HB2832 98TH GENERAL ASSEMBLY

LRB098 10729 OMW 41064 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB2832

Introduced , by Rep. Lou Lang

SYNOPSIS AS INTRODUCED:

55 ILCS 5/3-5010.5 new

Amends the Counties Code. Provides that a county recorder may establish a Review Index and procedures for investigating filings that would cause the recorder to reasonably believe that the filing may be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property. Provides the General Assembly's findings regarding property fraud and fraudulent filings. Provides for the following: (1) the filing of a notice sheet regarding a suspected fraudulent filing; (2) criteria that a recorder may rely upon to identify a filing as appropriate to be placed in the Review Index; (3) notification requirements of a recorder's determinations regarding a filing; (4) procedures for removal of a filing from the Review Index; (5) administrative review of a recorder's determination; (6) priority of filing; and (7) fees associated with filing a deed or instrument that is determined to be fraudulent. Further provides that no recorder, nor any of his or her employees or agents, shall be liable for any omission or error under this Section, nor for the failure to place a deed or instrument into the Review Index. Provides that this Section only applies to deeds or instruments filed after the effective date of this amendatory Act. Effective immediately.

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Counties Code is amended by adding Section 3-5010.5 as follows:

(55 ILCS 5/3-5010.5 new)

Sec. 3-5010.5. Purpose.

(a) The General Assembly finds that property fraud, including fraudulent filings intended to cloud or steal title to property by recording false or altered documents and deeds is a rapidly growing problem throughout the State. In order to combat the rise in these filings, a recorder may establish a Review Index as provided for herein.

(b) For purposes of this Section, "Review Index" means an index of filings identified by the recorder as having one or more of the criteria identified under subsection (c) of this Section, or other basis for suspicion, that would cause the recorder to reasonably believe that the filing may be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property.

The terms "recording" and "filing" are used interchangeably in this Section.

(c) Review Index. A recorder who establishes a Review Index under the provisions of this Section shall index deeds and instruments that cause the recorder to reasonably believe that the filing may be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property. The recorder shall investigate any deed or instrument placed in the Review Index, and may enter into an intergovernmental agreement with local law enforcement officials for the purposes of this investigation.

Any document that is placed in the Review Index shall be posted to the recorder's website if a website exists. The document shall only be represented in the chain of title by a notice sheet that does not allow the public to see an image of the suspected fraudulent filing. The notice sheet filing shall contain text that states that it represents a document suspected to be fraudulent. The document shall be assigned a unique reference number that is tied to the Property Identification Number that shall allow the document to be viewable in the Review Index to the recorder, filer, the last owner of record, anyone deemed by the office of the recorder to be necessary for investigative or law enforcement purposes, or by submission to the recorder of a valid court subpoena or court order.

A recorder may rely on the any of the following criteria to identify a filing as appropriate to be placed in the Review Index including, but not limited to:

(1) The owner of the property or his or her designated representative has reported to the recorder that another individual is attempting or has attempted to record a fraudulent deed or other instrument upon the property;

(2) A law enforcement official has contacted the recorder indicating that he or she has probable cause to suspect title or recording fraud;

(3) The filer's name has a copyright attached to it or the property owner's name has nonstandard punctuation attached to it;

(4) A document asserts fines that do not exist or have no basis under current law or that require payment in gold or silver;

(5) Maritime Liens, or liens under the Federal Maritime Lien Act or the Preferred Ship Mortgage Act, or not authorized by the United States Coast Guard;

(6) Land Patents not authorized and certified by the United States Department of the Interior Bureau of Land Management;

(7) Documents filed by the property owner or third party, not the lien holder, that purport to release the owner from a lien;

(8) Documents protesting or disputing a foreclosure proceeding that are not filed within the foreclosure suit and with the court presiding over the matter;

(9) Uniform Commercial Code filings referencing birth certificates or other private records that are not in compliance with Section 9-501 of the Uniform Commercial Code;

(10) Re-recording deeds to re-notarize or attach notary certification if prior notarization already appears unaltered on the document of record;

(11) Documents that assert any of the following: independence from the laws of the United States, diplomatic credentials or immunity, or non-United States citizenship;

(12) Claims that a bank cannot hold title after a foreclosure;

(13) Deeds not properly signed by the last legal owner of record or their court appointed representative or attorney-in-fact under legally drafted power of attorney;

(14) Recording of manipulated or altered federal or State legal or court forms that release a lien;

(15) A document that is not related to a valid existing or potential adverse transaction, existing lien, or judgment of a court of competent jurisdiction;

(16) A document that is not related to a valid existing or potential commercial or financial transaction, existing agricultural or other lien, or judgment of a court of competent jurisdiction;

(17) A document filed with the intent to harass or defraud the person identified in the record or any other person;

(18) A document filed with the intent to harass or defraud any member of a governmental office including, but not limited to, the recorder's office, local government offices, the State of Illinois, or the Federal government; and

(19) Previous court determinations, including a previous determination by a court of competent jurisdiction that a particular document is fraudulent, invalid, or bogus.

(d) Determinations. If a recorder determines, after review by legal staff and counsel, that the deed or instrument may be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property, he or she may record the deed or instrument in the Review Index and shall notify the parties set forth in subsection (e) of this Section. A recorder shall have the discretion to not record the deed or instrument if the last owner of record is not aware of the filing or states the filing to be fraudulent or unlawful. A recorder may, at his or her discretion, notify law enforcement officials regarding a filing determined to be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property.

If a recorder determines, after review, that the deed or instrument is not fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property, he or she shall move the document or instrument to its proper place in the chain of title and remove any notice sheet document suggesting that it may be fraudulent.

(e) Notice. The recorder shall provide notice to the last owner of record by telephone, if available, and certified mail when: (1) a deed or instrument has been placed in the Review Index and is under investigation; and (2) a final determination has been made regarding the deed or instrument.

The recorder shall advise the filer of any deed or instrument of ways to prove the legitimacy of the deed or instrument and procedures for removal of the deed or instrument from the Review Index under this Section. This advice shall not be construed as legal advice and shall be limited to directing the filer to the proper venue for a hearing and providing any other information regarding the process that the filer must take. The recorder shall provide notice to the filer of the deed or instrument by telephone, if available, and certified mail when: (1) a deed or instrument has been placed in the Review Index and is under investigation; and (2) a final determination has been made regarding the deed or instrument.

(f) Removal from Review Index. A deed or instrument may be removed from the Review Index if: the recorder determines, after investigation, that the deed or instrument is not fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property; the last owner of record and the filer both appear at the recorder's office, sign an affidavit, and provide proper identification; or a court order is presented that orders the removal of the document from the Review Index.

(g) Administrative Review. The recorder's decision that a deed or instrument is fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property under this Section is a final administrative decision that is subject to review by the circuit court of the county where the real property is located under the Administrative Review Law. Review by the circuit court shall be de novo.

Within 15 business days of a determination by the recorder that a deed or instrument is fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property, the recorder shall bring a case to its county department of administrative hearings and, within 10 business days of receipt, an administrative law judge must schedule a hearing to occur no later than 30 days after receiving the filing. Notice of the hearing must be provided by the administrative law judge (ALJ) to the filer, or the party represented by the filer, of the suspected fraudulent document, the legal representative of the recorded or deeds who filed the case, and the last owner of record.

If a preponderance of the evidence shows the document in question to be fraudulent, the ALJ shall rule the document to be fraudulent and forward the judgment to all the parties under this subsection. Upon receiving notice of the judgment of fraud, the recorder must, within 5 business days, record a new document before the notice sheet reference provided in subsection (c) of this Section that shall clearly state that the document in question has been found to be fraudulent and must not be considered to affect the chain of title of the property in any way.

If the ALJ finds the document to be legitimate, the recorder must, within 5 business days of receiving notice, remove the notice sheet reference provided in subsection (c) of this Section and replace it with the original document.

A decision by an ALJ shall not preclude a State's attorney or sheriff from proceeding with a criminal investigation or criminal charges. If a county does not have an ALJ that specializes in public records, one must be appointed within 3 months of the effective date of this amendatory Act of the 98th General Assembly, or the original case must be forwarded to the proper circuit court with jurisdiction.

(h) Priority of filing. When a document is moved to the Review Index, a notice sheet document shall be filed in its place that references the original filing and its location in the Review Index. The notice sheet document shall not provide an image or duplication of the document in the Review Index. If a document is moved from the Review Index back to the Property Index after a finding that the document is legitimate, the original document shall retain its priority of filing ahead of any documents that may have been filed after it.

(i) Fees. The recorder shall retain any filing fees associated with filing a deed or instrument that is determined to be fraudulent, unlawfully altered, or intended to unlawfully cloud or transfer the title of any real property under this Section and use these monies to support the cost of the development and implementation of the Review Index.

(j) Liability. No recorder, nor any of his employees or agents, shall be subject to personal liability by reason of any error or omission in the performance of any duty under this Section, except in case of wilful or wanton conduct. Neither the recorder nor any of his or her employees shall incur liability for the review of, or failure to review, a document or instrument under this Section or for the refusal to accept a record for filing in the lawful performance of the duties of the recorder or employee.

(k) This Section applies only to filings provided to the recorder on and after the effective date of this amendatory Act of the 98th General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law.