking in some way beyond what we currently do? Is there a way to if we didn't do 60,000, that we did 6,000? COMMISSIONER DECKER: We can do an automated sample after the fact to see what does not match. That would be after the fact of recording. That would give us a little bit more of a sense, but we do not capture who presents the document. Once a document is recorded, unless a 179 5/21/08 - LAW & GOV'T - BILL 080424 title company or a law firm stamps on the document their name, we would not know if that was walked in or by whom.
But, again, Commissioner, if we did a sample in the front end, if we said that one out of ten we're going take and we're going to put through the match, just so that there is a test that people believe would be a deterrent to the crime and that they know they run the risk of running the gauntlet that you may be that tenth time. Similar to when people cross the border into this country, they don't check everybody, but they check one out of ten. So that people at least get a sense that we are looking and will run an extra check on things. Is that something that would not -- COMMISSIONER DECKER: We certainly could look at that, yeah.
And, Councilman, if I could just add very quickly, if I'm right, Commissioner, you 180 5/21/08 - LAW & GOV'T - BILL 080424 gave the 60,000 figure, but given the fact that we're excluding title companies, attorneys and law firms, if I remember at the meeting yesterday, didn't you say that that would -- and the sheriff's deeds, that we're really down to percent of that 60,000 that would 9 really be covered under this bill? 10 COMMISSIONER DECKER: Yes. 11 That's correct. 12
So it's 13 not 60. It's 15 percent of 60,000. 14 Thank you. 15 And, Mr. Haver, you've been very patient. It's a long day, and we're trying to get through this and I know we got other things to do.
I do want to just once again state Commissioner Decker has 181 5/21/08 - LAW & GOV'T - BILL 080424 been in the forefront of making very positive changes. I think these recommendations in this bill are necessary. We should always strive for continual improvement. Everything we do that improves creates another problem, which we should try and solve. I would ask once again that Council look at the issue of the name match. When we have documentation that suggests that it's a high number, that we look at what that problem is and see if it's names such as missing middle initials or Joseph instead of Joe or Joe instead of Joseph. If that's all it is, that part should go forward. If it's a bigger problem, we should hesitate and look at it again. I would just, Councilman, you were asking about the number of family members. On the letter that we send, we ask people to come to our office. We routinely try and persuade people who are engaged in a family issue not to use the 182 5/21/08 - LAW & GOV'T - BILL 080424 court system, to resolve it personally. It's a very difficult call, I understand, but sometimes people don't understand that they're going to ask -- they're going to be asked to prosecute. I would hope that you would send a letter to the District Attorney -- you asked how many prosecutions there are. I was not sure I heard an answer. I would hope that you follow up and get a complete answer. We are told from the people who we speak with that they are frustrated that there's no prosecution. We are told that they are frustrated that there's no follow through. So I will hope that you will do that. I would also hope that you would -- as I know it doesn't do a lot of good, but it would do some good to pass a resolution urging the State Legislature to act on the notary bills. That is a significant problem that you cannot control, but, again, as Councilman Kelly said, I don't know that the state always 183 5/21/08 - LAW & GOV'T - BILL 080424 knows what our problems are.
And just for the record, Mr. Haver, and I talked to Councilwoman Miller about this because the resolution is hers, that we're going to keep the record open on the resolution 8 and hopefully bring -- it just didn't work out today, but bring some state people back -- it's probably just as well. We'd be here until 4 o'clock -- bring some state people back and talk about specifically the kind of things that they can do. So I'm sure we'll need your input then, too. Thank you.
No. I got you. Thank you. Thank you all very much. Thank you for coming. We're ready to go -- anybody else need to testify on this? You want to testify? Okay. (Witness approached witness 184 5/21/08 - LAW & GOV'T - BILL 080424 table.)
If I could respectfully ask you to be as brief as possible, because we're running into another hearing. Could you identify yourself for the record and proceed, please.
Hello. My name is Kenneth Fleisher. I'm an attorney at law in the City of Philadelphia. I appreciate the opportunity to come forward, Mr. Chairman, members of the panel, to be here today. I am not testifying in any official capacity, although by way of my own background, I am a former Chair of the Real Property section of the Bar Association. I have also been very involved personally with the fraudulent conveyances task forces that have been set up by the Bar Association. I've worked closely with Commissioner Decker on many occasions. I have taught CLE courses on fraudulent conveyances and 185 5/21/08 - LAW & GOV'T - BILL 080424 chaired CLE courses on fraudulent conveyances. So I have more than just a passive knowledge of this extraordinary and deep problem. I am thrilled that the Council is taking this problem head on. I think it is an important gesture to the City of Philadelphia, to its citizens and to everybody who comes into the City of Philadelphia to do business to know that the City Council takes this very serious problem very seriously, and I'm heartened by that, and I am very pleased to say that you are doing a remarkable job in taking this on directly. My comments are to some of the more technical aspects of this bill. I don't come here with a legal memorandum. I come here, however, with years of 21 practice in the real estate area of law 22 and a more than working knowledge of what 23 happens on the ground level. 24 Specifically, there are some 25 sections of the law which -- or the 186 5/21/08 - LAW & GOV'T - BILL 080424 proposed bill which I believe will create problems that are, as Ms. Decker said, unintended consequences and also may not really address the questions that the bill is trying to solve. Looking at the requirements imposed by Section 2-202 on the recording of a document, there are some exceptions to the proposal of the Recorder's Office verifying the names of the deeds. I don't want to get into and reiterate Ms. Decker's testimony in that regard, but there are some questions I have about the way this bill is presented. For example, it seems as if the way I read it, Section 202(1) sets forth four exceptions to the Commissioner's office having to check the actual name on the deed against a grantor or grantee indexed previously. Section (2) then takes those exceptions and says, well, if one of these situations arises, here's what is needed to be presented in that regard. So I want to focus more 187 5/21/08 - LAW & GOV'T - BILL 080424 specifically on Section 202, Subsection (2)(a), (b), (c), (d) and (e), because I think some of the requirements here don't really solve the problem and may create additional problems or issues or, as Commissioner Decker said, some unintended consequences. First of all, from my own experience, most of the problems involving fraudulent conveyances of property deal with forgery. This bill 13 does not and really cannot deal with the issue of how property -- how signatures on deeds are forged. That is a notary issue in many regards, and as Commissioner Decker testified, I would encourage this Council to ask the state legislators to address that issue by reforming the notary law. But with respect to Subsection (b), for example, where the grantor has been granted power of attorney, written documentation of the power of attorney shall be provided, that's an excellent 188 5/21/08 - LAW & GOV'T - BILL 080424 idea. The question is, what is the written documentation. Does the power of attorney have to be in a recordable form itself under state law? I think the answer to that would be yes as a matter of state law, but the grantor on a deed is not the power of attorney. The grantor on the deed is still the person who is the punitive owner of the property. When a deed is written, if a deed is being signed by an attorney-in-fact, it would be written, for example, as Kenneth Fleisher, grantor, by his attorney-in-fact, whoever that might be.
So the grantor named in the deed is actually supposed to be the owner of the property, not the power of attorney himself or herself. That may be a technical issue, but it's something which as a real estate practitioner, we wouldn't want to come in with the wrong documentation or the wrong type of information. Subsection (c) I have more of a 189 5/21/08 - LAW & GOV'T - BILL 080424 visceral problem with. It says where the grantee is a trustee, the writing creating the trust shall be provided. Many trusts involve families who do not want their affairs to be public. They want to deal with their monetary or transfer of property issues in a private venue. Trusts are not written necessarily to become part of the public record. Unlike a will, which by its nature must be made public in order to be made effective, a trust does not. Trusts are not customarily signed in a recordable form. Trusts may not be signed or created in the Commonwealth of Pennsylvania or involve people whose property or whose lives or whose residences deal with the Commonwealth of Pennsylvania. To require a recordable form of a trust to be recorded in order to record a deed is not only a burden, but I think would place an unusual restriction on those who are dealing with trust property. 190 5/21/08 - LAW & GOV'T - BILL 080424 If the named grantee in the previous deed is in fact a trustee, then that, in and of itself, should carry forward, without the necessity of giving the recorder a private document, which may when it was created 20, 30, 40, 50 years ago, who knows when, may not be in recordable form. That could literally prevent this deed from being recorded. Subsection 2-202(d) requires that documentation of the filing of articles of incorporation of a corporate grantor be provided. Again, candidly that's not the issue. The question whether the grantor is a corporation -- whether that grantor is legitimately represented by the signatory as an officer of the corporation is not addressed by whether there's a good standing certificate. It's addressed by whether there is a resolution or whether there is a bylaw or whether there is something giving the corporate authority to the signatory of that deed. That 191 5/21/08 - LAW & GOV'T - BILL 080424 might be just a matter of there being a corporate bylaw, because under many corporate bylaws the officers are vested by virtue of the bylaws with the authority to transfer title. But merely giving a copy of a good-standing certificate or of the existence of a corporation does not address the issue. The seriousness of the issue is whether the person signing that deed has the authority on behalf of the corporation. I don't believe Subsection (d) would address that issue. The personal delivery aspect of Section 2-202, Subsection (3) also gives me great pause. I know there is currently a program for electronic recording of documents. The way this is written, as I see it, this would literally prevent electronic recording of documents. That, in and of itself, has been a tremendous program, which cuts down on the possibility of the fraudulator performing a fraud, because 192 5/21/08 - LAW & GOV'T - BILL 080424 the idea, which I believe this Council is properly addressing, is let's identify the person who is presenting the document, because if you know who is giving you the document, the police and the Economic Crimes Unit can trace the origin of that document. The toughest thing for a criminal to face is knowing that he can be found. That is the issue. So I don't think this Council would presume to prevent all electronic recording of documents, but this would do so the way it is written. Further, the concept of --
We have an amendment that's going to address that. So we're addressing that issue.
I appreciate that. And I was not aware of that and thank you, Mr. Chairman, in that regard. With respect to just personal 193 5/21/08 - LAW & GOV'T - BILL 080424 delivery, as it is written I can think sitting here of many ways that any even not so clever criminal -- because I'm not so clever and, thankfully, I don't think I'm a criminal -- could get around that. You could mail a deed to Kangaroo Delivery Service and Kangaroo Delivery Service delivers it over to the Recorder's Office. Anybody can walk in with a deed. Anybody can walk in with a deed that he didn't sign. It's not a question of who is delivering the deed. It's a question of who signed the deed. And I don't think the mere fact that somebody is personally delivering a deed gives the deed --