 Now we're taking up H551 and Eric is going to do a walk-through at the five page bill. So let's go with it. Okay. Yes. Good morning. Thank you, Senator Sears. Good morning again, everybody. This is Eric. This Patrick for the record with the Office of Legislative Council here to do a walk-through of H551, which is an act relating to prohibiting racially and religiously restrictive covenants in deeds. So just a moment to explain what this is. The word covenant generally speaking just means an agreement. That's for the definition of that term, but this refers to something specific a racially or religiously restrictive covenant. That's a very specific term. What it refers to is an agreement either in a deed or that's referenced in a deed that basically says that someone who owns property can't sell that to another person on the basis of the person's race or on the basis of that person's religion. Now these racially restrictive covenants were quite commonly used in the United States for a period of time. Many of them still exist. The way that it most commonly worked actually is that, for example, it would be say a subdivision or a development that would be being built and there would be a separate list of covenants. In other words, agreements about what could be done on the property and the covenant would, covenants would include all kinds of things like maybe you can't operate a business within the home. The home must be a certain setback from the street. You can't hang, you can't put this or that on the property. And it would be a long one. That was McCormick's. Yes. That one as well. Exactly. Exactly. But it was not uncommon at all for within that list to be a racially or restrictive covenant. They were, and I can read one to the committee if that would be helpful. Thank you. Thank you. Thank you. I don't think you understand how that they work, but if you want to hear the language of one, let me know. I have a couple, a couple I could. But they, as I mentioned, the covenants were in a separate document. Most often known as the list of covenants for this subdivision or this development, and they would be recorded in the land records and the deeds would incorporate them right reference. The deed would say, hey, this is the land records and that's where they would be. Now the, and they, another important point is that they, in legal terminology, those covenants, they run with the land. So in other words, every person who buys it after the, after they were initially, they were initially recorded in the land records, the property remains subject to it. So even, you know, the, the deed will say that subject to the, these covenants recorded at page so and so, they would be the subsequent purchasers of the property. Now back in 1948, the U.S. Supreme Court decided a very well-known case called shall it be Kramer that said these racially and religiously restrictive covenants were, were avoid their unconstitutional and unenforceable, but they didn't actually, you know, they're not, they're still there on the books and they still do run with the land, even though they cannot be enforced because it will be unconstitutional to do so. And that's what this bill proposes to do is to address the fact that they are still there. They may not be enforceable, but they are still attached to the property. The properties are still subject to them. And so it, what the bill does is a couple of, a couple of things in general to address that situation. First of all, says that, well, at least going forward, and this is moving on to page two now, I skipped the findings, which I certainly could read, but I know the committee can just read those on their own time as well, because we're getting short of time. But, but it's, it's a, it's a little bit, it's a little bit, it's a little bit, uh, Substitutably moving on to page two that, so the first thing the bill says, all right, going forward after the effective data of July 1st, 2022 deeds cannot contain these religious restrictive governance. They are, and it just are prohibited and they, they're going to be null and void. The subdivision two says, all right, well, what, what if a deed already has? Well, they already are in there. and unenforceable. So of course the rest of the deed is unenforceable but it's this restrictive covenant that's cross-referenced. It's hereby declared void contrary to the public policy of Vermont and it will be unenforceable in the future and the method that the bill provides to essentially cure the deed of this reference to these restrictive covenants it creates this and this is moving on the subsection b now on page two this is a pretty simple and inexpensive process for anyone to remove one of these existing restrictive covenants they you know in other words you don't it specifically says you don't need to hire an attorney it says on toward the bottom of subsection b that you prepare we prepare what's known as a certificate of release you can do it without an attorney and it gives you a form as well it's another way to try and make it simple and inexpensive is to actually provide a statutory form that a person could could use and if they but they use that form then this releases the property from that covenant because remember I said even though the Supreme Court said yes that's true they're unenforceable but they still run with the land they're still subject to it well this is a release so the property will no longer be subject to that covenant if one of these certificates is properly filled out and recorded in the land records and notarized and recorded in land records which it is required that that process be followed if you're going to take advantage of the ability that the statute gives to to have this release this covenant gets released so the form is the statutory form is based on other statutory forms for notarization that that are elsewhere in the green books uh you'll see that the covenant is the specific real uh language on page three that says uh that's the covenant contained in this instrument is released um so it's officially done it's acknowledged before or notary public toward the bottom of page three and over onto the top of page four um and that's also boilerplate boilerplate uh notary public acknowledgement language uh you'll see subsection or sorry section three is uh a fee waiver provision so what this does is because there's typically a fee required when you record documents in the land records and in order to make this certificate of release official and have it be accomplished the legal purpose of releasing uh this covenant has to be recorded in the land records um that ordinarily uh comes with a fee and uh what this does is that it waves that fee um for recording for this particular type of document so if you're recording one of these certificate of releases to remove or racially or religiously restrictive covenant um then the uh then the fee that's ordinarily charged his way um same thing for a decorrection so if you wanted to who's losing the money the um town clerk yes and there was we can uh the jfo testified that the uh financial effect would be uh pretty minimal but you could get that and there was a I think a fiscal note done uh for that as well um so that might also be testimony that you would want to hear too okay um Peggy for next week would set up somebody from joint fiscal whoever worked on this can I ask a question can I just ask a question yes um Eric but wouldn't this I mean doing away with the fees is one thing if there are only a few properties but some towns may have many many properties that have these covenants and therefore have a different impact in different towns so it seems to me it could be a burden at some towns yeah I think it you're right center knicker that it depends on how many of how many properties are out there that have these covenants attached to them and um it's difficult to to project that you could ask some of your witnesses if they might have some knowledge of how how prevalent they are but I think you're right there is uh uh some bit of unknown there with respect to that so this is already a league it's in unenforceable as is correct correct so this is just for example Vermont has certain laws in the books that are unconstitutional this is just make you know clearing up the unconstitutional um deeds yeah that's a I think that's a good analogy centered series yeah that uh some of that's good go ahead so it doesn't include those that um deeds that wouldn't allow a family or you know you have trailer in my district there's a a number of places that don't allow children there's a trailer park for senior citizens basically this wouldn't prohibit that I don't think right doesn't touch any of those types of deeds or exactly only only racially or religiously restricted covenants would would be affected so may I ask a question yep so this says that after July 2022 there they they can't be in any deeds but for once before that it's up to the current owner if they want to um file one of these um um release of the covenant right so nobody nobody has to do it that um am I right about that yes absolutely it's not mandatory it's whether the property owner would like to do it yeah I wonder how many property owners know that that even if that's even in their deeds I have no idea if it's in our deed I never looked I've seen places know already what it seems to me that I've heard and where I know near me like big universities had them from very old times the big tracks of land that they own also likes um different camps I don't mean like the Girl Scout camp but I mean bigger camping areas that like when people went to camp with big groups in the case any of you are really interested in the subject or gang gave me a book called color of law which is fairly recent book but it's like the noted authority on this subject describing every possible example you could think of it really is quite bizarre because in my early days I did real estate dabbling and I can recall provisions that I looked at trying to figure out why the heck would they put that in there but after reading that book it was very apparent what they put that in there they were trying to manipulate in neighborhoods to make sure that they were correct for whoever was in the neighborhood right now we have Daniel is Daniel Richardson here Peggy or in the way here from Dan now uh the city attorney for the city of Burlington and welcome Dan uh nice to see you back thank you chairs chairs and if no one objects I may just remove my mask clarity purposes I was please just send myself this muffle when I'm wearing it speaking also fogs up the glass well thank you all for having me here today and for considering this bill I think it's it's an important bill um and I want to sort of outline some of the points I think the questions have already been sort of primed for so a lot of the impetus for this legislation came out of a conversation that occurred between my office and the REIP department in this paper this was about the issue that if you read the color of law you know the history of a lot of immigration covenants there's there's multiple histories but probably the bulk of them were written sometime between the 1930s and as late as uh the early uh in early 50s uh and the federal housing administration actually promoted the use of these covenants um there was process of red lining uh that identified neighborhoods often of that were owned by people of color um as untraverable um and for any new development loans they were required in some cases developers couldn't get federally backed mortgages unless they included these covenants in their uh in their deeds and subdivision regulations um they were strongly encouraged by the housing administration and in fact when shelly versus kramer came out in 1948 the head of the federal housing administration fought the obligation of the result of shelly versus kramer for several years and in fact the use of these restrictive covenants continued um in some cases into the 1960s uh so you know what has changed is that um fair housing laws have come up and uh the courts have built on shelly versus kramer and number of state court decisions and they've largely expanded the use of it so um the chair chair sears is absolutely correct in that um you couldn't go to court and enforce all these version covenants today um but uh eric is also correct in that they sit in the deeds um and there is no legislation that makes them illegal and i think the analogy that chair sears but forward is an apt one uh for years uh 13 bsa started with the abortion restriction law even though that had essentially been a nullity since the 1970s since 1970 um in the late eights um this is one of those situations where it is arguably going to stay unenforceable in the courts um but i think this is an important message that you know the judiciary has spoken and has said these are unenforceable these are unconstitutional and this is an opportunity for the legislative and executive branches to join that statement that's a question um it'll keep on okay uh so this is an opportunity to to strike it out these uh and void out these provisions um the you know and i think it also strengthens and i don't want to in any way shape or form you know the present this is sort of a fear monitoring but court decisions always depend on the next court case um precedent is overruled um and so if one of the precedents that underlies the shelly press agreement decision is ever revisited then that reopens the door this legislation helps close the door and it's also i think an important taking down of these covenants i can only imagine as a color who might have a piece of property and come across his covenants and find it's still active on the property it's an unwelcome sum um or you know someone of a certain religious faith um and and actually the religious covenants are probably the one that has been most famous in Vermont uh i found a new york times article from august 1986 when uh justice rank west was being nominated for chief justice u.s. court he had a place in greensboro that had a religious restricted covenant that did not allow him ostensibly to sell his property to any one of the people of faith um and apparently greensboro had a number of fees and then attorney general jeff amistoy said they're unaborsable because shelly press is framer but you'd have to go to court to get this removed um and the town clerk said that there were dozens of them in the greensboro town records back to your plans yes so you know what we design what we and working with eric um on this i think what we aim for in this is really the first two the first provision is the key one which is let's make this let's make this void prospectively saying you cannot add these two beads and let's make this void retrospectively saying that these are no longer enforceable or legal under Vermont law um and the the other provision about allowing the certificate to be filed and you know certainly there's there's a split in thinking about how that works and in speaking with the rga department you know one of the early versions of this um contained language that would actually preserve the covenant in part because it's the idea that we shouldn't um erase this this history as ugly as it is it should be a reminder that there was a point in time where these type of things existed um that ran into certain problems that the title companies because of a fear that you start to have these requirements that these things come forward or requirement that there's disclaimer language put into the beat and then you start to read clouds on title and i think that's an issue that really hasn't been fully worked out and uh one of the compromises we struck was let's have this just a certificate instead if somebody wants to go and affirmatively put on to their land records this release they should be able to it should be simple they shouldn't require a lawyer um and you know i think because we're talking about a fraction of a fraction of people that would not only have these covenants in their land but um a fraction of them are going to actually go to the additional step of of disclaiming them um we felt that it was it was something that was right to do to simply make it um at very low threshold cost of no cost for an individual seat to put that on there i think practically what's going to happen um from having done real estate law for a number of years is no one's going to stumble upon this because nobody goes into the land records except lawyers for just the fun of it um but what's going to happen is somebody's going to be selling the property or buying a property and they're going to discover this in the midst of that land record search and at that point in time they'll make that election to disclaim uh the the deed and so the actual certificate is just going to be one of a number of papers that is done in a land transaction and i think that's a fairly minimal burden for clerks for doing this because they'll already be receiving payment from the actual land transaction with all the other papers being reported this is just one extra page it's unlikely to be i think a flurry or a rush of individuals filing this that might overwhelm the clerk's office i can't say that the city clerk of burlington even if you do put a number on this i would strongly suspect in the conversations we've had will make this free for burlington residents because it's important enough to the city and i think it's something we want to make sure remains a very low threshold so it can be accomplished so you know we certainly support this as a city if there are these racially restricted covenants from the fh a days but probably going to be a burlington because there was a substantial development um i expect you'll hear from jim now in a little bit i've had conversations with jim um you know in his 40 years and and i consider jim to be the um the expert on titles in vermont he's never come across a sort of live or fresh version of these type of restricted covenants they are of all a sort of older vintage um but he has come across them and he has come across them in a number of towns in burlington included um and so you know the other part of this is you know our eib was at one point considering going through the land records to start to identify these these type of covenants and one of the things this legislation does is it allows them to take those resources and use them in different areas because this essentially nullifies it and it provides a way forward they can we can have a form there at the city parks office so if somebody wants to do it you can do it right then and there if they don't have to even go home um and they can just simply fill it out and i think that that addresses this sort of lurking remnant uh of a time so the language of the covenants remains in place this is a page that's added to the record just correct so the big histories yeah what they wanted our eib was proposing was actually carrying forward language so that every deed would say if i was to buy a house that had a racially restrictive covenant at one time even if i file the certificate i would still have to say this property was at one point in time you know um subject to a racially restrictive covenant as a way of sort of bringing history forward that's where the title insurance companies have said yeah that's that that could be a thorny issue because what does it mean if it doesn't if it isn't included and so i think for the time being at least we felt i felt that this was more important to get this bill across than to then that's an issue we can always revisit um and i think in the process of finally sort of it will be creating a database because you know we can we can track and i attempt to have the the city clerk track you know how many certificates are we seeing what is file what is um what does this look like um you know because it's as i think it's been indicated you know certain properties were subject to these between the 1930s you know the 1930s and the 1960s there were the bulk of them but number of them predate if there was a camp if there was a group that felt you know they had to restrict these type of things for whatever uh belief system that they have um they do exist uh but you know they often represent the fears of the of the time um but i i think that it'll be interesting to see how how these pay it and pan out because i don't think we have an accurate count of what they are but with this bill you could i i believe that would it would create a channel forward out of this so that it effectively closes that door so that's you're welcome i'm wondering if there are any questions from the committee for dan about any of this testimony uh my only question that comes up what is more likely in vermont the religious or the racial or do you have any idea religious i i don't know i think in certain areas certainly for if you took greensboro for example it would far more likely be the religious because that just seems to have been the people that own land there um that was the covenant that they used in the town clerk back in 1986 seem to be very familiar with these religiously restrictive covenants whereas i suspect if you're looking at burlington there's going to be more racially restrictive covenants or south burlington any area that's going to be under that sort of traditional fha period of time where the federal government was endorsing um these racially restricted feminists interesting that the federal government actually endorsed well they had they had policies also against loaning taking loans and no no i understand i mean if you read the legislative intent it's clear read the book question i over is um we have is is terry course room yes she's here for any more questions for dan i'll just note in passing then it's an inexpress inexpensive process right now unless and until tyler technologies takes over thank you very much i want to put a disclaimer in joe that tyler technology is not allowed to deal with it okay uh terry executive director of the vermont bar association thank you senator spose and so nice to be back in your room well nice if i were there too but conditions don't allow for the uh record terry course sounds vermont bar associations if my testimony will be brief i'm mainly just reporting that when this building came before the house judiciary i posted it to the real property section and to the municipal law section for comment we did receive very broad general support for the bill some tweaking to the language that dan has referred to from title insurance and practitioners so the version that was passed by the house was agreed to by all the persons who have responded to that i did also post it when you all scheduled it for testimony and received just one comment yesterday from carl lispin who's involved in the uniform law commission and he indicated which was i wasn't aware of i don't know if dan or jam work were but apparently the uniform law commission is considering a restricted covenants indeed's act that would have similar goals and end results so he had in his comments said over with the committee consider postponing this until next year when the uniform law commission may have finalized its process so i had asked you is there anything in h551 with which you disagree and he hasn't responded and just looking at the the proposal it is different it's more broad it also includes a mandatory disclaimer in every deed whether it has a comment or not just saying that if there's anything in this deed that violates any federal law regarding instrumentation it's not enforceable it's it's definitely much more broad so that i just wanted to report that that's the only comment i know in discussing with dan and jam one thought was if the uniform law commission does come out with something next year whenever they wish to perhaps propose an amendment if h551 passes then that might be the time for that but that's really my only um purposes to report back and let the um members respond to the posts i think we move slowly like uniforms thank you carl for the suggestion i think it's the feeling of the committee that we should act now and that you can always amend the bill depending upon how the uniform law commission what the the uniform law might look like so senators here's can i make a comment here sure i i don't know if other people got these or not but i got some emails from people in tennessee and different places about this and about what we should be doing in vermont and i found out this morning that there was some kind of a a back door into our agenda setting system and so the agendas the potential agendas before they were actually listed were getting out there and so some of us have been getting lobbyists from all over the country are weighing in on the issues that we're dealing with and some of those yeah well good to know where that's why they they closed the door so you will they won't get it anymore but these lobbyists are it was that one of our committee systems from the night from uh senate health welfare who realized it and brought it up to it and said you know that they were exactly what you're saying before we were publishing the agendas they were getting it and yeah you found it so that was pretty yeah we we have jim nap are there any other questions for terry on this booth i did jim nap where is jim nap he's on the he's in he's remote oh right you want to join us morning jim good morning for the record jim nap james nap i'm the co-chair of the real estate section of the bar association so perhaps the group that most directly deals with these issues i don't have a lot to add to what anybody has said after careful consideration of the bill with dan richardson and eric we all agree that this bill represents an appropriate means of moving forward and we agree that the language is fine and i'm happy to answer questions but beyond that i don't really have much to say okay well i'd just like to hear that that that was are there any questions for jim so are you i'll have a question are you doing some real estate i'm not sure where you're located but are you doing real estate other areas around the state where you've seen these i technically retired as of december 31st so i'm not doing anything related to much other than contributing to legislative hearings periodically and a few other things but i wasn't practiced for 41 years before i retired primarily working in the northwestern section of the state and i can think of only two examples where i've run into this one is mayfair park in south burlington and one was at subdivision in burlington the name of which actually escapes me at the moment i did start my career doing title searches in the hard week in greensboro area but i don't ever remember running across a covenant that being said that was close to 50 years ago so i might not remember anyway so i've seen a very limited number of these and i suspect from a fiscal standpoint most towns won't even notice that this is a rounding error in the total recording fees that the towns where this is likely to be an issue would come up so i mean mayfair park has about 45 50 lots in it and they went through the process of amending their covenants to actually amend and restate to remove the objectionable covenant a few years ago so in theory the association itself has taken care of this for that particular subdivision great any other questions for jim jim thank you very much appreciate it we're going to take this bill up again next week mark hues has requested to testify and there may be others so if anybody else wants to testify on this bill they should contact piggy