ISBA Statehouse Review for the week of January 24

ISBA Director of Legislative Affairs Jim Covington reviews bills in Springfield of interest to ISBA members. In this episode he covers The Religious Freedom and Marriage Fairness Act (Senate Bill 110), Bail bonds and release (House Bill 130), Driver’s licenses and child support (House Bill 128) and Transfer on Death Instruments (TODI) (House Bill 169). More information on the bill is available below the video.

(1) The Religious Freedom and Marriage Fairness Act. Senate Bill 110 (Steans, D-Chicago) creates the Religious Freedom and Marriage Act that recognizes civil marriages between persons of the same sex. Just introduced. House Bill 110 (Harris, D-Chicago) is an identical bill.

(2) Bail bonds and release. House Bill 130 (Monique Davis, D-Chicago. If a first-time offender is charged with a non-violent offense, it requires the court to order the defendant released on his or her own recognizance unless the court makes a specific finding that a cash bond is necessary to secure the defendant’s appearance. The court may, in addition to any other conditions, order as a condition of release that the defendant be monitored under electronic surveillance. Just introduced.

(3) Driver’s licenses and child support. House Bill 128 (Davis, D-Chicago) amends a number of different statutes to do three things. (1) Prohibits driver’s licenses from being suspended for failure to respond to a subpoena or warrant regarding paternity or for failure to make timely support payments. (2) Removes the prohibition on issuance of a driver's license to persons that are delinquent in making support payments and limits the prohibition on issuance of a driver's license to persons that have not posted security or proof of financial responsibility to those persons who have failed to do so in connection with the requirements of Chapter 7 of the Illinois Vehicle Code. (3) Prohibits the suspension of a driver’s license for visitation abuse or delinquency of court-ordered support payments.

(4) Transfer on Death Instruments (TODI). House Bill 169 (Bradley, D-Marion) cleans up the recently enacted TODI law. The Illinois General Assembly created the Illinois Residential Real Property Transfer on Death Instrument Act that took effect January 1, 2012. It allows Illinois homeowners to transfer their residential property on their death to their heirs without being forced to go to probate.

The title industry has requested that the Act be amended to clean up a couple of issues, and our Trust and Estates Section has drafted House Bill 169 to do that as follows

Issue No. 1. More than one beneficiary. Section 75 currently requires each beneficiary or a beneficiary’s authorized representative to file a notice of death affidavit and acceptance form with the recorder. If no beneficiary files an acceptance within two years of the owner’s death, the TODI is void and ineffective and the property passes to the owner’s estate. The problem arises if there is more than one designated beneficiary, and some but not all the beneficiaries file a notice of death affidavit and acceptance form.

House Bill 169 states that if a beneficiary has not accepted the TODI within six months of the owner’s death, any co-beneficiary, contingent beneficiary, legatee, heir, or personal representative of the deceased owner’s estate may file a written demand upon the non-accepting beneficiary requiring the filing of an acceptance or disclaimer within 30 days.

If the beneficiary fails to file an acceptance or disclaimer, the beneficiary will be deemed to have predeceased the owner with no surviving descendants. This will allow the beneficiaries who have accepted to accelerate the time in which those beneficiaries who have not acted must either accept or disclaim their interest in the property.

Issue No. 2. “Authorized representative” is not defined in the Act. The proposed amendment specifically defines the term “authorized representative” to mean “an agent under a power of attorney, a guardian, a standby guardian, a short-term or temporary guardian, an executor, an administrator, or an administrator to collect.” (Section 5)

Issue No. 3. Need protection of bona fide purchasers. Section 90 currently imposes a statute of limitations on actions seeking to challenge or set aside a TODI. This kind of action may be brought at anytime within the earlier of two years after the owner’s death or six months from the date letters of office are issued. But the Act provided no protection to a transferee or mortgagee who took title or placed a lien on the property for value and without notice within the time period of the statute of limitations.

House Bill 169 protects any purchaser or mortgagee who acquires its title or lien from the beneficiaries of the real estate for value and without notice prior to the commencement of any action. But the amendment does not relieve the beneficiaries of liability to the claimant under the Act.

Issue No. 4. Definition of “residential real estate for residential cooperatives and condominiums.” Currently, a TODI may be used only for residential real estate as defined in the Residential Real Property Disclosure Act. This has caused several problems.

First, residential cooperatives. Owners of residential cooperative normally hold shares of stock in the cooperative and possession is normally given in the form of a lease. Typically, these documents of ownership are internal records held by the cooperative and are not recorded in the recorder of deeds office. Thus, the current TODI doesn’t fit the legal structure applicable to residential cooperatives. House Bill 169 resolves this problem by deleting any reference to “units in residential cooperatives.”

Second, the definition of a condominium unit. Owners of residential condominium units also have legal rights in what is known as the “common elements.” House Bill 169 includes “common elements” as what may be passed by a TODI as it relates to a residential condominium unit.

Issue No. 5. Problems with agency under powers of attorney. The current Act doesn’t prohibit an agent from creating or revoking a TODI if properly authorized under the instrument appointing the agent, but the concept of an agent doing so conflicts with the other requirements for the execution or revocation of a TODI. House Bill 169 eliminates the power to create or revoke a TODI by an agent even if expressly authorized under the agency.

Issue No. 6. Problems caused by strict adherence TODI execution formalities. The current Act requires strict compliance with the signing, attestation, and acknowledgement provisions in Section 45. House Bill 169 adds the word “substantial” to this compliance requirement so that mere technical errors do not render the TODI void. Examples include if the notary public failed to include the names of the witnesses in its acknowledgement, or if the attestation clause fails to contain a provision stating the witnesses believed the owner to be of sound mind and memory.