MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
March 6, 2003
The Senate Committee on Judiciary was called to order by Chairman Mark E. Amodei, at 8:00 a.m., on Thursday, March 6, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mark Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Valerie Wiener
Senator Terry Care
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Barbara Moss, Committee Secretary
OTHERS PRESENT:
Kimberly McDonald, Lobbyist, City of North Las Vegas
Judy Rushing Cruden
C. Larotonda, Lieutenant, North Las Vegas Police Department
John Sande, III, Lobbyist, Nevada Bankers Association
Melody L. Luetkehans, Lobbyist, Nevada Association of Realtors
Tami DeVries, Acting Deputy Administrator, Real Estate Division, Department of Business and Industry
Stan Olsen, Lobbyist, Lieutenant, Las Vegas Metropolitan Police Department and Nevada Sheriff’s & Chief’s Association
Sean Gamble, Lobbyist, Clark County Health District
Nicole J. Lamboley, Lobbyist, City of Reno
Richard Bjelke, Sergeant, Reno Police Department
Mike Price, Reno Police Department
James F. Nadeau, Lobbyist, Washoe County Sheriff’s Office and Nevada Sheriff’s & Chief’s Association-North
James T. Endres, Lobbyist, National Council to Prevent Delinquency
Fred L. Hillerby, Lobbyist, Washoe County Regional Transportation Commission
Don W. Ashworth, Probate Commissioner, Eighth Judicial District Court
Todd L. Torvinen, Lobbyist, Nevada Trial Lawyers’ Association
Pat Coward, Lobbyist, Nevada Land Title Association
Dave Evans, Nevada Land Title Association
Nancy K. Ford, Administrator, Welfare Division, Department of Human Resources
Charles Hilsabeck, Deputy Attorney General, Office of the Attorney General
Chairman Amodei:
I will open the hearing on Senate Bill (S.B.) 204.
SENATE BILL 204: Revises certain provisions governing disclosure of certain information to purchasers of real property. (BDR 3-562)
Kimberly McDonald, Lobbyist, City of North Las Vegas:
For the committee’s perusal and use during the hearing, we have provided Senate Bill 204 packets (Exhibit C. Original is on file in the Research Library.) which include the bill, written testimony, and various supplemental information. I will read my written testimony (Exhibit C).
We would like to play our first tape of a story featured by KVBC-TV Channel 3, titled “Home Sweet Meth Lab,” (Exhibit D. Original is on file in the Research Library.) by reporter Glenn Meek, which aired more than a year ago.
Judy Rushing Cruden:
I will read my prepared testimony contained in the Senate Bill 204 packet (Exhibit C).
Chairman Amodei:
Are there any questions for Ms. Cruden? Hearing none, Lt. Larotonda, please proceed.
C. Larotonda, Lieutenant, North Las Vegas Police Department:
I will read my prepared testimony contained in the Senate Bill 204 packet (Exhibit C).
Senator Wiener:
Would methamphetamine (meth) go beyond the structure to the outside environment which may not be included in the cleanup process?
Lt. Larotonda:
Meth does not go into the environment, such as trees in the neighborhood, because of the ventilation process. Once it gets airborne, the parts per million drop dramatically. When it is confined, or buried, it becomes an issue. Many times it will be dropped into a hole dug in the back yard.
Senator Wiener:
Unfortunately, the marketplace for cleanup companies must be very prosperous. Is there a scientific measurement to determine environmental impact? I am concerned about children playing in the neighborhood who might be exposed to the external environment.
Lt. Larotonda:
That is a concern. If requested, cleanup companies will measure soil samples. Although the police department seeks evidence, a cursory search outside the structure for contaminants is also done. If contaminants are discovered, they are removed. However, it is up to the home owner, or whoever controls the residence, to actually have the soil sampled.
Senator Care:
Senate Bill 204 says, “…a crime that involves manufacturing any material, compound, mixture, or preparation which contains any quantity of methamphetamine…,” what are the list of crimes? In earlier sessions, we contemplated statutes prohibiting possession of certain compounds that might be used to manufacture meth. The crime here could be selling, attempting to sell, manufacturing, or include possessing the ingredients even if the containers are unopened. I want to be sure what we are talking about when we say “any crime.”
Lt. Larotonda:
Senate Bill 204 says, “… any crime punishable as a felony…,” we are obviously referring to the manufacture wherein all the chemicals come together. I will defer to someone else on that question.
Senator Care:
Actually, S.B. 204 says, “…felony that involves manufacturing…,” which may not address the mere transaction of selling or buying meth.
Lt. Larotonda:
We are concerned about the manufacturing process, not the mere selling of meth. Although selling is a problem, getting the chemicals together is the real issue. The tri-fold brochure entitled “Meth Labs” which is part of the packet (Exhibit C), shows the process by which the chemicals are put together. When those chemicals meet, therein lies the rub.
Senator Care:
We are framing this as a health issue.
Lt. Larotonda:
Absolutely, there is no question about it.
Ms. McDonald:
We would like to show our final videotape which is an exposé on “Inside Edition” (Exhibit E. Original is on file in the Research Library.) that shows the invasiveness of this particular problem.
Senator Care:
Would the evidence of manufacturing meth in a house be obvious to an inspector who examines for termites, mold, and so forth?
Lt. Larotonda:
Not necessarily. If meth has been processed against a wall there may be red residue, however, most of it is sucked into air conditioning ducts, carpeting, and things of that nature, where it is very difficult to detect. Sometimes the residue is thrown into a hole in the yard, covered with dirt, is a red color, and does not readily go away. It is insidious. It could be produced in the committee room for a period of time before anyone could detect the room was contaminated.
Chairman Amodei:
Are there any more questions?
Ms. McDonald:
In closing, the city of North Las Vegas is pleased to bring this issue before the Senate Committee on Judiciary, and we thank you for your consideration. We strongly encourage passage of S.B. 204 because it removes the exemption of financial institutions from not disclosing to a purchaser a real property was a meth lab if they possess such knowledge. The disclosure must be made by all if such knowledge is known. Help us close this loophole and combat this critical public health issue with S.B. 204. The number of meth labs continues to increase the number of unknowing purchasers. Hardworking people in our community are unaware the home in which they live or rent could have been a meth lab. For the health and safety of our families, the public has a right to know which homes have been identified as previous meth labs. We urge passage of S.B. 204 and are happy to provide answers to any questions you might have. Thank you for hearing our presentation today.
John Sande, III, Lobbyist, Nevada Bankers Association:
Meth labs are certainly a problem and we have no problem disclosing it with actual knowledge. I think, for the record, section 1 of S.B. 204 should be clarified because, in effect, it talks about what is not material and certain things are excluded. Does it mean they are automatically material and in all cases must be disclosed? I foresee a circumstance in which there was a meth lab four or five purchasers earlier. Must the information continue to be disclosed forever, or only the first time a sale is made? This issue came up in the past with reference to damaged cars. Must that always be disclosed even if the car has been repaired? Other than that, I have received no indication of opposition to S.B. 204.
It is my understanding section 2 of S.B. 204 says in a foreclosure situation the exemption would be removed. I am concerned how people will be educated. For example, normally in a foreclosure situation the bank notifies the title company to do the foreclosure. Therefore, I assume the title company would be advised by the financial institution, if it had actual knowledge, and the title company would advise any potential purchaser of the problem at the foreclosure sale. It would have to be worked out with the title industry.
Senator Care:
Section 1, subsection (b) of S.B. 204 says, “The site of any crime punishable as a felony other than a crime…,” does that require an arrest or conviction, or just the act?
Mr. Sande:
I think it would be just the act. A crime is a crime, it does not have to be prosecuted.
Senator Care:
In regard to actual knowledge and the case of a next-door neighbor who mentions to the real estate agent that years ago the home was a meth lab. It may go back to one or two possessions prior to the current owner of the home. Would you feel more comfortable with “actual” as opposed to “constructive” knowledge? Rumor, arguably, would be actual knowledge.
Mr. Sande:
Nothing comes to mind immediately on how to correct the problem. I think the intent is to make sure if there was a meth lab at a house, it should be material to the purchaser at the first sale. It seems to me, in all circumstances, a person would want to know. My question is, for subsequent sale transactions, must a person disclose the fact that 50 years ago there was a meth lab in the house? I read the bill as saying the fact there was a meth lab in the house would not be automatically material, but it certainly would not be nonmaterial. It would be a question of fact as to whether or not, after two or three sales, a person must continue to disclose it, unless you want to specifically say the first sale, which could get a little complex.
Senator Washington:
How long must a fire in a residence be disclosed?
Mr. Sande:
It would be a question of fact for the buyer to determine whether or not a fire was material. It is the same in car sales. If there is a lot of damage to a car which affects the value, a person has a duty to disclose it to the purchaser. We are saying, if there is a crime punishable as a felony at a residence, even if was meth manufacturing, it was deemed under the statute to be nonmaterial. Senate Bill 204 would say it is probably material, but it would be a question of fact. From what I heard today, if a person actually knows there was a meth lab in a house, he or she has an absolute duty to disclose it to the purchaser.
Senator Wiener:
The second video (Exhibit E) showed renters exposed to meth without their knowledge which could be considered constructive eviction. Would renters be protected by S.B. 204?
Mr. Sande:
Nevada Revised Statutes (NRS) Chapter 113 only deals with residential sales, therefore, it would not apply to renters. However, I have to believe if you had actual knowledge a meth lab had been in a house and you rented it, under common law you would be responsible to the renter if they became ill because the property had not been cleaned up.
Senator Wiener:
I did not get that impression from the video.
Mr. Sande:
If somebody came to me with that type of situation, I would be pretty comfortable I would prevail should it go to court.
Melody L. Luetkehans, Lobbyist, Nevada Association of Realtors:
I would like to pick up where Mr. Sande left off in regard to property managers, who are licensed through the Real Estate Division. Property managers are controlled under NRS Chapter 645 and required to disclose to any potential tenants any material aspects of the transaction. So, property managers are covered under the disclosure acts.
Senator Nolan:
I think a public safety issue should be disclosed as long as it is a safety hazard. I do not think S.B. 204 addresses that. What does it mean when a person is told the house they wish to purchase was a meth lab? First of all, we are not sure whether or not the house is contaminated or a health hazard, and it should be determined. When a meth lab is cleaned out, a hazardous material team is usually present with the tools and ability to make an assessment as to what levels of residual chemicals are left. In the event of a severely contaminated house, S.B. 204 says the house can be vacuumed and cleaned, but the next tenant is never told it may be a serious health hazard. While I agree with the intent of S.B. 204, I believe at some point the problem must be remediated if people are to be allowed to occupy the residence. I would like to go further with this to protect people who live in contaminated houses.
Tami DeVries, Acting Deputy Administrator, Real Estate Division, Department of Business and Industry:
The Real Estate Division supports passage of S.B. 204 and feels the legislation is consistent with the intent of the Seller Real Property Disclosure Act, effective January 1996. You heard testimony regarding the fact this could materially affect the property and, therefore, should be disclosed if the seller has actual knowledge. We are in support of the proposal to remove the exemption for certain entities from the Seller Real Property Disclosure Act if they have actual knowledge of the information.
I provided written testimony (Exhibit F) and a copy of the current Seller’s Real Property Disclosure Form prescribed by the Real Estate Division under that act.
Senator Wiener:
In Nevada, is there recourse when disclosure is not made to tenants who entered into a contract or arrangement, in good faith, for a residence proven to previously have been a meth lab? Particularly when there is denial on the part of the renting agency or property manager.
Ms. Luetkehans:
At this time, should a property manager rent a unit having knowledge the unit had previously been a meth lab, the tenant can breach the lease and sue the property manager and landlord for any damages they may have suffered. It is general contract law that exists in the State of Nevada. If it was shown to be a willful act on a licensee licensed through the Real Estate Division, then there would be an extra form of disciplinary hearing or proceeding that could be brought by the tenant against that real estate licensee through the Real Estate Division.
Senator Care:
If an experienced agent walks through a house and sees what might appear to be evidence of residue from the manufacturing of meth, under S.B. 204, would the agent have a duty to pursue some sort of investigation to ascertain whether there really was meth manufactured there, or does the inquiry stop right there? That is not constructive as opposed to actual, it is just suspicion there might be something there, and making a determination whether to find out for sure. I cannot tell from the way the bill is written.
Ms. Luetkehans:
That scenario would not fall under NRS 40.770, which is the statute S.B. 204 is asking to modify. It would normally fall under NRS 645, which are the statutory duties of a real estate licensee. If a real estate licensee has a reasonable belief there may be a material defect, whether it is the presence of a meth lab, mold, or any other kind of material defect in the property, depending upon whom they represent, they have the responsibility to bring the information forward. If they have actual knowledge of a problem with the property, they are statutorily required to disclose it to all parties.
For example, in your scenario, if the real estate licensee was examining the property and noticed a problem, the listing agent, which is the licensee who works for the seller, would have a duty to ask the seller about it. If the licensee was working for the buyer, he or she would have a duty to the buyer to point out the problem and ask whether the buyer would want an inspection or testing done, and also take an extra step and ask the listing or seller’s agent if they had knowledge of the problem. So, there is a duty to inform the client if there is any question of a problem. If you have actual knowledge, there is a duty to disclose it.
Chairman Amodei:
Do you have an opinion as to whether or not this proposal needs an amendment to deal with the time issues brought up by Mr. Sande? Also, what is your opinion on an amendment to S.B. 204 to make clear this is something that specifically needs to be disclosed in a lease context?
Ms. Luetkehans:
The time issue is similar to the construction defect issue regarding whether or not a problem that existed on a property was remediated, and at what point it should be disclosed. I agree with Mr. Sande, the requirement for sellers to continue to disclose remediation must stop at some point. The question remains as to whether or not it was properly remediated. I am not a chemist and have no knowledge as to the length of time the chemicals remain, but they are obviously a concern for everybody and every industry that deals with housing.
In regard to a reasonable cap on the time frame, you may want to investigate how long the chemicals remain and whether or not a 10-year-old property would still have problems. Earlier testimony said 18 months later there was still sufficient residue to create a health hazard. I have no answer insofar as a specific time frame, but it seems reasonable that a time frame should be established.
Chairman Amodei:
Is existing law in the lease context sufficient to cover this, or do we need to find something to make it clearly applicable to a lease scenario?
Ms. Luetkehans:
It is applicable to property managers because they are subject to the disclosure requirements under NRS Chapter 645. It is not applicable to individuals who rent their own property and are not subject to the disclosure requirements of the other statutes.
Chairman Amodei:
Ms. DeVries, do you have an opinion as to whether or not any of these timing issues could, or should, be dealt with appropriately in your chapters of the Nevada Administrative Code (NAC), or should it be in statute?
Ms. DeVries:
It could be dealt with in the NAC should authority be given to the administrator to adopt regulations. There could be additional testimony from the public through the workshop process, which may provide further insight as to what type of timeframe is reasonable.
Chairman Amodei:
I am thinking about the remediation scenario in which it probably would not do much good to put the definition in statute, although we would need to use words of art in terms of the timing issue. Mr. Sande, have you any other opinions?
Mr. Sande:
I think the proposed legislation probably covers the issue. In most cases, should there be actual knowledge or concern, it would be disclosed. This type of problem exists whenever a house is sold. For example, how long must a mold problem continue to be disclosed? I do not think we have to reinvent the wheel. Perhaps we could just say this is not a nonmaterial issue, such as the law reads at present, and it would be a question of fact. If the seller of the property remediated within the last 5 years, it should be disclosed. However, if it was 20 years ago, it probably would not be disclosed. It could still be disclosed, but it would not be material.
Senator Nolan:
Having been a hazardous materials and occupational health and safety technician, I understand the issue. Should S.B. 204 pass, a form would exist with a check off list indicating there was a meth lab and the seller would disclose that fact. In the videotape (Exhibit E), the house contained hazardous chemicals 2000 times a safe and healthy limit.
Ms. Luetkehans:
We have always determined with full disclosure the buyer may, or may not, choose to buy the property. Philosophically, once the disclosure is made, I do not think it is the responsibility of this body or any other government agency to say a person cannot rent or purchase a property.
Senator Nolan:
So, a person could move into a house …
Ms. Luetkehans:
That is correct. With full disclosure, the buyer would take the responsibility.
Senator Nolan:
To clarify, full disclosure means telling the buyer there was a meth lab in the residence.
Ms. Luetkehans:
That is my understanding.
Senator Washington:
Mr. Sande, after disclosure has been given, the buyer then has the opportunity to test for remediation to ascertain whether or not any chemical deposits remain. Based upon your testimony, it is a disclosure of fact, as opposed to material. Therefore, it is up to the seller whether or not he or she chooses to proceed.
Mr. Sande:
After disclosure, there would undoubtedly be a reduction in purchase price and, I assume, a rational buyer would remediate the property. Senator Nolan brought up a good point regarding the Legislature making it a condition when a meth lab is disclosed, the health department would become involved to ensure remediation is done before the property is transferred. It would be a government function rather than a private function. In any event, if a meth lab is disclosed to a buyer, a rational person would determine what must be done to effect remediation. However, there is no such requirement under S.B. 204.
Stan Olsen, Lobbyist, Lieutenant, Las Vegas Metropolitan Police Department and Nevada Sheriff’s & Chief’s Association:
We support S.B. 204 and wish to bring a couple of issues to your attention. In the metropolitan jurisdiction of Las Vegas covered by the Las Vegas Metropolitan Policy Department (METRO), the type of raid seen in the video is done every 2½ days, every year. In 2002, the number dropped almost 50 percent; in the year 2000, 300 meth labs were apprehended in METRO’s jurisdiction; and there were 148 in the last calendar year. At this point, METRO raids a meth lab facility every 2.4 days. In the best case scenario, we capture 25 percent of the meth labs.
Sean Gamble, Lobbyist, Clark County Health District:
The Clark County Health District feels S.B. 204 is a good public health policy for all the reasons mentioned in the videos and testimony. The chemicals left in carpets and walls of homes could be a public health hazard. There is no burden on the Division of Environmental Protection to give out information or records to inform people what properties have been meth labs. Upon request of the public, information is available which lifts the burden on the Clark County Health District to supply the information.
Senator Nolan:
Is an inspection ever made to ascertain whether or not the residence is still contaminated?
Mr. Gamble:
I do not believe the Clark County Health District has done that type of investigation. I will find out for you.
Senator Nolan:
Lt. Olsen, are hazardous materials teams involved when a home is raided and a meth lab cleaned out?
Lt. Olsen:
METRO, and most agencies in southern Nevada, have lab teams consisting of chemists, evidence technicians, and police officers. After the initial raid, the lab team enters the meth lab residence in “space suits” and breather packs and removes any obvious areas, including walls, carpeting, furniture, cabinets, and some appliances. After that procedure, the remainder of remediation falls to the owner of the property.
Chairman Amodei:
Are there any more questions or testimony on S.B. 204? Seeing none, I will close the hearing on S.B. 204.
Ms. McDonald, we will look at an amendment to perhaps tie up some of the landlord-tenant situations which would make the proposal more global as opposed to less. I assume it would be a good thing for you.
Ms. Cruden, thank you for bringing S.B. 204 forward.
Ms. DeVries, if the Real Estate Division has any concerns or proposed language to put into the statute, I am not opposed to relying significantly upon the regulatory rule giving authority to clear up the loose ends in terms of timing and so forth. Please bring to the attention of Mr. Anthony or Mr. Wilkinson anything you think should be put in statute.
Ms. Luetkehans, please submit any thoughts in terms of wording for an amendment to Mr. Wilkinson.
I would like to move S.B. 204 by next week, therefore, all parties should provide proposals by Tuesday, March 11, or Wednesday, March 12.
Ms. McDonald:
We look forward to providing some effective amendments. Thank you.
Chairman Amodei:
I will open the hearing on Senate Bill 105.
SENATE BILL 105: Aggregates value of property damaged or destroyed for purposes of determining penalty if one or more persons place graffiti on or otherwise deface property pursuant to scheme or continuing course of conduct. (BDR 15-375)
Nicole J. Lamboley, Lobbyist, City of Reno:
With a great deal of effort, the City of Reno has addressed the issue of graffiti. Senate Bill 105 was proposed to provide law enforcement tools to further criminalize the act of graffiti. Currently, graffiti can be addressed at the local level through enactment of ordinances. The City of Reno, as well as other cities around the State, addressed some of the issues. Although there is civil abatement of graffiti as a nuisance, it does not address the perpetrator and only sanctions against victims of graffiti. Local governments can enact ordinances that regulate businesses regarding graffiti tools, markers, spray paint, and so forth, but do not address the perpetrator.
Graffiti affects business and may impact expenses and profits. The cost of graffiti is borne by the victims, not the perpetrators. Currently, local governments cannot increase the seriousness of the offense for criminal penalties above misdemeanor. Therefore, we are asking the Legislature to pass legislation allowing cities to accumulate monetary damages caused by a perpetrator in more than one incident of graffiti for the purpose of determining an appropriate sentence.
For instance, if one perpetrator is responsible for ten incidences of graffiti where the cost is approximately $180, each of the offenses is a misdemeanor punishable by a fine of not more than $1000, or by imprisonment in county jail for not more than 6 months, or by both fine and imprisonment. However, when the conviction is a misdemeanor, an alternative sentence of community service may be imposed as part, or all, of the punishment. Senate Bill 105 would allow each of the ten incidences as accumulated which would put the value of the damage at $1,800, which would be a gross misdemeanor. The penalty for a gross misdemeanor is imprisonment in county jail for not more than 1 year, or by a fine of not more than $2,000, or by both fine and imprisonment. Under NRS 193.140, community service is not an alternative for all or part of the punishment. We would like to reduce the fact that victims are paying the price for graffiti.
We provided a packet of incidences of graffiti collected by the city of Reno (Exhibit G. Original is on file in the Research Library.) Some of them are very serious and threaten police and the district attorney. Included in the packet is a PowerPoint presentation used to educate the community and elected officials about graffiti, the individuals who commit graffiti, and the cost borne by the city, residents, and businesses for remediation or eradication of graffiti. Our philosophy is as long as graffiti remains on businesses, homes, fences, overpasses, and schools, it is a license for “taggers” and gangs to continue to do it. In cooperation with other local governments, we are working tirelessly to eradicate and abate graffiti. We are hoping S.B. 105 will put more teeth into the law to address graffiti.
Chairman Amodei:
There is a similar measure in the Assembly. Could you tell us the status of that measure?
ASSEMBLY BILL 11: Provides increased penalty for certain repeat offenses involving vandalism. (BDR 15-191)
Ms. Lamboley:
Assembly Bill 11 came out of an interim study which addressed changing the penalty to a felony. Currently the bill has been placed on the chairman’s board. The committee members were concerned the bill was too strong. We are attempting to demonstrate graffiti is not just a juvenile problem. We provided profiles (Exhibit G) of adult taggers in the city of Reno.
Chairman Amodei:
Are there any more questions of Ms. Lamboley?
Senator McGinness:
Is being placed on the chairman’s board in the Assembly similar to being placed on the Secretary’s desk in the Senate?
Ms. Lamboley:
That is my understanding, although I cannot speak for the chairman of the Assembly Committee on Judiciary.
Senator McGinness:
Do we aggregate other crimes, such as tire slashing?
Ms. Lamboley:
I defer to Sergeant Bjelke on that question.
Richard Bjelke, Sergeant, Reno Police Department:
Yes, we have the ability to aggregate other crimes.
Chairman Amodei:
Would S.B. 105 bring the issue into line with other vandalism loss presently on the books in which the value of the crime is aggregated?
Sgt. Bjelke:
Yes.
Senator Washington:
Section 1, subsection 5 of S.B. 105, suspends a driver’s license for 6 months for perpetrators of graffiti 18 years of age or older. You are proposing the crime be considered a felony for graffiti over $5,000. What was the reason behind suspending the driver’s license for 6 months?
Ms. Lamboley:
That is currently existing law and relates to …
Senator McGinness:
You are asking us to stiffen the penalty.
Ms. Lamboley:
We are asking that graffiti be considered in the courts a crime that can be aggregated.
Senator Washington:
I understand that. The packet (Exhibit G) pointed out that some taggers have a definite hatred of police and their language was not defined in the context of legislative word craft, but was pretty bold. If that person is over 18 years of age, suspension of a driver’s license for 6 months is not much of a deterrent.
Ms. Lamboley:
I agree, and that is why we are hoping …
Sgt. Bjelke:
We have over 80 separate cases involving the individuals of whom you are speaking.
Chairman Amodei:
Are there any other questions?
Sgt. Bjelke:
I did some research after taking over the graffiti program and gang unit in November 2002. As a law enforcement officer and citizen of the city of Reno, I must say the dollar amount of graffiti is staggering, not to mention the fear it instills in people. I am currently working with our legal advisor in an attempt to put teeth into the prosecution of graffiti perpetrators. We find both juvenile and adult penalties very slight and not carried through.
Mike Price, Reno Police Department:
I became the graffiti officer for the Reno Police Department in October 2002. I began organizing and documenting different types of graffiti occurring in the city of Reno. For instance, in December 2002, there was a graffiti count in a six‑block area of downtown Reno. In that six-block area there were over 1000 graffiti tags, not murals, but little marks on light poles, mail boxes, and so forth. Currently, it is estimated the city and county spend approximately $188 on a 2-hour minimum to remove graffiti.
Page 4 of the PowerPoint presentation (Exhibit G) demonstrates 185 tags at $188 would be $203,980 spent to remove graffiti in the 6 block downtown area.
Chairman Amodei:
Is there any more testimony on S.B. 105?
James F. Nadeau, Lobbyist, Washoe County Sheriff’s Office and Nevada Sheriff’s and Chief’s Association-North:
The Washoe County Sheriff’s office supports this legislation. Graffiti is interesting because it is associated with individuals who often sign their names. Therefore, the aggregate would not just clump everything together in order to pin it on one person. It is easily tracked because the individual possesses a certain style which is easily identified. The idea is to take care of graffiti so it does not continue. We have worked with the Reno and Sparks Police Departments and the community on graffiti abatement. I think this is good legislation and should move forward.
James T. Endres, Lobbyist, National Council to Prevent Delinquency:
The National Council to Prevent Delinquency (NCPD) endorses S.B. 105. The NCPD was organized in the early 1990s, came about as a result of graffiti actions, and was called to action by cities and communities around the country to address the problem. The NCPD represents the business community and its many interests in an attempt to support communities and local governments to develop approaches to managing the graffiti situation across the country. The NCPD currently works with the City of Reno to help evaluate the graffiti situation, and help the police department construct and develop appropriate ordinances to address graffiti. The NCPD believes the constructs S.B. 105 brings to the law provide the foundation from which local governments can continue to build upon their ordinance structures, and to include in those constructs approaches that seek to protect retailers, manage the retail process, and protect public and private property, along with good, sound, government practices.
Fred L. Hillerby, Lobbyist, Washoe County Regional Transportation Commission:
I am here in support of S.B. 105. Last year our agency spent $55,000 trying to correct graffiti and other defacements. Recently, the glass in the transfer station at Meadowood Mall was etched and cost $8,000 to repair. We are concerned about the problem and interested in solutions. I spoke with the sponsor of S.B. 105, the City of Reno. I provided two handouts entitled: “S.B. 105 Comments from RTC,” and the section of the statute referenced in S.B. 105 (Exhibit H). Regarding NRS 193.155, the punishment section referenced in S.B. 105, you will note it talks about “…impairment of public transportation…,” but there is no definition of impairment. Our legal counsel recommends amending NRS 193.155 to define impairment as essentially, “the disruption of ordinary or incidental service, temporary loss of use, or the removal of the property from service for repair or damage.” I hope this would be germane to S.B. 105 since we reference this particular penalty section of the NRS.
In sections 4 and 5 of S.B. 105, a situation exists in which a minor is defined as someone under 17, and an adult as someone 18 or older, which says a 17‑year‑old is neither. We suggest the situation be remedied at this time. Senator Washington suggested an enhanced penalty in section 5 of S.B. 105. We thought a 6-month suspension at felony level could reach to almost $5000, and perhaps a 1-year suspension until the perpetrator makes restitution might be more of a deterrent. We spoke to the sponsors about the amendment and they were not offended by it. As you proceed with S.B. 105, we suggest you consider these as well.
Senator Wiener:
I wrote a book entitled, “Winning the War Against Youth Gangs,” published in 1999, at which time I worked with business communities and youth gangs across the country. My book is now a library book in the United States, England, and Canada. In my interviews, I learned that tagging, or graffiti art as it is called, is often a rite of passage when making a mark in another gang’s territory, and it is also a turf issue. Have your business members found if they take quick action to clean up graffiti it affects related gang activity as well?
Mr. Endres:
Up until 4 months ago I knew nothing about graffiti. I have since learned the quicker action is taken, the quicker the graffiti issue is addressed. Tagging represents a large part of all graffiti and is a rite of passage, a cultural thing, and recognition of individuals. One of the officers assigned to the graffiti unit has more background and can probably address it better than I.
I agree the sooner the graffiti problem is addressed, the sooner the opportunity for recognition to occur is eliminated and the cycle broken. The NCPD supports those activities and provides “paint banks” to communities in designated locations, such as a fire station, a house, or whatever is suitable, where retailers can obtain paint, free of charge, to clean up graffiti as quickly as possible.
Mr. Hillerby:
I failed to mention, in addition to the cost of cleaning up graffiti, the Regional Transportation Commission has spent considerable resources trying to develop new surfaces resistant in terms of both glass and metal. Therefore, it is an ongoing issue, not only in trying to recover from the vandalism, but preventing it as well.
Senator Washington:
Every day I pass a checkerboard-surfaced wall at the corner of McCarran Boulevard and Prater Way, and I have never seen graffiti on that wall. I guess the theory is if the object does not have a constant surface, the taggers will not place graffiti on it.
Mr. Hillerby:
I hope we have not identified a target.
Chairman Amodei:
Are there any more questions or testimony on S.B. 105? Hearing none, the hearing is closed on S.B. 105. What is the pleasure of the committee?
SENATOR WASHINGTON MOVED TO AMEND AND DO PASS S.B. 105.
SENATOR WIENER SECONDED THE MOTION.
Senator McGinness:
Will the amendment to S.B. 105 cause it to end up on the chairman’s board in the Assembly, or has it been significantly improved?
Chairman Amodei:
I am certain if this committee feels it is important and the Senate passes it, the Assembly will feel the same way. Are there any further comments on the motion?
Mr. Wilkinson:
In regard to the proposed amendment to NRS 193.155, I want to point out that statute applies throughout the entirety of NRS; therefore, it would not be confined to simply the crime of graffiti. It would have further reaching implications than might be desired. The term “impairment of public transportation” is used in other statutes as well, without definition. If there is a desire to define it simply for the purposes of this statute, the penalty could be brought from NRS 193.155 into this statute itself, and it would address the problem.
Chairman Amodei:
I am certain it is nothing beyond the capability of the Legislative Counsel Bureau.
Mr. Wilkinson:
I can certainly do that.
Chairman Amodei:
Are there any other comments on the pending motion on S.B. 105?
THE MOTION CARRIED. (SENATOR TITUS WAS ABSENT FOR THE VOTE.)
*****
Chairman Amodei:
I will now open the hearing on Senate Bill 207.
SENATE BILL 207: Makes various changes concerning conveyances of property and wills and estates. (BDR 10-940)
Don W. Ashworth, Probate Commissioner, Eighth Judicial District Court:
I sat on this committee 22 years ago and I want you to know your efforts are appreciated and do not go unnoticed. Senate Bill 207, a 14-page bill, is not too complicated. Many of the provisions of S.B. 207 bring it into conformity with S. B. 400 of the 71st Session. There were a few items we thought were covered in that bill, but because of the interrelation of various sections of probate code, Title 12 of NRS, it was not done. These items relate to such things as conflict of interest, which is now a provision. A personal representative, defined in the statute, means both administrators and executors. Under Title 12 of NRS, executors and administrators are bifurcated and there are separate sections that deal with them. We put them in one section, but not the other.
The situation is the same in Chapter 148 of NRS, which deals with sales in probate. The sections we amended dealt with the sale of real property. Once again, in Chapter 148 of NRS, that is bifurcated. There is sale of real property, but also sale of personal property. Therefore, we brought into the statute applicable portions relating to personal property, which gives the heirs and devisees the opportunity to waive an appraisal on personal property, which they can do on real property. It means if they do not want to have the property appraised, they do not have to, and can hold the sale without an appraisal.
The heirs and devisees are required to do a published notice and, given the opportunity under the sale of real property which is in current law, to waive that provision. Under S.B. 207 they would also have that right. Those items should have been in S. B. 400 of the 71st Session, but were inadvertently left out.
Section 1 of S.B. 207 is a substantive change and comes from the state of Arizona. It gives an individual opportunity to make a testamentary disposition by deed, which cannot be done in the State of Nevada at the present time. You might say we already have that in the joint tenancy property and community property with full right of survivorship. That is true. There are several problems with joint tenancy property. One problem is you do not get a step-up basis on both halves as opposed to community property. That is probably the biggest problem with joint tenancy property and most people are unaware of it. The other situation is, once you have transferred property into joint tenancy, then the other joint tenant has to sign the deed to transfer the property to a third party. Therefore, what you have are situations in which parents want to transfer property to their children and they do it in joint tenancy to avoid probate. The problem arises when they sell the property and the children refuse to sign a deed to sell the property. It is a situation where the property was owned by the parents, placed in joint tenancy to avoid probate, and they lost the flexibility of being able to transfer the property as they see fit.
Mr. Ashworth:
Under S.B. 207, in the deed you would be able to designate that the property can go to “A,” “B,” and “C,” at the time of your death. You would still have the flexibility to be able to deal with the property exactly as you had prior to the time you did the deed. You would be able to transfer it without going to a child and asking permission to transfer the property. In my estimation, it gives a little more flexibility to the residents of the State of Nevada on the disposition of their property without going through probate. As you know, most people want to avoid probate like they would the plague. Therefore, we think this is another possibility for people to distribute their assets to whomever they choose through a deed itself. That is the basic background of this.
You may ask, what about the pick-up tax? Under most circumstances, people who do this do not have estates subject to tax. People who have estates subject to tax are not doing this type of thing. They are using revocable trusts and extensive wills. This is for “Mom and Pop” people who only have a home and want to distribute it to whomever they choose. Senate Bill 207 will give them more flexibility to do so.
If S.B. 207 passes, many people will not transfer their property into joint tenancy, but keep it in their name and put their children’s names on it. In so doing they receive two benefits: no probate, and a step-up in basis on the whole property. If they do it through joint tenancy they do not get that. It is just another benefit a person would receive under section 1 of S.B. 207.
Section 2 of S.B. 207 addresses the self-proving declaration. In the last Legislative Session it was approved, under penalty of perjury, a person could use the self-proving declaration as a witness to a will. Prior to that there was a specific exclusion and it could not be done. It brings into conformity NRS 133.055 which inadvertently left out the self-proving declaration, which is what the law is today.
Mr. Ashworth:
The reason for the change in Chapter 134 of NRS, under section 3 of S.B. 207, is because the heading had nothing to do with the wording. The wording is identical to the way the law is now, but it is under a different section. I thought it would be better housed under another heading.
Language was removed from NRS 134.080 on page 3, section 5, subsection 1 of S.B. 207, and the heading of that section deals with unmarried minor decedents without issue. It is a complicated section. I have been probate commissioner for 12 years and this situation has never come before me. It is not used very often. I thought it would be better placed under another heading so people could find it.
Regarding page 4, line 14, section 8 of S.B. 207, for some reason the language admitted the descendant’s will to probate. I do not know how that language got in there. It is in current law. Attorneys are aware, under special administration, there is no will. Therefore, the language is a misnomer and should not be there. We are asking it be stricken insofar as the Letters of Special Administration are concerned. It is not mandatory, it is just something attorneys can use if they so choose in the drafting of the letters.
Section 9 of S.B. 207 deals with conflict of interest with a personal representative which we currently have in the law under another section. This now broadens the law so it is applicable to all administrators, as well as personal representatives or executors. We changed the statute of limitations from 4 months to 1 year, which brings it into conformity with another section of the NRS.
On page 6, section 11, subsection 3, of S.B. 207, the treble damage section. You might think it increases from double damages to treble damages, but it does not. The language being omitted is, “…double the value of the property and damages in addition thereto…,” and we are saying it is treble damages. We are making sure everybody understands it is treble damages. I have had four or five cases before me in which they stated it was not treble damages, therefore, we put it in that section. Where it says treble damages, that is exactly what it is.
Since I have been probate commissioner, we have increased the value of the set‑aside provision, under NRS 146.070, from $25,000, to $50,000, and I suggest we change it to $75,000. Let me tell you how NRS 146.070 works. It is a set-aside statute, which means if the value of the estate is the value of the assets less encumbrances of less than $75,000, then all you have to do is one petition and one notice, and the assets are transferred. This provision is used more and more. We see approximately 90 to 100 cases per week in Clark County. Tomorrow I have 100 cases on the docket in probate and, of those cases, probably 10 or 15 percent are set-asides.
Chairman Amodei:
Was the $75,000 amount chosen because it is a logical step up, or in the set‑aside mechanism is $75,000 an appropriate number?
Mr. Ashworth:
That is a valid question. Once again, we are dealing with real property, which is usually one house going through probate. Because the value of homes and equity are rising, the $75,000 figure is more meaningful. We can move the process along quicker by this proceeding and get more of them out of the system than with the $50,000 figure.
Chairman Amodei:
How do you feel about a larger number?
Mr. Ashworth:
I think you need to be aware, this statute vitiates a will. In other words, if you have a will devising the property to another party, and that party is neither a spouse or a minor child, it takes care of them first, and then on down to the children, then you have a situation where it goes to those individuals without a will. I feel good with the $75,000 figure, but I think if we start pushing it up to $100,000 or $150,000, we will do an injustice to the individual as to how the property will go and the meaning of the statute, which is basically to take care of the family.
There is no change to section 14 of S.B. 207, which comes from NRS 150.220 verbatim. We want it moved from NRS Chapter 150, which is a compensation accounting section, to NRS Chapter 147, which is a debt section where it belongs. Most attorneys have a problem finding the section.
Section 16 of S.B. 207 is the personal property sales section making it similar to what we have now for real property.
Page 10, line 5, section 18, subsection 3 of S.B. 207, the language, “…and prior to the appointment of the personal representative…,” was put in my draft. I called the Legislative Counsel Bureau (LCB) and thought we had it out before the final bill draft request (BDR). The language is not proper there and was placed by mistake. It should be moved to read, “If a personal representative is the sole devisee or heir of the estate, or if all devisees and heirs of the estate consent in writing…the court may waive the requirement of publication.” The language “…prior to the appointment of the personal representative…” is related to something in section 19 of S.B. 207, was a typographical error, and needs to be removed.
Section 21 and section 22 of S.B. 207 deal with ademption. Ademption under the law is when a person makes a gift to an individual and wants to make sure the gift is taken into consideration in his or her will. We would like to request a couple of changes to S.B. 207. On page 10, line 22, section 21, subsection 2, strike the language, “…contemporaneous to the gift or grant…,” and put in, “…changed in writing by the decedent as a partial or complete satisfaction of the testamentary gift.” It gives an opportunity for them to mention in their will, which is not necessarily contemporaneous writing, that they want it to be considered a gift or satisfaction of a devise. With the word “contemporaneous,” it would have to be done at the same time as the gift. We think it best to take out “contemporaneous” so, in any writing, if the decedent says he or she made a gift to the individual 5 years ago for $50,000 and wants it taken into consideration when the estate is divided, they will get $50,000 less and the other children will remain equal. They could do it in their will or in a trust.
Mr. Ashworth:
On page 10, line 27, section 22 of S.B. 207, rather than, “…or in the contemporaneous writing…,” it would be “…or in a writing…, and the word “contemporaneous” would be omitted so it does not have to be done at the same time the gift is made.
On page 10, section 19 of S.B. 207, if there is a will with a provision a personal representative will serve, but I only want him or her to receive 1 percent of the gross estate, the value in the statute is now greater than 1 percent, the minimum is 2 percent, with $3150 in the first $100,000 worth of value. I argue with attorneys who say they do not have to renounce that will provision until the very end. That is not true. If it is in the will and the appointed executor does not want to take under the 1 percent provision, but would rather take under the laws of the State of Nevada, then the executor needs to declare the situation to the court before his or her appointment in order for the heirs to say whether or not they want that person to serve. Why should we allow them to wait until the very end when they will not be bound by the will, but will take what is provided under the statute? Attorneys have been faced with the situation numerous times. Therefore, we decided the best way to fix it would be to add a provision that says, “before he or she is appointed.” The appointed executor must say, yes, he or she is bound by the provision, or no, he or she is not.
I know these are technical matters and if contacted by the LCB, I would be glad to explain in more detail. I know better than to think you understand the various things we have done today. I have no other purpose than to make our probate code more meaningful for Nevada citizens and provide a better working relationship with the bar.
Senator Wiener:
In section 10 of S.B. 207, you want to change the language from 4 months to 1 year. You mentioned in another section of the law the language is a 1-year statute of limitations. Therefore, if you have 4 months here and 1 year somewhere else, which one have you been bound by?
Mr. Ashworth:
We have been bound by 4 months and it has not caused any problems. All I am trying to do is bring Title 10 of NRS into conformity with the remainder of the NRS.
Senator Wiener:
Have you been challenged on that?
Mr. Ashworth:
No.
Senator Care:
What prevails when there is a will, and a deed, and the terms conflict?
Mr. Ashworth:
I had a trial on a similar case yesterday. The problem was the individual had transferred the property to a trust and then tried to do a holographic will transferring the same property to another party. The answer to that is, they cannot do it. They can do it by amendment to the trust, but they cannot do it by the will. The will only transfers assets within the box. Joint tenancy property assets are not within the box. Community property assets, with full right of survivorship, are not within the box. They all pass by operation of law and the will has no affect on them whatsoever.
Senator Care:
Do you think another jurisdiction would recognize the deed?
Mr. Ashworth:
The deed would be controlled by the domiciliary of the real property. Under the circumstances, those deeds would not be recognized in another state. In other words, they would not allow us to do a deed that would affect real property in another state.
Senator Wiener:
In section 19 of S.B. 207, is the current language at least 2 percent, or is it 2 percent a person is entitled to as a fee for administering the trust?
Mr. Ashworth:
The current language is $600 on the first $15,000, 3 percent of the next $85,000, which gives a total of $3l50 on the first $100,000, and 2 percent on the excess.
Senator Wiener:
Would it say in the will it would be limited to a 1 percent fee for the entire trust?
Mr. Ashworth:
It is not a trust. We are talking about the testator putting in the will. I do not agree with Nevada law. I think it is too high. If the individual is going to function in my estate, I want him or her to get 1 percent of the gross estate.
Senator Wiener:
You want the beneficiaries to reap greater award or benefits from the estate.
Mr. Ashworth:
Right.
Senator Wiener:
Following up on what you said, you are allowing the person to determine the fee. I would hope the people who have responsibility would be told they would receive a lesser fee. Hopefully they could negotiate and be aware of the situation. Because the decision to serve must be made before the appointment, the person may say he or she does not want to serve, the law is on his or her side, and he or she wants a bigger cut for administering the affairs. In that event, is another executor appointed?
Mr. Ashworth:
Yes, the court would be requested to appoint another administrator.
Senator Wiener:
Do the heirs have input as to who that person might be?
Mr. Ashworth:
They certainly do.
Senator Wiener:
Does it have to be by a majority, or do they have to agree in entirety?
Mr. Ashworth:
It has to be done by petition. The court would look at the petition on an individual basis.
Senator Wiener:
If there were five beneficiaries, would it require three of them to agree to come to court with a petition? Could one out of five bring it?
Mr. Ashworth:
One could do it as long as there was no opposition.
Senator Wiener:
Could the others come to court and say they do not agree?
Mr. Ashworth:
That is correct.
Senator Wiener:
Would they be required to take action if there was disagreement at that point?
Mr. Ashworth:
You must understand, the statute also sets up priority as to who will serve. A spouse has priority to serve if he or she is not named in a will. First there is the spouse, then children, then mother and father, and then brothers and sisters. The criteria is set up in the statute if no one is appointed. It happens all the time when an individual dies intestate and nobody is appointed at all.
Todd L. Torvinen, Lobbyist, Nevada Trial Lawyers’ Association:
I want to thank Mr. Ashworth. He and I have had extensive telephone conversations. I also had extensive telephone conversations with Pam Gullihur, Washoe County Probate Commissioner. We support S.B. 207 with one amendment, including the amendments proposed by Mr. Ashworth, to clean up the language in sections 18, 21, and 22 of S.B. 207.
My practice consists of part family law and part estate planning, therefore, I have some contact with this area of the law. Although I am not a Medicaid planner, I would like to alert you to a situation. As Mr. Ashworth suggested, joint tenancy deeds have serious costs. The reason people do not do it is because they must get the other transferee on deed to agree, and there is also a limit on joint tenancy. If the children who are the other joint tenants have legal problems, judgments, or anything of that nature, a judgment creditor could start executing on the joint tenancy part of the deed. Consequently, there are costs when transferring things in a joint tenancy. I raise this issue because this transfer is, what we refer to in law school, like a Totten trust, only it is for real property. It is effective completely on death, nobody else is on the deed except for the deceased person.
In a Medicaid context, under Chapter 422 of NRS, when a person dies the divisible estate, which includes all assets in which the person had an interest whether or not they transferred upon death, is subject to Medicaid claims. Should there be a rush to do these things, the State would be forced to start collecting money against the heirs. I certainly do not know the answer to that.
Mr. Ashworth:
I think the Legislature has done a grand job in the last 15 years to protect Medicaid requirements. We have requirements on notice under Medicaid that have been very helpful. I do not think this is going to be a big problem because the problem already exists with joint tenancy property. You will see most people who put their property in joint tenancy will go this other route, therefore, the nature of the beast has not changed because Medicaid has the same problem with joint tenancy property it would under this circumstance. It has the same problem with community property with full right of survivorship because those pass by operation of law. This does not diminish the ability to go against that property whatsoever. They still have the same ability under Chapter 422 of NRS; therefore, this does not affect Medicaid’s ability to go after that property.
Mr. Torvinen:
I do not entirely disagree, but it is a concern. At the present time, when an estate is open the State welfare division must be noticed. If there was a deed stuck in the estate, the State will know and file a claim. There are built-in limitations for people to put something into joint tenancy because of the cost of having somebody else on deed and the fact a judgment creditor could execute.
The real beef between Mr. Ashworth and myself was over section 19 of S.B. 207. Ms. Gullihur is mildly concerned about it. I spoke with other estate planners in Reno about this concern. We oppose the language “before his appointment,” having to waive the executor’s commission provided in the will. The reason is, many times the executor or person appointed is a family member. After a person dies, the family member wants to do the right thing and accepts a smaller fee of 1 percent, 1/2 percent, or even a fixed amount, in order to help the family. Before being appointed, the executor has no right to document accounts to know what is there. They may have a general idea because it could be a parent or another family member, but they really do not know the nitty‑gritty of what is going on. So, they may agree to a lesser amount, then find out there is a huge amount of work, much more than they anticipated. The records may be in poor shape and the estate may own a duplex with horrible tenants that cause a lot of time-consuming administration. The person would not know these things until appointed. As an intermediate solution, I suggest an inventory 60 days after the estate is opened, and on or before that date the executor must choose whether or not to serve. The person then would have a clue about what is going on and what administration of the estate would entail. That would be a commonsense approach to the problem.
Any lawyer worth his salt who works in this area would never put in a compensation clause other than what defaults to the State statute. When I do a will, I either leave it blank or say, “See the State statute.” In this day and age, there are many computer programs, Internet access. Even if the will is valid, it may have some crazy provision for compensation of an executor. People do not necessarily go to a lawyer or even think about those issues. This would allow flexibility for that sort of occurrence in today’s world.
Mr. Ashworth:
The problem is, going to a period of 60 days when the inventory is due proliferates the cost of the estate. The estate is already going and the executor appointed, but should the executor choose not to be bound by it and the heirs want another person, a new executor must be appointed. If you have a family situation, I guarantee this provision will not be there. Like Mr. Torvinen, I never placed that provision in a will in my 35 years of practice. We need to be aware if the provisions are in a will, there is usually a cogent reason for them to be there. If it says, “I want John Jones to be my executor, but I want John Jones to only get 1.5 percent,” then John Jones either takes it or does not. Why should he or she have the ability to be in the estate for the full length of time, then at the end say he or she does not want 1.5 percent, but would rather have 2 percent? It does not make sense.
Senator McGinness:
As Mr. Torvinen said, any lawyer worth his salt would not put the number in there. We are not talking about lawyers worth their salt, we are talking about lawyers who do not have any salt.
Mr. Ashworth:
These provisions are very seldom used. In my 12 years as a probate commissioner, I have not seen them more than five times.
Mr. Torvinen:
In regard to section 19 of S.B. 207, often executors do not have a clue what is entailed in the administration of an estate. I have drafted wills for people who did not speak to the executor about the nature of the compensation and the essence of the work. I reiterate, in this day and age, with electronic documents floating around, it makes more sense to add a little flexibility to the process.
Pat Coward, Lobbyist, Nevada Land Title Association:
Dave Evans, Nevada Land Title Association, is one of our subject matter experts who will address the committee on concerns with section 1 of S.B. 207.
Dave Evans, Nevada Land Title Association:
We already have joint tenancy laws, right of survivorship, and trust mechanisms. I understand deeds, upon contemplation of death, have always been void at best. We see people holding deeds in drawers and files waiting for death, and then there is confusion among the heirs when trying to record the deed, saying, “Dad wanted me to be the heir. No, dad wanted me to be the heir.” In addition, many times wills conflict deeds. We have seen trusts that were probated and turned around in probate court because the will did, in fact, go against the wishes of the trust.
We have questions on whether or not these deeds need to be recorded. Will recording laws prevail? Will the first deed recorded prevail over perhaps an unrecorded deed that shows up the day of escrow closing? These things will happen. What types of documents? We do not have a formal document type. I guess we could create a document that would create contingency estates. We would be vesting a prelim subject to a contingency estate because it is in the interest of sorting real property. Will the lenders understand when you vest in Ma and Pa, subject to a remainder estate of son? Can son convey that estate to other people?
There is a very confusing section in S.B. 207. It says a person can deed to a son and to successors upon contingencies. What contingencies? Whenever there are contingencies such as that, as title insurers, we become confused and do not know when these specific things happen. How do you get rid of these deeds once you give them to a child? You can deed them to another child and the first one is void, but how do you get rid of the first one? Let us say a person decides to change his or her will, but has already given the estate to the firstborn. I am not sure how you get rid of that, or the record. I can see no provision.
Mr. Evans:
Can they encumber these “life estate or contingency” provisions? There will be lenders who will loan on any estate they see. Will that confuse the lending industry? When we write up a report showing the other interest and a person desires to get a second deed of trust on his or her home, or refinance, will the lenders understand what it is, and what effect it has? It will be an exception on the report we write.
Can you convey property held in community interest? The law states you cannot do so without the joiner of the other community property interest holder.
What if we are holding as community property only and I try to convey my interest to my son or heir? Is that void? Is that voidable? Does it work? I am not sure.
Federal estate taxes are still an issue, but not of great extent anymore because the threshold is up to approximately $1 million. Does this situation alleviate it? I do not know. There will be big estates where people will abuse this situation. There will be estates with multiple properties and deeds that will surface at time of death. They can deed out every property they own. Are they good after death? I do not know. As a rule, we do not allow deeds recorded after death. In our understanding, it has not been a legal matter.
We have issues, questions, and concerns. I can see a lot of confusion. When there is confusion in our industry, we begin putting strange exceptions in title reports. This sometimes causes more harm than good to everyone concerned. We do not do it intentionally, but until case law gives us some kind of support as to what it all means and how to interpret, it we will continue to do so. We have very good case law in all other estate interests and now a new animal is being created. We need a lot of clarification.
Senator Amodei:
Section 1 of S.B. 207 is presently law in Arizona. Have you shared your concerns with any of your counterparts in Arizona to see how they are dealing with it?
Mr. Evans:
I do not know how long it has been effective in Arizona. I only had a chance to review this act for a few days. Consequently, the answer is no, I have not.
Nancy K. Ford, Administrator, Welfare Division, Department of Human Resources:
I would like to introduce Charles Hilsabeck, Deputy Attorney General, Nevada State Welfare Division, who will provide the majority of testimony.
Charles Hilsabeck, Deputy Attorney General, Office of the Attorney General:
As counsel for the State Welfare Division, I have concerns regarding the interpretation of this bill and we suggest a subsection 5 be added to protect recovery of Medicaid benefits. I will read my written testimony (Exhibit I).
Mr. Ashworth:
We have no problem with the amendment, which is throughout the probate statute anyway. It is not the purpose of the statute to do away with recovery under Medicaid. We support that.
Senator Titus:
Mr. Ashworth, please address the concerns brought forth by Mr. Evans.
Let me tell you what I tell my people about title companies. I tell them they are not the law, but if you want a title report you better do what they say. First of all, they are talking about a vesting. There is no vesting whatsoever under this statute as far as title is concerned. The fee simple is in the name of the individual on the deed. This has no effect. They have no vested interest. The statute is very clear on that. The vesting does not become effective until the death. The title companies can put in this exception or that exception, they do that to protect themselves. I understand that. An individual can do nothing with that interest. They have no interest. They cannot give it to another party, or get money on it, or anything else.
Senator Amodei:
Is there more testimony on S.B. 207? Seeing none, the hearing is closed on S.B. 207.
I would entertain a motion to introduce Bill Draft Request (BDR) 5-1198.
BILL DRAFT REQUEST 5-1198: Makes changes pertaining to Interstate Compact on Juveniles. (Later introduced as Senate Bill 242.)
SENATOR WASHINGTON MOVED TO INTRODUCE BDR 5-1198.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Amodei:
There being no further business to come before the committee, the hearing is adjourned at 10:30 a.m.
RESPECTFULLY SUBMITTED:
Barbara Moss,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: