PLEASE NOTE: The following instructions are not to be taken as applying to all of the methods that could be employed by a closing attorney in his closing of a Department of Transportation acquisition, nor do they contemplate all of the situations that may arise. These observations furnish elementary guidelines for the closing attorney only. The Department of Transportation will continue to rely on the individual skill of the closing attorney in securing title to needed right of way.
(A) / SATISFACTION OF TAXES AND ASSESSMENTS
STATUTORY BACKGROUND: Please refer to the following sections of the North Carolina General Statues: G.S. 105-385 (c); G.S. 136-121.1; G.S. 133-12 (a) (3); G.S. 105-360; G.S. 105-359 (b); G.S. 133-12 (b); and G.S. 105-359 (c) and (d). In order to assist the Department in carrying out its statutory obligations to satisfy taxes which are a lien on the property it purchases, the following procedure is recommended.
1. / TAX BILL AVAILABLE ON DAY OF CLOSING - TAXES DUE AND PAYABLE – PAYMENT:
All property taxes for prior years should be paid out of the closing proceeds.
In general, if the tax bill is available, the taxes should be paid, either out of the proceeds or separately by the property owner(s).
When the Department (A) purchases an entire tract, or (B) purchases a portion of a tract where the amount of the tax liability on the whole tract is relatively small in relation to the amount of the settlement, the entire amount of the taxes, including eligible deferment or recapture taxes, then due on the whole tract should be collected from the property owner or withheld from the settlement, and payment made to the proper taxing unit.
For partial acquisitions where the tax liability for the whole tract is a substantial portion of or more than the amount of the settlement, so that payment of taxes on the whole tract would be a hardship on the property owner, the closing attorney should make a reasonable effort to have the taxing unit separate the value of the portion being acquired, and to obtain a statement for the portion, payment of which will be full satisfaction of the tax liability thereon. If the taxing unit is willing to cooperate with the Department in this regard, the closing attorney should proceed with a separate value and statement as set forth herein where the entire tract is acquired. If it is not, the closing attorney should contact the Division Right of Way Agent for consideration of a waiver of the payment of the taxes on the property and permit the property owner to forward his paid receipt for the taxes to the Division Right of Way Agent for proration and reimbursement later, on condition that he warrant the property to be free and clear of the lien for taxes.
2. / TAX BILL NOT AVAILABLE ON DAY OF CLOSING - TAX ES NOT DUE – WITHHOLDING AND PREPAYMENT:
When the Department purchases (A) an entire tract, (B) a substantial portion of the entire tract, (C) any remnant, or (D) any property acquired by general warranty deed, the closing attorney will withhold from the settlement proceeds, the full amount of the previous years’ tax liability, including deferment or recapture taxes, and promptly forward that amount, payable to NCDOT, to the Division Right of Way Agent. The Division Right of Way Agent will promptly forward the proceeds to the NCDOT in Raleigh to be held in trust for the payment and satisfaction of the taxes on the property when they become payable in full satisfaction.
For partial acquisitions that do not meet the criteria in the previous paragraph, the closing attorney should contact the Division Right of Way Agent for consideration of a waiver of the payment of the taxes on the property and permit the property owner to forward his paid receipt for the taxes to the Division Right of Way Agent for proration and reimbursement later, on condition that he warrant the property to be free and clear of the lien for taxes.
If withholding the full amount of the previous years’ tax liability would be a hardship on the property owner, the closing attorney should contact the Division Right of Way Agent for consideration of a proration of tax liability. If proration is approved, the closing attorney will withhold the prorated amount and promptly forward that amount, payable to NCDOT, to the Division Right of Way Agent. The prorated amount should clearly be sufficient to satisfy the owner’s portion of the tax liability. The Division Right of Way Agent will promptly forward the proceeds to the NCDOT in Raleigh to be held in trust for the payment and satisfaction of the taxes on the property when they become payable in full satisfaction.
3. / PRORATION AND REIMBURSEMENT:
The closing attorney should include receipts for the payment of the current year’s taxes, including eligible deferment or recapture taxes, with the closing paperwork delivered to the Division Right of Way Agent, who will arrange for proration and reimbursement to the owner of his/her allocable share. Where payment of the current year’s taxes is not made, the owner should be instructed that when he receives his statement for the current year’s taxes, he should forward it to the Division Right of Way Agent for payment, proration and reimbursement of his allocable share.
4. / UNUSUAL SITUATIONS:
Where the closing attorney encounters problems of satisfying taxes in unusual situations, such as dealing with special classes of property or annexations, he/she should contact the Division Right of Way Agent for instructions.
(B) /
PREPARATION OF INSTRUMENTS OF CONVEYANCE AND OTHER CLOSING DOCUMENTS
1. / Deeds for Right of Way – As a general rule, Warranty deeds, easements, and other conveyance documents are prepared by NCDOT using its forms. The description of the needed areas to be included in these deeds will be taken from field surveys and the recorded description of the property. The composition of these deeds will incorporate the deed references, the description, and interest holders as indicated upon the title certificate furnished on the acquisition. The Department of Transportation will need your assistance in examining these instruments as to grantors, accuracy of description, consideration, acknowledgment, recording, etc.2. / Other closing documents – The preparation of quitclaim deeds, deeds of correction, special proceedings, affidavits, and all other instruments, except releases on deeds of trust, necessary to the closing of an acquisition are prepared by the closing attorney. In cases that will involve a special proceeding to insure that the Department of Transportation will receive a clear title, or when the clearing of a title will require an additional charge, the Division Right of Way Agent should be contacted for approval of the additional fee. The Department may waive the clearing of the lien or defect in title in those cases when the added cost will be substantial and the defect is of a minor consequence.
(C) /
EXECUTION OF INSTRUMENTS
Generally, the Right of Way Agent will secure the execution of right of way deeds with occasional advice and assistance from the closing attorney. The attorney should examine the instruments to determine that the capacity of the grantor (i.e., trustee, attorney in fact, etc.) appears in both the granting clause and the signature line at the bottom of the instrument. All powers of attorney must be recorded prior to the time the right of way deed is recorded. Trustees and cestui que trust executions should indicate the book and page number of the trust instrument under which they serve or receive the beneficial interest. A corporation’s name should appear above the signature line and the instrument should be executed by its president or vice-president, attested by its secretary, and its corporate seal affixed. In instances when partnership property is being conveyed and one partner is empowered to convey, it, notwithstanding, would be our wish that all of the partners and their spouses be asked to execute the conveyance. Deeds from religious, charitable, or fraternal organizations, as well as towns and other political subdivisions should be accompanied by a copy of a resolution passed at its duly called meeting. Executions by an illiterate should be by his mark made beside his name which has been inserted by a subscribing witness. The words, “his (or her) mark” should be also written adjacent to mark and, thereafter, an acknowledgment should be taken reciting this circumstance.(D) /
CONVEYANCE BY PERSONS UNDER A DISABILITY
When minors or persons non compos mentis own an interest in property to be acquired, the conveyance must be by judicial sale pursuant to an Ex Parte Special Proceeding. Special note should be taken of G.S. 1-402 and G.S. 33-31 providing that the sale must be approved “confirmed and directed by the Judge” when the petitioner is an infant. The judicial sale, under the authority granted in G.S. 33-31 and G.S. 1-400, should be held in accordance with Part 3 of Article 29A of Chapter 1 of the General Statutes entitled “Procedure for Private Sales of Real and Personal Property”. (G.S. 1-339.33 et seq)(E) /
CLEARING OF ENCUMBRANCES
1. / Public and private utility company rights of way – As a general rule, the rights of way and easements of public and private utility companies, visible upon the property, or reflected in the title opinion, are cleared through negotiations between the owner thereof and the Utility section of the Department of Transportation. The closing attorney, many times, will be asked to assist in the dispositions of these easements.2. / Judgments, estate taxes (State and Federal), welfare lines, etc. – The closing attorney should clear these types of encumbrances using the same considerations that he would employ when clearing ad valorem taxes as earlier discussed.
3. /
Deeds of Trust – This type of encumbrance will be cleared in manyinstances of right of way acquisition. Normally, the clearing of deeds of trust are handled through by the Right of Way Agent. The Division Right of Way Agent may, however, request your assistance in many instances. Methods of clearing deeds of trust upon property acquired by the Department generally contemplate the execution of a release by beneficiary as permitted by law. Releases should be recorded immediately after the recording of the deed. Additionally, the indebtedness can be satisfied and the instrument cancelled of record prior to closing.
(F) /CLEARING OF DEFECTS IN TITLE
NCDOT will rely on the judgment of the closing attorney as to steps he/she wishes to take to clear defects in the title. The lengths to go to clear the title, (i.e. institution of special proceedings, securement of affidavits, quitclaim deeds, deeds of correction, etc.) will depend on the seriousness of the defect, the consideration involved, etc. There may be instances when the abstracting attorney feels that the clearing of an encumbrance or title defect is in the borderline area which presents a title situation that he/she does not want to assume the responsibility for ignoring. When this doubt arises, the attorney should contact the Division Right of Way Agent to secure the authority to waive this defect.
(G) /FINAL CERTIFICATES
After the closing attorney has delivered the settlement checks, he/she will include a final certificate of title with the closing documents to be delivered to Department. The final certificate of title will set forth what disposition the closing attorney has made of liens and encumbrances and defects in title prior to his delivery of the check and his recording of the deed. The final certificate of title should cover the period between the date of the preliminary certificate of title and the date and hour of the actual recording of the instrument.
(H) /EXCISE TAX STAMPS AND RECORDING FEES
In all closings of NCDOT acquisitions, the Department bears the cost of recording the instrument of conveyance and the cost of excise stamps as a part of just compensation. Generally, the Department will provide checks payable to the Register of Deeds for these costs. Occasionally, the closing attorney may be asked to advance these costs and include same on his statement for services rendered.
(I) /BILLING
Approval of fees paid to private attorneys for title/closing services rests with the Department of Transportation. Your fee for the preparation of title certificates and closing of acquisitions should be in line with the APPROVED FEE SCHEDULE FOR TITLE SERVICES TO THE NORTH CAROLINA DEPARTMENT OF TRANSPORTATION, which was attached to the assignment letter furnished to you. In order to facilitate the payment of fees being billed for title certificates and closing acquisitions, the recorded original deed(s), agreement(s) or instrument(s) of conveyance must be included with the billing statement, final certificate of title, warrant deliver certification, and other closing documents. You should also furnish proof of satisfaction of any lien that was to be paid off or cancelled of record. If you encounter unusual difficulties in a title or closing which may require an additional charge, please contact the Division Right of Way Agent that assigned the work to you, prior to proceeding with the work.
NOTE: Beginning January 1, 2015, title and closing services that are part of a Consultant contract are to be paid by the consultant and not billed to NCDOT.NOTE: NCDOT will send 1099s out to the payee as shown on the warrant (or recipient of ACH). If the warrant is made payable to the closing attorney or there is direct deposit to the closing attorney’s trust account, NCDOT will send 1099s to the closing attorney.
(J) /
IRS FORMS
NOTE: NCDOT will send 1099s out to the payee as shown on the warrant (or recipient of ACH). If the warrant is made payable to the closing attorney or there is direct deposit to the closing attorney’s trust account, NCDOT will send 1099s to the closing attorney.(K) /
NON RESIDENT PROPERTY OWNERS
Every individual, fiduciary, partnership, corporation or unit of government buying real property locatedin North Carolina from a nonresident individual, partnership, estate or trust must complete FormNC-1099NRS reporting the seller’s name, address, and social security or federal identificationnumber; the location of the property; the date of closing; and the gross sales price of the realproperty and its associated tangible personal property.The Closing Attorney should complete this form if the owner is a nonresident seller (individual,partnership, estate, or trust). Within fifteen days of the closing date of the sale, the closing attorney must file this reportwith the North Carolina Department of Revenue, Central Examinations Section, P.O. Box 871, Raleigh,North Carolina 27602-0871 and furnish a copy of this form to the Department with the closing documents.
FRM12-G
Revised 12-31-2014