The Journal of theVirginia State BarReal Property Section

http: / /www.vsb.org/s i te/sect ions/realproperty

Stephen C. Gregory, EditorDerek Van De Walle, Student Editorial Assistant

2015-2016 Real Property Section Officers

F. Lewis Biggs Susan S. Walker Whitney J. LevinVice Chair Chair Secretary/Treasurer

Vol. XXXVI, No. 2 Fall 2015

Vol. XXXVI, No. 2 i Fall 2015

TABLE OF CONTENTS Chair’s Column ............................................................................................................................................. 1 Susan S. Walker From the Cluttered Desk (and Mind) of the Editor...................................................................................... 2 Stephen C. Gregory Saint Francis Service Dogs and the Virginia Department of Corrections: The Prison Pup Program ................................................................................................................. 5 Cabell Youell “Cybersecurity and the Duty to Protect Confidential Client Information” .................................................. 7 James M. McCauley E-Mail Encryption ...................................................................................................................................... 10 Sharon D. Nelson and John W. Simek Access to Equity for Real Estate Projects: An Update on the Basics for Advising Your Clients................ 15 Alyson M. Harter and Richard Chess Welcome to the Wild, Wild West: How Koontz Has Helped Land Developers Fight Back Against Lawlessness (Part 1 of A 3 Part Series) ......................................................... 21 Joshua M. Johnson Recent ALTA Hazardous Risk Endorsements ............................................................................................ 26 Lisa K. Tully and Cynthia A. Nahorney Committee Reports:

Commercial Real Estate ................................................................................................................ 30 Richard B. Chess Ethics ............................................................................................................................................. 31 David C. Helscher Fee Simple ...................................................................................................................................... 32 Stephen C. Gregory Membership ................................................................................................................................... 33 J. Philip Hart Programs ....................................................................................................................................... 36 Paula Caplinger and Blake Hegeman Residential Real Estate .................................................................................................................. 37 Susan S. Walker and Christina E. Meier Technology ..................................................................................................................................... 38 Mark W. Graybeal Title Insurance ............................................................................................................................... 40 Kay M. Creasman Board of Governors ..................................................................................................................................... 41 Area Representatives and Honorary Representatives ................................................................................. 44 Committee Chairpersons and Other Section Contacts ................................................................................ 51

Subject Index: November 1987-Fall 2015 ............ http://www.vsb.org/docs/sections/realproperty/subjectindex.pdf

Vol. XXXVI, No. 2 ii Fall 2015

Real Property Section member resources website login:

User name: realpropertymember

Password: Nwj5823

Visit the section web site at

http://www.vsb.org/docs/sections/realproperty/rpmembershipapplication.pdf for the Real Property Section Membership form

and

http://www.vsb.org/site/sections/realproperty/newsletters for articles from the FEE SIMPLE and a whole lot more!

The FEE SIMPLE is published semiannually for distribution to members of the Real Property Section of the Virginia State Bar. Anyone interested in publishing an article in the FEE SIMPLE is invited to contact the Editors. Articles should be submitted by email as Microsoft Word documents. Your submission will also be your consent to the posting of the article on the Real Property Section website, http://www.vsb.org/site/sections/realproperty/ newsletters. The FEE SIMPLE has the authority to edit materials submitted for publication. Authors are responsible for the accuracy of the content of their article(s) in the FEE SIMPLE and the views expressed in them are solely the views of the author(s).

The Board of Governors gratefully acknowledges the dedication and the hard work of the Assistant to the Editors, Felicia A. Burton ((757) 221-3813, (email) faburt@wm.edu), of the College of William and Mary School of Law.

Editor Stephen C. Gregory, Esq. 1334 Morningside Drive Charleston, WV. 25314 (703) 850-1945 (mobile) (email) 75cavalier@gmail.com

Student Editorial Assistant Derek Van De Walle 3809 E. Steeplechase Way Apartment B Williamsburg, VA 23188 (586) 850-0351 (email) dmvandewalle@email.wm.edu

SPRING SUBMISSION DEADLINE: FRIDAY, APRIL 1, 2016

The next meeting of the Board of Governors of the Real Property Section of the Virginia State Bar

will be held on Friday, January 22, 2016, at 1:00 pm

Location TBA

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Vol. XXXVI, No. 2 1 Fall 2015

CHAIR’S COLUMN

by Susan S. Walker

I write this message from the perspective of a small firm lawyer handling a high volume of residential real estate transactions and a smattering of commercial matters. The most valuable non-legal preparations I had for this kind of practice were: a) growing up on a dairy farm in Central Virginia; b) having parents who made commitment to church a priority; and c) majoring in English. You can envision how managing cows, negotiating icy roads on Sunday morning, and learning to wordsmith all relate to law practice, so I need not elaborate. In short, our life experiences make us who we are as lawyers; we are not programmed “law machines.”

There are several aspects of law practice that reflect who we are. How we relate to people with whom we interact daily—be they colleagues, staff, clients, vendors, and/or opposing parties—presents opportunities either to be impatient, critical, or patronizing, or to be respectful, patient, and humble. Our responses to these opportunities serves as a barometer of our overall success. The people we interact with are important to our lives and exist for our own good, even if only to promote character growth.

Another transferrable life skill is, starkly put, the management of greed. Although we generate revenue to keep our doors open and to provide for ourselves and our staff, doing so is only satisfying when it is the byproduct of good work and not our primary objective. A big fee can lure a practitioner into taking on a matter that may bring exposure to undesirable attorney-client relationships and/or professional competence or time management issues. Furthermore, it might seem logical and efficient to focus less attention on a smaller, residential closing than to a larger, commercial transaction. Yet, title problems and property condition issues are remarkably similar, regardless of the size of the transaction, and require equal vigilance to avoid malpractice. It is a matter of keeping both the forest and the trees in view at the same time.

Valuing people and doing quality work, in my observation, results in a long-lasting enjoyment of law practice. Lawyers who follow this formula consistently remain vibrantly engaged in their practices and beyond, even after practicing for many years. With specific reference to our Real Property Section, many former Section officers and committee chairs (and the list is very long), continually provide input and practical help to both the Section and to attorneys seeking advice, despite no longer holding a titled position.

(For example, the Board of Governors and Area Representatives maintain an informal practice of e-mailing one another with requests for advice and/or forms. Last summer, I sent an e-mail blast asking for advice on drafting an Intercreditor Agreement, a document I had never heard of when I made the request. I was delighted and gratified to receive prompt feedback from at least seven colleagues, as well as sample forms from at least one (thank you, Thompson McMullen, P.C.)).

The quarterly Board of Governor meetings and quarterly substantive committee conference calls provide another forum for discussing topics of current concern affecting practitioners across the Commonwealth. As a closing thought, if you are not already taking advantage of the opportunities available to you as a Section member, I encourage you to do so. At the end of this newsletter you will find committee reports from a number of the substantive committees of the Section. If you would like to join one or more of the committees, please contact the committee chair, whose contact information is in the Roster. Lastly, if you are interested in becoming an Area Representative to the Section, please contact me or another Board member identified in the Roster. I look forward to interacting with many of you as I serve our Section this year.

Susan S. Walker is a principal with the firm of Jones, Walker & Lake, a professional corporation,

in Virginia Beach, where her practice focuses on residential real estate. She graduated with a B.A. from the University of Virginia in 1986 and received her J.D. from Marshall-Wythe School of Law at the College of William and Mary in 1989.

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Vol. XXXVI, No. 2 2 Fall 2015

FROM THE CLUTTERED DESK (AND MIND) OF THE EDITOR

by Stephen C. Gregory

I think most of us went to law school altruistically—through movies, television, or personal experience, we had observed the good (and the bad) that the legal system could do. We saw an opportunity to help others and craft a career at the same time. Our intentions were noble. Early in our education, we were given John Adams’ quote that our government is one of laws, not of men. We were taught to respect the rule of law and to become the defenders and custodians of those laws, regardless of what we may have thought of them.

It is astonishing, then, that we have devolved into a nation with utter contempt for the laws of this country, and that members of our profession are aiding and abetting that descent into darkness. A duly elected public official openly defies the laws she swore to uphold, and members of our profession not only rush to her defense, but hail her as a hero. A politician who should know better advocates for officials to ignore the law as interpreted by “five unelected persons in black robes.” Vigilantes disagree with the duly enacted laws of this country by openly carrying weapons into places they deem in need of their protection. Members of our profession profess an obeisance to a superior being whenever the laws of their declared religion conflict with the laws of the state/nation in which they reside and which they pledged to observe and defend upon admittance to the bar.

Aren’t we better than this? The United States Constitution and the various states guarantee a right to believe and speak as you wish (within the law)—but ultimately, it is the law that must reign supreme, not man and not God. We are not a theocracy, and no one has the right to impose his or her religion or religious views on anyone else outside the home, the place of worship, or certain schools affiliated with religions.

Yes, everyone deserves, and is entitled to, representation in a court of law. Even the most heinous of criminals gets to have counsel by his side as his actions are laid bare before his peers—and for which more than one lawyer has suffered threats, snubs and disdain while honoring the most noble aspects of lawyering. That said, imparting the credibility of the profession to personal crusades is not only inflammatory, but dangerous.

As lawyers, we know how to change laws—either by statute or by judicial decisions. Our profession carries a sworn duty not to encourage and promote lawlessness in open rebellion of the laws with which we disagree. There’s a reason Dick the Butcher advocated first killing all the lawyers—because in Shakespeare’s time, as today, it is the lawyers who are responsible for justice in an orderly society, and the elimination of lawyers removes barriers to anarchy. Thus, we must use our skills, knowledge, and voices to preserve the republic for which we have become the guardians.

The Greatest Generation made the world safe for democracy; the Baby Boomer generation, through law, changed the world to promote social equality and social justice. Surely, there should never be a time for the United States to reverse all the advances made over the last three-quarters of a century because of some perceived moral slight or outrage, all in the name of fealty to only those selected passages of a holy book that suits one’s purposes. Spare me the sanctimony of these false prophets, these street-corner preachers, who condemn that which they decree immoral while dining on shrimp and tolerating their children cursing them.

Speaking of which, the contretemps about the appointment of Judge Jane Marum Roush to the Supreme Court of Virginia is, in a word, disgraceful. The petulance of the Republican leadership in the legislature does a disservice not only to themselves but also to all the citizens of the Commonwealth.

With all due respect to the GOP choice, Judge Rossie D. Alston, Jr., of the Court of Appeals, the editor is firmly of the belief that not one person with knowledge of the judiciary would consider Justice

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Roush anything other than the most qualified person for the position. (Then) Judge Roush served as the judicial liaison to the Real Property Section for many years; having worked with her in that capacity and having appeared before her in the Circuit Court of Fairfax County, I feel eminently qualified to join the ranks of all those who have found her to be fair, thoughtful, and scholarly. Her elevation to the Supreme Court bench was based on merit, not politics or longevity.

And yet the leaders in the Senate and House of Delegates would deny their constituents the benefit of having a jurist who has earned the reputation of being among the best ever to serve.1 No, instead the GOP has gone into full pout mode, whining that the Governor failed to consult with them sufficiently or cave to their demands that Judge Alston be elevated instead.2 Indeed, there have been reports that the opposition will stop at nothing to see Justice Roush removed.

The judiciary must be free of politics, political bias, and ideology for the public to respect it and have faith in the fairness of its decisions. Regrettably, that has not been the case in recent years, as the United States Supreme Court has split along party lines in so many of its latest decisions. That’s not to say that the opinions are necessarily “wrong,” only that there is the appearance of ideology, which erodes public confidence and trust. Because SCOTUS is so visible, people have a tendency to extrapolate its perceived bias to the lower courts, both state and federal.

The Editor has experienced two radically different means of determining who gets to wear the black robes. In West Virginia, judges and justices are elected by popular vote. There are several drawbacks to the method. First, many people who vote for the judiciary really have little or no knowledge of the candidates’ qualifications; they are persuaded to cast their ballot by party affiliation or mass media information (or, in some cases, misinformation). Second, like all politics today, the process is subject to the corruption of an infusion of money from partisan interests. Many may recall that in 2004, Massey Energy CEO Don Blankenship spent nearly $3,000,000 of his own money3 to unseat sitting Justice Warren McGraw, whom Brent Benjamin was challenging. Benjamin won, a victory largely credited to the negative attack ads run with Blankenship’s funds. Justice Benjamin refused to recuse himself from a Massey Energy case before the West Virginia Supreme Court, which case was decided in Massey’s favor by a 3-2 vote (twice), with Benjamin in the majority both times. The United States Supreme Court, however, ruled that Justice Benjamin’s failure to recuse himself created an appearance of conflict of interest so extreme that it resulted in the denial of due process to Massey’s opponent in the action.

Until recently, Virginia’s method of appointment has been generally without controversy and has resulted in a knowledgeable and respected judiciary. In the last few years, however, judges up for reappointment have had to endure intense scrutiny over their decisions in what legislators had decided were “politically-charged” cases that came before them. It has mattered little that the judges followed the law in a fair and impartial manner; their tenure on the bench hung by the slender thread of their rulings comporting with the ideology of the legislators who held their careers in their hands. Now we have the unseemly spectacle of a perfectly qualified jurist facing a partisan effort to disenfranchise her appointment by whatever means necessary and available--not by her detractors, but by the detractors of the person responsible for her appointment.

If the GOP succeeds in removing Justice Roush, who wins?

1 In addition to the ordinary, run-of-the-mill cases to come before her, Judge Roush was entrusted

to hear some of Fairfax County’s high-profile cases, knowing she would rule only on the merits of the case and not be swayed by politics or public opinion.

2 Again, I want to emphasize that Judge Alston has served nobly as a jurist. However, the appointment of Justice Roush was not and is not a reflection of his capabilities; rather, it was the recognition that Justice Roush, because of her experience and reputation, deserved the seat.

3 According to the SCOTUS opinion, Blankenship’s contribution was more than the total spent by all other Benjamin supporters, and 3 times more than that spent by Benjamin’s own committee.

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Elsewhere in this issue is an article by Cabell Youell recounting her experiences with a program that employs prisoners to train dogs for disabled persons. Her achievements stand as a beacon of what we can accomplish to benefit our communities through our knowledge and skills.

I realize that many of you may have tuned out my message to get involved, but for those who haven’t, please consider some kind of pro bono work to aid those who are less fortunate than we are.

By the time you read this, TRID will have been in effect for approximately two months. We are interested in your experiences in implementing and complying with the new regulations. Please contact the editor at 75cavalier@gmail.com with specific issues for a roundtable discussion, or—better yet—contribute an article for the Spring 2016 FEE SIMPLE.

As always, we close with our entreaty for your help in making this magazine better. Let us know what you like, what you don’t like, and where we can improve. We encourage you, our readers, to write, call or email your ideas, thoughts, criticisms, and comments.

We have an open door and an open mind—even if it is cluttered.

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Vol. XXXVI, No. 2 5 Fall 2015

SAINT FRANCIS SERVICE DOGS AND THE VIRGINIA DEPARTMENT OF CORRECTIONS:

THE PRISON PUP PROGRAM by Cabell Youell*

It doesn’t take long after we settle into our desks at our first job as attorneys for the issue of pro bono work to come up. What is the best way to meet our pro bono obligation? What is most efficient? Most helpful? Too often our pro bono time fails to be either the most helpful or most efficient use of our time and talents. If we can only find a way to use our pro bono time to the best effect, then we might be able to make a difference.

I was lucky and found a way.

I moved to Roanoke from Richmond in 2001 after getting married and began work in the commercial real estate and corporate law section for what was then Flippin Densmore Morse and Jessee (now LeClair Ryan). I was approached by a local non-profit, Saint Francis Service Dogs, that wanted to set up a new and innovative program—a partnership with the Department of Corrections to employ inmates to train dogs for people with disabilities. I was intrigued by both the organization and the project.

Saint Francis Service Dogs is based in Roanoke but serves the entire state, plus an area within a three hour radius of Roanoke. A secular organization, Saint Francis selects, raises and trains dogs to perform a myriad of jobs to assist people with physical disabilities to lead more independent and active lives. The dogs are meticulously trained, beginning at eight weeks old and continuing for two solid years. The dogs are taught to pick items up, bring the phone, go for help, open doors, close drawers, retrieve objects, and many other useful jobs. They are taught to do these tasks in all types of environments and under all sorts of circumstances. Saint Francis bears the cost of this extensive training and provides trained service dogs free of charge to people with disabilities. It is an extremely expensive undertaking, and finding creative ways to make it happen are critical to the organization’s success. Working with the prison population offered the potential of saving time and money, while maintaining the very high quality of training needed to produce these professional working dogs.

The more I looked into this idea, the more it made sense. The inmates had the time and capacity to do the slow and careful work of training a service dog. Saint Francis needed more puppies in the program to meet the burgeoning need for service dogs in Virginia. I accepted the task of helping to negotiate the terms of the program with the Bland Correctional Facility.

Soon, the Prison Pup Program was born. When the Saint Francis Prison Pup Program began at the medium security Bland Correctional Facility in the summer of 2002, there was no other program like it in the state, nothing to guide the non-profit or the prison, and no predictor of success. No one at the time knew it would become such an integral part of the Saint Francis training program; almost all of the dogs in the Saint Francis program spend at least some time in prison under the tutelage of twenty-five selected men.

The dogs are trained using methods approved and taught by Saint Francis trainers. The men work together every day, providing the dogs with intensive training over a short period of time. Saint Francis Puppy Program Manager, Connie Kniseley, travels to the prison weekly to meet with the inmates and dogs. She

* Cabell graduated from the University of Virginia in 1991 and Washington and Lee University

School of Law in 1999. Cabell was an associate at Williams Mullen in Richmond, VA until she moved to Roanoke in 2001 and went to work at Flippin Densmore Morse & Jessee (now LeClair Ryan). She worked there until she left the practice of law in December of 2003 to become the Executive Director of Saint Francis Service Dogs.

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teaches the men new training methods, evaluates the progress of the dogs, and troubleshoots training issues. A counselor on the prison staff acts as liaison to Saint Francis, overseeing the Prison Pup Program and communicating with Saint Francis in the event any problems arise when Connie is not there.

One inmate described the impact of the program as follows:

“You know I’ve been asked the question: Does this program rehabilitate criminals, and I would like to share my view with you. First and foremost, I believe that criminal conduct is like any other habit or obsession; you have to have a desire to stop. You have to believe that you are capable of functioning in a society without committing crime. I believe that this program demands that you be responsible, unselfish, patient and giving. It also demands that you set reasonable and achievable goals. It also demands that you work through setbacks and appreciate small victories. Does it rehabilitate, I don’t know, but it certainly sets the foundation if one chooses to try. It has made me take a hard look at my past life and I plan to change it. Like Saint Francis, I believe that my best years are ahead of me.”

In addition to offering the inmates a rare opportunity to make a difference, the Saint Francis dogs also thrive in prison. For the dogs it means a regular schedule, lots of training, and constant companionship. While there, the dogs learn by leaps and bounds the behavior and tasks they need to master in order to become a Saint Francis Service Dog. For the men, the dogs provide a balm for the spirit and an opportunity to do something worthwhile with their time.

This is very good news for the many deserving people waiting for a Saint Francis Service Dog. Thanks to the inmates in the Prison Pup Program, their wait is much shorter than it might have been.

As for me, my pro bono project resulted in my joining the Board of Directors for Saint Francis Service Dogs and eventually becoming its Executive Director—all from a lucky opportunity to do an interesting and innovative pro bono project.

Editor’s note: We realize this article is not “real estate.” Regular readers of this magazine may even be growing weary of the editor’s entreaties to service beyond our standard income-generating practice. We admire Ms. Youell for her dedication and commitment and are pleased to offer her account of her experience. At the risk of wearing out our welcome, we renew our call to our members to “get involved.” Pro bono work isn’t all representing the indigent in court (although that is needed also).

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Vol. XXXVI, No. 2 7 Fall 2015

“Cybersecurity and the Duty to Protect Confidential Client Information”*

James M. McCauley, Ethics Counsel

Virginia State Bar

Cyber-attacks and computer theft of client and customer data directed against business entities and professional service firms are on the rise. Sony, Target, Chase, Anthem, and the Veteran’s Administration are but a few of the many examples publicized in the media. Lawyers and law firms are not immune from the mischief of cyber-criminals and hackers. Cyber-crimes against smaller businesses and firms are also on the increase. As attorneys embrace new technologies in their practice, they must pay attention to both the benefits and risks associated with technology. At the core of all this is the fundamental ethical duty to protect the confidentiality of client information—Rule 1.6 of the Rules of Professional Conduct. “Cybersecurity” is a necessary component of that ethical duty.

As early as November 18, 2009, the FBI issued a formal advisory alert that law firms are the targets of systematic, sophisticated attacks on their information systems and networks.1 Wendy F. Inge, who frequently lectures on law firm cyberliability, and former Risk Manager for the Virginia State Bar reports that:

“[i]n January 2014 the ABA released the details from a survey conducted by the ABA's Legal Technology Resource Center ‘Security Snapshots: Threats and Opportunities.’” Jeff Brandt at Pinhawk breaks down the key findings as follows: “The summary of the report is that most lawyers don't know if their firm has experienced a data breach.”

70% of large firm respondents reported that they didn't know if their firm had experienced a security breach.

15% of survey respondents had experienced a security breach, and respondents of mid-size firms (10-99 attorneys) were most likely to know about the breach.

No one seems to care about state breach notification laws.2 As Anne Costello, who has worked in legal technology for over 24 years, quipped on Twitter: “There are two types of law firms: those that have been hacked and those that have been hacked and don’t know it.”3 Cisco Systems ranks law firms seventh on the list of industries most vulnerable to cyber-attack.4 An estimated eighty percent of the 100 biggest law firms have been breached.5

State and federal laws mandate privacy protection, security and data breach notification for certain types of information.6 Perhaps the most well-known are regulations promulgated under HIPPA, but there are many other laws as well. To date 46 states have enacted breach notification statutes. For a list of states and their corresponding notification statute see the NCSL (National Conference of State Legislatures)

*Reprinted from the fall 2015 issue of the VBA Journal with permission of The Virginia Bar Association and author James M. McCauley.

1 Vincent I. Polley, The Judges Journal, “Cybersecurity for Lawyers and Law Firms,”(2014) posted at http://www.americanbar.org/publications/judges_journal/2014/fall/cybersecurity_for_lawyers _and_law_firms.html

2 Wendy F. Inge, CLE White Paper, “Don’t Be Fooled or Foolish: Protecting Your Firm From Cyberliability,” (2014).

3 Anne Costello @annecost66 https://twitter.com/annecost66/status/501487955966722049 4 Ellen Rosen, “Most Big Firms Have Had Some Hacking: Business of Law,” Bloomberg

Business Blog (March 11, 2015). 5 Id. 6 See Data Breach Charts, BakerHostetler, LLP, at http://www.bakerlaw.com/files/Uploads/

Documents/Data%20Breach%20documents/Data_Breach_Charts.pdf

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web site.7 Virginia is included among them.8 The irony is that state and federal law are evolving to require higher standards to protect a third party’s personal, financial and medical information than the protection many law firms provide to their clients.

In March 2012, Jeffrey Brandt, a well-known law firm IT professional and blogger, wrote an article titled “When Good Enough—Isn’t”9, reporting findings from a 2011 International Legal Technology Association (ILTA) study, reflecting the deplorable state of law firm cybersecurity:

86 percent of firms do not use or require two-factor authentication. 78 percent of firms do not issue encrypted USB drives. 76 percent of firms do not automatically encrypt content-based email. 58 percent of firms do not encrypt laptops. 87 percent of firms do not use any laptop tracking technology. 61 percent of firms do not have intrusion detection tools. 64 percent of firms do not have intrusion prevention tools.10

Subsequent studies reveal that there has not been any remarkable improvement. For example the 2013 ILTA study reported minimum improvement in these seven areas and no change in the last two.11

Recognizing that client data and information are increasingly vulnerable to cyber-attack, the ABA adopted in 2012 an amendment to Model Rule 1.6, adding a new paragraph (c)): “[a] lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”

On March 16, 2015, the Virginia State Bar petitioned the Supreme Court of Virginia to adopt similar amendments to the Virginia Rules of Professional Conduct. To date, 16 states have amended their

7 Inge, supra. 8 In addition to § 32.1-127.1:05, Breach of medical information notification Va. Code § 18.2-

186.6 Breach of personal identification information (PII) notification requires businesses to report to the A.G.s office any disclosure of a client(s) PII. Virginia law requires a business or state agency to notify any Virginia resident whose unencrypted personal information, as defined, was acquired, or reasonably believed to have been acquired, by an unauthorized person.

…(B) If unencrypted or unredacted personal information was or is reasonably believed to have been accessed and acquired by an unauthorized person and causes, or the individual or entity reasonably believes has caused or will cause, identity theft or another fraud to any resident of the Commonwealth, an individual or entity that owns or licenses computerized data that includes personal information shall disclose any breach of the security of the system following discovery or notification of the breach of the security of the system to the Office of the Attorney General and any affected resident of the Commonwealth without unreasonable delay. Notice required by this section may be reasonably delayed to allow the individual or entity to determine the scope of the breach of the security of the system and restore the reasonable integrity of the system. Notice required by this section may be delayed if, after the individual or entity notifies a law-enforcement agency, the law-enforcement agency determines and advises the individual or entity that the notice will impede a criminal or civil investigation, or homeland or national security. Notice shall be made without unreasonable delay after the law-enforcement agency determines that the notification will no longer impede the investigation or jeopardize national or homeland security.

9 Jeffrey Brandt, “When Good Enough—Isn’t: A Spotlight on Law Firm Security,” March 28, 2012 at http://www.legalitprofessionals.com/legal-it-columns/jeffrey-brandt/4087-when-good-enough-isnt

10 Joseph M. Burton, Four Steps to Getting Serious About Law Firm Cybersecurity,” Law Practice Today (September 15, 2014) at http://www.lawpracticetoday.org/article/4-steps-getting-serious-law-firm-cybersecurity/

11Id. See also http://www.iltanet.org/Downloads/2013-Tech-Survey.pdf

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versions of Rule 1.6, by making amendments similar to those adopted by the ABA in 2012, requiring lawyers to exercise reasonable care to protect client data from cyber-attack, corruption, theft, loss or destruction. A copy of the bar’s petition filed with the Court and the proposed amendments are posted on the Virginia State Bar’s web site at http://www.vsb.org/docs/prop-rules1-1_1-6_031615.pdf. The proposed amendments to the Virginia rules are similar but not identical to the ABA amendments adopted in 2012. The first is a proposed amendment to Comment 6 to Rule 1.1 (Competence):

[6] To maintain the requisite knowledge and skill, a lawyer should engage in continuing study and education in the areas of practice in which the lawyer is engaged. Attention should be paid to the benefits and risks associated with relevant technology. The Mandatory Continuing Legal Education requirements of the Rules of the Supreme Court of Virginia set the minimum standard for continuing study and education which a lawyer licensed and practicing in Virginia must satisfy. If a system of peer review has been established, the lawyer should consider making use of it in appropriate circumstances. The second proposed amendment to Rule 1.6 (Confidentiality), adding a new paragraph: (d) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information protected under this Rule.

Requiring lawyers to use reasonable care to safeguard information protected by Virginia Rule 1.6, is not overwhelming nor should it impose a financial burden on solo or small firm lawyers. This ethical requirement should not strike lawyers as startling or new. For nearly a decade, other state bar legal ethics opinions have already interpreted their version of Rule 1.6 as requiring lawyers to employ reasonable measures to secure their computers and electronically stored client information.12 Much of what can be done to safeguard client confidential information from unauthorized use, access, destruction or compromise entails some minimal cost, but more often requires common sense, education and application. Examples include using strong passwords, automatic log-offs, firewalls, encryption and updating internet security and network applications. Many of these features come with the operating systems and software already installed on our computers. Policies regarding use of personal portable electronic devices, removable storage, social media, opening e-mail and downloading applications should be considered and implemented. The proposed rule changes move lawyers in the right direction to counter a well-recognized “cyber war.” The proposed standards only require that the lawyer act reasonably, and do not require that the lawyer guarantee the security of a client’s data. If the lawyer has acted reasonably to protect the client’s data from cyber-attack, the proposed rule creates a “safe harbor,” i.e., a data breach would not be rule violation. In short, lawyers need to stop, think and plan how to protect their clients’ confidential information. Staying abreast of relevant technology does not require a lawyer to become “tech-savvy” or an IT expert. However, fulfilling this ethical obligation may require that lawyers consult periodically with persons that have expertise in cybersecurity so that lawyers can sleep peacefully at night knowing that they have acted reasonable to secure their client’s confidential information.

12 See State Bar of Arizona, Formal Op. 05-04, which addressed what lawyers must do to ensure

that computers, through which Internet connections are available and to which connection can be made over the Internet, are secure from attack or from inadvertent disclosure of confidences, concluding that an attorney must take reasonable precautions with regard to electronically stored communications among a “panoply” of available measures, including firewalls, security software against destructive intrusions (viruses and “worms”) and against “spyware” (the more malicious intrusions allowing outsiders access to computer files), password systems, and encryption systems. See New Jersey Supreme Court Advisory Committee on Professional Ethics, Electronic Storage and Access of Client Files, NJ Eth. Op. 701, April 10, 2006 (storing client information to be accessed by the lawyer from “any location in the world” requires reasonable care to ensure that unauthorized persons do not have similar access).

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Vol. XXXVI, No. 2 10 Fall 2015

E-MAIL ENCRYPTION*

by Sharon D. Nelson and John W. Simek**

The most used method of electronically communicating today is via e-mail. Some may argue that text messaging is the number one method and that may be true for the younger generation, but businesses are generally communicating with some sort of e-mail service. The issue that we need to tackle is whether our electronic communications are secure (or need to be) and how to securely communicate when needed.

Attorneys have an ethical duty to protect the confidentiality of client information. It’s not just the written word and paper documents. The duty extends to electronic communications as well. Sending a simple e-mail message potentially exposes the contents to interception by the bad guys if not our own government. Encryption can protect the electronic communications thereby preserving the confidentiality of the information. In addition, digitally signing communications helps ensure the authenticity of the sender. Real Estate attorneys in particular will benefit from encrypting e-mail and attachments, especially since they deal with a lot of financial and personally identifiable information. Since 47 states now have data breach notification laws, you don’t want your law firm to need to comply with your state law because you didn’t realize that e-mail encryption is now cheap, easy – and may start to be ethically required as a matter of competence. Using e-mail encryption when transmitting sensitive data has become a no-brainer.

MICROSOFT EXCHANGE SERVER

By default, Exchange is configured automatically to attempt to communicate with other servers using TLS (Transport Layer Security), which is the successor to SSL. This means that the server-to-server communications travel in an encrypted state. You can also configure Exchange so that communications between two domains is required to be encrypted using TLS. If the same encryption level does not exist between the two domains, the messages are returned and a non-delivery report (NDR) is generated. Obviously, this would be a very secure configuration and something that may be considered for use between the firm and specific clients. However, implementing such configurations is best left to the technology professionals. We are pretty sure we won’t see any attorneys attempting to do this on their own.

Exchange can also be configured to require TLS encryption for the accessing computers. This means that any software (e.g. Outlook) must use TLS in order to access a mailbox. Again, your IT person is probably better equipped to configure the TLS requirement for client computers.

E-MAIL ENCRYPTION

This topic can be complicated and confusing for most lawyers. We’ll try to simplify how to encrypt messages (and any attachments). The data flow is the same as if you were encrypting a file. Instead the “file” is an e-mail message.

* © 2015 Sensei Enterprises, Inc. ** The authors are the President and Vice President of Sensei Enterprises, Inc., a legal technology,

information security and digital forensics firm based in Fairfax, VA. 703-359-0700 (phone) www.senseient.com.

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Figure 1

Figure 1 shows the steps (in simplistic form) for encrypting a single message. The sender starts by composing their e-mail message is plaintext. When they transmit the message the recipient’s public key is used to encrypt the message with the output being unreadable ciphertext. The ciphertext (encrypted data) is sent along its merry way destined for the recipient. The recipient then uses their private key to decrypt the ciphertext into readable plaintext. The encryption applies to the message contents as well as any attachments.

As you can see, it is extremely important for the sender to have a copy of the recipient’s public key in order to make this work. Key exchange and management is one of the challenges when trying to encrypt e-mail messages. Since the recipient is the only one with their private key (they better be the only one), that is used in decrypting the data, confidentiality is maintained.

OUTLOOK MESSAGES

Since the majority of attorneys use Outlook as their e-mail client, we’ll describe the requirements and steps to encrypt a message when using Outlook. The first requirement is to have a digital ID, also known as a digital certificate. The digital ID helps prove your identity and includes the public and private keys needed for encryption. How do you get a digital ID? Just follow the steps below from Outlook:

1. Click on the File tab 2. Click Options 3. Click Trust Center 4. Under Microsoft Outlook Trust Center, click Trust Center Settings … 5. On the E-mail Security tab, under Digital IDs (Certificates), click Get a Digital ID …

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Figure 2

You will then open a browser window where you will have a choice to select a Digital ID provider. Once you have selected a provider and obtained your digital ID, follow the providers instructions on how to install the digital certificate to your computer.

Once you have installed your digital ID, you can begin the process of sending an encrypted message from Outlook. Create your message and include any attachments you want to send along. Once you are ready to send the message, select the Options tab from the Ribbon and then the More Options symbol as shown by the arrow in Figure 3.

Figure 3

After selecting the More Options symbol, a Properties dialog box will be presented with additional options. Click on the Security Settings … button to display the Security Properties dialog box. Check the box for Encrypt message contents and attachments as shown in Figure 4 to encrypt the e-mail.

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Figure 4

Remember we said previously that you need the public key of the recipient(s) in order to encrypt the message? If there is a problem with the certificate, therefore the key, you have the option of sending the message unencrypted by just clicking the Send Unencrypted button.

SECURE E-MAIL SERVICES

There are many providers of secure e-mail. Just do a Google search and all sorts of results will be returned. How do they work and what features are important? We can’t possibly cover all the solutions. ProtonMail (https://protonmail.ch/) gets high marks and good reviews. It is a complete end-to-end encrypted messaging system that does not require any installation. Other highly rated providers include 4SecureMail.com, ShazzleMail.com and StartMail.com. See if the vendor offers a trial period and if their system can integrate in your current e-mail environment with ease.

HUSHMAIL

It would be impossible to discuss all the possible options for sending encrypted communications. One very popular service is called Hushmail. They have plans for Individuals, Business and HIPAA compliance. Hushmail is a web-based e-mail service that provides encrypted communications between parties. While Hushmail encrypts e-mail, it is not a totally secure solution. The servers are located in British Columbia, Canada, and will comply with any lawful request to access the data. Under normal circumstances they do not store the passphrase that is used for encryption/decryption. However, it may be required to store a passphrase for an account identified in an order enforceable in British Columbia, Canada. Like the encrypted services of some cloud storage vendors, you need to understand that Hushmail does have the ability to access messages even though they are encrypted.

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ZIXCORP

Another service that is worth considering are the e-mail encryption services of Zix Corporation. ZixCorp is the only e-mail encryption provider with SOC3/SysTrust certification, SOC2 accreditation and PCI Level 1, DSS V2.0 certification. The encryption service is easy to install and very simple to use.

Most attorneys will subscribe to the ZixCorp service through a reseller. The reseller will set up the mail flow so that messages in and out are routed through the ZixCorp servers. This is similar to many spam and anti-virus services. The user installs an Outlook add-in that provides for one-button-click encryption. Compose your message and just click the button to encrypt. Simple, right? The message is then sent to the ZixCorp servers.

If the recipient can receive messages via a TLS connection, the message is delivered to directly to their Inbox and is opened it in Outlook with no further processing. If they do not have the ability to receive e-mail via TLS, they receive a link to the message on the ZixCorp servers. The recipient will have to create a login ID or login to their account if they have already created one. They then retrieve the message. In other words, a non-TLS enabled user will be viewing the decrypted messages via a web browser once they have logged in. It couldn’t be easier.

If the message is delivered directly to the recipient’s inbox, the recipient knows that the message was secured throughout its journey by the insertion of the ZixCorp graphic at the end of the message. This footer message is inserted by Zix for the e-mail that is delivered via a TLS connection. In addition, you have the option to set policies where the messages will automatically get encrypted based on message content. As an example, you can have a “financial policy,” where Zix scans the e-mail for the inclusion of any financial data such as bank account numbers, credit card numbers, routing numbers, etc. If financial data exists then Zix will automatically encrypt the e-mail without the user clicking any buttons. You can override any policy by clicking on the Send Unencrypted button in the Outlook toolbar.

Would you use this all the time? Possibly, especially where there are a communications involving a real estate transaction. Items such as credit reports, deed transfers, closing documents, etc. could all be transmitted by e-mail if the attorney has encryption available.

FINAL WORDS

Encrypting e-mail is a very powerful tool for an attorney. Not only will encrypting e-mail fulfil your ethical duties to protect confidential client information, but it can save you money too. No more taking time to meet with clients to obtain signatures or pay courier fees to deliver closing documents. Pack the files as attachments to an e-mail message and encrypt away. Easy peasy. And cheap too.

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ACCESS TO EQUITY FOR REAL ESTATE PROJECTS: AN UPDATE ON THE BASICS FOR ADVISING YOUR CLIENTS

by Alyson M. Harter* and Richard L. Chess**

If you are a real estate attorney assisting clients with commercial acquisitions and developments, you have probably had many a client approach you seeking advice on how to quickly and cost-effectively raise equity for such projects. Advising a client on these matters steps outside the confines of a real estate law practice and into the realm of securities laws. Raising capital from passive investors is generally considered to constitute the offer and sale of securities.

Securities can be sold three ways: (i) through a registered offering, (ii) pursuant to an exemption from registration, or (iii) illegally. Selling securities illegally is obviously not the desirable choice, so the only remaining options are by registration of the securities or pursuant to an exemption from registration. For most commercial real estate clients, a registered offering will be too cumbersome, time-consuming and expensive for their needs.

There are various methods for raising the requisite equity for commercial real estate projects; however, choosing the best vehicle for doing so can be very dependent on the facts of the deal, the particular needs of the client, and the current “temperature” of the market. An attorney must be careful if he or she is not familiar with constantly changing federal and state securities laws, rules, and regulations that govern securities offerings. A lack of knowledge or familiarity could prove dangerous for the client and for the attorney providing the advice. In recent years, there have been significant changes in securities laws that have opened doors to more options for raising capital through private offerings--which is where a majority of commercial real estate clients will need to raise their equity. Such offerings are the focus of this article.

The Jumpstart Our Business Start-Ups Act (the “JOBS Act”), signed into law by President Obama on April 5, 2012, is an attempt to increase the number of capital formation alternatives for companies and ease the burdens and hurdles of raising capital for smaller companies that do not have the money and

* Alyson Harter is a Partner with LeClairRyan, a national law firm with 25 offices located

throughout the United States. She represents sponsors and issuers in the structuring of a variety of syndications, including private placements, 1031 exchange offerings, initial and secondary public offerings for both traded and non-traded issuers, and Regulation A offerings. Ms. Harter also assists clients with all aspects of related corporate formation, organizational and governance matters, SEC compliance reporting and state securities regulation matters. In addition to her securities practice, she is also a practicing commercial real estate attorney, which provides her with additional insight into the businesses and needs of her securities clients whose syndications are often used to fund commercial real estate acquisitions or developments. Ms. Harter received her Juris Doctor from Tulane Law School in 2001 and is licensed in New York, Massachusetts, Georgia and Virginia. She is a member of the Alternative & Direct Investment Securities Association and a member of the Commercial Real Estate Committee of the Virginia State Bar.

** Richard B. “Rick” Chess is an investment real estate consultant/lawyer based in Chesterfield, VA. Rick helps firms “grow, fund and protect their success” by applying his 35 years’ experience in real estate acquisitions, equity capital formation, securities, government and governance.

Chess received a J.D. from the University of Richmond and a B.S. from the University of Pittsburgh. He has served as an Assistant County Attorney (Pittsburgh), a State Legislator (Pennsylvania), and as a Marine (Sergeant in the USMCR).

Rick serves as the Chair of the Commercial Real Estate Committee of the Real Estate Section of the Virginia State Bar. He has served as the President of the Real Estate Investment Securities Association.

Chess serves as a founding board trustee of a NYSE REIT (First Potomac) where he is the Chair of the Audit Committee. He acquired 50,000 apartments for United Dominion Realty Trust (UDR) as Director of Acquisition and attracted over $100,000,000 in equity at Triple Net Properties and American Realty Capital Markets.

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resources to raise capital through traditional public markets; however, the applicability of these alternatives is very limited.

Among other things, the JOBS Act (i) removed the prohibition against the general solicitation of an offering for the sale of interests in a company, (ii) created a new exemption under the Securities Act of 1933, as amended (the “Securities Act”), for “crowdfunding”, and (iii) amended the Securities Act to permit quasi-public offerings of up to $50 million. These changes were specifically encapsulated in Title II (general solicitation), Title III (crowdfunding) and Title IV (Regulation A+) of the JOBS Act, respectively.

Title II and General Solicitation…Hello Internet.

Title II of the JOBS Act permitted the U.S. Securities and Exchange Commission (the “SEC”) to amend the rules governing the most traditional form of private offerings—private placements exempt from registration pursuant to Regulation D, as promulgated under the Securities Act (“Regulation D”). These updated rules took effect on September 23, 2013.

Most real estate attorneys may be familiar with Regulation D private placements. Although Regulation D establishes three different exemptions (under Rules 504, 505 and 506), approximately 90% of all Regulation D offerings are made pursuant to the exemption provided under Rule 506.An advantage of the Rule 506 exemption is that no dollar limit exists on the amount of capital you can raise in the offering—it can be $1 million or $100 million. The issuer of the securities (the “Issuer”) does not need to register the securities with either the SEC or with the states in which the securities are sold. This results in significantly lower offering costs compared to a public offering, as well as providing a quick and efficient entry to market because the Issuer does need SEC approval or qualification of the proposed offering. Filing a Form D with the SEC is the only requirement, and, subject to certain exceptions, in each state in which the securities are sold. Additionally, general solicitation of the offering is now permitted under subsection (c) of Rule 506, subject to compliance with certain requirements as set forth therein.

The Rule 506 exemption is not without its disadvantages. The securities sold under the exemption are deemed “restricted securities” and cannot be resold without first registering with the SEC or pursuant to an exemption from registration. Thus, an investor cannot turn around and go sell its shares, units, or membership interests in the Issuer on a stock exchange. If an investor wishes to sell the shares in a private transaction, there are holding period limitations and restrictions on permissible purchasers of such securities, depending on the exemption being used. Additionally, if an Issuer seeks to use the Rule 506(c) exemption to sell the securities so that general solicitation may be utilized, each purchaser of the securities must be an “accredited investor.”1 The new rules also include the prohibition of “bad actors” (e.g., felons and others barred from securities transactions) from involvement in the offering, the failure with which to comply can result in serious consequences for the Issuer.

From a practical perspective, this type of offering works well for clients who can access accredited investors and need quick access to capital (this is often the case for commercial real estate clients beholden to due diligence and closing deadlines). The Issuer can also publicly advertise and market the offering if it complies with the requirements of Rule 506(c). Offerings can be for securities in one real estate asset or in the form of a “fund,” meaning that a pool of capital can be raised to acquire or develop two or more assets. Fund offerings can consist of identified assets, a partially blind pool (in which not all assets are identified, but some are), or a blind pool (in which no assets are identified). With a client which is always in the acquisition mode, a fund may allow them to take advantage of opportunities that will not wait for an offering process needing to start from zero each time equity is required.

1 For individuals, this means they must have a minimum net worth of at least $1,000,000

individually or with their spouse and excluding the value of their primary residence, or an income in excess of $200,000 individually or $300,000 jointly with their spouse in each of the two most recent years and have a reasonable expectation of reaching the same income level in the current year. See Rule 501 of Regulation D.

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The Delaware statutory trust (“DST”) is another offering vehicle available which can utilize the Rule 506 exemption. DSTs have gained in popularity in recent years. With a DST, an investor purchases a beneficial interest in the DST and, if certain restrictions are properly observed, such beneficial interest is considered for tax purposes to be a direct interest in the real property assets owned by the DST. As a result, investors who desire to defer capital gains using Internal Revenue Code §1031 can do so by using the proceeds from the sale of their relinquished property to purchase a beneficial interest in the DST. The popularity of the DST structure is also attributable to the decline of the tenancy-in-common (“TIC”) structure in the broker-dealer community, which was a common offering vehicle prior to the Great Recession. Community banks continue to be a source of debt for TICs with five or fewer investors, but since every TIC investor has a direct interest in the property, many lending institutions will not provide debt to TICs with a large number of investors due to the cumbersome nature of such a structure. The DST structure, where the lender is dealing with a single entity trust, is more widely accepted by many financial institutions. However, TICs may give your clients a vehicle to attract out of market money from investors desperately looking for a §1031 replacement property without the heavy front end load of DSTs available from broker-dealers. A fulsome discussion of the DST and TIC structures is beyond the scope of this article.2

Title III…Crowdfunding!

“Crowdfunding” has been a common buzzword of late; however, a substantial number of people do not fully understand what it is. Generally speaking, crowdfunding is the pooling of money from a crowd to fund a project or venture, and utilizes a donation model, reward model, royalty model, debt model or equity model. Most of what is marketed as crowdfunding is essentially a platform for a charity or start-up firm where no equity interest is gained, but there may be an opportunity to be recognized for the contribution (Some firms using other offering vehicles discussed in this article (e.g., general solicitation Reg D or a Reg A+ offering) are incorrectly using the crowdfunding label).

Securities laws come into play when equity or debt securities are offered. Section 4(a)(6), added to the Securities Act by Title III of the JOBS Act, provides an exemption from the registration of such securities provided the issuer complies with certain rules and restrictions. Congress gave the SEC a deadline of December 31, 2012, to enact new rules providing for the exemption; however, that did not happen. Crowdfunding rules were proposed by the SEC in October, 2013, and were finally enacted on October 30, 2015 as Regulation Crowdfunding. The rules are not expected to become effective until May, 2016.

The federal rules provide that (i) the offering must be an “all-or-none” offering (meaning that the entire amount offered must be raised or else the raise “fails” and all subscriptions must be returned to investors); (ii) the aggregate amount sold by an Issuer to all investors in any 12-month period may not exceed $1,000,000.00; (iii) offering activities must occur through a registered broker-dealer or a new type of platform that must also be registered with the SEC and known as a “funding portal;” and (iv) issuers may only communicate with investors through the funding portal or broker-dealer. Investors in the offering do not have to be accredited investors; however, the maximum amount any one investor can invest in crowdfunding offerings in any 12-month period cannot exceed:

the greater of $2,000 or 5% of the lesser of the annual income or net worth of the investor, if either the annual income or the net worth of such investor is less than $100,000;

10% of the lesser the annual income or net worth of the investor, but not to exceed $100,000, if both the annual income and net worth of the investor is equal to or greater than $100,000.

Additionally, the financial statements for an issuer choosing to sell its securities pursuant to the federal crowdfunding exemption would need to be: (i) for offerings of $100,000 or less, certified by the principal executive officer, unless financial statements of the issuer are available that have either been reviewed or audited by a public accountant independent of the issuer, then those must be provided instead; (ii) for offerings greater than $100,000 and up to $500,000, reviewed by a public accountant independent

2 The authors will be happy to provide additional information upon request.

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of the issuer, unless financial statements of the issuer are available that have been audited by a public accountant independent of the issuer, then those must be provided instead; and (iii) for offerings greater than $500,000, audited by a public accountant independent of the issuer, except that for issuers that are first-time issuers, financial statements of the issuer reviewed by a public accountant independent of the issuer are sufficient (nevertheless, if audited statements are available, those must be provided instead). All financial statements must be prepared in accordance with generally accepted accounting principles (“GAAP”).

In addition to the foregoing requirements and limitations on the actual offering, there are restrictions on the resale of the securities sold. Securities sold in an offering exempt under Regulation Crowdfunding cannot be transferred by an investor for one year from the date of purchase, except for transfers to the issuer of the securities, an accredited investor, a family member of the investor or in estate type transfers, and third parties in a registered offering.

The rules also provide for ongoing reporting obligations for Issuers. An Issuer would be required to file with the SEC and provide to investors certain annual and periodic reports, progress updates on the offering and a notice of termination of the issuer’s reporting obligations.

The alternative to interstate crowdfunding under Regulation Crowdfunding, intrastate crowdfunding, raises money through crowdfunding solely within one state. Pursuant to Section 3(a)(11) of the Securities Act, it is permissible to conduct an offering of securities that is not registered with the SEC so long as the securities are only offered to the residents of a single state by an Issuer that is registered and doing business in that state. All intrastate offerings must comply with the applicable state registration and offering requirements, which varies by state.

Many states have passed their own intrastate crowdfunding exemptions. In Virginia, SB 763 was signed into law by the Governor on March 19, 2015, as the “Virginia Intrastate Crowdfunding Exemption.” In response, the Virginia State Corporation Commission proposed the adoption of Rule 21 VAC 5-40-190, which generally provides that:

the issuer must be formed and authorized to do business and have its principal place of business in the Commonwealth of Virginia;

the securities may only be sold to residents of the Commonwealth of Virginia; the exemption is only available for equity offerings and not debt offerings; no more than $10,000 can be invested in the offering by a single investor, unless the

investor is an accredited investor as defined in Rule 501 under Regulation D; an issuer is limited to an aggregate offering amount of $2 million per 12-month period; the term of the offering cannot extend beyond the date which is 12 months after the date of

the first offer of the securities; none of the proceeds raised may be released to the issuer until at least the targeted offering

amount has been raised; certain financial statements must be provided depending on the amount of the offering; the issuer must make an exemption filing on Form ICE at least 20 days prior to an offering

of the securities or the use of any publicly available website in connection with the offering; certain conditions apply to offers and sales made over the internet; certain reports must be provided to investors and the Virginia State Corporation

Commission; the issuer must file a final sales report with the Virginia State Corporation Commission

within 30 days after the last sale in the offering; and the crowdfunding exemption may not be used with other state exemptions.

Crowdfunding, whether intrastate or interstate, lacks the flexibility and speed available under the Regulation D exemptions. If an Issuer wishes to purchase a property valued at more than a few million dollars, crowdfunding is a viable option. The $1,000,000.00 federal offering limitation (which is $2,000,000.00 in a few states for intrastate offerings, including Virginia) significantly limits the assets that

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an Issuer can acquire. Many lenders will not permit a loan-to-value ratio in excess of 70% on a commercial property, meaning that an Issuer in Virginia wishing to use crowdfunding exclusively to raise capital for a transaction will be capped out at a purchase price of approximately $6.66 million. This may work for clients that typically acquire smaller assets, but for many Issuers, crowdfunding, unless utilized simultaneously with some other offering vehicle pursuant to a permitted exemption, will not be the answer. To ensure that concurrent offerings comply with securities laws, they would first need to be fully assessed by securities counsel.

Additionally, although the pool of potential investors may be greater since the offering is not limited to accredited investors, the amount each investor can invest in the offering is capped, meaning that the Issuer will need to reach a larger number of investors and process a greater number of subscriptions potentially resulting in increased marketing and administrative costs for the Issuer. The foregoing, combined with the ongoing reporting requirements, would likely limit the utility of this offering exemption for most Issuers.

Title IV and Regulation A+, also known as “IPO-Lite”.

Another exciting development that came out of the JOBS Act, in addition to the removal of the restriction on general solicitation for certain Regulation D offerings, is Title IV, which provides for an expanded exemption under Section 3(b)(2) of the Securities Act, and is known as Regulation A+. Prior to the enactment of Section 3(b)(2), an exemption from registration existed under Section 3(b), which has been retitled Section 3(b)(1). Section 3(b) provided a limited offering exemption for offerings of up to $5 million raised in any 12-month period, and sales could be made using general solicitation to investors who may or may not be accredited. These securities were not restricted and could be resold on the open market, but the Issuer of the offering had to complete and file Form 1-A with the SEC. The form is similar to Form S-1 (for public offerings), but more limited in scope and shorter in length. The offering then had to be pre-qualified with the SEC and the states in which the Issuer intended to sell the securities. From commencement of the structuring of the offering until SEC qualification, offerings made pursuant to the Section 3(b) exemption averaged almost one year. Under Section 3(b), now Section 3(b)(1), there are limits on investments, except those that may be imposed by the states in which the securities are sold. Nevertheless, many in the industry saw the Section 3(b) exemption as being cumbersome and useless due to the limited offering amount permitted and lengthy time to get to market. Only twenty-six Section 3(b) filings were qualified by the SEC from 2012 to 2014. (The maximum amount was $5 million per offering, which if all were for the maximum permitted, would be only $130 million aggregate. Compare to the total amount of capital raised via Regulation D in 2014 alone, over $1.4 trillion.)

With the enactment of Title IV and the SEC’s adoption of final rules in March 2015,3 Regulation A+, sometimes referred to as “IPO-Lite”, was born under Section 3(b)(2) of the Securities Act. The final SEC rules created a two-tiered exemption structure. The first tier (“Tier 1”) allows Issuers to raise up to $20 million in any 12-month period, while the second tier (“Tier 2”) allows Issuers to raise up to $50 million in any 12-month period. There are no investment limits for investors under Tier 1, or under Tier 2 for accredited investors. Under Tier 2, investors who are not accredited may not invest more than 10% of their annual income and net worth. Both tiers still require SEC qualification. The states are pre-empted from requiring the offering to be qualified in the states for Tier 2 offerings, but not Tier 1. This slightly shortens the time to market for Tier 2 offerings (which are likely to average between 2-4 months), but timing to market for Tier 1 offerings remains approximately the same as under the original Regulation A (Section 3(b)).

Issuers under both tiers must file balance sheets and certain other financial statements for their two most recently completed fiscal years (or since they have been in existence, if for less than two years). All financial statements for U.S. Issuers must be prepared in accordance with GAAP. Financial statements of Tier 1 Issuers are not required to be audited, but financial statements of Tier 2 Issuers must be audited in

3 These rules went into effect in June.

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accordance with GAAP or the rules of Protecting Investors through Audit Oversight, a private-sector, non-profit corporation, created by the Sarbanes-Oxley Act of 2002 (“PCAOB”).

In addition to the foregoing financial reporting requirements, both Tier 1 and Tier 2 offerings are subject to ongoing reporting requirements. A Tier 1 Issuer must file an exit report on Form 1-Z no later than 30 calendar days after the termination or completion of its Regulation A offering. The report must provide the number of securities sold, the names of underwriters and other service providers involved as well as the fees they received, and the net proceeds received by the Issuer. Reporting requirements for Tier 2 Issuers mimic those of Exchange Act reporting Issuers, but are more extensive, requiring annual reports, semi-annual reports, current reports disclosing material events, special financial reports, and the Form 1-Z exit report.

There is significant discussion over whether Regulation A+ will have the impact the industry had hoped. The limited advantages of Regulation A+ over its Regulation D counterpart underscore this sentiment. Although securities sold pursuant to the Regulation A+ exemption are not restricted and are freely transferable, this is more complicated than it sounds. Most commercial real estate clients will not have the need for an ongoing market for their shares. Instead, clients will often want a one-time equity raise for one project at a time, and once that project is sold or transferred, the Issuer will be dissolved. That equity can be raised from non-accredited investors would also seem to be a bonus. However, with the investment limitations on investors in Tier 2 offerings, there is more time involved in marketing the offering and smaller investments per investor, resulting in increased administrative costs. Equally important are the total costs to structure a Regulation A+ offering, for which the legal costs alone are about double that of a Regulation D private placement; this does not include the accounting costs and the costs of ongoing reporting compliance for Tier 2 offerings. Lastly, the timing for putting together a Regulation A+ offering and having it qualified by the SEC, anywhere from two months to one year or more, can be significantly longer than for a Regulation D offering, which typically takes about 4-6 weeks to get to market and does not require SEC review or qualification. Most commercial real estate clients have a window of approximately 60-180 days to close on a property, and for that reason Regulation A+ would not be palatable for single property capital raises. It may work, however, in a fund type structure (e.g., where $50 million is raised under Tier 2 to acquire a portfolio of assets; the portfolio may have some, all, or no assets identified during the capital raising stage).

Despite the increased options for raising capital attributable to the new Regulation A+ and Regulation Crowdfunding rules and intrastate crowdfunding in Virginia and other states, Rule 506 under Regulation D remains an attractive offering exemption for commercial real estate clients. Regulation A+ requires heavy lifting, including the time to market, the cost of getting there, and the costs after you arrive. Crowdfunding, whether intrastate or interstate, provides for a significantly limited offering amount, reporting requirements, and investment limitations on certain investors. In contrast, Rule 506 offerings provide for unlimited offering amounts, are quicker to market and do not require SEC qualification or any ongoing reporting requirements. Rule 506(c) also allows for general solicitation. In the near future, Regulation D offerings may be affected by changes in the definition of “accredited investor”, which may include increased net worth or annual income requirements for individuals, but there is no certainty yet as to when those changes may take place. In the meantime, Issuers should continue to utilize all the benefits that the Regulation D exemptions have to offer and explore whether Regulation A+ or Regulation Crowdfunding may work for them. Please note: in most of the options discussed above, some level of pre-marketing is permitted. It may be advisable to survey the market first to determine what features gain the most prospective investor support before finalizing the structure of their offerings.

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WELCOME TO THE WILD, WILD WEST: HOW KOONTZ HAS HELPED LAND DEVELOPERS FIGHT BACK AGAINST LAWLESSNESS

PART 1 OF A 3 PART SERIES

by Joshua M. Johnson*

Local governments can coerce developers into bearing a greater burden than they create. The standard of judicial review of such negotiations is literally “fairly debatable;” that is, as long as the local government’s requirements can be argued, they will most likely stand. This judicial deference has created an environment in which the largest and wealthiest municipalities in the country have the ability to run roughshod over private property rights.

Welcome to the Wild, Wild West of the law. If ever there was a need for a new sheriff, it is in land use law. In 2013, the United States Supreme Court took a giant step toward appointing that sheriff in Koontz v. St. Johns River Water Management District. Like the Colt Single Action Army, the Koontz decision can act as a powerful weapon in the hands of land owners and developers, but unlike the “Peacemaker,” the Koontz decision has many detractors. Critics decry the decision as the worst land use case ever, but those critics rely on theory that has little applicability in the real world. The intent of this article is to inject a much needed dose of reality into the debate. Showdown at the O.K. Corral.**

INTRODUCTION1

The majority of the discussion on the Supreme Court’s decision in Koontz v. St. Johns River Water Management District2 is negative,3 resting on the shaky ground of logical inconsistency.4 The Koontz detractors insist the holding—a demand for monetary exactions in a land-use permitting process can be an unconstitutional condition taking5—will have drastic and chilling consequences for local

* Joshua M. Johnson is a law clerk at LeClairRyan focusing on Community Associations and Land Use Law. A former Marine, Mr. Johnson will graduate from William & Mary Law School in the spring of 2016.

** The opinions expressed herein are those of the author.—Ed. 1 Several of the following footnotes contain information and assertions obtained through direct

interview. These interviews were conducted under the condition of anonymity, as many of these individuals are still practicing or employed in local government.

2 133 S. Ct. 2586 (2013). 3 See, e.g., John D. Echeverria, Koontz: The Very Worst Takings Decision Ever?, VT. L. SCH.

PAPER 28-13 (Aug. 26, 2013), http://ssrn.com/abstract=2316406 (Although the author includes a question mark in the title of his paper, the first sentence of his introduction straightens the bend, turning “?” into “!”.); Julie A. Tappendorf & Matthew T. DiCianni, The Big Chill? - The Likely Impact of Koontz on the Local Government/Developer Relationship, 30 TOURO L. REV. 455, 467–68 (2014) (The authors, mirroring Professor Echeverria, state that this decision may be the “worst takings decision of all time,” and they further address theoretical differences between “demands” and “proposals” by local governments.); Michael Allan Wolf, The Brooding Omnipresence Of Regulatory Takings: Urban Origins And Effects, 40 FORDHAM URB. L.J. 1835, 1856–857 (2013)(listing broad categories of “urban elements” that have received regulatory takings challenges such as historic preservation, inclusionary zoning, and green building requirements; however, no explanation for the challenges is given, allowing the reader to make generalizations about the nature of government regulations based on the author’s succinct and purposefully worded categories).

4 See infra Part IV. See also Mark Fenster, Substantive Due Process by Another Name: Koontz, Exactions, and the Regulatory Takings Doctrine, 30 TOURO L. REV. 403 (2014) (acknowledging the predictability of the various opinions based on the specific authors’ political/policy stance).

5 See Koontz, 133 S. Ct. at 2599.

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government—developer relations.6 This argument is overstated at best.7 A vacuum exists between statutory and common law, whereby the daily operations and proceedings of developers and local governments are controlled by business decisions.8 Justice Alito, writing for the majority, acknowledges this, and, understanding the economic pressures facing developers and local governments, his ruling is fairly limited. At its core, Koontz is about standing to sue the government under the Takings Clause9 for an unconstitutional condition imposed on an interest in property.10 In other words, if the government tries to force a property owner to give up a constitutional right in order to obtain a discretionary benefit, the property owner can sue the government. This ruling makes no assertions to the likely outcome of those claims; it merely holds that aggrieved parties may now bring them.11

The author suggests that by making it easier for private developers to bring a per se takings claim against local governments, the Supreme Court’s decision in Koontz is an additional weapon for landowners in an area of law that heretofore has been deferential to local governments.12

Section I of this article will describe the specific issues that make landuse law particularly “messy,” partisan, and often outside the purview of academic analysis. Section II will focus on the key decisions that Justice Alito relied upon to apply the unconstitutional conditions doctrine to the Takings Clause and begin to dig into the Koontz case. Finally, Section III will analyze and refute the arguments made by the majority of critics by arguing that the Koontz holding is consistent with precedent, and is a logical tool giving landowners the ability to stop the imposition of an unconstitutional condition.

UNDERSTANDING THE LAND USE INDUSTRY

Landuse law is a particularly messy area of the law where statutes, common law, constitutional rights, and politics intersect. A primary purpose of local land-use regulation is to provide, privately, services the local government would normally provide. Local governments face a “Catch-22” when they are expected to provide services to a growing population that does not want to pay for those same

6 See, e.g., Tappendorf & DiCianni, supra note 3, at 467; Israel Piedra, Confusing Regulatory

Takings With Regulatory Exactions: The Supreme Court Gets Lost In The Swamp Of Koontz, 41 B.C. ENVTL. AFF. L. REV. 555, 565 (2014); Elizabeth Tisher, Land-Use Regulation After Koontz: Will We "Rue" The Court's Decision?, 38 VT. L. REV. 743, 773 (2014).

7 Some localities are likely to overreact to the Court’s decision initially, but, if there is a disruption, it won’t take long to normalize. See e.g., Fenster, supra note 4, at 418.

8 See discussion infra note 18. Developers and financial institutions are usually more concerned with their return on investment rather than the technical legality of a land-use negotiation. They are generally willing to allow local politicians to make demands that may not necessarily be “legal” as long as they are still above their profit floor.

9 U.S. CONST. amend. V, cl. 4. “...nor shall private property be taken for public use, without just compensation.”

10 See Koontz, 133 S. Ct. at 2600 (stating “petitioner’s claim rests on . . . [a] limited proposition . . . [that] a ‘per se [takings] approach’ is the proper mode of analysis under the Court's precedent[, and]. . . does not implicate ‘normative considerations about the wisdom of government decisions.’”).

11 Id. 12 See id. at 2590. The local government has “substantial power and discretion in land-use

permitting to pursue governmental ends.” See also Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (citing Radice v. New York, 264 U.S. 292, 294 (1924) and applying the fairly debatable standard to land use and zoning regulations enacted by the legislature-- that is, if the “constitutional validity of a statute depends upon the existence of facts . . .” the legislative determination must stand “if the question of what the facts establish be a fairly debatable one . . .”).

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services.13 Many voters simply will not vote for any tax increase, thus the “tortured” way local politicians try to raise revenue without using the word “tax.” 14 New development impacts existing services such as schools and utilities by imposing costs. Local legislators are left to find ways to increase the funding in these areas to match the growth.15 Local governments often condition approval of a development plan on the payment of impact fees in order to offset increases in police, fire, and school resources because of development.16 The concept is simple: “You created the impact; you can pay for the impact.” However, local governments exceed their authority when they place conditions on development that are outside the scope of the impact.17 In such cases, developers are faced with a Catch-22 of their own: the developer can pay a lower “fee” to the local government, or take legal action that may cost substantially more than the amount of the original “fee.”18 If another entity was demanding the fee, people would have no qualms about labeling it “extortion;” however, due to the democratic nature of local governments, people’s reliance on local services, and possibly stereotypes about developers, many people may be inclined to make excuses for these governmental impositions.19

13 See Michael Castle Miller, The New Per Se Takings Rule: Koontz’s Implicit Revolution of the

Regulatory State, 63 AM. U.L. REV. 919, 920-21 (2014) (Development increases a population’s footprint, which will affect water and power use as well as increasing the burden on school systems.); see also Scott Woodward, The Remedy For A “Nollan/Dolan Unconstitutional Conditions Violation,” 38 VT. L. REV. 701 (2014) (mentioning development’s effects on natural resources and public infrastructure).

14 See AHEC 2013 Conference https://www.youtube.com/watch?v=iHihDa_VPWw starting at 20:42. Jonathan Gruber comments on the political difficulties of revenue raising schemes without calling them taxes. Although I have chosen an amusing initial reference, the “tax revolt” and the subsequent legislative scramble for “non-tax taxes” is a well-documented phenomenon. See, e.g., Proposition 13, codified as Cal. CONST. art. 13A; Proposition 2 ½, Mass. Gen. Laws Ann. 59 § 21C (West); and Oregon Ballot Measure 5, Or. CONST. art. XI, § 11. See also Drum, Kevin, “Happy 35th Birthday, Tax Revolt! Thanks for Destroying California,” Mother Jones June 7, 2013 http://www.motherjones.com/kevin-drum/2013/06/tax-revolt-35th-anniversary-prop-13-california.

15 See supra note 13. 16 Each state has a different scheme for regulating municipal impact fees. Virginia uses a system

called “proffering,” whereby local governments are allowed to set a “price menu” for various impacts. Developers will then “volunteer” to pay these fees. As a practical matter, cash proffers are not voluntary. According to many private practice land use attorneys interviewed for this Article, this is indicative of pay to play extortion. According to at least one former county attorney, they do not know what they are talking about. The politics involved in this aspect of land use is very heavy.

17 C.f., Compl. ¶¶ 3-5, 38-40, Virdis Dev. Corp v. Bd. Of Supervisors of Chesterfield Cnty. VA. (E.D.V.A. 2014) (No. 3:14CV589)(The Plaintiff in this case has complained that the county is not only engaged in unconstitutional conditioning, but is also violating their own ordinance to do so).

18 A land-use and zoning attorney from a well-known firm relayed the following experience: He and his client met with the local legislative body to discuss a rezoning plan. One of the legislators asked the client if he had paid the “$3000 fee.” The client, confused, asked his attorney about this “fee.” The attorney looked over the ordinance and questioned the legislator on the validity of the fee. The legislator responded, “It’s all right; we are on legally solid ground asking for this.” Naturally the client did not want to pay, but the attorney gave this advice: “You can walk away right now and file suit and win, or you can pay the fee. If you file suit you will spend 10 times the amount of the fee and you will likely spend months in litigation while your project is on stand-by.” The client “snarled” and reached for his check book.

19 There are some local government bodies that rely on “extortionate demands” in the land-use context as a matter of course because they know developers will generally make business decisions rather than “fight the system.”

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DEVELOPERS ARE INSTITUTIONAL CLIENTS OF LOCAL GOVERNMENT IN A MONOPOLISTIC SYSTEM, AND THEY HAVE TO MAKE SOUND BUSINESS DECISIONS

TO SURVIVE.

Landowners, developers, professional engineers, land-use attorneys, and local government agencies are all part of the land-use industry. The goal is to enable landowners and/or developers20 to make valuable use of their property in a manner that enhances its economic value;21 however, this can also create environmental impacts on the surrounding land and increase the burden on the local infrastructure.22 Local governments developed a system to control growth through the use of conditional zoning via comprehensive plans.23 Although zoning and subdivision ordinances have evolved a great deal since 1926,24 this authority has remained squarely within the purview of local governments.25 As a result, local governments act as a gatekeeper for uses or improvements to private property within their jurisdictions.26

The success of the land-use process is built on working relationships between developers and the local government.27 Developers rely on the local government to approve plans and grant building permits; and because there the local government has no competition in this field, developers are beholden to them.28 Local governments, in turn, see “development fees” as a lucrative means to collect revenue without raising taxes on their constituents.29 As in any other relationship, there are limits to the amount one party may exact before the relationship falls apart.30 Local governments realize they cannot provide every good and service the people desire (even by raising taxes) and therefore they need private

20 Throughout this Article, the terms “land owner” and “developer” may be used interchangeably,

except in certain case discussions where the terms are used as they are in said case. 21 See e.g., Penn Central, 438 U. S., at 124 (1978) (where loss of economic value is a determining

factor for a regulatory taking). 22 See supra note 13. 23 See generally Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)(This is the bedrock

zoning decision that confirmed local government had the power to enact zoning ordinances through a state’s police powers asserted for public welfare).

24 Local governments in every state have professional land-use planning staff. See American Planning Association, What Do Planners Do? https://www.planning.org/aboutplanning/whatisplanning .htm.

25 See View Outdoor Adver., LLC v. Town of Schererville Bd. of Zoning Appeals, No. 2:13 CV 219-PPS, 2015 WL 331940, at *7 (N.D. Ind. Jan. 22, 2015)(citing Euclid to reaffirm that the local government’s interest in land use is great).

26 Local zoning ordinances proscribe various permitted uses for a particularly zoned property (called “by right” uses), as well as uses that require special permission and uses that are banned outright—although banned uses are normally inferred by their omission from the by right and special use lists.

27 See generally Tappendorf & DiCianni, supra note 3 (discussing the relationship between developers and local governments).

28 See supra note 23. 29 See Michael Castle Miller, The New Per Se Takings Rule: Koontz’s Implicit Revolution of the

Regulatory State, 63 AM. U.L. REV. 919, 920 (2014). 30 See Prince William considering Virginia's highest impact fees, WASHINGTON EXAMINER, (Oct.

13, 2007, 2:00AM), http://www.washingtonexaminer.com/prince-william-considering-virginias-highest-impact-fees/article/83456.

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developers to create housing, shopping, employment, dining facilities, etc.31 If local government demands too much, through taxes or other means, the local economy will stagnate and those who can afford to move most likely will.32 Larger developers can take their business to a jurisdiction that is not as burdensome, but even so, they will have to deal with local politicians trying to do the exact same thing—raise revenue without raising taxes.33

It is worth noting here that these “user pay” schemes of extracting resources from developers are practically deceptive. There is no company on earth that is going to absorb 100% of the costs of business. Developers will pass these costs to the consumer (the home buyer, or the commercial property owner) as often as possible. This manifests itself in a higher total mortgage which, in turn, incurs higher interest payments to the lender. In an effort to avoid increasing taxes, local governments are forcing the end user to pay more than they would originally have money that is going to pay the bank rather than pay for a different service.

PART 2 OF THIS 3 PART ARTICLE WILL CONTINUE THIS DISCUSSION ABOUT DEVELOPERS AS INSTITUTIONAL CLIENTS AND BEGIN AN ANALYSIS OF THE KOONTZ

DECISION ITSELF…

STAY TUNED!

31 See Michael J. Totten, The Last Communist City, City Journal, (Spring 2014), http://www.city-

journal.org/2014/24_2_havana.html. 32 See Thomas C. Frohlich and Alexander E.M. Hess, Top 10 cities with the highest tax rates,

24/7 WALL ST. (Feb. 17, 2014, 12:20PM), hosted by USA Today, http://www.usatoday.com/story/ money/personalfinance/2014/02/16/top-10-cities-with-highest-tax-rates/5513981/.

33 This Article does not delve into the issue of municipal competition; needless to say this is an over simplification meant to illustrate that the ideas of “tax revolt” and local governments as gatekeepers of land-use are universal in the United States. See sources cited supra note 13 and discussion supra note 18.

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RECENT ALTA HAZARDOUS RISK ENDORSEMENTS

by Lisa K. Tully and Cynthia A. Nahorney*

The importance of the ALTA Hazardous Risk Endorsements has evolved over time. At first, these endorsements were designed to address residential risks; however, the birth of the secondary market in the 1970s led to a wave of new concerns for investors. Thus, the ALTA 9 Restrictions, Encroachments, Minerals Endorsement provided a transition to coverages that could be used effectively in either residential or commercial transactions. Since the adoption of the ALTA 9, the list of endorsements has continued to grow, providing expanded coverage not available to owners and lenders in the base policy. It is important to keep up with the endorsements currently available to make sure your clients and customers are getting the best coverage in their title insurance policies.

Beginning in 2013 and continuing through this year, the American Land Title Association approved twenty-six new or revised endorsement forms for the ALTA Loan Policy (6-17-06) and/or the ALTA Owner’s Policy (6-17-06).1 Following is a brief explanation of the coverage afforded by these endorsements.

(Issuance of endorsements is subject to satisfaction of title insurance company underwriting requirements. All capitalized terms are as defined in the policy or endorsement.)

ALTA 9.6-06 (Private Rights –Loan Policy) (4-2-13) ALTA 9.6.1-06 (Private Rights-Current Assessments-Loan Policy) (4-2-15) ALTA 9.9-06 (Private Rights-Owner’s Policy) (4-2-13) These endorsements provide coverage over loss as a result of enforcement of an option to purchase, right of first refusal or right of future purchaser or occupant. Additionally, the 9.6-06 provides coverage over loss from enforcement of a prior charge, such as from a property owner’s association dues or private transfer fees. The 2013 revision to these endorsements added an exclusion for specific instruments known to contain private rights. Previously, the endorsements were not available at all if an instrument was found to contain an option, right of first refusal or other matter insured against.

Coverage under the ALTA 9.6.1-06 is similar to the ALTA 9.6-06. They differ in that the coverage under the 9.6.1-06 for private charges or assessments is limited to loss or damage arising from a private charge or assessment due and payable at Date of Policy.

ALTA 9.10-06 (Restrictions, Encroachments, Minerals-Current Violations-Loan Policy) (4-2-13) The ALTA 9.10-06 is identical to the ALTA 9-06 (Restrictions, Encroachments, Minerals) (4-2-12), except that it limits the coverage for violations of covenants to those that occur on or before Date of Policy. Previously, no coverage could be given if covenants contained a right of reverter for future violation. This endorsement provides coverage for loss suffered by the insured lender for a violation existing on or prior to Date of Policy.

* Lisa K. Tully is Vice President and Senior Underwriting Counsel for the Fidelity National Title

Group in its Virginia National Commercial Services Office in Richmond, Virginia. Cynthia A. Nahorney is Vice President and Area Agency Counsel for Fidelity National Title Group in its Agency Support Office located in Virginia Beach, Virginia.

1 All publications of the American Land Title Association©, including ALTA© Policy Forms, Endorsements, and Related Documents, are copyrighted and are reprinted herein by specific permission from: American Land Title Association© (ALTA©), 1828 L Street, N.W., Suite 705, Washington, DC 20036, Phone: 202-296-3671, E-Mail: service@alta.org, Web: http://www.alta.org.

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ALTA 11.2-06 (Mortgage Modification with Additional Amount of Insurance Endorsement-Loan) (12-2-13) Similar to the ALTA 11-06, the ALTA 11.2-06 adds coverage for loss due to the invalidity or lack of priority of the insured Mortgage as a result of a modification agreement. It is used when the Amount of Insurance will be increased as a result of the modification.

ALTA 12-06 (Aggregation-Loan) (4-2-13) The Aggregation endorsement allows the pooling of Amount of Insurance among several policies to provide aggregate coverage to the insured lender. The endorsement was modified in 2013 to clarify how that pool and each individual policy is reduced by a claim payment.

ALTA 12.1-06 (Aggregation-State Limits-Loan) (4-2-13) This form of Aggregation endorsement is used if the amount of any individual policy in the pool is limited by regulatory or self-imposed policy limits. The coverage reflects each specific state’s limited amount of coverage.

ALTA 19.2-06 (Contiguity Specified Parcels) (4-2-15) This endorsement insures an owner or a lender for loss or damage resulting from any gaps, strips or gores lying within or between specific parcels or tracts of land except as shown on a specified survey.

ALTA 28.2-06 (Encroachments-Boundaries and Easements-Described Improvements) (4-2-13) The ALTA 28.2-06 provides coverage for loss based upon an encroachment of an improvement over the boundary lines or into an easement that is not shown in the policy. It also provides coverage if any improvement owned by the insured must be forcibly removed due to its encroachment into an easement area or interference with the maintenance of the easement, or if it encroaches over a boundary line. The ALTA 28.2-06 endorsement is similar to the ALTA 28.1-06 (Encroachments-Boundaries and Easements) (4-2-12), but allows an improvement to be specifically described and deleted from coverage, allowing the endorsement to be issued and provide coverage over unknown encroachments when there is a known encroachment.

ALTA 28.3-06 (Encroachments-Land Under Development) (4-2-15) The ALTA 28.3-06 gives coverage to an owner or a lender similar to the 28.1-06; however, the ALTA 28.3-06 can be issued with respect to proposed improvements being constructed according to identified plans and specifications.

ALTA 32.1-06 (Construction Loan-Loss of Priority-Direct Payment) (4-2-13) The ALTA 32.1-06 is a mechanics’ lien coverage endorsement. It is issued with a loan policy insuring a construction loan and provides coverage against loss caused by the lack of priority of the Insured Mortgage over liens or encumbrances recorded as of an extended Date of Policy and over certain mechanics’ liens. The ALTA 32.1 is used when subcontractors and suppliers are paid directly by the Company. It does not cover payments made by the lender.

ALTA 32.2-06 (Construction Loan-Loss of Priority-Insured’s Direct Payment) (4-2-13) The ALTA 32.2-06 is similar to the ALTA 32.1-06, but it covers direct payments made by the insured lender to a mechanics’ lien claimant. This endorsement does not cover liens filed by a general contractor, a lower level supplier or a sub-subcontractor of a paid subcontractor.

ALTA 36.7-06 (Energy Project-Fee Estate-Owner’s Policy) (12-01-14) Similar to the ALTA 36-06, this endorsement incorporates certain energy project specific definitions. It clarifies the “Valuation of Title” section to specify the computation of loss or damage, adds coverage pertaining to “Severable Improvements,” and conforms the “Additional Items of Loss” section as appropriate to an energy project transaction. An exclusion is added to address costs of remediation resulting from environmental damage or contamination.

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ALTA 36.8-06 (Energy Project-Fee Estate-Loan Policy) (12-1-14) This endorsement is the loan policy counterpart to the coverage provided under the ALTA 36.7-06.

ALTA 39-06 (Policy Authentication) (4-2-13) This endorsement provides coverage to the insured lender if a policy is issued electronically or does not have the signature of an officer or agent of the company.

ALTA 40-06 (Tax Credit – Owner’s Policy) (4-2-14) The coverage under an ALTA 40-06 is for the benefit of an identified Tax Credit Investor in a real estate project. It covers loss sustained by the Tax Credit Investor due to a reduction in a Tax Credit caused by a defect insured under the policy. The endorsement also contains an assignment by the Insured to the Tax Credit Investor of loss payable under the policy arising as a result of a loss of an available Tax Credit.

ALTA 40.1-06 (Tax Credit – Defined Amount - Owner’s Policy) (4-2-14) The ALTA 40.1-06 is similar to the ALTA 40-06, but it additionally includes a specific defined maximum amount of coverage for the tax credit benefit in addition to the Amount of Policy.

ALTA 41 Water Endorsements The ALTA 41 Water Endorsements insure against loss or damage “by reason of the enforced removal or alteration of any Improvement resulting from the future exercise of any right existing at Date of Policy to use the surface of the Land for the extraction or development of water excepted from the description of the Land or excepted in Schedule B.” The endorsements do not insure against adverse ownership of water rights or insure title to water. They were developed primarily for issuance in western states where extraction of water under a lease agreement is more common than it is in the east. The ALTA 41 endorsements may be issued with an owner’s or a loan policy.

ALTA 41-06 (Water – Buildings) (12-2-13) insures against loss arising from damage to buildings on the Land at Date of Policy.

ALTA 41.1-06 (Water – Improvements) (12-2-13) insures against loss arising from damage to defined Improvements (including building and surface structures) on the Land at Date of Policy.

ALTA 41.2-06 (Water – Described Improvements) (12-2-13) insures against loss arising from damage to Improvements listed in the endorsement or attached as an exhibit that are on the Land at Date of Policy.

ALTA 41.3-06 (Water – Land Under Development) (12-2-13) insures against loss arising from damage to Improvements and Future Improvements to be constructed on or affixed to the Land in the locations according to the Plans.

ALTA 42-06 (Commercial Lender Group) (12-2-13) The ALTA 42-06 defines ‘Lender Group’ and ‘Participant’ and designates Participants as Insureds. The endorsement gives coverage for changes in the composition of the Lender Group with respect to the validity, enforceability and priority of the Insured Mortgage. The endorsement reserves all rights and defenses that the Company has against any Insured as to any Participant unless the Participant acquired its portion of the Indebtedness without Knowledge of the matter asserted in a claim. The ALTA 42-06 is effective only if the land is not developed with a one-to-four family residential dwelling.

ALTA 43-06 (Anti-Taint) (12-2-13) The ALTA 43-06 may be issued when the Insured Mortgage secures both a Term Loan and a Revolving Credit Loan. It provides coverage for loss of priority of the lien of the Insured Mortgage as security for the term component of the loan arising from future advances under the revolving credit component of the loan. In other words, the existence or provisions of the Revolving Credit Loan will not “taint” the priority of the Term Loan.

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ALTA 44-06 (Insured Mortgage Recording) (12-2-13) Loan policies may be issued “at the table” prior to recording the Insured Mortgage. These policies do not include specific recording information or Date of Policy. The ALTA 44-06 adds specific recording information to the policy. It also insures against loss sustained by failure of the Insured Mortgage to have been recorded.

ALTA 45-06 (Pari Passu Mortgage-Loan Policy) (12-1-14) The ALTA 45-06 endorsement is available for loan polices when two or more lenders agree to share the same priority. Subject to the provisions as set forth in the endorsement, it provides coverage for loss or damage sustained by the Insured by reason of (a) the invalidity or unenforceability of the lien of the Insured Mortgage resulting solely from the provision of a Pari Passu Mortgage or Intercreditor Agreement establishing lien priority; or (b) the lack of equal lien priority of the Insured Mortgage with other Pari Passu Mortgages.

ALTA 46-06 Option (8-1-15) The ALTA 46-06 Option endorsement provides coverage over loss due to defects in a recorded option agreement resulting from forgery or incapacity of the grantor (called the “Optionor”), failure of the Optionor to have authorized the option, and/or the option not being signed, witnessed sealed, acknowledged, notarized or delivered to the Optionor. The endorsement also insures against loss in the event a right to acquire an interest in the property had been previously conveyed.

The above endorsements are not offered in all states, or for all policies. Practitioners should contact their title insurance company to verify availability, requirements for issuance, and any extra-hazard risk premium associated with the endorsement.

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REPORT OF THE COMMERCIAL REAL ESTATE COMMITTEE

by Richard B. Chess, Chair

A conference call meeting of the Commercial Real Estate Committee was convened by Committee Chair, Richard Bruce Chess (Chess Law Firm, PLC) on September 10, 2015, at 11:00 A.M. Participating in the call were Whitney Levin (Miller Levin), Grice McMullan (Thompson McMullan), Ben Leigh (Atwill, Troxell & Leigh), Alyson Harter (LeClair Ryan), Jean Mumm (LeClair Ryan), Randy Howard, and Mike Barney (Kaufman & Canoles).

The meeting opened with a discussion of potential 2016 FEE SIMPLE articles and topics for either the Advanced or Annual Real Estate Seminars. Members agreed to explore issues (though they may recruit others to do the article or CLE) as follows:

Whitney Levin - Clearing title. Alyson Harter - The taxing and structuring of LLCs. Randy Howard - Mechanics liens and environmental studies, specifically rules regarding the

protections afforded to those who obtain such studies (as an article). Jean Mumm, Ben Leigh and Mike Barney – Land & lot condo (for the Advanced Seminar). Jean Mumm – Opinion letters and lawyer liability; foreclosures. Rick Chess – Contesting real estate assessments; like kind exchange. Grice McMullen and Ben Leigh - Issues involved in negotiating commercial real estate

contracts when the purchase price is tied to the municipality approving a specific number of units for a project. This topic is proposed as an Advanced Seminar panel and would include a developer, architect, and appraiser, along with an attorney moderator.

Alyson Harter is working on an article for the Fall 2015 FEE SIMPLE. The article is a follow up to the CLE program exploring the capital formation options available in Virginia, which she and Rick Chess presented at the spring Advanced Seminar..

Ben Leigh announced that the VBA Real Estate Section will host a gathering at Troutman Sanders in Richmond on October 8th at 6 P.M. Virginia real estate attorneys are invited to hear a presentation on the Virginia transmission line, with speakers invited from Dominion and the State Corporation Commission.

The Chair reminded everyone that the next meeting of the Board of Governors and Area Representatives of the Real Property Section will be in Charlottesville on September 18th. The next meeting of this Committee will be held on a date to be determined by the Chair, approximately two weeks prior to the meeting of the Board of Governors of the Real Estate Section, usually held in January of each year.

There being no other business to come before the Committee, the meeting was adjourned.

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REPORT OF THE ETHICS COMMITTEE

by Paul H. Melnick, Chair

The Ethics Committee met via teleconference on September 17, 2015, at 11:00 a.m. In attendance were Paul Melnick, Eric Zimmerman, Christina Meier, and Susan Pesner.

The committee discussed recent developments concerning the Virginia Rules of Professional Conduct:

1. The Supreme Court of Virginia approved changes to Rule 1.10 concerning Imputed Disqualification.

2. A Petition is pending before the Supreme Court of Virginia for changes to Rules of Professional Conduct 5.5 (Unauthorized Practice of Law; Multijurisdictional Practice of Law) and 8.3 (Reporting Misconduct).

The Committee urges section members to visit the Virginia State Bar website and review these changes as well as proposed changes to the Rules. The website for the Virginia Register is http://www.vsb.org/site/publications/valawyer/

There was a general discussion about the software lenders are using for confidential loan communications. When registering to use this software, only the law firm name can be entered and not the individual attorney. This is problematic in Virginia because only individual attorneys, and not law firms, can be registered with CRESPA. The concern is that the law firm will appear as the settlement agent on disclosure documents required by federal law. The Committee feels that Virginia CRESPA law should be amended to state that it will not be a violation if the law firm of the individual attorney/settlement agent appears on the disclosure document, to accommodate the limitations of this software.

Susan Pesner added that because settlement agent attorneys may be required to disclose client confidential information when registering for lender communication portals, language should be added to engagement letters for the client to give consent to the attorney to disclose such confidential information to the lender software/portal company.

The article by Jim McCauley concerning current ethical best practices with respect to cybersecurity, preserving client data, and internet communications has been submitted to the editor of the FEE SIMPLE for possible inclusion in the fall issue.

The meeting adjourned at 11:40 a.m.

Respectfully submitted,

Paul H. Melnick,

Chair, VSB Real Property Section, Ethics Subcommittee

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REPORT OF THE FEE SIMPLE COMMITTEE

by Stephen C. Gregory, Chair

The FEE SIMPLE Committee met by telephone on September 9, 2015, at 10:00 am. Participating were committee members Pia Trigiani, Doug Dewing, and Karen Day, and chair Steve Gregory.

Although the focus was on the upcoming fall 2015 issue of the journal, the panel discussed other topics also.

Ms. Trigiani will try to have her review of the 2015 legislation ready for publication.

The panel discussed the impact of the decision on same-sex marriage on real estate practice. It was noted that § 55-20.2 allows a husband and wife to hold property as tenants by the entirety; the panel wondered if a state could retain this kind of restriction on property rights while allowing same-sex marriage. Mr. Dewing volunteered to contact the VBA to ascertain what may be on their (real estate) legislative agenda for 2016.

The long-awaited implementation of the new closing regulations was discussed. Although the FEE SIMPLE has published articles in previous editions, those were pre-implementation. With the coming deadline, the panel wondered if an update would be beneficial. The chair offered to reach out to Kay Creasman for a possible short article.

The new regulations raise questions about e-mail encryption requirements and lender-secure sights. Mr. Dewing mentioned an article in the recent VBA journal. The chair said he would ask Sharon Nelson if she wanted to contribute.

Mr. Dewing expressed his experience with recording fee variations in certain clerk’s offices. Ms. Trigiani suggested a continuing feature called “Clerk’s Corner,” to be authored by circuit court clerks concerning issues they experience in real estate. The chair stated he would contact John Frey.

In addition to Clerk’s issues, Ms. Day wondered about realtor’s concerns with the new regulations. Mr. Dewing suggested that Board Member Blake Hegeman would be in the best position to know state-wide realtor questions. Ms. Day offered to contact local NVAR members.

Deadline for the fall issue is October 9. The meeting adjourned at 10:51 AM.

Respectfully submitted,

Stephen C. Gregory, Chair

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REPORT OF THE MEMBERSHIP COMMITTEE

by J. Philip Hart, Chair

Virginia State Bar Real Property Section

Membership Committee

September 14, 2015

The Membership Committee met by telephone on June 4, 2015. In the meeting, Philip Hart (chair) reviewed the activities of the Committee during 2014-16, which included: coordination of the Section’s participation is the VSB’s annual “First Day of Practice” CLE seminar in December 2014; waiver of dues for the first year of Section membership; Section CLE seminar discounts for Section members; coordination of recruiting efforts with the law school liaison committee;, and vouchers for law students to attend the Section’s CLE seminars. Minutes of the meeting follow with more details about these Committee efforts and results.

As of June 2015, the Section has 1908 members, which puts it in fourth place among all VSB sections. The Section has the largest number of members it has had in at least three fiscal years, having added 38 members in 2014-15, including five who signed up at the First Year in Practice seminar.

The Membership Committee plans to continue the same efforts in 2015-16. The Membership Committee will meet soon to confirm its plans for 2015-16, particularly in connection with the “First Day of Practice” CLE seminar on December 1, 2015.

Respectfully Submitted,

Philip Hart, Chair

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Virginia State Bar Real Property Section

Membership Committee

Meeting Minutes

June 4, 2015

The Membership Committee (the “Committee”) of the Real Property Section (the “Section”) met by telephone on Thursday, June 4, 2015 by telephone, starting at 11:30 a.m. The Committee members in attendance were Larry McElwain and Philip Hart.

Following a welcome, Philip Hart began the meeting by reviewing the Committee’s planned membership initiatives for 2014-15, which were:

Section participation in the VSB’s annual “First Day of Practice” seminar no Section dues for the first year of Section membership Section seminar discounts coordination of recruiting efforts with the law school liaison committee law student vouchers for attendance to the Section’s seminars focused recruitment efforts at the Section’s seminars contacting former Section members about re-joining the Section

Philip Hart then reviewed steps taken by the Committee on each of these initiatives:

Section participation in the VSB’s annual “First Day of Practice” seminar

The Committee coordinated participation by the Section in the VSB’s annual “First Day of Practice” seminar on December 2, 2014. The Section’s three presenters — Kay Creasman, Beth Godwin-Jones and Philip Hart — spoke about real estate law practice, and Ed Waugaman staffed a booth and spoke with many of the attendees about the same topics. All urged attendees to join the Section.

Philip reported that the VSB has agreed that the Section may participate in the seminar again this year. [The date of the seminar is December 1, 2015.] Larry McElwain volunteered to speak at the seminar.

No Section dues for the first year of Section membership

A number of new members were signed up at the First Day of Practice seminar, taking advantage of the “first year free” opportunity. Philip said he would follow up with Dolly Shaffner, the Section’s VSB, to try to find out the total number of new members who have done so.

Section Seminar discounts

Philip reported that based on information received from Nancy Kern at Virginia CLE, almost 250 section members used their Section discounts in attending the Advanced Seminar ($40 discount 75 members) and the Annual Practice Seminar ($15 discount - 173 members).

Coordination of recruiting efforts with the law school liaison committee

Philip reported that Section members have been actively engaged at the University of Richmond Law School in assisting with an advanced real estate class. Next Spring (2016), members of the Section, headed by Jay Steele of Hirschler Fleisher, will be team-teaching the class. Larry McElwain volunteered to teach a segment or two.

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Law student vouchers for attendance to the Section’s seminars

Philip reported that contact was made with UR, W&M, Regent and UVA to offer law student vouchers to attend the Section’s Annual Practice Seminar. Two law students — from UR and Regent — attended the seminar at the Williamsburg location in May. There was discussion that attendance will likely continue to be spotty because the seminar takes place around the time of law school spring exams and graduations, but the consensus was that the Committee should continue the effort because it builds stronger ties with the law schools.

Focused recruitment efforts at the Section’s seminars

Larry McElwain reported that when he convened the Advanced Seminar in March at Kingsmill, he recognized the Section’s sponsorship of the seminar and encourage attendees to join the Section.

Contacting former Section members about re-joining the Section

Philip Hart reported that there was no such effort made this year.

Following discussion, the Committee decided to continue the same initiatives in 2015-16. Upon motion duly made and seconded, the meeting was adjourned at 11:45 a.m.

Respectfully submitted,

Philip Hart Chair

The members of the Committee are:

Lewis Biggs Wayne Glass Philip Hart (Chair) Randy Howard Larry McElwain Harry Purkey Chip Royer Susan Siegfried

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REPORT OF THE PROGRAMS COMMITTEE

by Paula Caplinger and Blake Hegeman, Co-Chairs

Past Programs Committee Chair Larry McElwain and current Co-Chairs Paula Caplinger and Blake Hegeman met via conference call on August 5, 2015. The discussion included an overview of the Committee’s mission and best practices from past years. Participants agreed it was important to encourage the full Committee to begin thinking of topics and speakers for the Section’s education sessions as early as possible.

To that end, the Committee Chairs e-mailed the full Committee in early August to solicit feedback on topics and speakers for the Annual Advanced and Annual Real Estate Update seminars. Committee members were also reminded of the planning meeting after the September Board of Governors and Area Representatives meeting. Several members have already submitted excellent topics and speakers for discussion.

The Committee looks forward to planning engaging and informative education sessions that are of the highest quality for all attendees. We welcome any support or suggestions to accomplish this goal.

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REPORT OF THE RESIDENTIAL SUBCOMMITTEE

Susan S. Walker and Christina E. Meier, Co-Chairs

The Residential Subcommittee met by teleconference on September 15, 2015, at 11:00 a.m. Participating in the call were Kay M. Creasman, Christina E. Meier, and Eric V. Zimmerman.

Topics of discussion were as follows:

a) Issues Related to Implementation of CFPB Closing Disclosure: We spoke briefly about the impending changes which will become effective with loan applications taken on or after October 3, 2015, and discussed the need for attorneys(like lay settlement agents), to accede to lender requests for added software and compliance procedures.

b) Escrow Accounts and the Obligation to Escheat: We discussed the requirements for escheating funds held in escrow accounts and believe this would be a good topic for a FEE SIMPLE article. Ms. Creasman noted that the statutes have not had many changes in recent years, although reporting is now electronic, and suggested that there may already be a good article to be reprinted. We welcome any offers of an article on this subject. As a practice pointer, Mr. Zimmerman noted that attorneys can charge a fee for escheating funds if it is for a client, has been addressed in the engagement letter, and the client is notified prior to the fee being charged.

c) Jurisdictional Recording Differences: The different rules applied by clerks across the state in accepting documents for recording was discussed, and a call will go out for anyone willing to work on compiling local rules. Among the disparities we discussed included the different cover sheets used; how the Court-mandated cover sheet is used differently by different clerks; how taxes are calculated differently; how some clerks require documents to be numbered;, and how Norfolk requires multiple original documents if a document serves multiple purposes (e.g. a deed of trust with assignment of rents.) This topic was discussed to some degree in the last subcommittee meeting, and is a continuing issue for attorneys because it affects the timely recordation of documents.

e) New Case Law: Ms. Creasman called attention to two recent cases of interest, both handed down by the Supreme Court of Appeals on June 4, 2015. Evans v. Evans, addresses whether one tenant can sever a tenancy by the entirety. Deutsche Bank C. Arrington, Record No. 140978, includes both a review of the after acquired property statute (Va. Code Sec. 55-52) and the rules governing priority of recorded documents (Va. Code Sec. 55-96), with a reminder of what constitutes “duly admitted to record.” These cases should be of interest to the transactional real estate attorney, particularly considering the difficulty in getting documents recorded in a timely manner because of the jurisdictional recording differences discussed above.

The meeting concluded at Noon.

Respectfully submitted,

Christina E. Meier

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REPORT OF THE TECHNOLOGY COMMITTEE

by Mark W. Graybeal, Chair

Several technology related questions were raised at the last meeting of the Board of Governors of the Real Property Section. Since that meeting, I have worked with Dolly Shaffner at the Virginia State Bar and have the following to report:

Question 1: Can we modify the FEE SIMPLE database such that only the most recent two issues are password-protected and all older issues are available to the public?

Answer: Yes. I have coordinated with Dolly and Alison, the webmaster for the VSB Real Property Section website, and Alison has completed this change. On the Virginia State Bar Real Property Section website, there are two options on the left side of the page: one option is for “Newsletters” and the other is for “Past Newsletters”. Clicking on the “Past Newsletters” link will take you to an index of the past several issues of the FEE SIMPLE. Clicking on the “Newsletters” link will take you to a log-in page where you are prompted to enter a username and password. If you do not have a username and password (or you have lost or forgotten either), you can email barservices@vsb.org to request assistance with access to this section.

Question 2: What is the VSB’s policy on social media for the sections? Are there published guidelines?

Answer: Yes. The Section Chair’s handbook contains the policy for the use of social media. (I have attached a copy of the relevant section to this report. I encourage all board members to read the policy in detail.) The policy requires that a plan for social media usage must be submitted to the VSB staff liaison in writing. The VSB will establish the account and give the VSB entity access while the VSB maintains oversight.

The idea of opening a Facebook account was discussed at the prior meeting. The policy states: “Without advance approval by the Virginia State Bar staff liaison, no VSB entity shall establish a ‘group’ page on Facebook, to which comments could be posted; however, the VSB entity may establish an official ’page’ for the entity, to which only the VSB entity may post.”

On Facebook, the difference between a “page” and a “group” is:

A “page” enables public figures, businesses, and organizations to create an authentic and public presence on Facebook. Pages are visible to everyone on the internet. Any person on Facebook can connect with the page and then receive updates in his or her personal feed. For example, a “page” for Bodo’s Bagels in Charlottesville is on Facebook. People can connect with this page and receive updates in their personal news feeds featuring pictures posted by Bodo’s, links for news articles posted by Bodo’s, and other such information. It is not a place for discussion, and while a user can “comment” on a post by Bodo’s, no one can post directly to the feed of Bodo’s such that the post would be seen by all on Facebook.

A “group” is a place for a small (or large) group communication and for people to share their common interests and express their opinion. Groups can be either publicly available (available to all) or be by invitation only. Groups vary widely from church groups to athletic teams. For example, my gym has a Community Group on Facebook where we share information, ask for/receive rides to and from the gym, and organize clinics and special events. It is by invite only (you have to be a member of the gym to join the group) and is not open for viewing by the general public.

I believe it would be permissible to create a Facebook “page” and a Twitter account. The social media plan would need to be formulated and submitted to Dolly for review before we can proceed.

Question 3: Do we have access to data for website analytics? What can we know from that information?

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Answer: Yes, we do have access. Dolly has provided me with the link. I have not sifted through all the data in detail, but I can share the following information:

In August, we had 552 unique visitors. The most popular pages were:

1. Our front page 2. The Links page 3. Meeting Minutes page

In July, we had 773 unique visitors. The most popular pages were:

1. Our front page 2. The Links page 3. Area Reps section

The data is available back to January, 2014. If there is a detailed analysis that is required or a specific question that needs to be addressed, please let me know and I can provide that information. The information can address how many people are visiting our site for the first time, how many are repeatedly visiting our website, which pages are the most popular, etc.

Respectfully submitted,

Mark W. Graybeal

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REPORT OF THE TITLE INSURANCE COMMITTEE

by Kay M. Creasman, Chair

The Title Insurance Committee met via teleconference on September 10, 2015, at 3:00 p.m. Participating were Kay M. Creasman, Kenneth L. Dickinson, Brian O. Dolan, Randy C. Howard and Ronald D. Wiley, Jr.

In the residential arena, the October 3 TRID implementation date remains the biggest issue. By spring, 2016 we may or may not have sufficient materials for a program at the Annual Real Estate seminar on the impact TRID has had on the residential settlement process. Other possible programs (which may instead become FEE SIMPLE articles):

1. Liz Steele on Affordable Housing in Virginia 2. Ron Wiley on Time Shares. Although Ron feels this is important information for consumers,

there may not be much attorneys can do to terminate time share interests. A short article in the FEE SIMPLE may be a better approach.

3. The varying practices, by circuit court clerks, of interpreting statutes regarding recording and preserving land records. The Committee discussed the effectiveness or lack of effectiveness of an Attorney General’s opinion. Specific issues included: recordation of plats; needed planning department approval; refusal to accept electronically notarized documents; Norfolk now requiring multiple original copies of document that serve multiple purposes; etc. It was suggested we ask Section members to submit a list of practices in the courts in which they do business that seem to be different from the “norm.”

The Committee will also ask Susan Pesner’s permission to reprint, in the FEE SIMPLE, her article on Deeds which she presented at the VBA meeting in January, 2015.

The Committee also discussed environmental title insurance endorsements, ALTA 14 revolving credit line endorsements, and the impact of the NLRB ruling that subcontractors are considered “joint employees” with homebuilders. None of these topics generated sufficient enthusiasm to warrant either a seminar topic or an article for the FEE SIMPLE.

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BOARD OF GOVERNORS REAL PROPERTY SECTION

VIRGINIA STATE BAR (2015-2016)

Officers

Chair Susan S. Walker, Esquire Jones, Walker & Lake 128 S. Lynnhaven Road Virginia Beach, VA 23452 (757) 486-0333 (757) 340-8583 (fax) email: swalker@jwlpc.com Term Expires: 2017 (3)

Vice-Chair F. Lewis Biggs, Esquire Kepley Broscious & Biggs, P.L.C. 2211 Pump Road Richmond, VA 23233 (804) 741-0400 (804) 741-6175 (fax) email: flbiggs@kbbP.L.C..com Term Expires: 2017 (2)

Secretary/Treasurer Whitney Jackson Levin, Esquire Miller Levin, P.C. 11 Terry Court Suite A Staunton, VA 24402-2366 (540) 885-8146 (540) 886-8913 (fax) email: P.L.C.whitney@millerlevin.com Term Expires: 2018 (2)

Board Members

F. Lewis Biggs, Esquire Kepley Broscious & Biggs, P.L.C. 2211 Pump Road Richmond, VA 23233 (804) 741-0400 (804) 741-6175 (fax) email: flbiggs@kbbP.L.C..com Term Expires: 2017 (2)

Kathryn N. Byler, Esquire Pender & Coward, P.C. 222 Central Park Avenue Suite 400 Virginia Beach, VA 23462-3026 (757) 490-6292 (747) 490-1914 (fax) email: kbyler@pendercoward.com Term Expires: 2017 (1)

Kay M. Creasman, Esquire Assistant Vice President and Counsel Old Republic National Title Insurance Company 1245 Mall Drive Suite B North Chesterfield, VA 23235 (804) 897-5499 (804) 475-1765 (cell) (804) 897-9679 (fax) email: kcreasman@oldrepublictitle.com Term Expires: 2016 (1)

Kenneth L. Dickinson, Esquire Stewart Title 1802 Bayberry Court Suite 305 Richmond, VA 23226 (804) 897-0000 (804) 897-0001 (fax) email: kdickins@stewart.com Term Expires: 2017 (3)

Rosalie K. Doggett, Esquire Samuel I. White, P.C. 5040 Corporate Woods Drive Suite 120 Virginia Beach, VA 23462 (757) 217-3702 (757) 337-5558 (fax) email: rdoggett@siwpc.com Term Expires: 2018 (1)

Mark W. Graybeal, Esquire Keegan, DeVol & Clarke, P.L.C. 8133 Leesburg Pike Suite 220 Vienna, VA 22182 703-691-1700 (703) 691-3118 (fax) email: mgraybeal@keeganlaw.net Term Expires: 2017 (1)

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Stephen C. Gregory, Esquire 1334 Morningside Dr. Charleston, WV 25314 (703) 850-1945 (cell) email: 75cavalier@gmail.com Term Expires: 2016 (1)

Blake Hegeman, Esquire Deputy General Counsel Virginia Association of Realtors® 10231 Telegraph Road Glen Allen, VA 23059-4561 (804) 264-5033 (804) 262-0497 (fax) email: blake@varealtor.com Term Expires: 2018 (1)

Whitney Jackson Levin, Esquire Miller Levin, P.C. 11 Terry Court Suite A Staunton, VA 24402-2366 (540) 885-8146 (540) 886-8913 (fax) email: whitney@millerlevin.com Term Expires: 2018 (2)

*Paul H. Melnick, Esquire Melnick & Melnick, P.L.C. 711 Park Avenue Falls Church, VA 22046-3212 (703) 276-1000 (703) 536-8880 (fax) email: paul.melnick@melnickandmelnick.com Term Expires: 2016 (3)

*William L. Nusbaum, Esquire Williams Mullen 1700 Dominion Tower 999 Waterside Drive Norfolk, VA 23510-3303 (757) 629-0612 (757) 629-0660 (fax) email: wnusbaum@williamsmullen.com Term Expires: 2015 (3)

Susan S. Walker, Esquire Jones, Walker & Lake 128 S. Lynnhaven Road Virginia Beach, VA 23452 (757) 486-0333 (757) 340-8583 (fax) email: swalker@jwlpc.com Term Expires: 2017 (3)

Ronald D. Wiley, Jr., Esquire Of Counsel MartinWren, P.C. 400 Locust Avenue Suite 1 (434) 817-3100 (434) 817-3110 (fax) email: ronwileyjr@gmail.com Term Expires: 2017 (1)

*C. Cooper Youell, IV, Esquire Whitlow & Youell, P.L.C. 28A West Kirk Avenue Roanoke, VA 24011 (540) 904-7836 (540) 684-7836 (fax) email: cyouell@whitlowyouell.com Term Expires: -- / --

Ex Officio

Academic Liaison *Lynda L. Butler, Esquire Chancellor Professor of Law William and Mary Law School 613 South Henry Street Williamsburg, VA 23185 or P.O. Box 8795 Williamsburg, VA 23187-8795 (757) 221-3843 (757) 221-3261 (fax) email: llbutl@wm.edu

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VSB Executive Director Karen A. Gould, Esquire Virginia State Bar 1111 East Main Street Suite 700 Richmond, VA 23219-3565 (804) 775-0550 email: gould@vsb.org

Ex Officio Benjamin D. Leigh, Esquire Atwill, Troxell & Leigh, P.C. 50 Catoctin Circle, NE Suite 303 Leesburg, VA 20176 (703) 777-4000 ((703) 777-4001 email: bleigh@atandlpc.com

Immediate Past Chair *C. Cooper Youell, IV, Esquire Whitlow & Youell, P.L.C. 28A West Kirk Avenue Roanoke, VA 24011 (540) 904-7836 (540) 684-7836 (fax) email: cyouell@whitlowyouell.com

Other Liaisons

Virginia CLE Liaison Nancy Kern, Esquire Virginia C.L.E. 105 Whitewood Road Charlottesville, VA 22901 (800) 223-2167 ext. 145 (434) 984-0311 (fax) email: nkern@vacle.org

VSB Liaison Dolly C. Shaffner Special Projects Administrative Assistant Virginia State Bar 1111 East Main Street Suite 700 Richmond, VA 23219-3565 (804) 775-0518 (804) 775-0501 (fax) email: shaffner@vsb.org

____________________

* Past Chair and/or recipient of the Courtland Traver Award.

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AREA REPRESENTATIVES

Central Region

Steven W. Blaine, Esquire LeClairRyan, P.C. P.O. Box 2017 123 Main Street 8th Floor Charlottesville, VA 22902-2017 (434) 971-7771 (434) 296-0905 (fax) email: sblaine@leclairryan.com

Tara R. Boyd, Esquire Boyd & Sipe, P.L.C. 126 Garrett Street Suite A Charlottesville, VA 22902 (804) 248-8713 email: tara@boydandsipe.com

Richard B. "Rick" Chess, Esquire Chess Law Firm, P.L.C. 2727 Buford Road, Suite D Richmond, VA 23235 (804) 241-9999 (cell) (866) 596-9908 (fax) email: rick@chesslawfirm.com

Connor J. Childress, Esquire Scott Kroner, P.L.C. 418 E. Water Street Charlottesville, VA 22902 (434) 296-2161 email: cchildress@scottkroner.com

*Douglass W. Dewing, Esquire Fidelity National Title Group Virginia National Business Unit Vista II - Suite 200 5516 Falmouth Avenue Richmond, VA 23230-1819 (804) 643-5404 (office) (804) 521-5743 (direct) (804) 521-5756 (fax) (800) 552-2442 ext. 743 (toll free) email: douglass.dewing@fnf.com

Barbara Wright Goshorn, Esquire Barbara Wright Goshorn, P.C. 203 Main Street P.O. Box 177 Palmyra, VA 22963 (434) 589-2694 (434) 589-6262 (fax) email: office22963@earthlink.net

*J. Philip Hart, Esquire Vice President & Investment Counsel Legal Department Genworth Financial, Inc. 6620 West Broad Street Building #1 Richmond, VA 23230 (804) 922-5161 (804) 662-2596 (fax) email: philip.hart@genworth.com

Blake Hegeman, Esquire Deputy General Counsel Virginia Association of Realtors® 10231 Telegraph Road Glen Allen, VA 23059-4561 (804) 264-5033 (804) 262-0497 (fax) email: blake@varealtor.com

*Neil S. Kessler, Esquire Troutman Sanders, L.L.P. P.O. Box 1122 Richmond, VA 23218-1122 (804) 697-1450 (804) 698-6002 (fax) email: neil.kessler@troutmansanders.com

*Larry J. McElwain, Esquire Parker, McElwain & Jacobs, P.C. 2340 Commonwealth Drive Charlottesville, VA 22901 (434) 973-3331 (434) 973-9393 (fax) email: lmcelwain@pmjlawfirm.com

*C. Grice McMullan, Jr., Esquire Thompson & McMullan, P.C. 100 Shockhoe Slip 3rd Floor Richmond, VA 23219-4140 (804) 698-6203 (804) 780-1813 (fax) email: cgmcmullan@t-mlaw.com

Hope V. Payne, Esquire Parker McElwain & Jacobs, P.C. 2340 Commonwealth Drive Charlottesville, VA 22901 (434) 973-3331, ext. 109 (434) 973-9393 (fax) email: hpayne@pmjlawfirm.com

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Louis J. Rogers, Esquire Louis J. Rogers & Associates, P.C. 10900 Nuckols Road Suite 200 Glen Allen, VA 23060 (804) 290-7900 (804) 290-0086 (fax) email: lrogers@lrogers1031exchange.com; lrogers@rogersra.com

Collison F. Royer, Esquire Royer Caramanis & McDonough 200-C Garrett Street Charlottesville, VA 22902 (434) 260-8767 (434) 710-4061 (fax) email: croyer@rcmP.L.C..com

Lori H. Schweller, Esquire LeClairRyan 123 East Main Street Suite 800 Charlottesville, VA 22902 (434) 245-3448 (434) 296-0905 (fax) email: Lori.schweller@leclairryan.com

*Susan H. Siegfried, Esquire 5701 Sandstone Ridge Terrace Midlothian, VA 23112 (804) 739-8853 email: shs5701@comcast.net

John W. Steele, Esquire Hirschler & Fleischer Federal Reserve Bank Building 701 East Byrd Street Richmond, VA 23219 or P. O. Box 500 Richmond, VA 23218-0500 (804) 771-9565 (804) 644-0957 (fax) email: jsteele@hf-law.com

Stephen B. Wood, Esquire Bierman, Geesing & Ward, L.L.C. 81200 Three Chopt Road Room 240 Richmond, VA 23229-4833 (804) 282-0463 (804) 282-0541 (fax) email: Stephen.Wood@bgw-llc.com

J. Page Williams, Esquire Lenhart Pettit, P.C. 530 East Main Street P.O. Box 2057 Charlottesville, VA 22902-2057 (434) 817-7973 (434) 977-5109 (fax) email: jpw@fpwlaw.com

Northern Region

Dianne Boyle, Esquire Chicago Title Insurance Company 2000 M Street, NW Suite 610 Washington, D.C. 20036 (202) 263-4745 (202) 955-5769 (fax) email: boyled@ctt.com

Todd E. Condron, Esquire Ekko Title 410 Pine Street, SE Suite 220 Vienna, VA 22180 (703) 537-0800 (888) 448-3556 (fax) email: tcondron@ekkotitle.com

Lawrence A. Daughtrey, Esquire Kelly & Daughtrey 10605 Judicial Drive Suite A-3 Fairfax, VA 22030 (703) 273-1950 (703) 359-5198 (fax) email: ldaught@aol.com

*John David Epperly, Esquire Fidelity National Title Insurance Company 5875 Trinity Parkway Suite 210 Centreville, VA 22120-1971 (703) 279-1701 (888) 465-0406 ext. 701 (703) 691-2258 (fax) email: jepperly@fnf.com

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Pamela B. Fairchild, Esquire Attorney at Law Fairchild Law 9501 Ferry Harbour Court Alexandria, VA 22309 (703) 623-9395 (cell) email: pam@fairchild-law.com

Mark W. Graybeal, Esquire Keegan, DeVol & Clarke, P.L.C. 8133 Leesburg Pike Suite 220 Vienna, VA 22182 703-691-1700 (703) 691-3118 (fax) email: mgraybeal@keeganlaw.net

Jack C. Hanssen, Esquire Moyes & Associates, P.L.L.C. 21 North King Street Leesburg, VA 20176-2819 (703) 777-6800 (703) 777-9886 (fax) email: jack@moyeslaw.com

George A. Hawkins, Esquire Peterson Goodman & Hawkins, P.L.C. 8214-C Old Courthouse Road Vienna, VA 22182 703-442-3890 703-448-1834 (fax) email: ghawkins@pghva-law.com

John H. Hawthorne, Esquire Protorae Law, P.L.L.C. 8075 Leesburg Pike Suite 760 Tysons, VA 22181 (703) 942-6147 (703) 942-6758 (fax) email: jhawthorne@protoraelaw.com

*Susan M. Pesner, Esquire Pesner Kawamoto, P.L.C. 7926 Jones Branch Drive Suite 930 McLean, VA 22102-3303 (703) 506-9440 (703) 506-0929 (fax) email: spesner@pesnerkawamoto.com

Sarah Louppe Petcher, Esquire General Counsel Northern Virginia Association of Realtors® 6641 Locust Street Falls Church, VA 22046 (703) 207-3200 (703) 207-3277 (fax) email: spetcher@nvar.com

Jordan M. Samuel, Esquire Asmar, Schor & McKenna, P.L.L.C. 5335 Wisconsin Avenue, N.W. Suite 400 Washington, D.C. 20015 (202) 244-4264 (202) 686-3567 (fax) email: jsamuel@asm-law.com

*Lawrence M. Schonberger, Esquire Sevila, Saunders, Huddleston & White, P.C. 30 North King Street Leesburg, VA 20176 (703) 777-5700 (703) 771-4161 (fax) email: LSchonberger@sshw.com

David W. Stroh, Esquire 2204 Golf Course Drive Reston, VA 20191 (703) 716-4573 email: davidwstroh@gmail.com

Lucia Anna Trigiani, Esquire MercerTrigiani 112 South Alfred Street Alexandria, VA 22314 (703) 837-5000 (703) 837-5008 (direct) (703) 837-5001 (fax) (703) 835-5018 (direct fax) email: Pia.Trigiani@MercerTrigiani.com

Matthew White, Esquire Managing Attorney, RGS Alexandria 526 King Street Suite 213 Alexandria, VA 22314 (703) 519-7600 (703) 405-7024 (cell) email: mwhite@rgstitle.com

Eric V. Zimmerman, Esquire Miller Zimmerman, P.L.C. 50 Catoctin Circle, NE Suite 201 Leesburg, VA 20176 (703) 777-8850 (703) 777-8854 (fax) email: ezimmerman@millerzimerman.com

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Vol. XXXVI, No. 2 47 Fall 2015

Tidewater Region

Robert C. Barclay, IV, Esquire Cooper, Spong & Davis, P.C. P.O. Box 1475 Portsmouth, VA 23705 (757) 397-3481 (757) 391-3159 (fax) email: rbarclay@portslaw.com

*Michael E. Barney, Esquire Kaufman & Canoles, P.C P.O. Box 626 Virginia Beach, VA 23451-0626 (757) 491-4040 (757) 491-4020 (fax) email: mebarney@kaufcan.com

*Paula S. Caplinger, Esquire Vice President and Tidewater Agency Counsel Chicago Title Insurance Company Fidelity National Title Group P.O. Box 6500 Newport News, VA 23606 (757) 508-8889 (757) 277-0204 (fax) email: caplingerP@ctt.com

Brian O. Dolan, Esquire Kaufman & Canoles, P.C. 11815 Fountain Way Suite 400 Newport News, VA 23606 (757) 873-6311 (757) 873-6359 (fax) email: bodolan@kaufcan.com

Alyssa C. Embree, Esquire Williams Mullen 999 Waterside Drive Suite 1700 Norfolk, VA 23510 (757) 629-0631 (757) 629-0660 (fax) email: aembree@williamsmullen.com

*Howard E. Gordon, Esquire Williams Mullen 999 Waterside Drive Suite 1700 Norfolk, VA 23510 (757) 629-0607 (757) 629-0660 (fax) email: hgordon@williamsmullen.com

Ann A. Gourdine, Esquire 115 High Street Portsmouth, VA 23704 (757) 397-6000 (757) 399-1055 (fax) email: anngordine@vacoxmail.com

Naveed Kalantar, Esquire Pender & Coward, P.C. 117 Market Street Suffolk, VA 23434 (757) 490-6251 (757) 502-7389 (fax) email: nkalantar@pendercoward.com

Ray W. King, Esquire LeClairRyan, P.C. 999 Waterside Drive Suite 2100 Norfolk, VA 23510 (757) 624-1454 (main) (757) 441-8929 (direct) (757) 624-3773 (fax) email: ray.king@leclairryan.com

*Charles (Chip) E. Land, Esquire Kaufman & Canoles, P.C. P.O. Box 3037 Norfolk, VA 23514-3037 (757) 624-3131 (757) 624-3169 (fax) email: celand@kaufcan.com

*Charles M. Lollar, Esquire Lollar Law, P.L.L.C. Virginia Bar No. 17009 North Carolina Bar No. 7861 P. O. Box 11274 Norfolk, VA 23517 (757) 644-4657 (office) (757) 735-0777 (mobile) (757) 644-4659 (fax) email: cmlollar@gmail.com

Christina E. Meier, Esquire Christina E. Meier, P.C. 4768 Euclid Road Suite 102 Virginia Beach, VA 23462 (757) 313-1161 (757) 313-1162 (fax) email: cmeier@cmeierlaw.com

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Vol. XXXVI, No. 2 48 Fall 2015

*Jean D. Mumm, Esquire LeClairRyan, P.C. 999 Waterside Drive Suite 2100 Norfolk, VA 23510 (757) 441-8916 (direct) (757) 681-5302 (cell) (757) 441-8976 (fax) email: Jean.Mumm@leclairryan.com

Cynthia A. Nahorney, Esquire Fidelity National Title Insurance Corporation Commonwealth Land Title Insurance Company 150 West Main Street Suite 1615 Norfolk, VA 23510 (757) 628-5902 ext. 11 (757) 625-0293 (fax) email: Cynthia.nahorney@fnf.com

Harry R. Purkey, Jr., Esquire 303 34th Street Suite 5 Virginia Beach, VA 23451 (757) 428-6443 (757) 428-3338 (fax) email: hpurkey@hrpjrpc.com

*Stephen R. Romine, Esquire LeClairRyan, P.C. 999 Waterside Drive Suite 2100 Norfolk, VA 23510 (757) 624-1454 (main) (757) 441-8921 (direct) (757) 441-8971 (fax) email: sromine@leclairryan.com

William W. Sleeth, III, Esquire LeClairRyan, P.C. 5388 Discovery Park Boulevard 3rd Floor Williamsburg, VA 23188 (757) 941-2821 (757) 941-2879 (fax) email: william.sleeth@leclairryan.com

Amanda A. Smith, Esquire Smith and Peters 780 Pilot House Drive Suite 200-A Newport News, VA 23606 (757) 595-5500 (757) 595-4999 (fax) email: Amanda@smithpeterslaw.com

Allen C. Tanner, Jr., Esquire 701 Town Center Drive Suite 800 Newport News, VA 23606 (757) 595-9000 (757) 873-8103 (fax) email: atanner@jbwk.com

Andrae J. Via, Esquire Senior Corporate Counsel Ferguson Enterprises, Inc. 12500 Jefferson Avenue Newport News, VA 23602 (757) 969-4170 (757) 989-2613 (fax) email: andrae.via@ferguson.com

Edward R. Waugaman, Esquire 1114 Patrick Lane Newport News, VA 23608 (757) 897-6581 email: edward.waugaman@verizon.net

Mark D. Williamson, Esquire McGuire Woods, L.L.P. World Trade Center Suite 9000 101 W. Main Street Norfolk, VA 23510 (757) 640-3713 (757) 640-3973 (757) 640-3701 (fax) email: mwilliamson@mcguirewoods.com

Valley Region

K. Wayne Glass, Esquire Vellines, Cobbs, Goodwin & Glass P.O. Box 235 Staunton, VA 24402-0235 (540) 885-1205 (540) 885-7599 (fax) email: kwg24402@gmail.com

James L. Johnson, Esquire Wharton Aldhizer & Weaver, P.L.C. 100 South Mason Street P.O. Box 20028 Harrisonburg, VA 22801 (540) 434-0316 (540) 434-5502 (fax) email: jjohnson@wawlaw.com

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Vol. XXXVI, No. 2 49 Fall 2015

Paul J. Neal, Esquire 122 West High Street Woodstock, VA 22664 (540) 459-4041 (540) 459-3398 (fax) email: neallaw@shentel.net

Mark N. Reed, Esquire Reed & Reed, P.C. 16 S. Court Street P.O. Box 766 Luray, VA 22835 (540) 743-5119 (540) 743-4806 (fax) email: lawspeaker@earthlink.net

Western Region

*David C. Helscher, Esquire Osterhoudt, Prillaman, Natt, Helscher, Yost,

Maxwell & Ferguson, P.L.C. 3140 Chaparral Drive Suite 200 C Roanoke, VA 24018 (540) 725-8182 (540) 772-0126 (fax) email: dhelscher@opnlaw.com

Honorary Area Representatives (Inactive)

*Joseph M. Cochran, Esquire 177 Oak Hill Circle Sewanee, TN 37375

*Robert E. Hawthorne, Esquire Hawthorne & Hawthorne P.O. Box 603 Kenbridge, VA 23944 (434) 676-3275 (434) 676-2286 (fax) (Kenbridge Office) (434) 696-2139 (434) 696-2537 (fax) (Victoria Office) email: rehawthorne@hawthorne-hawthorne.com

*Edward B. Kidd, Esquire Troutman Sanders Building 1001 Haxall Point Richmond, VA 23219 (804) 697-1445 (804) 697-1339 (fax) email: ed.kidd@troutmansanders.com

*James B. (J.B.) Lonergan, Esquire Pender & Coward, P.C. 222 Central Park Avenue Virginia Beach, VA 23462 (757) 490-6281 (757) 497-1914 (fax) email: jlonerga@pendercoward.com

*Michael M. Mannix, Esquire Holland & Knight, L.L.P. Suite 700 1600 Tysons Boulevard McLean, VA 22102 (703) 720-8024 email: michael.mannix@hklaw.com

*R. Hunter Manson, Esquire R. Hunter Manson, P.L.C. P.O. Box 539 Reedville, VA 22539 (804) 453-5600 (804) 453-7055 (fax)

*G. Michael Pace, Jr., Esquire General Counsel Roanoke College Office of the President 221 College Lane Salem, VA 24153 (540) 375-2047 (540) 375-2085 (fax) email: gpace@roanoke.edu

*Joseph W. Richmond, Jr., Esquire McCallum & Kudravetz, P.C. 250 East High Street Charlottesville, VA 22902 (434) 293-8191 (main) (434) 220-5999 (direct) (434) 296-0025 (fax) email: jwr@mkpc.com

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Vol. XXXVI, No. 2 50 Fall 2015

*Michael K. Smeltzer, Esquire Woods, Rogers & Hazlegrove, L.C. P.O. Box 14125 Roanoke, VA 24038 (540) 983-7652 (540) 983-7711 (fax) email: smeltzer@woodsrogers.com

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Vol. XXXVI, No. 2 51 Fall 2015

COMMITTEE CHAIRPERSONS AND OTHER SECTION CONTACTS COMMITTEE CHAIRPERSONS

Standing Committees

FEE SIMPLE Chair Stephen C. Gregory, Esquire 1334 Morningside Dr. Charleston, WV. 25314 (703) 850-1945 (cell) email: 75cavalier@gmail.com Publication Committee members: *Douglass W. Dewing, Esquire

Karen L. Day, Esquire Michael P. Lovell, Esquire Trevor B. Reid, Esquire *Lawrence M. Schonberger, Esquire Jessica D. Selway, Esquire Lucia Anna Trigiani, Esquire

Membership Chair J. Philip Hart, Esquire Vice President & Investment Counsel Legal Department Genworth Financial, Inc. 6620 West Broad Street Building #1 Richmond, VA 23230 (804) 922-5161 (804) 662-2596 (fax) email: philip.hart@genworth.com Committee members: F. Lewis Biggs, Esquire

K. Wayne Glass, Esquire *Randy C. Howard, Esquire *Larry J. McElwain, Esquire Harry R. Purkey, Jr., Esquire Collison F. Royer, Esquire *Susan H. Siegfried, Esquire

Programs Co-Chairs *Paula S. Caplinger, Esquire Vice President and Tidewater Agency Counsel Chicago Title Insurance Company Fidelity National Title Group P.O. Box 6500 Newport News, VA 23606 (757) 508-8889 (757) 277-0204 (fax) email: caplingerP@ctt.com Blake Hegeman, Esquire Deputy General Counsel Virginia Association of Realtors® 10231 Telegraph Road Glen Allen, VA 23059-4561 (804) 264-5033 (804) 262-0497 (fax) email: blake@varealtor.com Committee members: *Paul A. Bellegarde, Esquire (Advanced CLE)

Kay M. Creasman, Esquire *Howard E. Gordon, Esquire Mark W. Graybeal, Esquire *Neil S. Kessler, Esquire Louis J. Rogers, Esquire *Paul H. Melnick, Esquire (Annual CLE) John W. Steele, Esquire Edward R. Waugaman, Esquire C. Cooper Youell, IV, Esquire

Technology Chair Mark W. Graybeal, Esquire Keegan, DeVol & Clarke, P.L.C. 8133 Leesburg Pike Suite 220 Vienna, VA 22182 703-691-1700 (703) 691-3118 (fax) email: mgraybeal@keeganlaw.net Committee members: Douglass W. Dewing, Esquire Ray W. King, Esquire James M. McCauley, Esquire

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Vol. XXXVI, No. 2 52 Fall 2015

Substantive Committees

Commercial Real Estate Chair Richard B. "Rick" Chess, Esquire Chess Law Firm, P.L.C. 2727 Buford Road, Suite D Richmond, VA 23235 (804) 241-9999 (cell) (866) 596-9908 (fax) email: rick@chesslawfirm.com Committee members: *Michael E. Barney, Esquire *Paul A. Bellegarde, Esquire Dianne Boyle, Esquire Richard B. Chess, Esquire Lucy G. Davis, Esquire Roberto P. Garcia, Esquire K. Wayne Glass, Esquire *Howard E. Gordon, Esquire

Jack C. Hanssen, Esquire

*Randy C. Howard, Esquire Ray W. King, Esquire *C. Grice McMullan, Jr., Esquire Jean D. Mumm, Esquire William L. Nusbaum, Esquire Jordon M. Samuel, Esquire John W. Steele, Esquire David W. Stroh, Esquire J. Page Williams, Esquire Mark D. Williamson, Esquire C. Cooper Youell, IV, Esquire

Common Interest Community Chair Jeremy R. Moss, Esquire MercerTrigiani 112 South Alfred Street Alexandria, VA 22314 (703) 837-5003 (703) 837-5013 (fax) email: Jeremy.Moss@MercerTrigiani.com Committee members: Michael A. Inman, Esquire

Marshall L. Jones, Esquire Jeremy R. Moss, Esquire Harry R. Purkey, Esquire Karen W. Ramey, Esquire Susan B. Tarley, Esquire

Creditors’ Rights and Bankruptcy Chair F. Lewis Biggs, Esquire Kepley Broscious & Biggs, P.L.C. 2211 Pump Road Richmond, VA 23233 (804) 741-0400 ext. 203 (804) 740-6175 (fax) email: flbiggs@kbbP.L.C..com Committee members: Paula S. Beran, Esquire

James E. Clarke, Esquire J. Philip Hart, Esquire Christopher A. Jones, Esquire

John H. Maddock, III, Esquire Richard C. Maxwell, Esquire

Lynn L. Tavenner, Esquire Stephen B. Wood, Esquire

Eminent Domain Chair *Charles M. Lollar, Esquire Lollar Law, PLLC Virginia Bar No. 17009 North Carolina Bar No. 7861 P. O. Box 11274 Norfolk, VA 23517 (757) 735-0777 email: cmlollar@gmail.com Committee members: Edmund M. Amorosi, Esquire David L. Arnold, Esquire Nancy C. Auth, Esquire Josh E. Baker, Esquire James E. Barnett, Esquire Stanley G. Barr, Esquire Robert J. Beagan, Esquire James C. Breeden, Esquire Barbara H. Breeden, Esquire *Lynda L. Butler, Esquire Michael S. J. Chernau, Esquire Francis A. Cherry, Jr., Esquire Stephen J. Clarke, Esquire Charles R. Cranwell, Esquire

Christianna Dougherty-Cunningham, Esquire Joseph M. DuRant, Esquire Lawrence S. Emmert, Esquire Jerry K. Emrich, Esquire Matthew D. Fender, Esquire Gifford R. Hampshire, Esquire Jeremy Hopkins, Esquire Henry E. Howell, Esquire Thomas M. Jackson, Jr., Esquire

James W. Jones, Esquire James J. Knicely, Esquire

Brian G. Kunze, Esquire Steven L. Micas, Esquire

Michael E. Ornoff, Esquire Sharon E. Pandak, Esquire

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Vol. XXXVI, No. 2 53 Fall 2015

Committee members (cont’d): Rebecca B. Randolph, Esquire Kelly L. Daniels Sheeran, Esquire

Mark A. Short, Esquire Bruce R. Smith, Esquire Rhysa G. South, Esquire Paul B. Terpak, Esquire Joseph T. Waldo, Esquire Scott Alan Weible, Esquire

Ethics Chair *Paul H. Melnick, Esquire Melnick & Melnick, P.L.C. 711 Park Avenue Falls Church, VA 22046 (703) 276-1000 (703) 536-8880 (fax) email: paul.melnick@melnickandmelnick.com Committee members: David B. Bullington, Esquire Todd E. Condron, Esquire Kay M. Creasman, Esquire James M. McCauley, Esquire Christina E. Meier, Esquire *Susan M. Pesner, Esquire *Lawrence M. Schonberger, Esquire Amanda A. Smith, Esquire J. Page Williams, Esquire Edward R. Waugaman, Esquire Eric V. Zimmerman, Esquire

Land Use and Environmental Chair *Stephen R. Romine, Esquire LeClairRyan, P.C. 999 Waterside Drive Suite 2100 Norfolk, VA 23510 (757) 624-1454 (main) (757) 441-8971 (direct) (757) 624-3773 (fax) email: sromine@leclairryan.com Committee members: Alan D. Albert, Esquire Robert C. Barclay, IV, Esquire *Michael E. Barney, Esquire Steven W. Blaine, Esquire Andrew W. Carrington, Esquire John M. Mercer, Esquire Lisa M. Murphy, Esquire Diana Norris, Esquire

R. J. Nutter, II, Esquire Karen W. Ramey, Esquire

William W. Sleeth, III, Esquire Jonathan Stone, Esquire David W. Stroh, Esquire

Residential Real Estate Co-Chairs *Christina E. Meier, Esquire Christina E. Meier, P.C. 4768 Euclid Road Suite 102 Virginia Beach, VA 23462 (757) 313-1161 (757) 313-1162 (fax) email: cmeier@cmeierlaw.com Susan S. Walker, Esquire Jones, Walker & Lake 128 S. Lynnhaven Road Virginia Beach, VA 23452 (757) 486-0333 (757) 340-8583 (fax) email: swalker@jwlpc.com Committee members: Richard F. Bozard, Esquire David B. Bullington, Esquire Todd E. Condron, Esquire Kay M. Creasman, Esquire K. Wayne Glass, Esquire Mark W. Graybeal, Esquire Barbara Wright Goshorn, Esquire *David C. Helscher, Esquire

*Paul H. Melnick, Esquire Karen W. Ramey, Esquire

Mark N. Reed, Esquire Trevor B. Reid, Esquire Dan L. Robinson, Esquire Collison F. Royer, Esquire Allen C. Tanner, Jr., Esquire Jordon M. Samuel, Esquire David W. Stroh, Esquire

Title Insurance Chair Kay M. Creasman, Esquire Assistant Vice President and Counsel Old Republic National Title Insurance Company 1245 Mall Drive Suite B North Chesterfield, VA 23235 (804) 897-5499 (804) 475-1765 (cell) (804) 897-9679 (fax) email: kcreasman@oldrepublictitle.com Committee members: Ali T. Anwar, Esquire *Michael E. Barney, Esquire *Paula S. Caplinger, Esquire Kenneth L. Dickinson, Esquire Rosalie K. Doggett, Esquire Brian O. Dolan, Esquire Stephen C. Gregory, Esquire *Randy C. Howard, Esquire

Cynthia A. Nahorney, Esquire Karen W. Ramey, Esquire Jessica D. Selway, Esquire Edward R. Waugaman, Esquire Ronald D. Wiley, Jr., Esquire

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Vol. XXXVI, No. 2 54 Fall 2015

Committee members (cont’d): Ronald D. Wiley, Jr., Esquire Eric V. Zimmerman, Esquire Law School Liaison Chair *Paul A. Bellegarde, Esquire 8284 Spring Leaf Court Vienna, VA 22182 (301) 537-0627 (cell) (703) 749-8306 (fax) email: bellslaw@aol.com Committee members: Kay M. Creasman, Esquire Kenneth L. Dickenson, Esquire Mark W. Graybeal, Esquire Charles M. Lollar, Esquire *Larry J. McElwain, Esquire

J. Page Williams, Esquire Mark Williamson, Esquire

C. Cooper Youell, IV, Esquire Eric V. Zimmerman, Esquire

Section Contact

Liaison to Bar Counsel Ray W. King, Esquire LeClairRyan, P.C. 999 Waterside Drive Suite 2100 Norfolk, VA 23510 (757) 624-1454 (757) 441-8929 (direct) (757) 624-3773 (fax) email: rking@leclairryan.com

NEWSCriminal Law FIRST CLASS

U.S. POSTAGEPAID

PERMIT NO. 709RICHMONDVirginia State Bar

1111 eaSt Main Street, Suite 700richMond, Virginia 23219-3565

Virginia State Bar Criminal Law SectionBoard of Governors 2010-2011

Elizabeth L. Keller, Staff Liaison

Newsletter Editor: Professor Ronald J. Bacigal, University of Richmond School of Law

www.vsb.org/site/sections/criminal

StatEmENtS oR ExPRESSioNS of oPiNioN oR commENtS aPPEaRiNg hEREiN aRE thoSE of thE EditoRS aNd coNtRiBUtoRS aNd Not NEcESSaRiLy thoSE of thE StatE BaR oR SEctioN.

hon. dennis W. dohnal, Ex-Officio, Judicialhon. charles S. Sharp, Ex-Officio, Judicial

hon. ashley K. tunner, Ex-Officio, Judicialhon. James S. yoffy, Ex-Officio, Judicial

Joel R. BranscomJames a. Bullard, Jr.claire g. cardwell

Linda d. curtisdavid J. damico

francis mcQ. Lawrence

andrea L. moseleyJeffrey a. Swartz

Reno S. harp, iii, Ex Officiohon. Neil h. macBride, Ex Officio U.S. attorney, Eastern district of Virginia

carolyn V. grady, Chaircasey R. Stevens, Vice Chair

Lisa K. caruso, SecretaryRichard E. trodden Immediate Past Chair

Francis McQ. Lawrence, ChairJoel R. Branscom, Vice ChairAndrea L. Moseley, Secretary

Lisa K. Caruso Immediate Past Chair

Melissa H. HoyManuel E. Leiva, Jr.

Colette Wallace McEachinRobert G. MorecockElizabeth P. Murtagh

Nancy G. ParrTheo K. Stamos

Esther J. WindmuellerS. Eugene Fishel IV, Ex Officio Reno S. Harp, III, Ex Officio

Hon. Timothy J. Heaphy,U.S. Attorney,

Western District of Virginia

Virginia State Bar Criminal Law SectionBoard of Governors 2013-2014

Hon. Rufus A. Banks, Jr., Ex-Officio, Judicial Hon. Ivan D. Davis, Ex-Officio, Judicial

Hon. Steven C. Frucci, Ex Officio, JudicialHon. Charles S. Sharp, Ex Officio, Judicial

Elizabeth L. Keller, Staff Liaison

NEWSCriminal Law FIRST CLASS

U.S. POSTAGEPAID

PERMIT NO. 709RICHMONDVirginia State Bar

1111 eaSt Main Street, Suite 700richMond, Virginia 23219-3565

Virginia State Bar Criminal Law SectionBoard of Governors 2010-2011

Elizabeth L. Keller, Staff Liaison

Newsletter Editor: Professor Ronald J. Bacigal, University of Richmond School of Law

www.vsb.org/site/sections/criminal

StatEmENtS oR ExPRESSioNS of oPiNioN oR commENtS aPPEaRiNg hEREiN aRE thoSE of thE EditoRS aNd coNtRiBUtoRS aNd Not NEcESSaRiLy thoSE of thE StatE BaR oR SEctioN.

hon. dennis W. dohnal, Ex-Officio, Judicialhon. charles S. Sharp, Ex-Officio, Judicial

hon. ashley K. tunner, Ex-Officio, Judicialhon. James S. yoffy, Ex-Officio, Judicial

Joel R. BranscomJames a. Bullard, Jr.claire g. cardwell

Linda d. curtisdavid J. damico

francis mcQ. Lawrence

andrea L. moseleyJeffrey a. Swartz

Reno S. harp, iii, Ex Officiohon. Neil h. macBride, Ex Officio U.S. attorney, Eastern district of Virginia

carolyn V. grady, Chaircasey R. Stevens, Vice Chair

Lisa K. caruso, SecretaryRichard E. trodden Immediate Past Chair

Francis McQ. Lawrence, ChairJoel R. Branscom, Vice ChairAndrea L. Moseley, Secretary

Lisa K. Caruso Immediate Past Chair

Melissa H. HoyManuel E. Leiva, Jr.

Colette Wallace McEachinRobert G. MorecockElizabeth P. Murtagh

Nancy G. ParrTheo K. Stamos

Esther J. WindmuellerS. Eugene Fishel IV, Ex Officio Reno S. Harp, III, Ex Officio

Hon. Timothy J. Heaphy,U.S. Attorney,

Western District of Virginia

Virginia State Bar Criminal Law SectionBoard of Governors 2013-2014

Hon. Rufus A. Banks, Jr., Ex-Officio, Judicial Hon. Ivan D. Davis, Ex-Officio, Judicial

Hon. Steven C. Frucci, Ex Officio, JudicialHon. Charles S. Sharp, Ex Officio, Judicial

Elizabeth L. Keller, Staff Liaison