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Compliance Update with Amy K by Amy Kleinschmit, Chief Compliance Officer New North Dakota Laws As follow-up from coverage that Kayla Pulvermacher, DakCU State Legislative Director, provided, here are some additional summaries on a few of the laws that will be going into effect in North Dakota later this summer that may be of interest to credit unions. HB 1368 relates to tracking devices on motor vehicles and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-0852-03000.pdf This bill added a new section to Title 51, Sales and Exchanges. The new NDCC 51 - 07 - 28.1 provides that a lender may not require a person to install or maintain a global tracking or positioning system or device on a motor vehicle for the purpose of locating or tracking the vehicle to repossess the vehicle in case of loan default, unless certain criteria are met. If the lender wants to install a GPS on a motor vehicle it must include within the financing contract, in a clear and conspicuous manner, information on the installation or placement of the system or device. If a system or device is installed it has to be at no cost to the buyer. Finally, the system or device must be removed within sixty days of the loan for the motor vehicle being paid in full at the expense of the seller or lender; and at a location agreed upon by the seller or lender and buyer. A lender who violates this section is subject to a $500 fine. If a lender continues to violate this provision, the fine increases to not less than $1,000 nor more than $2,000. HB 1366 amended provisions for repairman’s liens under NDCC 35-13-01 and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-0191-06000.pdf A repairman, which includes any blacksmith, machinist, farm equipment dealer, construction equipment dealer, welder, garage keeper, mechanic, or aviation operator, in North Dakota who makes, alters, or repairs any automobile, truck, engine, combine, tractor, farm equipment, construction equipment, well machine, aircraft, or watercraft at the request of the owner or legal possessor of the property has a lien on that property until charges are paid. The lien amount includes reasonable charges for work done, materials furnished, storage fees, and transportation costs. Storage fees may not begin to accrue until 15 days after the owner is requested to take possession of the property. If the repairman wants the entire bill to have lien priority, notice must be provided to other lienholders. The notice must include the estimated cost of repair and the estimated value of the property in its repaired condition. If the repairman fails to notify the other lienholders of record, or if such notice was given and the lienholder, within five days after receiving such notice, communicated in writing to the repairman an objection to all the proposed repair costs becoming a lien, then only that portion of the repairman's lien up to $6,000 or 30%, ($15,000 or 30% for property used for agricultural or construction purposes) of the retail value, whichever is greater, in the property's repaired condition, has priority over the lien of record. A person entitled to a lien under this chapter who retains possession of the property made, altered, or repaired is not required to file any statement with the state to perfect the lien. Notice before foreclosure – the repairman, holding a lien under this chapter, shall give ten days' written notice of their intention to foreclose the lien. This notice is to be provided to the lienholders of record and the owner of the property. Any lienholder may pay the amount due on the repairman’s lien at any time before a sale upon the foreclosure of the property. Upon payment of the lien by a lienholder, the holder of the lien shall assign it to the lienholder, and the lienholder then is entitled to all the rights which the person filing the lien had before the lien was paid. The repairman holding a lien under this chapter has the rights of a secured party under Article 9 of the Uniform Commercial Code for purposes of nonjudicial disposition of the property. A person holding a lien under this chapter who chooses to use nonjudicial disposition of the property shall dispose of the property in the manner prescribed for security interests under Article 9 of the Uniform Commercial Code. HB 1175 relates to business immunity from COVID-19 liability claims and can be found here – https://www.legis.nd.gov/assembly/67-2021/documents/21-0247-06000.pdf This new chapter to Title 32, Judicial Remedies, provides that a person may not bring or maintain a civil action alleging exposure or potential exposure to COVID - 19 unless the civil action involves an act intended to cause harm or an act that constitutes actual malice. This applies retroactively to January 1, 2020 and was declared to be an emergency measure. Among the provisions, this bill provides that a person is immune from civil liability for an act or omission resulting in damage or injury sustained from exposure or potential exposure to COVID - 19 if the act or omission was in substantial compliance or was consistent with a federal or state statute, regulation, or order related to COVID - 19 which was applicable to the person or activity at issue at the time of the alleged exposure or potential exposure. SB 2048 enacts the Revised Uniform Unclaimed Property Act and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-0167-06000.pdf This bill repeals current NDCC 47-30.1 Uniform Unclaimed Property Act and then enacts the Revised Uniform Unclaimed Property Act which will be found under NDCC 47-30.2. Transitional provisions were included that provide, a holder of property with a duty that arose before July 1, 2021, must still report, pay, or deliver property. A holder that fails to comply with the law in effect before July 1, 2021, is subject to the applicable enforcement and penalty provisions that existed before July 1, 2021, and the applicable provisions are continued in effect for the purpose of this subsection. The initial report filed under this revised law for property that was not required to be reported before July 1, 2021, but which is subject to this chapter must include all items of property that would have been presumed abandoned during the ten-year period preceding July 1, 2021, as if this chapter had been in effect during that period. A few highlights from this rule of when property is presumed abandoned, unless there is an “indication interest in property by the apparent owner” (which is explained below). Money order – presumed abandoned seven years after issuance (unless “indication of interest”). "Money order" means a payment order for a specified amount of money. The term includes an express money order and a personal money order on which the remitter is the purchaser. A cashier's check or certified check – presumed abandoned two years after issuance (unless “indication of interest”). "Cashier's check" means a check that: Is purchased by a remitter and made payable to a designated payee; Is signed by an officer or employee of the financial organization; Authorizes payment of the amount shown on the check's face to the payee; Is a direct obligation of the financial organization; and Is provided to a customer of the financial institution or acquired from the financial institution for remittance purposes. Uniform Transfers to Minors Act (UTMA) Account – presumed abandoned three years after the later of: the date a second consecutive communication sent by the holder to the custodian of the minor on whose behalf the account was opened is returned undelivered to the holder by the United States postal service; or the date on which the custodian of the minor is required to transfer the property to the minor or the minor's estate in accordance with UTMA state laws. (Unless “indication of interest”). Accounts - A payroll card or a demand, savings, or time deposit, including a time deposit that is automatically renewable, five years after the date of maturity of the time deposit or the date of the last indication of interest in the property by the apparent owner, whichever is earlier, provided a time deposit that is automatically renewable is deemed matured on its initial date of maturity unless the apparent owner has consented in a record on file with the holder to renewal at or about the time of the renewal. If an apparent owner has another established account with the credit union and has “demonstrated interest” in any account, then all accounts must be considered active. If there is “an indication of an apparent owner's interest in property” this would determine when the property is presumed abandoned (it is the later of either - the number of years or the “indication of interest”). "Apparent owner" means a person whose name appears on the records of a holder as the owner of property held, issued, or owing by the holder. Indication of interest includes a record communicated by the apparent owner to the holder or agent of the holder concerning the property or the account in which the property is held. This also includes an oral communication by the apparent owner to the holder or agent of the holder concerning the property or the account in which the property is held, if the holder or its agent contemporaneously makes and preserves a record of the fact of the apparent owner's communication. Indication of interest includes the presentment of a check or other instrument of payment of a dividend, interest payment, or other distribution, or evidence of receipt of a distribution made by electronic or similar means, with respect to an account, underlying security, or interest in a business association. Also, included is activity directed by an apparent owner in the account in which the property is held, including accessing the account or information concerning the account, or a direction by the apparent owner to increase, decrease, or otherwise change the amount or type of property held in the account. “Indication of interest” also can be a deposit into or withdrawal from an account at a financial organization, including an automatic deposit or withdrawal previously authorized by the apparent owner other than an automatic reinvestment of dividends or interest. There is also the very broad - any other action by the apparent owner which reasonably demonstrates to the holder that the apparent owner knows that the property exists, which is considered an indication of interest under this rule. New section NDCC 47-30.2-31, addresses dormancy charges. A holder may deduct a dormancy charge from property required to be paid or delivered to the administrator (State) if the following criteria are met. There must be an enforceable written contract between the holder and the apparent owner authorizing imposition of the charge for the apparent owner's failure to claim the property within a specified time. Also, the holder must regularly impose the charge and regularly does not reverse or otherwise cancel the charge. Charges authorized under this rule may only be charged until the respective property is deemed abandoned. There continues to be a notice requirement for abandoned property. The holder of property presumed abandoned shall send to the apparent owner notice by first-class United States mail not more than one hundred twenty days before filing the report if: the holder has a valid address for the apparent owner and the value of the property is twenty-five dollars or more. If an apparent owner has consented to receive electronic mail delivery from the holder, the holder shall send this notice both by first-class United States mail to the last-known mailing address and by electronic mail, unless the holder believes that the apparent owner's electronic-mail address is invalid. This notice must include the heading - "Notice. The State of North Dakota requires us to notify you that your property may be transferred to the custody of the North Dakota unclaimed property administrator if you do not contact us before (insert date that is thirty days after the date of this notice)." New NDCC 47-30.2-27 details what needs to be included in this notice. The holder’s report to the administrator (state) must be filed before November 1st of each year and cover the 12 months preceding July 1st of that year. SB 2098 revised provisions relating to abandoned vehicles and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-8090-02000.pdf Generally, when an abandoned motor vehicle is more than seven model years of age, is lacking vital component parts, and does not display a license plate currently valid in North Dakota or any other state or foreign country, it is immediately eligible for disposition and must be disposed of to a scrap iron processor licensed, and is not subject to the notification, reclamation, or title provisions under the state law. SB 2098 revised provisions regarding notice requirements to owner and law enforcement of abandoned vehicles. If the provisions for immediate disposition do not apply (discussed above) the unit of government or commercial towing service taking the abandoned motor vehicle into custody shall give notice of the taking within ten days. Among other details, the notice informs the owner and any lienholders/secured parties of their right to reclaim the vehicle, and must state that failure of the owner or, lienholders, or secured parties to exercise their right to reclaim the vehicle within thirty days is deemed a waiver by the owner, lienholders, or secured parties of all right, title, and interest in the vehicle and a consent to the disposal of the vehicle. The new provisions add an option to place the notice on an official website if it is “impossible to determine with reasonable certainty the identity and address of the registered owner and all lienholders.” Otherwise, the notice must be sent by certified mail, return receipt requested, to the registered owner, if any, of the abandoned motor vehicle and to all readily identifiable lienholders or secured parties of record. If it is impossible to determine with reasonable certainty the identity and address of the registered owner and all lienholders, the notice must be published once in a newspaper of general circulation in the area where the motor vehicle was abandoned OR placed on the official website for the unit of government that initiated the impound process from public property. Failure of the owner, lienholders, or secured parties to exercise the right to reclaim the vehicle by the end of the public notice period is deemed a waiver by the owner, lienholders, or secured parties of all right, title, and interests in the vehicle and a consent to the disposal of the vehicle. SB 2292 relates to mortgage modifications and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-1009-02000.pdf NDCC 35-03 sets forth requirements for a real property mortgage. Among the provisions is NDCC 35-03-14 which discusses expiration of real estate mortgages and NDCC 35-03-15 which provides for extensions of mortgage and delays to the expiration. New section NDCC 35-03-15.1 was added to address modification of mortgages. “Mortgage modification" means a written instrument amending at least one term of an original mortgage which: references the original mortgage by recording date and document number; AND is signed by the mortgagor, or the mortgagor's successor in interest, and the owner of the mortgage. The new provision provides that the expiration of a real estate mortgage under NDCC 35-03-14 does not occur if before the date the expiration would become effective a mortgage modification is recorded in the office of the recorder. A modified mortgage expires as provided under NDCC 35-03-14, unless the modified mortgage is extended under NDCC 35-03-15 or subsequently modified. If a modified mortgage is extended or subsequently modified, the mortgage expires as follows: a. If the final maturity date is ascertainable from the record of the mortgage modification, the lien of the mortgage expires ten years after the final maturity date. b. If the final maturity date of the mortgage is not ascertainable from the record of the original mortgage or a mortgage modification, the lien of the mortgage expires ten years after the date the last mortgage modification is filed for record in the office of the recorder. As always, DakCU members may contact Amy Kleinschmit at akleinschmit@dakcu.org with any compliance related questions.
Compliance Update with Amy K
by Amy Kleinschmit, Chief Compliance Officer
New North Dakota Laws
As follow-up from coverage that Kayla Pulvermacher, DakCU State Legislative Director, provided, here are some additional summaries on a few of the laws that will be going into effect in North Dakota later this summer that may be of interest to credit unions.
HB 1368 relates to tracking devices on motor vehicles and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-0852-03000.pdf
This bill added a new section to Title 51, Sales and Exchanges. The new NDCC 51 - 07 - 28.1 provides that a lender may not require a person to install or maintain a global tracking or positioning system or device on a motor vehicle for the purpose of locating or tracking the vehicle to repossess the vehicle in case of loan default, unless certain criteria are met. If the lender wants to install a GPS on a motor vehicle it must include within the financing contract, in a clear and conspicuous manner, information on the installation or placement of the system or device. If a system or device is installed it has to be at no cost to the buyer. Finally, the system or device must be removed within sixty days of the loan for the motor vehicle being paid in full at the expense of the seller or lender; and at a location agreed upon by the seller or lender and buyer.
A lender who violates this section is subject to a $500 fine. If a lender continues to violate this provision, the fine increases to not less than $1,000 nor more than $2,000.
HB 1366 amended provisions for repairman’s liens under NDCC 35-13-01 and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-0191-06000.pdf
A repairman, which includes any blacksmith, machinist, farm equipment dealer, construction equipment dealer, welder, garage keeper, mechanic, or aviation operator, in North Dakota who makes, alters, or repairs any automobile, truck, engine, combine, tractor, farm equipment, construction equipment, well machine, aircraft, or watercraft at the request of the owner or legal possessor of the property has a lien on that property until charges are paid. The lien amount includes reasonable charges for work done, materials furnished, storage fees, and transportation costs. Storage fees may not begin to accrue until 15 days after the owner is requested to take possession of the property.
If the repairman wants the entire bill to have lien priority, notice must be provided to other lienholders. The notice must include the estimated cost of repair and the estimated value of the property in its repaired condition. If the repairman fails to notify the other lienholders of record, or if such notice was given and the lienholder, within five days after receiving such notice, communicated in writing to the repairman an objection to all the proposed repair costs becoming a lien, then only that portion of the repairman's lien up to $6,000 or 30%, ($15,000 or 30% for property used for agricultural or construction purposes) of the retail value, whichever is greater, in the property's repaired condition, has priority over the lien of record.
A person entitled to a lien under this chapter who retains possession of the property made, altered, or repaired is not required to file any statement with the state to perfect the lien.
Notice before foreclosure – the repairman, holding a lien under this chapter, shall give ten days' written notice of their intention to foreclose the lien. This notice is to be provided to the lienholders of record and the owner of the property.
Any lienholder may pay the amount due on the repairman’s lien at any time before a sale upon the foreclosure of the property. Upon payment of the lien by a lienholder, the holder of the lien shall assign it to the lienholder, and the lienholder then is entitled to all the rights which the person filing the lien had before the lien was paid.
The repairman holding a lien under this chapter has the rights of a secured party under Article 9 of the Uniform Commercial Code for purposes of nonjudicial disposition of the property. A person holding a lien under this chapter who chooses to use nonjudicial disposition of the property shall dispose of the property in the manner prescribed for security interests under Article 9 of the Uniform Commercial Code.
HB 1175 relates to business immunity from COVID-19 liability claims and can be found here –
https://www.legis.nd.gov/assembly/67-2021/documents/21-0247-06000.pdf
This new chapter to Title 32, Judicial Remedies, provides that a person may not bring or maintain a civil action alleging exposure or potential exposure to COVID - 19 unless the civil action involves an act intended to cause harm or an act that constitutes actual malice. This applies retroactively to January 1, 2020 and was declared to be an emergency measure.
Among the provisions, this bill provides that a person is immune from civil liability for an act or omission resulting in damage or injury sustained from exposure or potential exposure to COVID - 19 if the act or omission was in substantial compliance or was consistent with a federal or state statute, regulation, or order related to COVID - 19 which was applicable to the person or activity at issue at the time of the alleged exposure or potential exposure.
SB 2048 enacts the Revised Uniform Unclaimed Property Act and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-0167-06000.pdf
This bill repeals current NDCC 47-30.1 Uniform Unclaimed Property Act and then enacts the Revised Uniform Unclaimed Property Act which will be found under NDCC 47-30.2.
Transitional provisions were included that provide, a holder of property with a duty that arose before July 1, 2021, must still report, pay, or deliver property. A holder that fails to comply with the law in effect before July 1, 2021, is subject to the applicable enforcement and penalty provisions that existed before July 1, 2021, and the applicable provisions are continued in effect for the purpose of this subsection.
The initial report filed under this revised law for property that was not required to be reported before July 1, 2021, but which is subject to this chapter must include all items of property that would have been presumed abandoned during the ten-year period preceding July 1, 2021, as if this chapter had been in effect during that period.
A few highlights from this rule of when property is presumed abandoned, unless there is an “indication interest in property by the apparent owner” (which is explained below).
Money order – presumed abandoned seven years after issuance (unless “indication of interest”). "Money order" means a payment order for a specified amount of money. The term includes an express money order and a personal money order on which the remitter is the purchaser.
A cashier's check or certified check – presumed abandoned two years after issuance (unless “indication of interest”). "Cashier's check" means a check that: Is purchased by a remitter and made payable to a designated payee; Is signed by an officer or employee of the financial organization; Authorizes payment of the amount shown on the check's face to the payee; Is a direct obligation of the financial organization; and Is provided to a customer of the financial institution or acquired from the financial institution for remittance purposes.
Uniform Transfers to Minors Act (UTMA) Account – presumed abandoned three years after the later of: the date a second consecutive communication sent by the holder to the custodian of the minor on whose behalf the account was opened is returned undelivered to the holder by the United States postal service; or the date on which the custodian of the minor is required to transfer the property to the minor or the minor's estate in accordance with UTMA state laws. (Unless “indication of interest”).
Accounts - A payroll card or a demand, savings, or time deposit, including a time deposit that is automatically renewable, five years after the date of maturity of the time deposit or the date of the last indication of interest in the property by the apparent owner, whichever is earlier, provided a time deposit that is automatically renewable is deemed matured on its initial date of maturity unless the apparent owner has consented in a record on file with the holder to renewal at or about the time of the renewal. If an apparent owner has another established account with the credit union and has “demonstrated interest” in any account, then all accounts must be considered active.
If there is “an indication of an apparent owner's interest in property” this would determine when the property is presumed abandoned (it is the later of either - the number of years or the “indication of interest”). "Apparent owner" means a person whose name appears on the records of a holder as the owner of property held, issued, or owing by the holder.
Indication of interest includes a record communicated by the apparent owner to the holder or agent of the holder concerning the property or the account in which the property is held. This also includes an oral communication by the apparent owner to the holder or agent of the holder concerning the property or the account in which the property is held, if the holder or its agent contemporaneously makes and preserves a record of the fact of the apparent owner's communication.
Indication of interest includes the presentment of a check or other instrument of payment of a dividend, interest payment, or other distribution, or evidence of receipt of a distribution made by electronic or similar means, with respect to an account, underlying security, or interest in a business association. Also, included is activity directed by an apparent owner in the account in which the property is held, including accessing the account or information concerning the account, or a direction by the apparent owner to increase, decrease, or otherwise change the amount or type of property held in the account.
“Indication of interest” also can be a deposit into or withdrawal from an account at a financial organization, including an automatic deposit or withdrawal previously authorized by the apparent owner other than an automatic reinvestment of dividends or interest.
There is also the very broad - any other action by the apparent owner which reasonably demonstrates to the holder that the apparent owner knows that the property exists, which is considered an indication of interest under this rule.
New section NDCC 47-30.2-31, addresses dormancy charges. A holder may deduct a dormancy charge from property required to be paid or delivered to the administrator (State) if the following criteria are met. There must be an enforceable written contract between the holder and the apparent owner authorizing imposition of the charge for the apparent owner's failure to claim the property within a specified time. Also, the holder must regularly impose the charge and regularly does not reverse or otherwise cancel the charge. Charges authorized under this rule may only be charged until the respective property is deemed abandoned.
There continues to be a notice requirement for abandoned property. The holder of property presumed abandoned shall send to the apparent owner notice by first-class United States mail not more than one hundred twenty days before filing the report if: the holder has a valid address for the apparent owner and the value of the property is twenty-five dollars or more.
If an apparent owner has consented to receive electronic mail delivery from the holder, the holder shall send this notice both by first-class United States mail to the last-known mailing address and by electronic mail, unless the holder believes that the apparent owner's electronic-mail address is invalid.
This notice must include the heading - "Notice. The State of North Dakota requires us to notify you that your property may be transferred to the custody of the North Dakota unclaimed property administrator if you do not contact us before (insert date that is thirty days after the date of this notice)." New NDCC 47-30.2-27 details what needs to be included in this notice.
The holder’s report to the administrator (state) must be filed before November 1st of each year and cover the 12 months preceding July 1st of that year.
SB 2098 revised provisions relating to abandoned vehicles and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-8090-02000.pdf
Generally, when an abandoned motor vehicle is more than seven model years of age, is lacking vital component parts, and does not display a license plate currently valid in North Dakota or any other state or foreign country, it is immediately eligible for disposition and must be disposed of to a scrap iron processor licensed, and is not subject to the notification, reclamation, or title provisions under the state law.
SB 2098 revised provisions regarding notice requirements to owner and law enforcement of abandoned vehicles. If the provisions for immediate disposition do not apply (discussed above) the unit of government or commercial towing service taking the abandoned motor vehicle into custody shall give notice of the taking within ten days.
Among other details, the notice informs the owner and any lienholders/secured parties of their right to reclaim the vehicle, and must state that failure of the owner or, lienholders, or secured parties to exercise their right to reclaim the vehicle within thirty days is deemed a waiver by the owner, lienholders, or secured parties of all right, title, and interest in the vehicle and a consent to the disposal of the vehicle.
The new provisions add an option to place the notice on an official website if it is “impossible to determine with reasonable certainty the identity and address of the registered owner and all lienholders.” Otherwise, the notice must be sent by certified mail, return receipt requested, to the registered owner, if any, of the abandoned motor vehicle and to all readily identifiable lienholders or secured parties of record.
If it is impossible to determine with reasonable certainty the identity and address of the registered owner and all lienholders, the notice must be published once in a newspaper of general circulation in the area where the motor vehicle was abandoned OR placed on the official website for the unit of government that initiated the impound process from public property. Failure of the owner, lienholders, or secured parties to exercise the right to reclaim the vehicle by the end of the public notice period is deemed a waiver by the owner, lienholders, or secured parties of all right, title, and interests in the vehicle and a consent to the disposal of the vehicle.
SB 2292 relates to mortgage modifications and can be found here - https://www.legis.nd.gov/assembly/67-2021/documents/21-1009-02000.pdf
NDCC 35-03 sets forth requirements for a real property mortgage. Among the provisions is NDCC 35-03-14 which discusses expiration of real estate mortgages and NDCC 35-03-15 which provides for extensions of mortgage and delays to the expiration.
New section NDCC 35-03-15.1 was added to address modification of mortgages. “Mortgage modification" means a written instrument amending at least one term of an original mortgage which: references the original mortgage by recording date and document number; AND is signed by the mortgagor, or the mortgagor's successor in interest, and the owner of the mortgage.
The new provision provides that the expiration of a real estate mortgage under NDCC 35-03-14 does not occur if before the date the expiration would become effective a mortgage modification is recorded in the office of the recorder. A modified mortgage expires as provided under NDCC 35-03-14, unless the modified mortgage is extended under NDCC 35-03-15 or subsequently modified.
If a modified mortgage is extended or subsequently modified, the mortgage expires as follows:
a. If the final maturity date is ascertainable from the record of the mortgage modification, the lien of the mortgage expires ten years after the final maturity date.
b. If the final maturity date of the mortgage is not ascertainable from the record of the original mortgage or a mortgage modification, the lien of the mortgage expires ten years after the date the last mortgage modification is filed for record in the office of the recorder.
As always, DakCU members may contact Amy Kleinschmit at akleinschmit@dakcu.org with any compliance related questions.