1940                                       Vetoes

E. What effect will all these problems have on the negotiability
of the notes that are secured by the deed of trust?

Senate Bill 209 does not give answers to any of these problems.
These types of problems are ones which led Paul L. Plack, Senior
Vice President of The Title Guarantee Company, to write with
respect to Senate Bill 209:

"The only effect S. B. No. 209 could accomplish is to ham-
string the lenders with no real benefits to citizens of Maryland,
and I would recommend the same be vetoed."

We submit that lenders should not be discouraged to lend money in
Maryland by having restrictive statutes such as Senate Bill 209.

IV.

The apparent model on which this statute was allegedly based
is a Virginia statute contained in 8 Va. Ann. Code (1950, 1969
Replacement Vol.), Section 55-58.1. Many of the problems referred to
in this memorandum would have been solved automatically if the
draftsmen of Senate Bill 209 had incorporated Virginia's entire statute.
However, the draftsmen of Senate Bill 209 simply took one sec-
tion of the Virginia statute and omitted the curative aspects of
the Virginia statute, which would have relieved Senate Bill 209 from
many of the more objectionable consequences.

For example, the Virginia statute goes on to state that the
clerk of the land records shall not record a deed of trust if the in-
strument does not state the residence of the trustee. If the clerk
does admit the instrument to record and it states that the trustee
is a Virginia resident, the statute creates a conclusive irrebuttable
presumption that the trustee is in fact a resident of Virginia. The
Virginia statute further states that if the clerk should accept the
deed of trust for record without a statement as to the residence of
the trustee, the instrument will still be a valid instrument and all
acts taken by the trustees will be valid. The inclusion of these pro-
visions would have eliminated all of the enormous title problems that
concern the real estate bar. A title searcher is not, in Virginia,
constrained to make an independent determination of the residence of
trustees of deeds of trust. He can rely on the irrebuttable statutory
presumption that if the deed of trust has been recorded, he need not
concern himself with the prohibition against non-residents. The eli-
mination of this safeguard in the Maryland statute, especially when
viewed in terms of the fact that the Maryland statute was ostensibly
patterned on the Virginia statute, creates the strong inference that in
Maryland, every time someone must search a title in which a deed
of trust appears in the chain, an independent determination of resi-
dence will have to be made. This is hardly a salutary situation.

CONCLUSION

From the point of view of the practising real estate bar and
those persons engaged in preserving the marketability of title
to real estate, Senate Bill 209 is a very bad bill with extremely
serious consequences. It deserves the same veto it received last year.

Maryland State Bar Association,
Section of Real Property, Planning

and Zoning Law
By Shale D. Stiller