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Minutes for HB2600 - Committee on Local Government
Short Title
All contract for deeds must be filed with the county register of deeds by the seller within 10 days after execution or such contract shall be deemed void.
Minutes Content for Wed, Feb 19, 2020
The Chair opened the hearing on HB2600.
Mr. Heim reviewed the focus of the bill; it would require sellers to file an affidavit of interest for a contract for deed with the county treasurer within 10 days of execution, after which time the contract would become void and unenforceable.
Representative Jason Probst, District 102, testified as a proponent for the bill (Attachment 2). He reported that city leaders in Hutchinson, in dealing with unscrupulous landlords who did not maintain their properties, would be unable to enforce city safety codes if the landlord sold a residence through a contract for deed ("land contract"), collected payments from a buyer/renter, and then voided the contract without being required to provide any equity to the renter/buyer. Further abuse of the land contract was evident when a person would sell a residence and, since the seller still held title to the property, leverage the collateral for other purposes. Representative Probst acknowledged that a land contract was beneficial to those for whom a mortgage loan was unrealistic, but urged members to find a way to address the abuses allowed by this gap in Kansas statutes.
Representative Probst responded to members' questions:
- Land contracts have no protections for the buyer. There is no public record required. If there is a third-party seller involved, the buyer should at least be made aware of that fact.
- The ten-day requirement is only a recommended number.
- The minimum expense to the buyer would be a filing fee and perhaps a statement of insurance coverage.
- Regarding home rule, it was discovered that the city of Hutchinson had no authority to require a land contract registration; it is a state issue.
Jackson Swearer, Community Health Specialist, Reno County Health Department, spoke in support of the bill (Attachment 3). He said his position in the county is to promote health equity so that all citizens can lead a healthy life; safe and affordable housing is a key factor for such a life. He reported that unscrupulous landlords give vulnerable people false hope and avoid responsibility for the maintenance of their properties. He stated that filing an affidavit of interest is a small step toward discouraging the exploitative use of land contracts. He recommended one modification to the bill's language: that the buyer be permitted to void the contract if the affidavit is not filed. Mr. Swearer also provided documentation to show the relationship between housing and health (Attachment 4).
Joe McGuire, former Mayor of Hutchinson, provided written-only testimony in support of the bill (Attachment 5).
Amanda Stanley returned to speak as an opponent to the bill (Attachment 6). She explained that the bill conflicts with the state's condemnation statutes and offers no mechanism to clear a title. She agreed to assist to accomplish the intent of the bill.
Ed Jaskinia, President, Associated Landlords of Kansas, testified in opposition to the bill (Attachment 7). He reported that Wyandotte County has been dealing effectively with abuses for years, and he questioned the need for the bill; he did, however, note the need for educating the public about unscrupulous landlords. He also noted that the courts offer protection for buyers. He provided an Affidavit of Equitable Interest to illustrate that documents are available for buyers and sellers (Attachment 8).
Joe Molina, Kansas Bar Association, offered testimony as an opponent of the bill (Attachment 9).
Kathy Taylor, Kansas Bankers Association, spoke as neutral regarding the bill (Attachment 10). She acknowledged the need for protection for a buyer, and she recognized the value of filing an Assignment of Equitable Interest or an Affidavit of Interest. However, she expressed concern that the time limit between the execution of the contract and the filing of the contract should be extended to address extenuating situations, and she recommended a requirement to exclude commercial transactions.
Jay Hall, Kansas Association of Counties, also provided written-only neutral testimony (Attachment 11).
The Chair closed the hearing on HB2600.
