T H E N S B A R E A L E S TAT E , P R O B AT E A N D T R U S T L AW S E C T I O N

P R E S E N T S

2019 REAL ESTATE

INSTITUTE

F R I D A Y S E P T E M B E R 1 3 , 2 0 1 9 8 : 0 0 A M - 3 : 4 5 P M

E M B A S S Y S U I T E S L A V I S T A

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Begin the morning with an overview of real estate-related legislation from the 2019 Legislative Session and preview expected legislation for the 2020 session.

REAL ESTATE INSTITUTE2019

P R E S E N T E D B Y T H E N S B A R E A L E S TAT E , P R O B AT E A N D T R U S T L AW S E C T I O N

EMBASSY SUITES 12520 WESTPORT PARKWAY LA VISTA

8:00 AM - 3:45 PM FRIDAY SEPTEMBER 13, 2019

The 2019 Real Estate Institute will provide title insurance representatives, title agents, abstracters, title searchers, and lawyers with an over-view of all things real estate, including: new real estate legislation, deeds of trust, deferred tax exchanges, homeowners’ and condominium as-sociations, tax certifi cates, legalized hemp and its impact on real estate, notarization trends, and problematic construction contract clauses.

8:30 am

Kaylen Akert WOODS & AITKEN LLP

eNotarization: Technology and Trends

Recent statutory changes now allow for electronic and remote nota-rization in Nebraska. This presentation will demonstrate the tech-nology facilitating the process, highlight the differences between electronic and remote notarization, and review the substantive and practical issues still surrounding e-notarization.

Timothy G. Hruza MUELLER ROBAK LLC

9:00 am

Craig Martin LAMSON DUGAN & MURRAY LLP

Construction Contracts—Clauses and ConductThat Can Create Problems on the Project

Contract clauses can, and often do, create problems on construc-tion projects. This presentation will review these clauses, the recent Nebraska Supreme Court case U.S. Pipeline v. Northern Natural Gas Co., 330 Neb. 444 (2019), and the court’s interpretation of contract provisions and conduct that can result in a waiver.

Legislative Update8:00 am

William Mueller MUELLER ROBAK LLC

9:45 am Break

10:00 am

Lilly A. Richardson-Severn RICHARDSON-SEVERN LAW, PLLC

A Primer: What you need to know aboutReal Estate Tax Certificates

This presentation will discuss the tax certificate process and what actions a holder of a tax certificate must take to recover their investment.

Deana K. Walocha US ASSETS, LLC

11:00 am

Jennifer Strand PRESIDENT AND GENERAL COUNSEL, NEBRASKA TITLE COMPANY

Tax Deferred Exchanges under IRC § 1031

This presentation will focus on the basic rules for forward, reverse and improvement exchanges under the Internal Revenue Code.

Nancy L. Loftis NANCY LOFTIS LAW OFFICE

11:45 am Lunch

12:45 pm

David Bracht KUTAK ROCK LLP

What Real Estate Lawyers Need to Know About Hemp

Hemp, now a legal crop in Nebraska, is heavily regulated. Learn what’s required for hemp growers and processors to operate, and how grow-ing and selling hemp and its derivatives impacts land use, rental prop-erties, real estate lending, and other aspects of real estate practice.

1:45 pm

Robert Dailey MCGRATH NORTH MULLIN & KRATZ, PC LLO

Operation of Condominium Ownersand Homeowners Associations

This presentation will provide an overview for lawyers on the legal frameworks for and responsibilities of condominium and homeown-ers’ associations.

2:30 pm Break

3:00 pmAndrew Biehl WALENTINE O’TOOLE, LLP

Deeds of Trust: Procedure and Litigation

This presentation will review the basics of Trust Deeds, the role of the trustee, the trustee’s sale process, deficiencies, litigation, the effects of bankruptcy, and when a judicial sale may be preferable.

Matthew McKeever COPPLE, ROCKEY, MCKEEVER & SCHLECHT P.C, L.L.O.

ACCREDITATION 6.0 CLE CREDIT HOURS / NEBRASKA & IOWA REGULAR / LIVE NE MCLE #179883 IA MCLE #333017DISTANCE LEARNING NE MCLE #179882 IA MCLE #333018NE Real Estate Commission: 6 hours [#1157R]NE Abstracters Board of Examiners: 3 hoursNE Dept. of Insurance: 6 hours [Course ID #6000053396 Provider ID #1519]

THANK YOU TO OUR SPONSORS

Credit for these entities only available via the live seminar, not via webcast.

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FACULTY BIOS

continued

TIMOTHY G. HRUZA Mueller Robak LLCA er gradua ng from law school, Mr. Hruza spent three years in private prac ce at a mid-sized fi rm in Grand Island, Nebraska, where he worked with clients on a number of diff erent legal issues, from li ga ng contract and property boundary disputes, to developing estate plans and managing business transac ons. Following his me in private prac ce, Mr. Hruza worked as legal counsel to a Lincoln business associa on, providing advice and counsel to local business owners and advoca ng for their interests before elected offi cials on the local and state levels. Most recently, Mr. Hruza served as legal counsel to the Nebraska Legislature’s Judiciary Commi ee, where he advised Senators on the legal aspects of bills presented to them for considera on. Mr. Hruza received his juris doctor degree with dis nc on from the University of Nebraska College of Law in 2012.

KAYLEN AKERT Woods & Aitken LLPKaylen K. Akert joined Woods & Aitken LLP in 2015 a er clerking at the fi rm for two years. Her areas of prac ce include busi-ness transac ons, mergers and acquisi ons, banking, real estate ma ers, and estate planning. Kaylen was a member of the working group considering legisla on regarding remote notariza on, recently enacted as the Online Notary Public Act. Kaylen received her J.D., cum laude, from Creighton University School of Law. During law school, she was president of the Student Bar Associa on, senior lead ar cles editor for the Creighton Law Review, a member of the Moot Court Board, and received mul ple CALI Excellence for the Future Awards. Kaylen received her B.A. from the University of Nebraska-Lincoln, where she majored in English and History.

DAVID BRACHT Kutak Rock LLPDavid is a corporate a orney in Omaha serving agribusiness, ag-banking and renewable energy clients (including ethanol, wind and solar) and is co-chair of the Kutak Rock Hemp Industry Prac ce Group. David has 35 years of business, legal and government experience, including most recently as the Nebraska Director of Energy from 2015-2018 and also in mul ple posi ons with the U.S. Department of Agriculture and the Nebraska Department of Agriculture. He received a B.S. in Agriculture from the Univer-sity of Nebraska and a J.D. from the Georgetown Na onal Law Center.

ROBERT DAILEY McGrath North Mullin & Kratz, PC LLOBob graduated from Creighton University School of Law, cum laude, in 1985. His experience in condominium and homeowners law and the representa on of developers and homeowners' associa ons provide a solid understanding of condominium and homeowners associa on law which is invaluable to developers, unit and home owners and condo and home owners' associa- ons. He provides insight into the latest industry trends and best legal prac ces. Bob assists developers in the crea on of new

condominiums. Some typical owners’ associa on ma ers that he counsels clients on include insurance coverage, fi nancial man-agement, nego a ons among owners, elec on of board members, dispute resolu on and enforcement of rules and bylaws. Bob also assists owners’ associa ons with legal issues related to opera on and maintenance and capital repair and replacement projects as well as various real estate and construc on-related issues and contract disputes.

NANCY L. LOFTIS Nancy Lo is Law Offi ceNancy is an a orney engaged in the private prac ce of law in Lincoln, Nebraska since 1982. Her prac ce focuses on fi nancial, business and real estate issues, including transac ons, residen al and commercial property development and management, tax deferred exchange transac ons and bankruptcy and reorganiza ons. She develops and instructs courses for licensed brokers and agents approved by the Nebraska Real Estate Commission and instructs real estate courses for the University of Nebraska College of Business. Her B.A. and J.D. degrees were awarded by the University of Nebraska in 1979 and 1982 respec vely.

ANDREW BIEHL Walen ne O'Toole, LLPMr. Biehl is a member of the fi rm’s banking and commercial prac ce group. Mr. Biehl represents clients in complex business and banking transac ons, regulatory ma ers, commercial li ga on, foreclosures and Chapter 7, 11, 12 and 13 bankruptcy proceed-ings, including adversary bankruptcy proceedings. Mr. Biehl possesses a unique perspec ve as a former commercial loan offi cer and workout analyst. Mr. Biehl also serves as an adjunct professor of Commercial Real Estate Finance and Investment for the University of Nebraska-Omaha.

FACULTY BIOS

LILLY A. RICHARDSON SEVERN Richardson-Severn Law, PLLCLilly represents clients with respect to real estate and business issues in Nebraska and Iowa, including the purchase and sale of commercial and residen al real estate, tenant/landlord issues, real estate tax liens, foreclosures and bankruptcy, leasing, probate, and estate planning ma ers. Born and raised in Iowa, Lilly achieved her law degree from Creighton University while her two boys went to college. She has worked in the legal fi eld for nearly 30 years in various roles from paralegal for Fitzgerald Schorr Law Firm, Vice President to Slusky Real Estate Group, and General Counsel for a local tax lien investor.

DEANA K. WALOCHA US Assets, LLCDeana has been in-house counsel with US Assets, LLC since 2001 where her primary prac ce focuses on tax cer fi cate foreclo-sure in the states of Nebraska and Iowa. In addi on to her foreclosure work, she has also worked with members of the Nebraska Unicameral on various issued pertaining to tax sale cer fi cates, most recently on LB 463, introduced by Senator Ma Williams this past session. Ms. Walocha received a Bachelor of Fine Arts from the University of Nebraska-Lincoln in 1992 and Juris Doc-tor from the Creighton University School of Law in 1998. She is admi ed to the Nebraska and Iowa State bars and the United States District Court for the District of Nebraska.

JENNIFER STRAND Nebraska Title CompanyPrior to joining Nebraska Title Company in 2012, Strand was a Partner at Woods & Aitken LLP. A member of the Nebraska and Iowa State Bar Associa ons, she received her juris doctorate with dis nc on from the University of Nebraska College of Law (1994). Strand is also the Manager of Safe Harbour Exchange, L.L.C., an affi liate of the Company, which provides qualifi ed inter-mediary and exchange services na onwide.

CRAIG MARTIN Lamson Dugan & MurrayCraig Mar n is a partner at Lamson Dugan & Murray, where he focuses his prac ce on the construc on industry, represen ng contractors, subcontractors, developers, owners, materials suppliers, and design professionals in construc on disputes. His experience encompasses both private construc on and public improvement projects.

When disputes arise, Craig assists clients with claim prepara on, arbitra on, media on, dispute resolu on boards, collec ons, and preparing and pursuing mechanics’ lien and bond remedies. He advises clients about alterna ve dispute resolu on proce-dures that off er viable alterna ves to expensive and prolonged li ga on.

Craig is also the primary author of the Construc on Contractor Advisor blog, a construc on-related blog that focuses on legal trends and best prac ces in the construc on industry. He has also served on the board of construc on industry trade groups, including Associated Builders and Contractors (ABC) and the Na onal Associa on of the Remodeling Industry (NARI).

MATTHEW MCKEEVER Copple, Rockey, McKeever & Schlecht P.C., L.L.O.Ma hew S. McKeever is a shareholder with Copple, Rockey, McKeever and Schlecht, P.C., L.L.O. with offi ces in Norfolk and Omaha. He is a graduate of the University of Nebraska – Lincoln and Brooklyn Law School. He began prac cing law in New York in 1997 and returned to Nebraska in 1999. His prac ce includes civil li ga on, commercial law, estate planning and real estate. He began advising clients about digital currencies and their regulatory framework in April of 2013.

WILLIAM MUELLER Mueller Robak LLCWilliam J. Mueller is a senior partner and co-founder of Mueller Robak LLC. Mr. Mueller has succeeded in combining a strong poli cal and legal background to become one of the state’s leading lobbyists. He advises clients on a broad range of legisla ve and government rela ons ma ers. Mr. Mueller is a graduate of UNL and the University of Nebraska College of Law. Mueller has been selected by his peers for inclusion in the Best Lawyers in America and a Great Plains Super Lawyer in Government Rela- ons Law since 2009. Mueller is an Ogallala, Nebraska na ve. Mueller has served as Legisla ve Counsel to the NSBA since 1984.

Legislative Update

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

WILLIAM MUELLER Mueller Robak LLC

TIMOTHY G. HRUZA Mueller Robak LLC

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MEMORANDUM

TO: 2019 Nebraska State Bar Association Real Estate Institute

FROM: William J. Mueller and Timothy G. Hruza, Legislative Counsel

DATE: September 13, 2019

RE: 2019 Legislative Session Review – 106th Nebraska Legislature, First Session

NSBA SESSION REVIEW

The Legislature adjourned sine die on Friday, May 31, 2019, one week earlier than initially

planned. The Speaker made the decision to move adjournment up after determining that the Legislature

would have adequate time to address all priority bills and the budget by the end of May. Although the

session did not reach its expected 90 days, the Legislature considered numerous policy proposals and

passed many of them.

The most high-profile and dramatic debates to take place this session centered on proposals to

address property taxes and the business community’s effort to adopt a tax incentive program for new and

expanding businesses in the state. After much debate both on the floor and behind the scenes, both bills

stalled when a block of senators determined that they would not vote for business incentives without an

agreement on a bill to provide property tax relief. In the end, neither effort saw success.

The NSBA, however, saw great success this legislative session with 10 of the 11 bills introduced

at its request being passed by the Legislature and signed by the Governor. Attached hereto as

Attachment A is a complete chart of all bills reviewed by the NSBA this session and the status of the

legislation as of adjournment sine die.

The following is a brief overview of the 10 bills introduced at the NSBA’s request that were

passed, the changes they will make, and their effective date:

Bill Number Introducer Description Effective

LB 145

Financial

POAs

Sen. Matt Hansen

(Lincoln)

Allows an attorney-in-fact to execute a

power of attorney on a form provided by a

financial institution

9/1/2019

LB 146

Enforce

POAs

Sen. Matt Hansen

(Lincoln)

Provides additional enforcement provisions

when a person refuses to accept a valid

power of attorney

9/1/2019

LB 300

Judicial

Salary

Increase

Sen. Steve Lathrop

(Omaha)

Provides a 3% salary increase for judges on

July 1, 2019, and another 3% salary

increase on July 1, 2020

7/1/2019

LB 308

Suggestion

in

Bankruptcy

Sen. Steve Lathrop

(Omaha)

Clarifies that the filing of a suggestion in

bankruptcy is not a general appearance in a

matter in response to the holding in Bayliss

v. Clason, 26 Neb. App. 195 (2018)

9/1/2019

2

LB 309

Douglas

County

Judgeship

Sen. Steve Lathrop

(Omaha)

Creates an additional district court

judgeship in Douglas County beginning

July 1, 2021. The start date was adjusted to

allow Douglas County officials time to plan

for court space and security personnel

7/1/2021

LB 315

Life

Insurance

Proceeds

and DHHS

Notice of

Inheritance

Tax

Sen. Mark Kolterman

(Seward)

Clarifies that life insurance proceeds paid to

an inter vivos trust are not subject to

inheritance tax unless the estate of the

deceased is the beneficiary of the trust. Also

clarifies that notice of a determination of

inheritance tax which must be provided to

the Department of Health and Human

Services if a decedent is 55 years of age or

older or resided in a medical institution is

only required in an independent proceeding

to determine inheritance tax in the absence

of a probate proceeding.

9/1/2019

LB 339

Judicial

Nominating

Commission

Sen. Steve Lathrop

(Omaha)

Provides for a separate judicial nominating

commission for the county court district and

the district court district in judicial district 2

since each district contains different

counties. The change is made in follow-up

to LB 697 (2018)

9/1/2019

LB 463

Parcel ID on

Tax Sale

Notices

Sen. Matt Williams

(Gothenburg)

NSBA portion of the bill requires that

notices of tax sale certificate sales include

the parcel ID number when one is available.

The rest of the bill makes a number of

changes to the process and procedure

related to tax sale certificates.

9/1/2019

LB 536

Uniform

Directed

Trust Act

Sen. Patty Pansing Brooks

(Lincoln)

Adopts the Uniform Directed Trust Act to

provide a statutory framework for the use of

directed trusts

9/1/2019

LB 593

Medicaid

Waiver and

Lien Repeal

Sen. Tom Briese (Albion) Repeals portions of LB 72 (2015) and LB

268 (2017) related to Medicaid recovery

liens, including repealing requirements of

obtaining a waiver from DHHS to distribute

trust assets of a revocable trust that became

irrevocable upon the death of the settlor and

repealing provisions of statute that created a

potential springing lien in favor of Medicaid

5/30/19

3

Only one bill introduced by a Senator at the request of the NSBA did not pass this session. The

following is the information about that piece of legislation:

Bill Number Introducer Description Status

LB 523

Non-Profit

Transfer

Exemption

Sen. Lou Ann Linehan

(Elkhorn)

Would have provided an exemption from real

estate transfer taxes for real property

transferred to an LLC that is a wholly-owned

subsidiary of a non-profit corporation

Held in

Committee

In addition to those bills the NSBA asked Senators to introduce, the NSBA was actively engaged

in testifying on and improving a number of other bills. The following is a list of bills the NSBA took an

active role in, and the status of each bill:

Bill Number Introducer Description Issues Status

LB 247 Sen. Kate

Bolz

(Lincoln)

Adopt the Advance

Mental Health Care

Directives Act

Attorneys who practice in the

area raised concerns about the

language of the bill and issues

that may arise based on the

revocability or irrevocability of a

directive, and language that may

give rise to disputes about

whether a directive is effective.

After many conversations, the

Judiciary Committee determined

to hold the bill this year and may

revisit the issue over the interim

or next session.

Held in

Committee

LB 388 Sen. Sara

Howard

(Omaha)

Change provisions

relating to

termination of

parental rights,

placement of

children, and

guardianship

The NSBA expressed concerns to

Sen. Howard prior to the hearing

on the bill with regard to how a

guardianship proceeding and

potential adoption preference

should be afforded to foster

parents over relatives or other

interested parties. Sen. Howard

considered the NSBA’s feedback

and the feedback of a number of

juvenile law advocacy groups and

amended the bill accordingly.

General

File

LB 389 Sen. Sara

Howard

(Omaha)

Change provisions

relating to

termination of

parental rights

The initial bill as drafted reduced

the out-of-home placement time

for parents to be subject to

termination of parental rights on

juveniles under the age of 2. The

NSBA expressed concerns about

the short time period and its

impact on certain types of drug

cases that might require more

Amended

into LB

388 (See

above)

4

treatment, and expressed

concerns about how the change

might impact siblings of different

ages. Sen. Howard made

adjustments to the bill based on

this feedback.

LB 426 Sen. Wendy

DeBoer

(Bennington)

Provide for

Adoption by Two

Adults

The bill as drafted raised

concerns from family law

practitioners about the scope of

the bill and how it might allow

multiple parent adoption and

because it lacked provisions that

provide for a determination of

parenting time and consideration

of the child’s best interests if an

unmarried couple adopts and then

later separates. After discussions

and a meeting of practice area

attorneys with Sen. DeBoer, the

Senator determined to place the

bill on hold this year and work on

it in the interim.

Held in

Committee

LB 532 Sen.

Machaela

Cavanaugh

(Omaha)

Change provisions

related to protection

orders

The bill as introduced would

have required hearings on all

requests for a protection order.

This would have resulted in more

than 3,000 hearings in Nebraska

courts across the state. The

NSBA worked with the Judiciary

Committee and advocates for the

bill to work on a compromise that

purports to only require

additional hearings on sexual

assault protection order filings.

Effective

1/1/2020

LB 595 Sen. Joni

Albrecht

(Thurston)

Change Office of

Dispute Resolution

to Office of

Restorative Justice

and Dispute

Resolution

The NSBA and advocates for the

bill reached an agreement to add

language that authorizes an

attorney licensed to practice law

in the State of Nebraska to serve

as a mediator under the Parenting

Act when the parties agree to

such attorney serving as a

mediator.

Effective

9/1/2019

5

INTERIM STUDIES OF INTEREST TO THE NSBA

As the Legislature heads into the interim, a number of interim studies have been introduced to

spur different committees to examine potential policy changes and determine whether legislation should

be introduced in the future. Oftentimes, the NSBA will be contacted by Senators and other interest groups

to provide feedback and input on different interim studies and potential legislative proposals. As those

requests arise, the NSBA will work to obtain feedback and input from practitioners in relevant practice

areas and will make efforts to improve potential policy initiatives whenever possible.

Attached hereto as Attachment B is a comprehensive list of those interim studies the NSBA may

have an interest in following this interim session and that may give rise to a need to provide technical

feedback to improve future policy proposals.

NSBA Legislative Counsel

William J. Mueller and Timothy G. Hruza

530 South 13th Street | Suite 110 | Lincoln, Nebraska 68508

Telephone 402.434.3399 | Fax 402.434.3390

Mueller@MuellerRobak.com | Hruza@MuellerRobak.com

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eNotarization: Technology and Trends

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

KAYLEN AKERT Woods & Aitken LLC

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09/29/16

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eNOTARIZATION:TECHNOLOGY & TRENDS

PRESENTED BY:KAYLEN K. AKERT

NSBA REAL ESTATE INSTITUTESEPTEMBER 13, 2019

@WoodsAitkenLLP

ELECTRONIC SIGNATURES

/s/ Kaylen K. Akert

Kaylen Akert

KKA

2

1

2

09/29/16

2

ELECTRONIC SIGNATURES

Basic Elements Agreement – an agreement by the parties toconduct the transaction electronically Attribution – the ability to attribute the signatureto the signor Retention – the retention of the electronic record

3

TYPES OF eNOTARIZATION

Electronic Notarization Remote Notarization

4

3

4

09/29/16

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Pavaso (https://www.youtube.com/watch?v=BG1u1k_1OtM&t=6s)

5

NEBRASKA ELECTRONIC NOTARY PUBLIC ACT

Requires physical presence + identification Form of certificate provided by statuteInstruction and examination required forregistration as an electronic notary Registration as traditional notary also aprerequisite

Providers must be approved by the NE SOSSee Neb. Rev. Stat. §§ 64‐301 to 64‐317 and 433 Neb. Admin Code, ch. 7 §001 to 017

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5

6

09/29/16

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NEBRASKA ONLINE PUBLIC NOTARY ACT

Requires live remote presence +identificationForm of certificate provided by statuteInstruction and examination required forregistration as an online notaryProviders must be approved by the NE SOSSee Neb. Rev. Stat. §§ 64‐401 to 64‐418

7

PRACTICAL ISSUES

Not all documents may be e‐notarizedSelection of e‐notary providers andexamination/registration of e‐notariesRecordation in real estate recordsRecognition in other jurisdictions

8

7

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09/29/16

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QUESTIONS?

THANK YOU!

KAYLEN K. AKERT301 South 13th Street, Suite 500Lincoln, NE 68508kakert@woodsaitken.com

@WoodsAitkenLLP

9

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Construction Contracts—Clauses and Conduct That Can Create

Problems on the Project

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

CRAIG MARTIN Lamson Dugan & Murray LLP

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10306 Regency Parkway Drive ǀ Omaha, Nebraska 68114 P: 402-397-7300 ǀ F: 402-397-7824

www.ldmlaw.com

Check List for Construction Contract Review

Construction contracts can be complicated and confusing. This is a list of provisions that I make sure to review.

Contracting Parties The contract should identify all parties and name them correctly. A failure to list a corporate designation, such as Inc. or LLC, can be the difference between a personal liability and a corporate liability. Equally important, are you doing business with a long-term contractor or an entity created only for this project? Naming the proper parties seems simple, but it’s a problem we deal with on a regular basis.

Contract Documents Construction contracts often define the contract document as the subcontract you are signing and the agreement between the owner and the general contractor. This means that the obligations between the general contractor and the owner flow down to you. It is imperative to request a copy of the prime contract and review its terms. You will not likely be able to negotiate terms of the prime contract, but you may be able to tailor the subcontract to avoid some of the prime terms.

Scope of Work The scope of work will obviously vary project to project. But this is another defined term in the contract and often includes “all work reasonably inferable from the plans, specifications and drawings.” It is important to address this one head on to either understand what the general contractor is seeking or limit the definition to your anticipated scope.

Pay-if-Paid/Pay-When-Paid These are not the same! A pay-when-paid clause relates to timing in that a contractor should pay you when it is paid or within a reasonable time after you completed the work. A pay-if-paid is entirely different. Under a pay-if-paid clause, the risk of non-payment is shifted to the subcontractor and the contractor is only required to pay after it is paid by the owner or other upstream contractor. Telling the difference between these two clauses may be difficult, but look for phrases like “condition precedent”, “unless and until” or even “subcontractor assumes risk of payment.” If you see these phrases, you might have a pay-if-paid clause that may severely limit your ability to get paid.

Change Orders What is the change order process for your contract? Chances are that there is a very specific procedure for change orders. Construction contracts often identify the number of days by which you must submit your claim, what your claim must contain, and to whom the claim must be submitted. It will also likely explain that if you do not

10306 Regency Parkway Drive ǀ Omaha, Nebraska 68114 P: 402-397-7300 ǀ F: 402-397-7824

www.ldmlaw.com

follow the change order rules exactly, your claim will be rejected. It is imperative that your project manager knows these terms for each project.

Delay Damages The primary question is whether you can demand damages for delays, particularly those delays that were not caused by you. Be on the look out for language like: Contractor shall not be liable to Subcontractor for costs or damages of any type for delay. These clauses are generally enforceable, but there may be specific state laws that limit their application.

Waiver Construction contracts often contain a No Waiver clause, explaining that the failure of one party to enforce a certain provision or insist upon the performance of a certain term, is not a waiver of the term. The Nebraska Supreme Court has recently weighed in on waiver, in U.S. Pipeline v. Northern Natural Gas, 303 Neb. 444 (2019). A written contract may be waived in whole or in part, either directly or inferentially, and the waiver may be proved by express declarations manifesting the intent not to claim the advantage, or by so neglecting and failing to act as to induce the belief that it was the intention to waive. Even a provision in a written contract that specifies that a waiver of the conditions and terms of the agreement must be in writing may be waived by acts or conduct.

Indemnification Indemnity provisions can be extremely broad, and they can lead to significant liability. It’s important to determine whether the indemnification provisions are mutual, in that each party is indemnifying the other for its negligence, or whether you are being asked to indemnify the upstream contractor for any claims remotely related to your work.

Termination Clauses Your contract likely contains a termination clause. The important question is whether your recovery is limited to payment for work performed and materials installed, or can you also demand lost profit. This is especially important when the contract can be terminated for convenience.

Dispute Resolution If problems arise on your project, do you have to go to court or arbitration? If you go to arbitration, can it be handled locally, or do you have to hire a panel of 3 arbitrators from out of state. Are the parties required to go to mediation to at least attempt to resolve their differences? These are all questions that your contract should answer.

Contract language can make or break a project. It’s important to review the entire contract, but the check list above identifies some key provisions that merit extra attention. I hope you find it helpful.

A Primer: What you need to know about Real Estate Tax Certificates

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

LILLY A. RICHARDSON-SEVERN Richardson-Severn Law, PLLC

DEANA K. WALOCHA US Assets, LLC

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A Primer: What you need to know about Real Estate Tax Certificates

Presented by:

Lilly A. Richardson-Severn, Richardson-Severn Law, PLLC Deana K. Walocha, US Assets, LLC

Nebraska State Bar Association

2019 Real Estate Institute

September 13, 2019

1. Nebraska Tax Certificate history and real taxes levied numbers of interest2. 2019 changes in law, updates to procedure for request of Treasurer tax deed3. Wisner v. Vandelay Investments, L.L.C., 300 Neb. 825 (2018)4. LB 463 (2019)

2019 UPDATES TO PROCEDURE FOR ISSUANCE OF TREASURER’S TAX DEEDS

I. LB 463 introduced January 18, 2019 in response to holding in Wisner v. VandelayIndustries, 916 N.W.2d 689, 300 Neb. 825 (Neb. 2018) and another recent case involvingthe noticing procedure under Article 18 foreclosures. It was approved by the Governor onMarch 27, 2019 and went into effect on September 1, 2019.

II. All foreclosures for certificates sold after December 31, 2017 are governed by the newstatute and those statutes that were in place at the time of the purchase of the certificate.See Neb. Rev. Stat. § 77-1837

III. Neb. Rev. Stat. § 77-1837 now provides a holder of a tax sale certificate is entitled to aTreasurer’s Tax Deed:

(1) At any time within nine months after the expiration of three years after the date ofsale of any real estate for taxes or special assessments, if such real estate has not beenredeemed, the purchaser or his or her assignee may apply to the county treasurer for a taxdeed for the real estate described in such purchaser’s or assignee’s tax sale certificate. Thecounty treasurer shall execute and deliver a deed of conveyance for the real estate describedin such tax sale certificate if he or she has received the following:

(a) The tax sale certificate;(b) The issuance fee for the tax deed and the fee of the notary public or other

officer acknowledging the tax deed, as required under section 77-1823;(c) For any notice provided pursuant to section 77-1832, the affidavit proving

service of notice, the copy of the notice, and the copy of the title searchrequired under section 77-1833; and

(d) For any notice provided by publication pursuant to section 77-1834, theaffidavit of the publisher, manager or other employee of the newspaper, thecopy of the notice, the affidavit of the purchaser or assignee, and the copyof the title search required under 77-1835

(2) The failure of the county treasurer to issue a deed of conveyance if requested withinthe timeframe provided in this section shall not impair the validity of such deed if there hasotherwise been compliance with sections 77-1801 to 77-1863.

IV. The form of the notice required by Neb. Rev. Stat. § 77-1831 now must include:

(1) The following statement in sixteen-point type: UNLESS YOU ACT YOU WILLLOSE THIS PROPERTY;

(2) The date when the purchaser purchased the real property sold by the county fortaxes;

(3) The description of the real property;(4) In whose name the real property was assessed;

(5) The amount of taxes represented by the tax sale certificate, the year the taxes werelevied or assessed, and a statement that subsequent taxes may have been paid andinterest may have accrued as of the date the notice is signed by the purchaser; and

(6) The following statements;

(a) That the issuance of a tax deed is subject to the right or redemption undersections 77-1824 to 77-1830;(b) The right of redemption requires payment to the county treasurer, for theuse of such purchaser, or his or her assigns, the amount of taxes represented by thetax sale certificate for the year the taxes were levied or assessed and any subsequenttaxes paid and interest accrued as of the date payment is made to the countytreasurer; and(c) The right of redemption expires at the close of business on the date ofapplication of for the tax deed, and a deed may be applied for after the expirationof three months from the date of service of this notice.

V. There were significant changes to the noticing requirements contained in Neb. Rev. Stat.§77-1832, which now provides as follows:

(1) Service of the notice provided by section 77-1831 shall be made by:

(a) Personal or residence service as described in section 25-505.01 upon aperson in actual possession or occupancy of the real property and upon the personin whose name the title to the real property appears of record who can be found inthis state. If a person in actual possession or occupancy of the real property cannotbe served by personal or residential service, service of the notice shall be madeupon such person by certified mail service or designated delivery service asdescribed in section 25-505.01, and the notice shall be sent to the address of theproperty. If the person in whose name the title to the property appears of recordcannot be found in this state or if such person cannot be served by personal orresidential service, service of the notice shall be made upon such person by certifiedmail service or designated delivery service as described in section 25-505.01, andthe notice shall be sent to the name and address to which the property tax statementwas mailed; and

(b) Certified mail or designated delivery service as described in section 25-505.01 upon every encumbrancer of record found by the title search required insection 77-1833. The notice shall be sent to the encumbrancer’s name and addressappearing of record as shown in the encumbrance filed with the register of deeds.

(2) Personal or residential service shall be made by the county sheriff of the countywhere service is made or by a person authorized by section 25-507. The sheriff orother person serving the notice shall be entitled to the statutory fee prescribed insection 33-117.

VI. Neb. Rev. Stat. § 77-1833 now provides as follows:

The service of notice provided by section 77-1832 shall be proved by affidavit. Thepurchaser or assignee shall also affirm in the affidavit that a title search was conducted by a registered abstracter to determine those persons entitled to notice pursuant to such section. If personal or residence service is used, the receipt or returns provided by the person authorized in subsection (2) of section 77-1832 to carry out such service shall be filed with and accompany the affidavit. If certified mail or designated delivery service is used, the certified mail return receipt or a copy of the signed delivery receipt shall be filed with and accompany the affidavit. The affidavit, a copy of the notice, and a copy of such title search shall be filed with the application for the tax deed pursuant to section 77-1837. For each service of such notice, a fee of one dollar shall be allowed. The amount of such fees shall be noted by the county treasurer in the record opposite the real property described in the notice and shall be collected by the county treasurer in case of redemption for the benefit of the holder of the certificate.

VII. New publication requirements

Neb. Rev. Stat. § 77-1834 now provides that if service cannot be made on any person orencumbrancer who is entitled to notice pursuant to section 77-1832 as described in section 77- 1832, that the certificate holder shall publish notice in a newspaper of general circulation in the county “which has been designated by the county board in the year publication is required under this section.”

VIII. Second mention of the additional affidavit required by certificate holder

Neb. Rev. Stat. §77-1835 was amended to again state that the certificate holder filean affidavit affirming that a title search was performed by a registered abstractor to determine who was entitled to notice under section 77-1832 and provide a copy of that search with the application for deed. The statute was further amended to clarify that the requirements under section 25-520.01 (mailing of published notice) is not required under the publication procedure in this chapter.

Wisner v. Vandelay Investments, L.L.C., 082418 NESC, S-16-451 /**/ div.c1 {text-align: center} /*

*/

300 Neb. 825

Robin J. Wisner, as Personal Representative of the Estate of Gladys P. Wisner, deceased.

APPELLANT,

v.

Vandelay Investments, L.L.C., a Nebraska limited liability COMPANY, ET AL., APPELLEES.

No. S-16-451

Supreme Court of Nebraska

August 24, 2018

1. Standing: Jurisdiction: Parties. Standing is a jurisdictional component of a party's case

because only a party who has standing may invoke the jurisdiction of a court.

2. Jurisdiction: Appeal and Error. The question of jurisdiction is a question of law, upon

which an appellate court reaches a conclusion independent of the trial court.

3. Equity: Quiet Title. A quiet title action sounds in equity.

4. Equity: Appeal and Error. On appeal from an equity action, an appellate court tries

factual questions de novo on the record and, as to questions of both fact and law, is obligated to

reach a conclusion independent of the conclusion reached by the trial court, provided that where

credible evidence is in conflict in a material issue of fact, the appellate court considers and may

give weight to the fact that the trial judge heard and observed the witnesses and accepted one

version of the facts rather than another.

5. Statutes: Appeal and Error. Statutory interpretation presents a question of law, for which

an appellate court has an obligation to reach an independent conclusion irrespective of the

decision made by the court below.

6. Standing: Words and Phrases. Standing is the legal or equitable right, title, or interest in

the subject matter of the controversy.

7. Jurisdiction: Standing. The requirement of standing is fundamental to a court's exercise

of jurisdiction, and either a litigant or a court before which a case is pending can raise the question

of standing at any time during the proceeding.

         [300 Neb. 826] 8. Title: Deeds: Tax Sale: Standing. Neb. Rev. Stat. § 77-1844 (Reissue

2009) sets forth the conditions precedent to questioning title conveyed under a tax deed; to obtain

standing to redeem property after the issuance of a tax deed, even if title under a tax deed is void

or voidable, a party must satisfy these conditions precedent.

9. Title: Deeds: Tax Sale: Public Officers and Employees. To comply with Neb. Rev. Stat.

§ 77-1844 (Reissue 2009), a party only needs to show that it has tendered the tax payment to the

treasurer, not that the taxes have actually been paid.

10. Pleadings: Evidence: Words and Phrases. A judicial admission is a formal act done in

the course of judicial proceedings which is a substitute for evidence, thereby waiving or dispensing

with the production of evidence by conceding for the purpose of litigation that the proposition of

fact alleged by the opponent is true.

11. Jurisdiction. While parties cannot confer subject matter jurisdiction upon a judicial

tribunal by either acquiescence or consent, nor may subject matter jurisdiction be created by

waiver, estoppel, consent, or conduct of the parties, such does not prevent a party from

conclusively admitting the truth of an underlying fact required to establish subject matter

jurisdiction by judicial admission.

12. Pleadings: Evidence. Judicial admissions must be unequivocal, deliberate, and clear,

and not the product of mistake or inadvertence.

13. Pleadings: Intent. A judicial admission does not extend beyond the intendment of the

admission as clearly disclosed by its context.

14. Pleadings: Words and Phrases. Generally, an admission made in a pleading on which

the trial is had is more than an ordinary admission; it is a judicial admission.

15. Pleadings: Proof. It is an elementary rule of pleading that matters admitted by the

pleadings need not be proved.

16. Title: Deeds: Tax Sale: Taxes: Evidence. A showing pursuant to Neb. Rev. Stat. § 77-

1844 (Reissue 2009) of taxes paid must be made by the evidence and not by allegations in the

pleadings alone.

17. Real Estate: Taxes: Tax Sale: Words and Phrases. Under Neb. Rev. Stat. § 77-1801

et seq. (Reissue 2009, Cum. Supp. 2016 & Supp. 2017), the term "redemption" refers to paying

the amount shown on the certificate and all subsequent taxes, along with the interest accrued

thereon and any statutory fees.

18. Pleadings: Evidence: Waiver. A party may waive its right to rely on an opponent's

admission by failing to object to the opponent's offer of contrary evidence or introducing contrary

evidence itself.

         [300 Neb. 827] 19. Pleadings: Evidence: Parties. A party is bound to its admission absent

the court's relieving it, in exercise of the court's judicial discretion, from that consequence.

20. Appeal and Error. An argument not presented to or decided by the trial court is not

appropriate for consideration on appeal.

21. Statutes: Legislature: Intent. Components of a series or collection of statutes

pertaining to a certain subject matter are in pari materia and should be conjunctively considered

and construed to determine the intent of the Legislature, so that different provisions are consistent,

harmonious, and sensible.

22. Title: Deeds: Tax Sale: Standing: Public Officers and Employees: Case

Disapproved. To satisfy the tax payment requirement in Neb. Rev. Stat. § 77-1844 (Reissue

2009), a party must show the tender or payment of taxes due to the county treasurer; Hauxwell v.

Henning, 291 Neb. 1, 863 N.W.2d 798 (2015), is disapproved to the extent it can be read to

authorize satisfying the standing requirement in § 77-1844 by tender or payment to the tax deed

holder.

23. Title: Deeds: Tax Sale: Statutes. The statutory prerequisites to defeating title, in Neb.

Rev. Stat. § 77-1843 (Reissue 2009), apply only to those tax deeds made after substantial

compliance with Neb. Rev. Stat. §§ 77-1831 to 77-1842 (Reissue 2009, Cum. Supp. 2016 & Supp.

2017).

24. Title: Deeds: Tax Sale: Proof: Presumptions: Evidence. A county treasurer's tax deed

is presumptive evidence that the procedures required by law to make a good and valid tax sale

and vest title in the purchaser were done. The presumption is not conclusive and may be rebutted,

but the burden is upon the party attacking the validity of such a deed to show by competent

evidence some jurisdictional defect voiding the deed.

25. Tax Sale: Service of Process. Under Neb. Rev. Stat. § 77-1832 (Reissue 2009),

service need only be provided to the owner of record at the address where the property tax

statement was mailed and may only be done by certified mail, return receipt requested.

26. Statutes. A court must attempt to give effect to all parts of a statute, and if it can be

avoided, no word, clause, or sentence will be rejected as superfluous or meaningless.

27. Tax Sale: Notice: Service of Process: Words and Phrases. Under Neb. Rev. Stat. §

77-1834 (Cum. Supp. 2016), the phrase "diligent inquiry" requires the tax certificate holder to

obtain the address where the property tax statement was mailed in order to send notice by

certified mail before moving to service by publication.

         [300 Neb. 828] 28. Statutes: Appeal and Error. Generally, statutory language is to be given

its plain and ordinary meaning, and an appellate court will not resort to interpretation to ascertain

the meaning of statutory words which are plain, direct, and unambiguous.

29. Statutes. A statute can be considered ambiguous when a particular interpretation from

the face of the statute could lead to an anomalous, unusual, or absurd result.

30. __. It is impermissible to follow a literal reading that engenders absurd consequences

where there is an alternative interpretation that reasonably effects a statute's purpose.

31. Statutes: Intent. In the exposition of statutes, the reason and intention of the lawgiver

will control the strict letter of the law when the latter would lead to palpable injustice or absurdity.

32. Real Estate: Taxes: Tax Sale. The overall objective of the certificate method for

delinquent taxes is the recovery of unpaid taxes on real property.

33. Statutes: Courts: Words and Phrases. A term of art is a word or phrase having a

specific, precise meaning in a given specialty apart from its general meaning in ordinary contexts.

The Nebraska Supreme Court has ascribed the term of art meaning to statutory terms when

necessitated by the statute's context.

34. Tax Sale: Notice: Service of Process: Words and Phrases. The word "found" in Neb.

Rev. Stat. § 77-1834 (Cum. Supp. 2016) means "able to be served."

35. Tax Sale: Notice: Service of Process: Proof. Under Neb. Rev. Stat. § 77-1834 (Cum.

Supp. 2016), a tax certificate holder may provide service by publication to an owner of record who

was not able to be served by certified mail at the address where the property tax statement was

mailed, upon proof of compliance with Neb. Rev. Stat. § 77-1832 (Reissue 2009) if the owner, in

fact, lives at such address.

36. Courts: Judgments: Appeal and Error. Upon further review from a judgment of the

Nebraska Court of Appeals, the Nebraska Supreme Court will not reverse a judgment which it

deems to be correct simply because its reasoning differs from that employed by the Court of

Appeals.

37. Tax Sale: Notice: Proof. Under Neb. Rev. Stat. § 77-1835 (Cum. Supp. 2016), a proof

of publication needs to state only that notice was published in the manner provided in Neb. Rev.

Stat. § 77-1834 (Cum. Supp. 2016).

38. Affidavits. In the absence of a sufficient showing to the contrary, the affidavit of the

publisher that a newspaper was one of general circulation in the county must be held sufficient to

establish the fact.

         [300 Neb. 829] 39. Tax Sale: Notice: Words and Phrases. Under Neb. Rev. Stat. § 77-

1834 (Cum. Supp. 2016), the plain meaning of the word "in" shows that a newspaper only need be

generally circulated within the county, not throughout the entire county.

40. Courts: Appeal and Error. Upon reversing a decision of the Nebraska Court of Appeals,

the Nebraska Supreme Court may consider, as it deems appropriate, some or all of the

assignments of error the Court of Appeals did not reach.

41. Deeds: Tax Sale. In order to defeat a tax deed, a party must show that it satisfied the

conditions precedent in Neb. Rev. Stat. § 77-1843 (Reissue 2009).

42. Tax Sale: Mental Health: Time. Neb. Rev. Stat. § 77-1827 (Reissue 2009) extends the

redemption period for a mental disorder only if the owner had a mental disorder at the time of the

property's sale.

43. Statutes: Presumptions: Legislature: Intent. In interpreting a statute, a court is guided

by the presumption that the Legislature intended a sensible rather than absurd result in enacting

the statute.

44. Tax Sale: Mental Health: Words and Phrases. A person with a "mental disorder" under

Neb. Rev. Stat. § 77-1827 (Cum. Supp. 2016) is one who suffers from a condition of mental

derangement which actually prevents the sufferer from understanding his or her legal rights or

from instituting legal action, and a mental disorder within the meaning of § 77-1827 is an

incapacity which disqualifies one from acting for the protection of one's rights.

45. Equity. Equity strives to do justice; it is not a rigid concept, but, instead, is determined on

a case-by-case basis according to concepts of justice and fairness.

         Petition for further review from the Court of Appeals, Moore. Chief Judge, and Inbody and

Riedmann, Judges, on appeal thereto from the District Court for Lincoln County, Richard A. Birch,

Judge. Judgment of Court of Appeals reversed, and cause remanded with directions.

          David W. Pederson, of Pederson & Troshynski, for appellant.

          Robert S. Lannin and Chris S. Schmidt, of Baylor, Evnen, Curtiss, Grimit & Witt, L.L.P, for

appellee Vandelay. Investments, L.L.C.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, JJ.

         [300 Neb. 830] FUNKE, J.

         Robin J. Wisner, personal representative of the estate of Gladys P. Wisner, deceased,

appealed from a district court judgment that quieted title to certain property in favor of Vandelay

Investments, L.L.C. (Vandelay), and dismissed his complaint-which requested that the court set

aside Vandelay's tax deed and permit him to exercise a right of redemption. The Nebraska Court

of Appeals reversed the district court's decision and remanded the cause after finding Vandelay

had failed to comply with the statutory notice requirements before applying for the tax deed, which

failure rendered Vandelay's deed void.

         On further review, we conclude that (1) Robin had standing to question Vandelay's tax deed,

(2) Vandelay complied with the statutory notice requirements before applying for the tax deed, and

(3) Robin failed to prove that the extension to the statutory redemption period for an owner with a

mental disorder applied. Therefore, we reverse the decision of the Court of Appeals and remand

the cause with directions that the Court of Appeals affirm the judgment of the district court.

         I. BACKGROUND

         1. Statutory Framework

         This case involves the purchase of real property due to delinquent real estate taxes.[1] The

purchaser of any real property sold by the county treasurer for taxes is entitled to a certificate in

writing, commonly known as a tax certificate or tax sale certificate.[2] This certificate represents a

transfer of the state's lien on the property to the purchaser and describes the property, the amount

paid by the purchaser, and the date that the purchaser will be entitled to a deed.[3] Tax certificates

can [300 Neb. 831] be assigned by endorsement, and the assignee steps into the shoes of the

purchaser.[4]

         A property owner may redeem his or her property by paying the county treasurer the amount

shown on the certificate and all subsequent taxes, along with the interest accrued thereon and any

statutory costs.[5] If the property is not redeemed within 3 years, however, the tax certificate

holder may pursue either one of two options: (1) apply for a deed of conveyance for the property,

commonly known as a tax deed, with the county treasurer[6] or (2) proceed in district court to

foreclosure on its lien and compel the sale of the property.[7] Tax sale certificates and the sale of

tax certificates are governed by chapter 77, article 18, of the Nebraska Revised Statutes, and the

foreclosure of tax certificates is governed by chapter 77, article 19, of the Nebraska Revised

Statutes for all tax sale certificates sold and issued between January 1, 2010, and December 31,

2017.[8]

         Vandelay elected to pursue the tax deed method. Under this method, the holder of the tax

certificate has a 6-month period, commencing 3 years from the date of the sale of the property, to

apply for a tax deed from the county treasurer.[9]Upon a county treasurer's delivery of the tax

deed to the tax certificate holder, a property owner loses the ability to redeem the property through

the county treasurer.[10] If the certificate holder waits longer than 3 years 6 months from the sale

to apply for a tax deed, the certificate ceases to be valid and the lien of taxes for which the

property was sold is discharged.[11] [300 Neb. 832] However, at least 3 months before applying

for the tax deed, the holder of the tax certificate must serve the record owner and encumbrancers

of record with sufficient notice that application for a tax deed will be made.[12]

         After a tax deed has been issued, the owner of the property may recover the property by

proving the tax deed issued to the tax certificate holder is either void or voidable. A tax deed is

void if the tax certificate holder did not substantially comply with the notice requirements.[13] A tax

deed is voidable if the property owner has a right to redeem the property and has exercised such

right.[14] While a property owner's ability to redeem property typically ends upon the delivery of a

tax deed, an owner with a mental disorder at the time of the property's sale may redeem the

property within 5 years from the date of the sale.[15]

         Here, Robin claims that Vandelay did not sufficiently comply with the notice requirements to

obtain the tax deed. He further contends that he has a right to redemption under this extended

redemption period due to the mental disorder of Gladys, the record owner of the property.

         2. Issuance of Tax Deed to Vandelay

         The real estate involved in this action consists of 480 acres, containing irrigated cropland,

rangeland, and a homestead; is located about 9 miles southeast of North Platte, Nebraska; and

has the following legal description: "The North Half (N/4) and the North Half of the South Half

(WASlA) of Section Twenty-Nine (29), Township Thirteen (13) North, Range Twenty-Nine (29)

West of the 6th P.M., in Lincoln County, Nebraska."

         Gladys and her husband moved onto the property in 1949 and inherited it upon the passing

of Gladys' father in 1971. [300 Neb. 833] They had two sons, Robin and Roger Wisner, and two

daughters. After Gladys' husband died in 2007, Roger primarily cared for Gladys and handled her

affairs until his own death in 2009. Robin then assisted Gladys in moving from the homestead to a

retirement community and arranged for her bills to be paid from her trust by a bank's trust

department.

         Robin testified he assumed the trust department was paying the real estate taxes, because

he thought Roger had probably paid them from the trust previously. While Robin stated that he

had access to semiannual records from the trust, he testified that he did not typically check them

closely or at all and that he never saw that the real estate taxes were being paid from it.

         In 2010, the real estate taxes on the property became delinquent. In March 2011, the Lincoln

County treasurer sold a tax sale certificate on the property to Acron Business Services, Inc. In

February 2014, Vandelay purchased the tax sale certificate from Acron Business Services. Randy

James, one of Vandelay's owners, obtained the address where Gladys received her property tax

statements, which was that of the retirement community. In March 2014, Vandelay sent notice of

its intent to apply for a tax deed to Gladys at that address by certified mail with a return receipt

requested, which was returned as "unclaimed."

         Despite the return of the certified mailing, James believed he had Gladys' actual address

because it was not returned as sent to a vacant address or not deliverable as addressed. In

addition, James had found a newspaper article, dated June 11, 2011, indicating that Gladys, in

fact, lived at the retirement community.

         Vandelay then published notice of its intent to apply for a tax deed in the Sutherland Courier-

Times newspaper (Courier-Times) for 3 consecutive weeks. Evidence was presented that the

Courier-Times covers events affecting Lincoln County, Nebraska, and residents in Sutherland,

Hershey, and Paxton, Nebraska, and that approximately 1, 300 weekly editions are sent to

subscribers and distributed to racks in those three [300 Neb. 834] communities. In ZIP codes

covering North Platte, there are about 100 Courier-Times subscribers but no distribution racks.

Vandelay also sent a copy of the publicized notice to Gladys' address by first-class mail, which

was not returned.

         In August 2014, Vandelay applied for a tax deed. Included with its application were a copy of

the certified mail return receipt, a proof of publication in the Courier-Times, and an affidavit from

James attesting that he had complied with the service requirements. The proof of publication

attested that the Courier-Times is a legal newspaper in general circulation that is published in

Sutherland and that the attached notice was published for 3 consecutive weeks, dates specified.

The county treasurer delivered a tax deed to the property to Vandelay in September 2014.

         Through the relevant period, the property was under lease, but the lease was not recorded.

Shortly after the tax deed was filed, however, the lessee informed Robin that a deed had been

issued in Vandelay's favor. Robin, as the holder of a power of attorney for Gladys, attempted to

redeem the tax sale certificate with Vandelay, which Vandelay rejected.

         3. District Court Proceedings

         Gladys, by and through Robin, filed a complaint against Vandelay, requesting to have

Vandelay's tax deed voided, have her deed redeemed pursuant to the mental disorder extension,

and title quieted in her name. Vandelay filed a counterclaim seeking to quiet title in its favor. Robin

was substituted as the party plaintiff after Gladys' death.

         The court ruled Vandelay had complied with the statutory requirements for notice and

publication. It reasoned that "[i]f Gladys could not be served after compliance by [Vandelay] with

[§] 77-1832, she was therefore not found for service within the meaning of [§] 77-1834." The court

also found the publication in the Courier-Times complied with the statutory requirement. Further,

the court ruled Robin failed to prove Gladys had a mental disorder, and it rejected Robin's [300

Neb. 835] equity argument. Thus, the court dismissed Robin's complaint with prejudice and

quieted title in favor of Vandelay. Robin filed a timely appeal.

         4. Court of Appeals Proceedings

         Before the Court of Appeals, Robin assigned, restated, that the district court erred in (1)

finding Vandelay complied with the statutory notice and publication requirements for obtaining a

treasurer's tax deed, (2) finding Robin failed to prove Gladys suffered from a mental disorder, and

(3) failing to use its equitable authority to remedy the situation.

         The Court of Appeals reversed the district court's decision and remanded the cause for

further proceedings after holding that Gladys was entitled to redeem the property because

Vandelay had not served Gladys with notice.[16] It reasoned that Vandelay's notice by certified

mail was insufficient because it was returned as "'unclaimed.'"[17] Further, the Court of Appeals

stated that notice by publication could not be relied on because Vandelay knew Gladys' address,

so she had been "found."[18] The Court of Appeals did not reach Robin's second and third

assignments of error.

         Vandelay filed a timely petition for further review, which this court granted.

         II. ASSIGNMENTS OF ERROR

         Vandelay assigns, reordered and restated, that the Court of Appeals erred in (1) not

determining Robin lacks standing to challenge the tax deed, under § 77-1844; (2) interpreting §

77-1834 not to permit service by publication in this case; (3) not interpreting the term "found" as

the equivalent of being "served"; (4) voiding Vandelay's tax deed and determining Gladys was

entitled to redeem the property; and (5) failing to [300 Neb. 836] acknowledge Vandelay's sending

of a copy of the publication notice by first-class mail to Gladys' address of record, which copy was

not returned, as accomplishing service.

         III. STANDARD OF REVIEW

         Standing is a jurisdictional component of a party's case because only a party who has

standing may invoke the jurisdiction of a court.[19] The question of jurisdiction is a question of law,

upon which an appellate court reaches a conclusion independent of the trial court.[20]

         A quiet title action sounds in equity.[21] On appeal from an equity action, an appellate court

tries factual questions de novo on the record and, as to questions of both fact and law, is obligated

to reach a conclusion independent of the conclusion reached by the trial court, provided that

where credible evidence is in conflict in a material issue of fact, the appellate court considers and

may give weight to the fact that the trial judge heard and observed the witnesses and accepted

one version of the facts rather than another.[22]

         Statutory interpretation presents a question of law, for which an appellate court has an

obligation to reach an independent conclusion irrespective of the decision made by the court

below.[23]

         IV. ANALYSIS

         1. Robin Has Standing to Challenge Vandelay's Tax Deed

         Vandelay contends Robin lacks standing to challenge its tax deed. It argues Robin did not

satisfy a condition precedent [300 Neb. 837] to questioning the validity of its tax deed, under § 77-

1844. because he failed to offer any evidence that he either paid or tendered payment of the taxes

due on the property to the county treasurer. Vandelay further argues that its response to Robin's

allegation in his pleading-that he tendered payment to the county treasurer-cannot be considered

a judicial admission regarding tender to the county treasurer because its statement was not

unequivocal, clear, or deliberate.

         Robin argues Vandelay's answer was a judicial admission, which acted as a substitute for

such evidence by conclusively admitting the fact's truth in this case. He also argues tendering

payment to Vandelay satisfied condition precedent of § 77-1844, citing Hauxwell v. Henning[24]

         (a) Statutory Requirements to Obtain Standing to Challenge Tax Deed

         Standing is the legal or equitable right, title, or interest in the subject matter of the

controversy.[25] The requirement of standing is fundamental to a court's exercise of jurisdiction,

and either a litigant or a court before which a case is pending can raise the question of standing at

any time during the proceeding.[26] A party invoking a court's or tribunal's jurisdiction bears the

burden of establishing the elements of standing.[27]

         To obtain standing to redeem property after the issuance of a tax deed, even if title under a

tax deed is void or voidable, a party must satisfy the requirements of § 77-1844.[28]Section 77-

1844 sets forth the conditions precedent to questioning title conveyed under a tax deed.[29] Under

§ 77-1844, [300 Neb. 838] a party must prove the person under whom he or she claims title (1)

had title to the property at the time of the tax sale and (2) paid all taxes due upon the property. To

comply with § 77-1844, a party only needs to show that it has tendered the tax payment to the

treasurer, not that the taxes have actually been paid.[30] Payment or tender thereof may be made

before or during the trial, or before final judgment.[31]

         (b) Vandelay's Answer Constituted Judicial Admission That Robin Tendered Payment of

Taxes Due to County Treasurer

         A judicial admission is a formal act done in the course of judicial proceedings which is a

substitute for evidence, thereby waiving or dispensing with the production of evidence by

conceding for the purpose of litigation that the proposition of fact alleged by the opponent is true.

[32]While parties cannot confer subject matter jurisdiction upon a judicial tribunal by either

acquiescence or consent, nor may subject matter jurisdiction be created by waiver, estoppel,

consent, or conduct of the parties, [33] such does not prevent a party from conclusively admitting

the truth of an underlying fact required to establish subject matter jurisdiction by judicial admission.

         This distinction is illustrated by J.S. v. Grand Island Public Schools, [34] where we held the

district court lacked subject matter jurisdiction because the appellant did not serve the appellee

with a copy of the petition after the appellee waived such service. Here, contrariwise, the

allegation is that Vandelay admitted the taxes had actually been tendered to the county treasurer,

a condition precedent for standing.

         [300 Neb. 839] Judicial admissions must be unequivocal, deliberate, and clear, and not the

product of mistake or inadvertence.[35] A judicial admission does not extend beyond the

intendment of the admission as clearly disclosed by its context.[36]

(i) Admission in Pleading May Serve as Sufficient Evidence to Satisfy Standing Requirement in §

77-1844

         We begin by addressing Vandelay's argument that an admission in its answer could not

satisfy the standing requirement. Generally, an admission made in a pleading on which the trial is

had is more than an ordinary admission; it is a judicial admission.[37] It is an elementary rule of

pleading that matters admitted by the pleadings need not be proved.[38] Despite these

propositions, Vandelay points to Hauxwell, where we stated that for the purposes of § 77-1844,

"[t]he showing of taxes paid must be made by the evidence and not by the pleadings alone."[39]

         Our proposition in Hauxwell originated in the modification of our opinion on rehearing of

Cornell v. Maverick Loan & Trust Co., [40] which affirmed our opinion with an explanation that we

had not referenced the predecessor statute to § 77-1844 because the taxes were clearly not

shown to have been paid. While we stated in our opinion on rehearing that the pleadings alone

were insufficient to provide such proof, our discussion of the facts in our initial decision reveals

that the plaintiff had alleged tender of payment in its complaint but does not state the fact was

admitted by the defendant. [300 Neb. 840] Thus, we do not find a conflict between our statement

in Cornell and our propositions of law concerning admissions in pleadings.

         Nevertheless, as a matter of clarity, we amend our proposition from Cornell as follows: The

showing pursuant to § 77-1844 of taxes paid must be made by the evidence and not by

allegations in the pleadings alone.

(ii) Vandelay Admitted Robin Tendered Redemption to County Treasurer

         Regarding Robin's efforts to pay the taxes due on the property, paragraph 16 of the

complaint alleges, "[Robin] presented the redemption to [Vandelay] and to the Lincoln County

Treasurer within forty-five (45) days of [Vandelay's] Application for Tax Deed, but the County

Treasurer declined to accept the redemption for filing"; Vandelay's answer "[a]dmits that Lincoln

County Treasurer declined to accept [Robin's] redemption, but denies the remaining allegations of

paragraph 16."

         Vandelay asserts that Robin's allegation should be read as two separate allegations: (1)

Robin presented redemption to Vandelay and the county treasurer and (2) the county treasurer

declined to accept Robin's redemption. It argues its answer admitted only the second allegation

and denied the first allegation. It argues that reading its answer to admit that Robin tendered

payment to the county treasurer would give no effect to its denial.

         We disagree with Vandelay's interpretation. Vandelay's admission that the county treasurer

declined to accept Robin's redemption necessarily admits Robin tendered redemption to the

county treasurer; redemption cannot be denied if it was never offered. Despite Vandelay's

contention, this interpretation gives effect to its general denial because the allegation that Robin

tendered payment to Vandelay is completely separate from the allegation concerning the county

treasurer.

         Further, we find that this admission is clear regarding the tender of all of the taxes due on the

property. As stated [300 Neb. 841] above, redemption under § 77-1801 et seq. refers to paying the

amount shown on the certificate and all subsequent taxes, along with the interest accrued thereon

and any statutory fees.[41]Thus, Vandelay's response conclusively admitted Robin tendered

payment of all taxes due on the property to the county treasurer and acted as a substitute for

evidence of such, dispensing with Robin's need to produce such evidence for the purpose of this

case.

         Vandelay's additional arguments that its admission was an inadvertency and that Robin

waived its judicial admission are unavailing. In Robison v. Madsen, [42] we recognized that a party

may waive its right to rely on an opponent's admission by failing to object to the opponent's offer of

contrary evidence or introducing contrary evidence itself[43] Robin's testimony that he tendered

payment to Vandelay and that the taxes were unpaid at the time of trial was not contrary to the

judicial admission concerning Robin's tender of payment to the county treasurer. Accordingly,

Robin did not offer contrary evidence waiving Vandelay's admission.

         Further, a party is bound to its admission absent the court's relieving it, in exercise of the

court's judicial discretion, from that consequence.[44] The requirements of § 77-1844 are clearly

stated in the statute and well established in our case law. If Vandelay had not intended to admit

that Robin tendered payment to the county treasurer, it should have raised the issue in the district

court, where it could have requested to be relieved of the consequence of its admission. An

argument not presented to or decided by the trial court is not appropriate for consideration on

appeal.[45] Therefore, Vandelay cannot argue [300 Neb. 842] for the first time on appeal that it

should not be bound by the plain meaning of its admission.

         The evidence presented at trial also clearly established that Gladys had title to the property

at the time of its sale. Therefore. Robin proved that he had standing to question Vandelay's tax

deed, under § 77-1844.

(c) Tender of Payment to Tax Deed Holder Is Not Sufficient to Obtain Standing

Robin also argued that we held in Hauxwell that payment or tender of payment to a deed

holder is sufficient to obtain standing, under § 77-1844.[46] We address this argument to clarify

our holding in Hauxwell.

         In Hauxwell, Selma B. Hauxwell filed a complaint seeking to quiet title by claim of adverse

possession in certain properties after Ryan R. Hanzlick and his wife acquired tax deeds to the

same.[47] We held that the district court erred by not dismissing the complaint for lack of

jurisdiction due to Hauxwell's failure to establish standing, under § 77-1844.[48] Robin cites our

conclusion that "Hauxwell did not plead or demonstrate through evidence that payment of the past

due taxes was ever made or tendered to the treasurer or to the Hanzlicks."[49]

         Directly preceding this conclusion, however, we cited our longstanding proposition of law that

to satisfy the tax payment requirement of § 77-1844, "the party needs only to show the tender of

payment of taxes to the treasurer"[50] In concluding that there was also no payment or tender to

the Hanzlicks, we provided no support or explanation for the implication that doing so would satisfy

the standing requirements of § 77-1844 and expanding our precedent.

         [300 Neb. 843] When we adopted this longstanding proposition, it was based on our

reasoning that when a plaintiff has tendered payment to the county treasurer and such payment is

refused, a "plaintiff could not do more" under the tax certificate statutes to satisfy the standing

requirement.[51] This reasoning itself necessarily rejects an argument that making payment to the

tax deed holder would be an acceptable alternative.

         Our statement in Hauxwell was also not supported by our tax certificate statutes.[52]

Components of a series or collection of statutes pertaining to a certain subject matter are in pari

materia and should be conjunctively considered and construed to determine the intent of the

Legislature, so that different provisions are consistent, harmonious, and sensible.[53] Sections 77-

1844 and 77-1843 both provide statutory prerequisites for property owners to recover their

property after the issuance of a tax deed.

         While § 77-1844 does not specify whom the taxes due on the property must be paid to, § 77-

1843 requires the property to have been redeemed pursuant to various statutory sections. Section

77-1843 explicitly references Neb. Rev. Stat. § 77-1701(1) (Reissue 2009), which provides in part:

"The county treasurer shall be ex officio county collector of all taxes levied within the county." As

we mentioned above, redemption, a term of art in § 77-1801 et seq., includes the payment of all

property taxes due.

         Thus, we hold that to satisfy the tax payment requirement in § 77-1844, a party must show

the tender or payment of taxes due to the county treasurer, and we disapprove of Hauxwell to the

extent it can be read to authorize satisfying the standing requirement in § 77-1844 by tender or

payment to the tax deed holder.[54]

         [300 Neb. 844] 2. Vandelay Substantially Complied With Statutory Notice Requirements

Before Applying for Tax Deed

         Robin argues Vandelay's tax deed is void because he presented sufficient evidence to

overcome the statutory presumption that the notice requirements were complied with before

Vandelay applied for the tax deed. Specifically, he argues that Vandelay was not entitled to

provide notice by publication and that Vandelay did not comply with the statutory publication

requirements.

         Section 77-1843 provides the statutory prerequisites to defeating title "[i]n all controversies

and suits involving the title to real property claimed and held under and by virtue of a deed made

substantially by the treasurer in the manner provided by sections 77-1831 to 77-1842 . . . ."[55]

We have interpreted § 77-1843 to apply only to those tax deeds made after substantial compliance

with the aforementioned sections.[56] Accordingly, we consider the validity of Vandelay's tax deed.

         A county treasurer's tax deed is presumptive evidence that the procedures required by law to

make a good and valid tax sale and vest title in the purchaser were done.[57] A tax deed holder is

entitled to receive a tax deed from the county treasurer only after it "serves or causes to be served

a notice," containing specific information provided therein, at least 3 months before applying for

the tax deed.[58] Specifically, § 77-1842 provides that a tax deed is presumptive evidence that

"the notice had been served or due publication made as required in sections 77-1831 to 77-1835

before the time of redemption had expired." The presumption is not conclusive and may be [300

Neb. 845] rebutted, but the burden is upon the party attacking the validity of such a deed to show

by competent evidence some jurisdictional defect voiding the deed.[59]

         As to proper notice under the tax deed method, § 77-1832, in relevant part, provides:

"Service of the notice provided by section 77-1831 shall be made by certified mail, return receipt

requested, upon the person in whose name the title to the real property appears of record to the

address where the property tax statement was mailed . . . ."

         This section, however, has been the subject of significant revision since the turn of the

century. The 2009 version resulted from a 2003 amendment to the following language: "Service of

the notice provided by section 77-1831 shall be made on every person in actual possession or

occupancy of the real property [and] upon the person in whose name the title to the real property

appears of record . . . ."[60]

         Further, the language of § 77-1832 (Supp. 2017), currently in effect, provides:

(1) Service of the notice provided by section 77-1831 shall be made by: (a) Personal, residence,

certified mail, or designated delivery service as described in section 25-505.01 upon every person

in actual possession or occupancy of the real property who qualifies as an owner-occupant under

section 77-1824.01; or (b) Certified mail service as described in section 25-505.01 upon: (i) The

person in whose name the title to the real property appears of record who does not qualify as an

owner-occupant under section 77-1824.01. The notice shall be sent to the name and address to

which the property tax statement was mailed[.]

         [300 Neb. 846] In summary, direct service under the recent versions of § 77-1832 was

provided for as follows: Before 2003, service was required both (1) on every person in actual

possession or occupancy of the real property and (2) upon the person in whose name the title to

the real property appears of record, and service was not limited to certified mail; under § 77-1832

(Reissue 2009), service need only be provided to the owner of record at the address where the

property tax statement was mailed and may only be done by certified mail, return receipt

requested; for tax certificates issued in 2018, service must be (1) made upon every owner-

occupant by the methods authorized in Neb. Rev. Stat. § 25-505.01 (Reissue 2016) and (2)

provided to the owner of record, if not an owner-occupant, at the address where the property tax

statement was mailed by certified mail.

         Besides § 77-1832, the only other section that provides for effectuating the service required

by § 77-1831 is § 77-1834. Section 77-1834, in relevant part, has consistently provided:

If the person in whose name the title to the real property appears of record in the office of the

register of deeds in the county . . . cannot, upon diligent inquiry, be found, then such purchaser or

his or her assignee shall publish the notice in some newspaper published in the county and having

a general circulation in the county ....

         There is no dispute that Vandelay sent notice to Gladys by certified mail, return receipt

requested, and that it was returned as '"unclaimed"' after three attempted deliveries.[61] Because

Vandelay was unable to serve Gladys in compliance with § 77-1832, it could comply with § 77-

1831 only by causing Gladys to be served under § 77-1834. Accordingly, we consider Robin's

arguments that Vandelay was not entitled to provide service under § 77-1834 and that the service

it did provide was deficient.

         [300 Neb. 847] (a) Vandelay Was Entitled to Serve Gladys by Publication After It Was

Unable to Serve Her Notice by Certified Mail

         Robin argues we should interpret "found" consistently with its plain meaning of a person's

whereabouts' being actually known, as the Court of Appeals held. Under this interpretation, he

argues that Vandelay could not serve Gladys by publication because it actually knew her address

and that instead, its only course of action was to resend notice by certified mail or initiate

foreclosure proceedings. Robin also contends publication was not available because Vandelay did

not conduct a "diligent inquiry" by publishing notice after sending only one certified mailing and

taking no other actions to provide Gladys notice.[62]

         Vandelay contends that because § 77-1801 et seq. allows service only by certified mail and

publication, we should construe the statutes harmoniously by interpreting someone to be "'found'"

only when he or she has been "[actually] 'served'" by certified mail, not when his or her address of

record simply becomes "'known.'" It also argues that its efforts were diligent because it sent the

notice of publication to Gladys by first-class mail, which was not returned.

(i) "Diligent Inquiry" Under § 77-1834 Requires Party to Request Address Where Property Tax

Statements Are Sent From County Treasurer

         We begin by considering the meaning of "diligent inquiry," under § 77-1834. This phrase is

not defined in the statutes, and we have not previously interpreted its meaning. Robin argues we

should interpret the phrase consistently with "reasonable diligence," from Neb. Rev. Stat. § 25-

517.02 (Reissue 2016).

         Section 25-517.02 provides: "Upon motion and showing by affidavit that service cannot be

made with reasonable diligence bv anv other method provided bv statute, the court mav [300 Neb.

848] permit service to be made ... (2) by publication . . . ."In In re Interest of A. W., [63] we

described a "reasonably diligent" search as

not requir[ing] the use of all possible or conceivable means of discovery, but [a]s such an inquiry

as a reasonably prudent person would make in view of the circumstances [that] must extend to

those places where information is likely to be obtained and to those persons who, in the ordinary

course of events, would be likely to receive news of or from the absent person.

         While the phrases are not identical, the context of both concerns the effort required to

determine the location of an individual for the purpose of providing service. As mentioned above,

components of a series or collection of statutes pertaining to a certain subject matter are in pari

materia and should be conjunctively considered and construed to determine the intent of the

Legislature, so that different provisions are consistent, harmonious, and sensible.[64] Based on

the similar subject matter, an argument could be made to interpret these phrases to have a similar

meaning. However, these phrases are not components of a series of statutes. Instead, the context

of the statutes for service under § 77-1831 is quite unique in its limitation.

         As mentioned above, § 77-1832 (Reissue 2009) authorizes a tax certificate holder to serve

the owner of record only at the address where the property tax statement was mailed. Unlike the

pre-2003 amended statute-which allowed for an owner of record to be served by mail at any

address-the limitation on service to the address where the property tax statement was mailed

remains in effect under the current statutory scheme. As a result, a party's efforts to discover the

actual location of an owner of record are fruitless because the tax certificate holder has no

authority to serve him or her at that location.

         [300 Neb. 849] Nevertheless, a court must attempt to give effect to all parts of a statute, and

if it can be avoided, no word, clause, or sentence will be rejected as superfluous or meaningless.[65]In this case, the Legislature has rendered the phrase "diligent inquiry" largely superfluous

through its 2003 amendment to § 77-1834, but we give the phrase effect by acknowledging that it

is still incumbent upon the tax certificate holder to obtain the address where the property tax

statement was mailed in order to send notice by certified mail before moving to service by

publication. Vandelay took this action, and the statutes do not require it to do any more.

         The parties' arguments surrounding "diligent inquiry," however, do not concern the efforts

required under § 77-1834 to locate the address of the owner of record. It is undisputed that

Vandelay did, in fact, discover Gladys' actual address. Instead, the parties' argument, essentially,

requests us to read all of the prerequisites to notice by publication, contained in § 25-517.02, into

§ 77-1834, under the guise of interpreting "diligent inquiry." This we cannot do. A court will not

read into a statute a meaning that is not there.[66] While subjecting a tax certificate holder to the

same prerequisites for service by publication as are required in § 25-517.02 might be a prudent

decision for the Legislature to make, it is solely within the Legislature's purview to do so.

Therefore, the parties' arguments concerning whether Vandelay took sufficient steps above those

required in § 77-1832 are irrelevant.

(ii) Owner of Record Is "Found" Only if He or She Is "Able to Be Served," Under § 77-1834

         We next consider whether Vandelay was entitled to serve Gladys notice by publication after

it was unable to serve her by certified mail, despite having actual knowledge of her location. [300

Neb. 850] Whether Vandelay was able to serve Gladys by publication depends on our

interpretation of the term "found."

         Generally, statutory language is to be given its plain and ordinary meaning, and an appellate

court will not resort to interpretation to ascertain the meaning of statutory words which are plain,

direct, and unambiguous.[67] However, '"[a] statute can ... be considered ambiguous when a

particular interpretation from the face of a statute could lead to an anomalous, unusual or absurd

result.'"[68] For '"[i]t is impermissible to follow a literal reading that engenders absurd

consequences where there is an alternative interpretation that reasonably effects the statute's

purpose.'"[69]

         In the exposition of statutes, the reason and intention of the lawgiver will control the strict

letter of the law when the latter would lead to palpable injustice or absurdity[70] As mentioned

above, components of a series or collection of statutes pertaining to a certain subject matter are in

pari materia and should be conjunctively considered and construed to determine the intent of the

Legislature, so that different provisions are consistent, harmonious, and sensible.[71]

         The definition of "found," as the past tense of "find," is "I. To come upon by chance or in the

course of events. . . . II. To discover or attain by search or effort."[72] Consistently with this plain

meaning, the Court of Appeals interpreted "found" to mean Vandelay actually knew Gladys'

address. The implication of ascribing this plain meaning to the term, however, would to a [300

Neb. 851] large extent obviate the utility of the tax deed statutes. It would, based on the narrow

service procedure in § 77-1832, preclude the holder of a tax certificate from obtaining a tax deed if

an owner of record either refuses to accept a certified mailing of the notice to the address where

the property tax statement was sent or lives at any other address and can be found there.

         We have stated that the overall objective of the certificate method for delinquent taxes is the

recovery of unpaid taxes on real property.[73] As explained above, the Legislature created two

separate methods for a tax certificate holder to elect to pursue to recover the taxes he or she paid

on behalf of the deficient owner. Neither of these policies supports a construction of the tax deed

statutes rewarding an owner, already deficient in paying taxes, by allowing him or her to force the

initiation of judicial foreclosure proceedings simply by avoiding the notice, which the tax deed

method was designed to provide the owner regarding his or her rights.[74] Therefore, we reject the

plain meaning of "found."

         Vandelay, contrariwise, argues that we should interpret "found" to mean '"able to be served.'"[75] While this definition is not supported by any plain or ordinary meaning of the word, it does find

support in the context of civil procedure as a legal term of art. "A 'term of art' is a word or phrase

having a specific, precise meaning in a given specialty apart from its general meaning in ordinary

contexts."[76] We have ascribed the term of art meaning to statutory terms when necessitated by

the statute's context.[77]

         [300 Neb. 852] In fact, we long ascribed such a meaning to the word "found" in Neb. Rev.

Stat. § 25-408 (Reissue 1985), which has since been repealed.[78] Section 25-408, in relevant

part, provided: "An action . . . against a nonresident of this state or a foreign corporation may be

brought in any county . . . where said defendant may be found . . . ." Regarding foreign

corporations, we had held that "[a] defendant 'may be found' in any county in which proper service

can be had upon its agent."[79]

         Further, in other states, courts have also determined "found" to mean '"found for legal

service'" in the context of civil procedure.[80] These states' venue statutes state the following:

"When the defendant is a resident of the state, either in the county within which the defendant

resides, or in the county within which the plaintiff resides, and the defendant may be found."[81]

The Nevada Supreme Court interpreted "found," in this context, as follows:

It is clear from the statute that the word "found" is used in contradistinction to the word "reside."

The action then may be instituted by a resident of the state in a court of a county, regardless of the

residence of the defendant, if it is alleged that he can be found within the county where suit is

instituted and is actually served with process therein.[82]

         This term of art definition of "found" also provides a harmonious construction to the tax deed

statutes by giving effect to the dichotomy created by §§ 77-1832 and 77-1834 to accomplish the

service requirement of § 77-1831. Under this construction, a tax certificate holder must attempt to

serve [300 Neb. 853] the owner of record under the requirements of § 77-1832. but, if such service

is impossible or unsuccessful, then the tax certificate holder may provide service by publication.

Such an interpretation gives effect to the statutory requirements while retaining the overall viability

of the tax deed statutes as a whole.

         Therefore, we hold that the word "found" in § 77-1834 means "able to be served."

Accordingly, we hold that § 77-1834 authorizes a tax certificate holder to provide service by

publication to an owner of record who was not able to be served by certified mail at the address

where the property tax statement was mailed, upon proof of compliance with § 77-1832 if the

owner, in fact, lives at such address.

         In this case, Vandelay obtained the address where Gladys received the property tax

statements for the property. It then sent notice by certified mail, return receipt requested, which

notice was returned as "unclaimed" after three failed attempts at delivery. Vandelay submitted this

into evidence along with an affidavit of its efforts to comply with § 77-1832, as required by § 77-

1833 (Cum. Supp. 2012). This constituted complete compliance with the requirements of § 77-

1832, and because Gladys was not able to be served in this manner, Vandelay appropriately

proceeded with service by publication. Therefore, we find the Court of Appeals' determination that

Vandelay was not entitled to serve Gladys by publication erroneous.

         Before we reverse the Court of Appeals' decision, however, we consider Robin's alternative

argument before the Court of Appeals that the tax deed was void because Vandelay failed to

comply with the publication requirements, which the Court of Appeals did not reach. Upon further

review from a judgment of the Court of Appeals, the Nebraska Supreme Court will not reverse a

judgment which it deems to be correct simply because its reasoning differs from that employed by

the Court of Appeals.[83]

         [300 Neb. 854] (b) Vandelay Complied With Publication Requirements of § 77-1834

         Robin argues Vandelay's proof of publication did not comply with § 77-1835 because it did

not say the Courier-Times newspaper was in general circulation in the county and because he

offered evidence the Courier-Times was not, in fact, in circulation throughout Lincoln County.

Further, Robin contends Vandelay did not comply with § 77-1834 because there was another

Lincoln County newspaper Gladys was more likely to see.

         As mentioned above, § 77-1834, in relevant part, provides that "the purchaser or his or her

assignee shall publish the notice in some newspaper published in the county and having a general

circulation in the county." Section 77-1835, in relevant part, states:

Proof of publication shall be made by filing in the county treasurer's office the affidavit of the

publisher, manager, or other employee of such newspaper, that to his or her personal knowledge,

the notice was published for the time and in the manner provided in this section, setting out a copy

of the notice and the date upon which the same was published.

         There is no requirement in the preceding sections that specific language must appear in a

proof of publication. Instead, the proof of publication needs to state only that notice was published

in the manner provided in § 77-1834. In addition, Neb. Rev. Stat. § 25-523 (Reissue 2016) defines

a "legal newspaper" for the publication of legal and other official notice as one which has a "bona

fide circulation of at least three hundred paid subscriptions weekly, and shall have been published

within the county for fifty-two successive weeks prior to the publication of such notice, and be

printed, either in whole or in part, in an office maintained at the place of publication."

         The proof of publication sufficiently stated that the Courier-Times is a legal newspaper

having a bona fide circulation of at [300 Neb. 855] least 300 paid weekly subscriptions and that it

had been published within the county for 52 consecutive weeks prior to the publication of such

notice.

         Robin also failed to produce sufficient evidence the Courier-Times was not, in fact, in general

circulation in Lincoln County. In the absence of a sufficient showing to the contrary, the affidavit of

the publisher that a newspaper was one of general circulation in the county must be held sufficient

to establish the fact.[84]

         Robin submitted evidence that the Courier-Times had only 1, 300 weekly subscriptions

among three villages within Lincoln County. However, absent anything to the contrary, statutory

language is to be given its plain meaning, and a court will not look beyond the statute or interpret it

when the meaning of its words is plain, direct, and unambiguous.[85] The plain meaning of the

word "in," in § 77-1834, shows that the newspaper only needed to be generally circulated within

Lincoln County, not throughout the entire county, as Robin argues.

         Robin's evidence does not constitute sufficient evidence that the Courier-Times was not a

legal newspaper in general circulation in Lincoln County.

         Robin also produced evidence another newspaper published in Lincoln County had greater

circulation throughout the county and, specifically, in the ZIP code where Gladys and the property

were located. He argues that Vandelay did not satisfy the publication requirement by not

publishing the notice in this newspaper, by reading some type of good faith requirement into § 77-

1834. However, § 77-1834 does not require publication in the newspaper of greatest circulation in

the county, and we will not impose such a requirement. As mentioned above, a court will not read

into a statute a meaning that is not there.[86]

[300 Neb. 856] Nevertheless, Robin directs us to State, ex rel. Elliott, v. Holliday, [87] where

in 1892, we stated: "Legal advertisements should not be inserted in an obscure paper where the

probabilities are that they will be seen by but few, where there is a paper of general circulation in

the county, because the object of the law will be in part at least defeated." In Holliday, we were

considering a sheriff's refusal to publish mortgage foreclosure sale notices in any newspaper

except the one published by his political party, which newspaper was alleged to have been '"of

such small circulation as in effect to utterly defeat the object of the law.'"[88] We do not foreclose

the possibility that there is some threshold requirement for the circulation of a newspaper to satisfy

the requirements of § 77-1834, but Holliday is inapplicable here, where, as we stated above,

Robin has not presented sufficient evidence to overcome the statutory presumption that § 77-1834

was complied with.

         Because we conclude Robin did not overcome the presumption Vandelay complied with the

statutory notice requirements to show Vandelay's tax deed is void, we must reverse the decision

of the Court of Appeals.

         Upon reversing a decision of the Court of Appeals, we may consider, as we deem

appropriate, some or all of the assignments of error the Court of Appeals did not reach.[89]

Because the Court of Appeals determined that Vandelay's tax deed was void, it did not consider

whether Gladys had a mental disorder entitling Robin to redeem the property under the expanded

statutory period or whether equity requires the protection of Robin's interests. The district court

fully decided these issues, and the meaning of "mental disorder," under § 77-1827, is a matter of

first impression. Thus, we elect to consider these assignments of error.

         [300 Neb. 857] 3. Robin Failed to Prove He Was Entitled to Extended Redemption Period in

§ 77-1827

         Robin argues that he was entitled to redeem the property because Gladys suffered from a

mental disorder that extended the statutory redemption period and because Vandelay admitted

that Robin had tendered redemption to the county treasurer. He argues that the district court erred

in not finding Gladys had a mental disorder by relying on Vandelay's expert, who never examined

Gladys and only selectively reviewed her medical records, over her long-term physician.

         Vandelay argues that the evidence was insufficient to prove Gladys had a mental disorder

affecting her ability to make legal decisions and that we should defer to the lower court's factual

finding that Vandelay's expert was more credible than Gladys' physician, whose testimony was not

supported by his own medical records.

         In order to defeat a tax deed, a party must show that it satisfied the conditions precedent in §

77-1843. One of the options to satisfy § 77-1843 includes proving that (1) the property has been

redeemed from the sale and (2) such redemption was had or made for the use and benefit of

persons having the right of redemption under the laws of this state. As discussed above, Vandelay

admitted that Robin tendered redemption to the county treasurer, which is sufficient to satisfy that

condition.

         Though we are aware that in 2013, the Legislature revised § 77-1827 to replace the term

"mental retardation" with the term "intellectual disability," for purposes of this matter we quote from

the version of the statute in place during the relevant period of this controversy. The 2009 version

states: "The real property of persons with mental retardation or a mental disorder so sold, or any

interest they may have in real property sold for taxes, may be redeemed at any time within five

years after such sale."[90] There is no contention that Gladys suffered [300 Neb. 858] from the

first condition, so we consider only whether she suffered from the second condition.

         The language of the statute indicates that the extended redemption period for a mental

disorder exists if the owner had a mental disorder at the time of the property's sale. Contrariwise,

interpreting the statute to extend the redemption period for an individual who only later develops a

mental disorder within the 5-year period provided therein would be absurd because such an

individual could not reobtain the right to redeem the property after a tax deed had been validly

issued. In interpreting a statute, a court is guided by the presumption that the Legislature intended

a sensible rather than absurd result in enacting the statute.[91] Accordingly, we restrict our

analysis to whether Gladys had a mental disorder in March 2011.

         At trial, each party called an expert witness concerning Gladys' mental state. The witnesses

agreed that a mental disorder is, as characterized by Vandelay's expert, "marked primarily by

sufficient disorganization of personality, mind and emotions to seriously impair the normal

psychological functioning of the individual."

         Robin called Dr. Ronald Asher, who provided Gladys' medical care beginning in at least

2006. He stated that an MRI record in his 2006 records indicated Gladys had vascular disease in

her brain, which causes small strokes. He described Gladys' mental functioning as starting at a

normal level in 2006 but slowly deteriorating until the time of her death, when she was mostly

bedridden. Asher explained that Gladys' deterioration was a "step-wise progression," where she

would suffer a small stroke impairing her mental status for 7 to 10 days before she recovered to a

level slightly worse than before the stroke.

         Asher opined Gladys had a mental disorder and dementia from at least 2009 until her death,

but he could not determine exactly when she developed the mental disorder. He [300 Neb. 859]

explained she was unable to understand complicated issues, make appropriate judgments, or

manage financial matters- beyond writing checks and simple cash management. While Asher

never performed any psychological testing or prescribed Gladys dementia medication, he

explained she had never suffered any behavioral issues warranting intervention. Finally, he

acknowledged his notes from June 2012, "I thought [her] mental status was good," and May 2015,

"mental status reassuring," but explained the notes were relative to her status during that period.

         Robin and one of his sisters provided anecdotal testimony about Gladys' false memories and

lack of reasoning, which were consistent with the symptoms of a mental disorder as described by

the experts. Robin also testified that Gladys' mental condition gradually declined but that the most

significant change occurred after she was hospitalized for a fall in December 2013.

         Regarding Gladys' ability to handle her affairs, Robin and his sister stated that Gladys

tended to keep all documents and mail she received and that they found records from doctor

appointments, letters from Social Security, various bills, junk mail, and a handicapped parking

pass Gladys claimed to have thrown away, but no property tax statements. Robin also stated

Gladys asked him about her bills frequently after 2009 to make sure they were being paid. Robin

testified he confirmed with the retirement community staff that Gladys continued to receive her

mail throughout her time living there.

         Dr. John Goldner, a neurologist, testified for Vandelay after conducting a comprehensive

review of Gladys' medical records. Specifically, he relied on Asher's notes, the absence of

psychological testing and prescriptions treating dementia, and the daily notes from the retirement

community-describing Gladys as alert, orientated, and able to make her needs known and make

her own decisions, through 2013. Goldner testified that Asher's notes indicated that in April 2013,

Gladys suffered from decreased memory, and that then in December 2013, Gladys moved from a

residential unit to the assisted living [300 Neb. 860] unit at the retirement community because she

required a higher level of care. He testified that at Gladys' age, it was possible that her functioning

could be deficient enough to be considered a mental disorder on certain days, but that she

appeared to generally be able to function within normal limits for her advanced age, which is not

de facto a mental disorder. He testified Gladys' functioning could not be classified as a mental

disorder before mid-2014, at which point her mental capacity was inconclusive.

         The court determined that Asher's records did not support his conclusions that Gladys had a

mental disorder. It concluded Robin failed to prove Gladys had a mental disorder, relying on

Goldner's testimony that Gladys did not suffer from a mental disorder any time before mid-2014,

the evidence that any mental decline she was experiencing was not out of line with other

individuals her age, and the fact that she was never tested for a mental condition or placed on

medication for dementia.

         We have not previously interpreted the term "mental disorder" in the context of § 77-1827

(Cum. Supp. 2016). We have, however, interpreted that same phrase in the context of statutory

limitations on certain actions. Neb. Rev. Stat. § 25-213 (Reissue 2016), in relevant part, provides:

[I]f a person entitled to bring any action [under listed statutes] for the recovery of the title or

possession of lands, tenements, or hereditaments, or for the foreclosure of mortgages thereon, is,

at the time the cause of action accrued ... a person with a mental disorder . . . every such person

shall be entitled to bring such action within the respective times . . . after such disability is

removed.

         In Maycock v. Hoody,[92] we adopted the definition of "mental disorder" employed by the

Court of Appeals, reasoning it was consistent with our interpretation of a previous version of the

statute.[93] We stated:

[300 Neb. 861] [A] person with a mental disorder under § 25-213 is "one who suffers from a

condition of mental derangement which actually prevents the sufferer from understanding his or

her legal rights or from instituting legal action[, ]" and ... a mental disorder within the meaning of §

25-213 is "an incapacity which disqualifies one from acting for the protection of one's rights."[94]

         Because both § 77-1827 and § 25-213 relate to extending the time required to exercise a

legal right for an individual suffering from a mental disorder, we interpret the meaning of the term

"mental disorder" consistently among them.

         While we review factual issues de novo on the record, we give deference to the fact that the

trial court observed the testimony of the experts and Wisner family members. The court

determined that Goldner's testimony was more credible than Asher's and the Wisners' because of

the contradiction with Asher's records and lack of anyone requesting psychological testing for

Gladys.

         The definition of a mental disorder provided by the experts appears to be broader than the

standard required by the statute. Accordingly, Goldner's opinion that Gladys did not suffer from

any mental disorder before mid-2014 strongly supports not finding Gladys to have had a mental

disorder in March 2011, while Asher's contrary opinion did not contain a precise conclusion

regarding her ability to understand and protect her legal rights.

         Both Asher and Robin described Gladys' mental condition as a slow decline. Asher could not

pinpoint when Gladys developed a mental disorder but concluded it was in at least 2009 despite a

general consensus that her greatest decline in functioning occurred in December 2013. While

Asher stated that Gladys had a decreased ability to make judgments and understand complex

issues since 2009, Robin stated that she remained vigilant regarding her financial obligations, and

[300 Neb. 862] the June 2011 newspaper article indicated that typically, she was still functioning

near her normal capacity-engaging in weekly card games with friends and reading. Finally, Asher's

note from June 2012 does not provide any support for his conclusion that she had a mental

disorder, even if it was only describing her relative status.

         Based on the district court's credibility determination and our independent review of the

evidence, we conclude Robin failed to prove Gladys suffered from a mental disorder in March

2011. Therefore, her right to redeem the property expired when the county treasurer delivered the

tax deed to Vandelay.

4. Equities of Case Do Not Favor Robin

Robin argues the equities of this situation warrant this court's permitting him to redeem the

property, even if the law does not. He argues the undisputed evidence is that Gladys was a 95-

year-old widow in a retirement community with no local family and at least some diminished

mental capacity. Conversely, he argues Vandelay chose to pursue the less arduous process for a

tax deed and did only the bare minimum required by the tax deed statutes, in bad faith to deprive

Gladys of her property at a significant windfall.

         The parties dispute whether we may provide an equitable remedy at all when the situation is

governed by a comprehensive, rigid statutory structure. We need not decide this issue, because

even assuming, without deciding, that we could craft some type of relief for Robin, his

characterization of the equities of the situation strongly distorts the reality of this case.

         Equity strives to do justice; it is not a rigid concept, but, instead, is determined on a case-by-

case basis according to concepts of justice and fairness.[95] But '"equity follows the law to the

extent of obeying it and conforming to its general rules and policies whether contained in common

law or [300 Neb. 863] statute.'"[96] This maxim is strictly applicable whenever the rights of the

parties are clearly defined and established by law.[97] Also, equitable remedies are generally not

available where there exists an adequate remedy at law.[98]

         When Roger died in 2009, Robin took responsibility over managing Gladys' affairs. He

passed this responsibility to the trust department of a bank but, apparently, overlooked the

property taxes due on the property. Further, his own testimony provided that he did not monitor

Gladys' finances, despite her persistent concern about her bills' being paid. Additionally, while

Gladys was stated to have retained all of her mail, even junk mail, she apparently disposed of her

repeated notices by Lincoln County and Vandelay regarding her property tax deficiency.

         Steps could have been taken to ensure that Gladys' affairs were being addressed. When

Gladys moved to the retirement community in 2009, her address of record was changed with the

relevant agencies. Robin, as the holder of Gladys' power of attorney, could have directed that all

of Gladys' mail be sent to him. He could have had the lease on the property recorded with the

register of deeds to allow additional notices to be sent to the tenant. He could have paid the real

estate taxes or authorized the trust department to pay the real estate taxes. He could have sought

to have her mental capacity tested, and if Gladys was found to be impaired by reason of disability,

he could have sought a conservatorship for her. However, Robin failed to take any one of the

steps to ensure the real estate taxes were paid.

         Despite the harsh result in this matter, the Legislature has established strict rules for the

payment of real estate taxes and ramifications for the failure to pay those taxes. Vandelay

complied with those statutory requirements to obtain a tax deed on validly purchased tax

certificates. Despite Robin's arguments [300 Neb. 864] that it did the bare minimum required,

Vandelay, in fact, researched where to find Gladys; sent Gladys, by certified mail to her correct

address, notice that an application for a tax deed would be made; published notice of the

application in a legal newspaper of general circulation in Lincoln County; and sent the notice of

publication to Gladys by first-class mail. The last step of mailing the notice of the publication by

first-class mail was not statutorily required and was made by Vandelay out of an abundance of

caution to ensure Gladys was not deprived of the due process rights in her property.

         Hence, the equities of this situation do not favor Robin, and this assignment of error is

without merit.

         V. CONCLUSION

         Despite Robin's standing to challenge Vandelay's tax deed, we conclude Robin failed to

present sufficient evidence to either overcome the presumption Vandelay provided Gladys with

sufficient service, as required to obtain a valid tax deed, or prove Gladys suffered from a mental

disorder at the time of her property's tax sale, extending her statutory redemption period. In

addition, the tax certificate statutes enacted by the Legislature establish a specific process upon

the failure to pay real estate taxes which does not take into consideration the amount of the

delinquent tax compared to the value of the property. As a result, we determine the record in this

case does not support providing Robin with a remedy he was not entitled to under the statutes.

Therefore, we reverse the decision of the Court of Appeals and remand the cause with directions

that the Court of Appeals affirm the judgment of the district court.

         Reversed and remanded with directions.

          Wright and Kelch, JJ., not participating.

          Cassel, J., dissenting in part.

         This court's admittedly "harsh" result flows from the district court's single failure, amidst an

otherwise thorough and correct analysis, to see the forest for the trees. The district court [300 Neb.

865] rejected Gladys' estate's attempt to redeem the property based on an extended redemption

period authorized where a taxpayer suffers from a "mental disorder."[1] The ultimate question here

is not whether Vandelay is entitled to all of the taxes, fees, and costs that it paid, together with all

of the interest imposed pursuant to a high statutory rate designed to encourage prompt payment of

real estate taxes. Rather, the question is whether, despite a remedy expressly authorized by the

Legislature's "strict rules" in anticipation of this situation, Vandelay should reap a windfall at the

expense of an extremely elderly taxpayer lacking the capacity to take action to protect her rights.

Because I conclude that Gladys was entitled to the extended redemption period and that equity

demands its implementation, I respectfully dissent.

         In all respects but one, the district court rendered an extensive, well-researched, and well-

written judgment. On appeal, the Court of Appeals concentrated on the complicated tax deed

method statutes and did not reach the essential issue. On further review, my colleagues have

almost everything right. I agree with this court's conclusions that Robin had standing to challenge

the tax deed and that Vandelay substantially complied with the statutory notice requirements for a

tax deed, and with all of this court's reasoning leading to those conclusions. The court's analysis

regarding those matters is spot on. Only where the court turns to the statutory right of redemption

do I part its company.

         This court acknowledges that both parties assert claims for quiet title, which sound in equity.

As this court's opinion admits, equity strives to do justice determined on a case-by-case basis

according to concepts of justice and fairness. This court recites the correct standard of review-

trying factual questions de novo on the record and, as to questions of both law and fact, reaching

an independent conclusion from that of the district court.

         [300 Neb. 866] Regarding whether Gladys suffered from a mental disorder during the

pertinent timeframe, I assert that this court should give no weight to the district court's observation

of the two medical experts. Our standard of review does not demand deference to the district court

in any respect. It is purely within this court's discretion. Here, none is due, for two reasons. First,

the testimony of Vandelay's expert was presented by deposition. As to that physician, the district

court was in no better position than this court to make credibility assessments. Second, where I

believe the district court went wrong had little to do with its observations of Robin's expert, who

was Gladys' treating physician.

         I accept this court's definition of "mental disorder, "[2] which the district court also employed.

Thus, a mental disorder in this context is '"an incapacity which disqualifies one from acting for the

protection of one's rights.'"[3]

         Several facts set the stage, which is essential to an assessment of Gladys' capacity to

protect her rights. She went to live at a retirement community in 2009, the year she turned age 93.

She moved there after the deaths of her husband in 2007 and her son Roger in 2009. The district

court recognized that "Gladys was generally unfamiliar with financial matters and did not pay her

own bills." When she entered the facility, she initially lived in the residential section. By the time

the tax sale certificates were sold in 2011, she was 94 years old. In late 2013, at age 97, she

suffered a number of falls. Because she was no longer ambulatory, she was moved to the facility's

assisted living section. By March 2014, as she approached the age of 98, she was, as the district

court found, suffering from numerous chronic medical issues and having difficulty with her

memory, particularly in recalling names, and with complicated tasks.

         [300 Neb. 867] Both the district court and this court relied on medical records kept for a

significantly different purpose-to guide her caregivers at the facility. Her caregivers were not

recording assessments of her understanding and ability to protect her rights in financial matters.

They were concerned with her day-to-day well-being. Thus, it is no surprise that the records

showed that "she was having no behavioral issues, was kind and easy to get along with, was

oriented to time, person and place, was alert and cooperative, was capable of performing simple

tasks, and displayed a fairly consistent pattern of normal intellectual behavior." Vandelay's expert

relied solely on these medical records. He never met or observed Gladys. His testimony provides

no significant insight into Gladys' capacity to protect her rights.

         In contrast, Gladys' longtime physician testified to personal observations and conclusions,

over an extended period, directly bearing on Gladys' incapacity which disqualified her from acting

for the protection of her rights. He observed in 2006 that she had episodes of confusion and

disorientation. Those were typically associated with findings suggesting small strokes-where

imaging studies showed evidence of "white matter changes," that is, "ischemic injury."

         When Gladys moved to the facility in 2009, her doctor observed that she was "not really able

to make good judgments." He explained, "You could ask her questions and she would give a good

response, but if you asked detail, if you . . . asked her to make judgments, she really wasn't able to

do that very well." He opined that "over time what you could see is that she became less capable."

         From 2009 until the time of Gladys' death, her doctor saw her about every 60 days. Her

doctor recalled a "fairly steady but gradual deterioration in how well she did." From his

observations, he described a "step-wise decrease in her . . . functional capacity," which he

characterized as "more mental than physical." He described her ability to do "simple things," such

as "describe that she needed to go to the bathroom, she [300 Neb. 868] was hungry, she was

tired." But he opined that her ability to understand business or financial matters from 2009 on was

"very limited." He opined that her ability to organize information also was "very limited." He opined

that she suffered from a "disorganization of the mind" from 2009 forward. And he opined that her

cognitive capacity from 2009 forward showed that her "ability to deal with anything that was

beyond simple was not something that she could do." With respect to her reasoning and memory,

he opined that "anything that was . . . complicated would be beyond what she would be able to

manage." Ultimately, Gladys' doctor opined that from 2009 to the time of her death, she suffered

from a "mental disorder." He characterized it as "multi-infarct dementia," that is, "multiple small

strokes which . . . progressively knock out sections of brain."

         The district court recognized that the question of whether by 2014 Gladys suffered from a

mental disorder in the statutory sense was "more difficult." It acknowledged that by the spring of

2014, there "had been a decline in Gladys' cognitive and mental status."

         But then the district court missed the forest, stating that the "evidence [did] not establish that

her decline was out of the normal range for a person of her age" (Emphasis supplied.) It defies

reason and common sense to ignore the impact of extremely advanced age on mental ability. And

coupled with the testimony of her doctor, supported by imaging showing repeated small strokes

over a period of years, I cannot agree that Gladys had the capacity to act for the protection of her

own rights in the payment of real estate taxes.

         Because I conclude that a de novo review supports the existence of a "mental disorder" as

contemplated by § 77-1827 at the relevant time, I would modify the Court of Appeals' decision and

direct that court to reverse the judgment of the district court and remand the cause with directions

to quiet title in Gladys' estate upon payment by the estate into court of all taxes, costs, and fees

paid by Vandelay, together with statutory [300 Neb. 869] interest (14 percent per annum) to the

time of payment into court, to be disbursed to Vandelay in redemption of its tax deed and the

underlying tax sale certificate.

         I reiterate that Vandelay is entitled to the full benefit of the payments required for redemption.

But Gladys (and now. her estate) is no less entitled to justice. That was the exact purpose of the

statutory extended redemption period. And the failure to implement that statute permits Vandelay

to reap a windfall that borders on the obscene. Because I believe that the windfall is an unjust

result contrary to statute, I respectfully dissent.

---------

Notes: [1] See Neb. Rev. Stat. § 77-1801 et seq. (Reissue 2009, Cum. Supp. 2016 & Supp. 2017) and §

77-1901 et seq. (Reissue 2009 & Cum. Supp. 2016).[2] § 77-1818.

[3] Coffin v. Old Line Life Ins. Co., 138 Neb. 857, 295 N.W. 884 (1941): § 77-1818; Neb. Rev. Stat.

§ 77-203 (Reissue 2009).[4] § 77-1822.[5] §§ 77-1824 and 77-1830.[6] § 77-1837. See, generally, § 77-1801 et seq.[7] § 77-1902. See, generally, § 77-1901 et seq.[8] § 77-1837.01.[9] § 77-1837.[10] § 77-1824.[11] § 77-1856.[12] § 77-1831 (Cum. Supp. 2012).[13] Ottaco Acceptance, Inc. v. Larkin, 273 Neb. 765, 733 N.W.2d 539 (2007). See §§ 77-1842

and 77-1843.[14] § 77-1843.[15] § 77-1827.[16] See Wisner v. Vandelay Investments, No. A-16-451, 2017 WL 2399492 (Neb.App. May 30,

2017) (selected for posting to court website).[17] Id. at *4.[18] Id.[19] Applied Underwriters v. S.E.B. Servs. of New York, 297 Neb. 246, 898 N.W.2d 366 (2017).[20] J.S. v. Grand Island Public Schools, 297 Neb. 347, 899 N.W.2d 893 (2017).[21] Royal v. McKee, 298 Neb. 560, 905 N.W.2d 51 (2017).[22] Id.[23] J.S., supra note 20.[24] Hauxwell v. Henning, 291 Neb. 1, 863 N.W.2d 798 (2015).[25] Landrum v. City of Omaha Planning Bd, 297 Neb. 165, 899 N.W.2d 598 (2017).[26] Id.[27] Applied Underwriters, supra note 19.[28] See, Hauxwell, supra note 24; Ottaco Acceptance, Inc., supra note 13.[29] Ottaco Acceptance, Inc., supra note 13.[30] Hauxwell, supra note 24.[31] Ottaco Acceptance, Inc., supra note 13.[32] Id.[33] J.S., supra note 20.[34] Id.[35] In re Estate of Radford, 297 Neb. 748, 901 N.W.2d 261 (2017).[36] Lewison v. Renner, 298 Neb. 654, 905 N.W.2d 540 (2018).[37] Id.[38] Id.[39] Hauxwell, supra note 24, 291 Neb. at 6, 863 N.W.2d at 802.[40] Cornell v. Maverick Loan & Trust Co., 95 Neb. 9, 144 NW. 1074 (1914), modified on denial of

rehearing 95 Neb. 842, 147 NW. 697. [41] §§ 77-1824 and 77-1830.[42] Robison v. Madsen, 246 Neb. 22, 516 N.W.2d 594 (1994).[43] Id. (citing Collision Center Paint & Body v. Campbell, 773 S.W.2d 354 (Tex. App. 1989);

Jenni v. Gomel, 602 S.W.2d 696 (Mo. App. 1980); and 31AC.J.S. Evidence § 381 c. (1964)).[44] See Kipf v. Bitner, 150 Neb. 155, 33 N.W.2d 518 (1948).[45] Fetherkile v. Fetherkile, 299 Neb. 76, 907 N.W.2d 275 (2018).[46] Hauxwell, supra note 24.[47] Id.[48] Id.[49] See id. at 7, 863 N.W.2d at 802.[50] Id. at 6, 863 N.W.2d at 802 (emphasis supplied).[51] Howell v. Jordan, 94 Neb. 264, 266, 143 N.W. 217, 218 (1913).[52] Hauxwell, supra note 24.[53] In re Trust of Shire, 299 Neb. 25, 907 N.W.2d 263 (2018).[54] Hauxwell, supra note 24.[55] See Ottaco Acceptance, Inc., supra note 13.[56] Id.[57] SID No. 424 v. Tristar Mgmt, 288 Neb. 425, 850 N.W.2d 745 (2014). See § 77-1842.[58] § 77-1831.[59] Ottaco Acceptance, Inc. v. Huntzinger, 268 Neb. 258, 682 N.W.2d 232 (2004). See § 77-

1842.[60] § 77-1832 (Reissue 1996). See 2003 Neb. Laws, L.B. 319.[61] Wisner v. Vandelay Investments, supra note 16, 2017 WL 2399492 at *4.[62] Brief for appellant on petition for further review at 20.[63] In Interest of A.W., 224 Neb. 764, 766, 401 N.W.2d 477, 479 (1987).[64] In re Trust of Shire, supra note 53.[65] Woodmen of the World v. Nebraska Dept. of Rev., 299 Neb. 43, 907 N.W.2d 1 (2018).[66]State v. Gill, 297 Neb. 852, 901 N.W.2d 679 (2017).[67] Becker v. Becker, 299 Neb. 206, 908 N.W.2d 12 (2018).[68] U.S. v. E.T.H., 833 F.3d 931, 938 (8th Cir. 2016), quoting Breedlove v. Earthgrains Baking

Companies, Inc., 140 F.3d 797 (8th Cir. 1998). Accord, e.g., Dean v. State, 288 Neb. 530, 849

N.W.2d 138 (2014).[69] U.S. v. E.T.H., supra note 68, 833 F.3d at 938, quoting Ashley, Drew & Northern Ry v. United

Transp. U, 625 F.2d 1357 (8th Cir. 1980).[70] Anthony, Inc. v. City of Omaha, 283 Neb. 868, 813 N.W.2d 467 (2012).[71] In re Trust of Shire, supra note 53.[72] "Find," Oxford English Dictionary Online, http://www.oed.com/view/ Entry/70348 (last visited

Aug. 3, 2018).[73] SID No. 424, supra note 57.[74] Id.

[75] Supplemental brief for appellee on petition for further review at 27.[76] 82 C.J.S. Statutes § 418 at 537 (2009).[77] In re Estate of Young, No. A-96-423, 1997 WL 426191 (Neb.App. July 1, 1997) (not

designated for permanent publication), citing In re Estate of Hannan, 246 Neb. 828, 523 N.W.2d

672 (1994). See, also, e.g., Spaefy v. Spady, 284 Neb. 885, 824 N.W.2d 366 (2012); ATS Mobile

Telephone, Inc. v. General Communications Co., Inc., 204 Neb. 141, 282 N.W.2d 16 (1979).[78] See 1986 Neb. Laws, L.B. 529, § 58.[79] Mittelstadt v. Rouzer, 213 Neb. 178, 181, 328 N.W.2d 467, 469 (1982), quoting Juckett v.

Brennaman, 99 Neb. 755, 157 N.W. 925 (1916).[80] Shields v. Shields, 115 Mont. 146, 155, 139 F.2d 528, 530 (1943). Accord State ex rel. Ford

Motor Co. v. Manners, 161 S.W.3d 373 (Mo. 2005).[81] See, e.g., Mo. Ann. Stat. § 508.010(1) (West Cum. Supp. 2018). Accord Mss. Code Ann. §

93-5-11 (2013).[82] Tiedemann v. Tiedemann, 36 Nev. 494, 500-501, 137 P. 824, 826 (1913).[83] In re Estate of dinger, 292 Neb. 237, 872 N.W.2d 37 (2015).[84] See Bourke v. Somers, 3 Neb. (Unoff.) 761, 92 N.W. 990 (1902).[85] In re Trust of Shire, supra note 53.[86] State v. Gill, supra note 66.[87] State, ex rel. Elliott, v. Holliday, 35 Neb. 327, 333, 53 N.W. 142, 144 (1892).[88] Id. at 331, 53 N.W. at 143.[89] Burns v. Burns, 293 Neb. 633, 879 N.W.2d 375 (2016).[90] § 77-1827 (Reissue 2009).[91] Burns v. Burns, 296 Neb. 184, 892 N.W.2d 135 (2017).[92] Maycock v. Hoody, 281 Neb. 767, 799 N.W.2d 322 (2011).[93] See Sacchi v. Blodig, 215 Neb. 817, 341 N.W.2d 326 (1983).[94] Maycock, supra note 92, 281 Neb. at 776, 799 N.W.2d at 329, quoting Vergara v. Lopez-

Vasquez, 1 Neb.App. 1141, 510 N.W.2d 550 (1993).[95] Floral Lawns Memorial Gardens Assn. v. Becker, 284 Neb. 532, 822 N.W.2d 692 (2012).[96] Jeffrey B. v. Amy L., 283 Neb. 940, 949, 814 N.W.2d 737, 745 (2012).[97] Id.[98] Jeffrey B. v. Amy L., supra note 96.[1] See Neb. Rev. Stat. § 77-1827 (Cum. Supp. 2016).[2] § 77-1827.[3] Maycock v. Hoody, 281 Neb. 767, 776, 799 N.W.2d 322, 329 (2011).

---------

LEGISLATURE OF NEBRASKA

ONE HUNDRED SIXTH LEGISLATURE

FIRST SESSION

LEGISLATIVE BILL 463FINAL READING

Introduced by Williams, 36; Brandt, 32; Briese, 41; Chambers, 11;Clements, 2; Dorn, 30; Friesen, 34; Groene, 42; Kolterman,24; Stinner, 48; McCollister, 20.

Read first time January 18, 2019

Committee: Revenue

A BILL FOR AN ACT relating to revenue and taxation; to amend sections1

77-1802, 77-1831, 77-1832, 77-1833, 77-1834, 77-1835, 77-1837, and2

77-1837.01, Reissue Revised Statutes of Nebraska; to change and3

eliminate provisions relating to real property sold for delinquent4

taxes, the process for issuing treasurer's tax deeds, and tax sale5

certificates; to harmonize provisions; to repeal the original6

sections; and to outright repeal section 77-1824.01, Reissue Revised7

Statutes of Nebraska.8

Be it enacted by the people of the State of Nebraska,9

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Section 1. Section 77-1802, Reissue Revised Statutes of Nebraska, is1

amended to read:2

77-1802 The county treasurer shall, not less than four nor more than3

six weeks prior to the first Monday of March in each year, make out a4

list of all real property subject to sale and the amount of all5

delinquent taxes against each item, describing the property as it is6

described on the tax list, with an accompanying notice stating that so7

much of such property described in the list as may be necessary for that8

purpose will, on the first Monday of March next thereafter, be sold by9

such county treasurer at public auction at his or her office for the10

taxes, interest, and costs thereon. In making such list, the county11

treasurer shall describe the property as it is described on the tax list12

and shall include the property's parcel number, if any.13

Sec. 2. Section 77-1831, Reissue Revised Statutes of Nebraska, is14

amended to read:15

77-1831 No Except as otherwise provided in this section, no16

purchaser at any sale for taxes or his or her assignees shall be entitled17

to a tax deed from the county treasurer for the real property so18

purchased unless such purchaser or assignee, at least three months before19

applying for the tax deed, serves or causes to be served a notice that20

states, after the expiration of at least three months from the date of21

service of such notice, the tax deed will be applied for. In the case of22

owner-occupied property, no purchaser at any sale for taxes or his or her23

assignees shall be entitled to a tax deed from the county treasurer for24

the real property so purchased unless such purchaser or assignee, at25

least three months and forty-five days before applying for the tax deed,26

serves or causes to be served a notice that states, after the expiration27

of at least three months and forty-five days from the date of service of28

such notice, the tax deed will be applied for.29

The notice shall include:30

(1) The following statement in sixteen-point type: UNLESS YOU ACT31

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YOU WILL LOSE THIS PROPERTY;1

(2) The date when the purchaser purchased the real property sold by2

the county for taxes;3

(3) The description of the real property;4

(4) In whose name the real property was assessed;5

(5) The amount of taxes represented by the tax sale certificate, the6

year the taxes were levied or assessed, and a statement that subsequent7

taxes may have been paid and interest may have accrued as of the date the8

notice is signed by the purchaser; and9

(6) The following statements:10

(a) That the issuance of a tax deed is subject to the right of11

redemption under sections 77-1824 to 77-1830;12

(b) The right of redemption requires payment to the county13

treasurer, for the use of such purchaser, or his or her heirs or assigns,14

the amount of taxes represented by the tax sale certificate for the year15

the taxes were levied or assessed and any subsequent taxes paid and16

interest accrued as of the date payment is made to the county treasurer;17

and18

(c) The Except as provided for real property that is actually19

occupied by the record owner of the real property, the surviving spouse20

of the record owner, or a minor child of the record owner, right of21

redemption expires at the close of business on the date of application22

for the tax deed, and a deed may be applied for after the expiration of23

three months from the date of service of this notice. For real property24

that is actually occupied by the record owner of the real property, the25

surviving spouse of the record owner, or a minor child of the record26

owner, a deed may be applied for after the expiration of three months and27

forty-five days after the service of this notice.28

Sec. 3. Section 77-1832, Reissue Revised Statutes of Nebraska, is29

amended to read:30

77-1832 (1) Service of the notice provided by section 77-1831 shall31

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be made by:1

(a) Personal or , residence, certified mail, or designated delivery2

service as described in section 25-505.01 upon a every person in actual3

possession or occupancy of the real property and upon the person in whose4

name the title to the real property appears of record who can be found in5

this state. If a person in actual possession or occupancy of the real6

property cannot be served by personal or residence service, service of7

the notice shall be made upon such person by certified mail service or8

designated delivery service as described in section 25-505.01, and the9

notice shall be sent to the address of the property. If the person in10

whose name the title to the real property appears of record cannot be11

found in this state or if such person cannot be served by personal or12

residence service, service of the notice shall be made upon such person13

by certified mail service or designated delivery service as described in14

section 25-505.01, and the notice shall be sent to the name and address15

to which the property tax statement was mailed who qualifies as an owner-16

occupant under section 77-1824.01; and or17

(b) Certified mail or designated delivery service as described in18

section 25-505.01 upon every encumbrancer of record found by the title19

search required in section 77-1833. The notice shall be sent to the20

encumbrancer's name and address appearing of record as shown in the21

encumbrance filed with the register of deeds. :22

(i) The person in whose name the title to the real property appears23

of record who does not qualify as an owner-occupant under section24

77-1824.01. The notice shall be sent to the name and address to which the25

property tax statement was mailed; and26

(ii) Every encumbrancer of record in the office of the register of27

deeds of the county. The notice shall be sent to the encumbrancer's name28

and address appearing of record as shown in the encumbrance filed with29

the register of deeds.30

(2) Personal or residence service shall be made by the county31

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sheriff of the county where service is made or by a person authorized by1

section 25-507. The sheriff or other person serving the notice shall be2

entitled to the statutory fee prescribed in section 33-117. Within twenty3

days after the date of request for service of the notice, the person4

serving the notice shall (a) make proof of service to the person5

requesting the service and state the time and place of service including6

the address if applicable, the name of the person with whom the notice7

was left, and the method of service or (b) return the proof of service8

with a statement of the reason for the failure to serve. Failure to make9

proof of service or delay in doing so does not affect the validity of the10

service.11

Sec. 4. Section 77-1833, Reissue Revised Statutes of Nebraska, is12

amended to read:13

77-1833 The service of notice provided by section 77-1832 shall be14

proved by affidavit, and the notice and affidavit shall be filed and15

preserved in the office of the county treasurer. The purchaser or16

assignee shall also affirm in the affidavit that a title search was17

conducted by a registered abstracter to determine those persons entitled18

to notice pursuant to such section. If personal or residence service is19

used, the receipt or returns provided by the person authorized in20

subsection (2) of section 77-1832 to carry out such service shall be21

filed with and accompany the affidavit. If certified mail or designated22

delivery service is used, the certified mail return receipt or a copy of23

the signed delivery receipt shall be filed with and accompany the24

affidavit return of service. The affidavit, a copy of the notice, and a25

copy of such title search shall be filed with the application for the tax26

deed pursuant to section 77-1837. For each service of such notice, a fee27

of one dollar shall be allowed. The amount of such fees shall be noted by28

the county treasurer in the record opposite the real property described29

in the notice and shall be collected by the county treasurer in case of30

redemption for the benefit of the holder of the certificate.31

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Sec. 5. Section 77-1834, Reissue Revised Statutes of Nebraska, is1

amended to read:2

77-1834 If any the person or encumbrancer who is entitled to notice3

under subsection (1) of section 77-1832 in whose name the title to the4

real property appears of record in the office of the register of deeds in5

the county or if the encumbrancer in whose name an encumbrance on the6

real property appears of record in the office of the register of deeds in7

the county cannot, upon diligent inquiry, be found, the purchaser or his8

or her assignee shall publish the notice in a some newspaper of published9

in the county and having a general circulation in the county which has10

been designated by the county board in the year publication is required11

under this section or, if no newspaper is printed in the county, then in12

a newspaper published in this state nearest to the county in which the13

real property is situated.14

Sec. 6. Section 77-1835, Reissue Revised Statutes of Nebraska, is15

amended to read:16

77-1835 The notice provided by section 77-1834 shall be published17

inserted three consecutive weeks, the last time not less than three18

months before applying for the tax deed. Proof of publication shall be19

made by filing in the county treasurer's office the affidavit of the20

publisher, manager, or other employee of such newspaper, affirming that21

to his or her personal knowledge, the notice was published for the time22

and in the manner provided in this section, setting out a copy of the23

notice and the date upon which the same was published. The purchaser or24

assignee shall also file in the county treasurer's office an affidavit25

affirming in the office that a title search was conducted by a registered26

abstracter to determine those persons entitled to notice pursuant to such27

section 77-1832 and a copy of such title search. The affidavits, the copy28

of the notice, and the copy of the title search shall be filed with the29

application for the tax deed pursuant to section 77-1837. Such documents30

The affidavits shall be preserved as a part of the files of the office.31

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Any publisher, manager, or employee of a newspaper knowingly or1

negligently making a false affidavit regarding any such matters shall be2

guilty of perjury and shall be punished accordingly. Section 25-520.013

does not apply to publication of notice pursuant to section 77-1834.4

Sec. 7. Section 77-1837, Reissue Revised Statutes of Nebraska, is5

amended to read:6

77-1837 (1) At any time within nine months after the expiration of7

three years after the date of sale of any real estate for taxes or8

special assessments, if such real estate has not been redeemed, the9

purchaser or his or her assignee may apply to the county treasurer for a10

tax deed for the real estate described in such purchaser's or assignee's11

tax sale certificate. The county treasurer county treasurer, on12

application, on production of the certificate of purchase, and upon13

compliance with sections 77-1801 to 77-1863, shall execute and deliver a14

deed of conveyance for the real estate described in such tax sale15

certificate if he or she has received the following: as provided in this16

section.17

(a) The tax sale certificate;18

(b) The issuance fee for the tax deed and the fee of the notary19

public or other officer acknowledging the tax deed, as required under20

section 77-1823;21

(c) For any notice provided pursuant to section 77-1832, the22

affidavit proving service of notice, the copy of the notice, and the copy23

of the title search required under section 77-1833; and24

(d) For any notice provided by publication pursuant to section25

77-1834, the affidavit of the publisher, manager, or other employee of26

the newspaper, the copy of the notice, the affidavit of the purchaser or27

assignee, and the copy of the title search required under section28

77-1835.29

(2) The failure of the county treasurer to issue the deed of30

conveyance if requested within the timeframe provided in this section31

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shall not impair the validity of such deed if there has otherwise been1

compliance with sections 77-1801 to 77-1863.2

Sec. 8. Section 77-1837.01, Reissue Revised Statutes of Nebraska, is3

amended to read:4

77-1837.01 (1) Except as otherwise provided in subsections5

subsection (2) and (3) of this section, the laws in effect on the date of6

the issuance of a tax sale certificate govern all matters related to tax7

deed proceedings, including noticing and application, and foreclosure8

proceedings. Changes in law shall not apply retroactively with regard to9

the tax sale certificates previously issued.10

(2) Tax sale certificates sold and issued between January 1, 2010,11

and December 31, 2016 2017, shall be governed by the laws and statutes12

that were in effect on December 31, 2009, with regard to all matters13

relating to tax deed proceedings, including noticing and application, and14

foreclosure proceedings.15

(3) Tax sale certificates sold and issued between January 1, 2017,16

and the effective date of this act shall be governed by the laws and17

statutes that are in effect on the effective date of this act with regard18

to all matters relating to tax deed proceedings, including noticing and19

application, and foreclosure proceedings.20

Sec. 9. Original sections 77-1802, 77-1831, 77-1832, 77-1833,21

77-1834, 77-1835, 77-1837, and 77-1837.01, Reissue Revised Statutes of22

Nebraska, are repealed.23

Sec. 10. The following section is outright repealed: Section24

77-1824.01, Reissue Revised Statutes of Nebraska.25

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LEGISLATIVE BILL 463Approved by the Governor March 27, 2019

Introduced by Williams, 36; Brandt, 32; Briese, 41; Chambers, 11; Clements, 2;Dorn, 30; Friesen, 34; Groene, 42; Kolterman, 24; Stinner, 48;McCollister, 20.

A BILL FOR AN ACT relating to revenue and taxation; to amend sections 77-1802,77-1831, 77-1832, 77-1833, 77-1834, 77-1835, 77-1837, and 77-1837.01,Reissue Revised Statutes of Nebraska; to change and eliminate provisionsrelating to real property sold for delinquent taxes, the process forissuing treasurer's tax deeds, and tax sale certificates; to harmonizeprovisions; to repeal the original sections; and to outright repealsection 77-1824.01, Reissue Revised Statutes of Nebraska.

Be it enacted by the people of the State of Nebraska,

Section 1. Section 77-1802, Reissue Revised Statutes of Nebraska, isamended to read:

77-1802 The county treasurer shall, not less than four nor more than sixweeks prior to the first Monday of March in each year, make out a list of allreal property subject to sale and the amount of all delinquent taxes againsteach item, describing the property as it is described on the tax list, with anaccompanying notice stating that so much of such property described in the listas may be necessary for that purpose will, on the first Monday of March nextthereafter, be sold by such county treasurer at public auction at his or heroffice for the taxes, interest, and costs thereon. In making such list, thecounty treasurer shall describe the property as it is described on the tax listand shall include the property's parcel number, if any.

Sec. 2. Section 77-1831, Reissue Revised Statutes of Nebraska, is amendedto read:

77-1831 No Except as otherwise provided in this section, no purchaser atany sale for taxes or his or her assignees shall be entitled to a tax deed fromthe county treasurer for the real property so purchased unless such purchaseror assignee, at least three months before applying for the tax deed, serves orcauses to be served a notice that states, after the expiration of at leastthree months from the date of service of such notice, the tax deed will beapplied for. In the case of owner-occupied property, no purchaser at any salefor taxes or his or her assignees shall be entitled to a tax deed from thecounty treasurer for the real property so purchased unless such purchaser orassignee, at least three months and forty-five days before applying for the taxdeed, serves or causes to be served a notice that states, after the expirationof at least three months and forty-five days from the date of service of suchnotice, the tax deed will be applied for.

The notice shall include:(1) The following statement in sixteen-point type: UNLESS YOU ACT YOU WILL

LOSE THIS PROPERTY;(2) The date when the purchaser purchased the real property sold by the

county for taxes;(3) The description of the real property;(4) In whose name the real property was assessed;(5) The amount of taxes represented by the tax sale certificate, the year

the taxes were levied or assessed, and a statement that subsequent taxes mayhave been paid and interest may have accrued as of the date the notice issigned by the purchaser; and

(6) The following statements:(a) That the issuance of a tax deed is subject to the right of redemption

under sections 77-1824 to 77-1830;(b) The right of redemption requires payment to the county treasurer, for

the use of such purchaser, or his or her heirs or assigns, the amount of taxesrepresented by the tax sale certificate for the year the taxes were levied orassessed and any subsequent taxes paid and interest accrued as of the datepayment is made to the county treasurer; and

(c) The Except as provided for real property that is actually occupied bythe record owner of the real property, the surviving spouse of the recordowner, or a minor child of the record owner, right of redemption expires at theclose of business on the date of application for the tax deed, and a deed maybe applied for after the expiration of three months from the date of service ofthis notice. For real property that is actually occupied by the record owner ofthe real property, the surviving spouse of the record owner, or a minor childof the record owner, a deed may be applied for after the expiration of threemonths and forty-five days after the service of this notice.

Sec. 3. Section 77-1832, Reissue Revised Statutes of Nebraska, is amendedto read:

77-1832 (1) Service of the notice provided by section 77-1831 shall bemade by:

(a) Personal or , residence, certified mail, or designated deliveryservice as described in section 25-505.01 upon a every person in actualpossession or occupancy of the real property and upon the person in whose name

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the title to the real property appears of record who can be found in thisstate. If a person in actual possession or occupancy of the real propertycannot be served by personal or residence service, service of the notice shallbe made upon such person by certified mail service or designated deliveryservice as described in section 25-505.01, and the notice shall be sent to theaddress of the property. If the person in whose name the title to the realproperty appears of record cannot be found in this state or if such personcannot be served by personal or residence service, service of the notice shallbe made upon such person by certified mail service or designated deliveryservice as described in section 25-505.01, and the notice shall be sent to thename and address to which the property tax statement was mailed who qualifiesas an owner-occupant under section 77-1824.01; and or

(b) Certified mail or designated delivery service as described in section25-505.01 upon every encumbrancer of record found by the title search requiredin section 77-1833. The notice shall be sent to the encumbrancer's name andaddress appearing of record as shown in the encumbrance filed with the registerof deeds. :

(i) The person in whose name the title to the real property appears ofrecord who does not qualify as an owner-occupant under section 77-1824.01. Thenotice shall be sent to the name and address to which the property taxstatement was mailed; and

(ii) Every encumbrancer of record in the office of the register of deedsof the county. The notice shall be sent to the encumbrancer's name and addressappearing of record as shown in the encumbrance filed with the register ofdeeds.

(2) Personal or residence service shall be made by the county sheriff ofthe county where service is made or by a person authorized by section 25-507.The sheriff or other person serving the notice shall be entitled to thestatutory fee prescribed in section 33-117. Within twenty days after the dateof request for service of the notice, the person serving the notice shall (a)make proof of service to the person requesting the service and state the timeand place of service including the address if applicable, the name of theperson with whom the notice was left, and the method of service or (b) returnthe proof of service with a statement of the reason for the failure to serve.Failure to make proof of service or delay in doing so does not affect thevalidity of the service.

Sec. 4. Section 77-1833, Reissue Revised Statutes of Nebraska, is amendedto read:

77-1833 The service of notice provided by section 77-1832 shall be provedby affidavit, and the notice and affidavit shall be filed and preserved in theoffice of the county treasurer. The purchaser or assignee shall also affirm inthe affidavit that a title search was conducted by a registered abstracter todetermine those persons entitled to notice pursuant to such section. Ifpersonal or residence service is used, the receipt or returns provided by theperson authorized in subsection (2) of section 77-1832 to carry out suchservice shall be filed with and accompany the affidavit. If certified mail ordesignated delivery service is used, the certified mail return receipt or acopy of the signed delivery receipt shall be filed with and accompany theaffidavit return of service. The affidavit, a copy of the notice, and a copy ofsuch title search shall be filed with the application for the tax deed pursuantto section 77-1837. For each service of such notice, a fee of one dollar shallbe allowed. The amount of such fees shall be noted by the county treasurer inthe record opposite the real property described in the notice and shall becollected by the county treasurer in case of redemption for the benefit of theholder of the certificate.

Sec. 5. Section 77-1834, Reissue Revised Statutes of Nebraska, is amendedto read:

77-1834 If any the person or encumbrancer who is entitled to notice undersubsection (1) of section 77-1832 in whose name the title to the real propertyappears of record in the office of the register of deeds in the county or ifthe encumbrancer in whose name an encumbrance on the real property appears ofrecord in the office of the register of deeds in the county cannot, upondiligent inquiry, be found, the purchaser or his or her assignee shall publishthe notice in a some newspaper of published in the county and having a generalcirculation in the county which has been designated by the county board in theyear publication is required under this section or, if no newspaper is printedin the county, then in a newspaper published in this state nearest to thecounty in which the real property is situated.

Sec. 6. Section 77-1835, Reissue Revised Statutes of Nebraska, is amendedto read:

77-1835 The notice provided by section 77-1834 shall be published insertedthree consecutive weeks, the last time not less than three months beforeapplying for the tax deed. Proof of publication shall be made by filing in thecounty treasurer's office the affidavit of the publisher, manager, or otheremployee of such newspaper, affirming that to his or her personal knowledge,the notice was published for the time and in the manner provided in thissection, setting out a copy of the notice and the date upon which the same waspublished. The purchaser or assignee shall also file in the county treasurer'soffice an affidavit affirming in the office that a title search was conductedby a registered abstracter to determine those persons entitled to noticepursuant to such section 77-1832 and a copy of such title search. Theaffidavits, the copy of the notice, and the copy of the title search shall befiled with the application for the tax deed pursuant to section 77-1837. Such

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documents The affidavits shall be preserved as a part of the files of theoffice. Any publisher, manager, or employee of a newspaper knowingly ornegligently making a false affidavit regarding any such matters shall be guiltyof perjury and shall be punished accordingly. Section 25-520.01 does not applyto publication of notice pursuant to section 77-1834.

Sec. 7. Section 77-1837, Reissue Revised Statutes of Nebraska, is amendedto read:

77-1837 (1) At any time within nine months after the expiration of threeyears after the date of sale of any real estate for taxes or specialassessments, if such real estate has not been redeemed, the purchaser or his orher assignee may apply to the county treasurer for a tax deed for the realestate described in such purchaser's or assignee's tax sale certificate. Thecounty treasurer county treasurer, on application, on production of thecertificate of purchase, and upon compliance with sections 77-1801 to 77-1863,shall execute and deliver a deed of conveyance for the real estate described insuch tax sale certificate if he or she has received the following: as providedin this section.

(a) The tax sale certificate;(b) The issuance fee for the tax deed and the fee of the notary public or

other officer acknowledging the tax deed, as required under section 77-1823;(c) For any notice provided pursuant to section 77-1832, the affidavit

proving service of notice, the copy of the notice, and the copy of the titlesearch required under section 77-1833; and

(d) For any notice provided by publication pursuant to section 77-1834,the affidavit of the publisher, manager, or other employee of the newspaper,the copy of the notice, the affidavit of the purchaser or assignee, and thecopy of the title search required under section 77-1835.

(2) The failure of the county treasurer to issue the deed of conveyance ifrequested within the timeframe provided in this section shall not impair thevalidity of such deed if there has otherwise been compliance with sections77-1801 to 77-1863.

Sec. 8. Section 77-1837.01, Reissue Revised Statutes of Nebraska, isamended to read:

77-1837.01 (1) Except as otherwise provided in subsections subsection (2)and (3) of this section, the laws in effect on the date of the issuance of atax sale certificate govern all matters related to tax deed proceedings,including noticing and application, and foreclosure proceedings. Changes in lawshall not apply retroactively with regard to the tax sale certificatespreviously issued.

(2) Tax sale certificates sold and issued between January 1, 2010, andDecember 31, 2016 2017, shall be governed by the laws and statutes that were ineffect on December 31, 2009, with regard to all matters relating to tax deedproceedings, including noticing and application, and foreclosure proceedings.

(3) Tax sale certificates sold and issued between January 1, 2017, and theeffective date of this act shall be governed by the laws and statutes that arein effect on the effective date of this act with regard to all matters relatingto tax deed proceedings, including noticing and application, and foreclosureproceedings.

Sec. 9. Original sections 77-1802, 77-1831, 77-1832, 77-1833, 77-1834,77-1835, 77-1837, and 77-1837.01, Reissue Revised Statutes of Nebraska, arerepealed.

Sec. 10. The following section is outright repealed: Section 77-1824.01,Reissue Revised Statutes of Nebraska.

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Tax Deferred Exchanges Under IRC § 1031

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

JENNIFER STRAND Nebraska Title Company

NANCY LOFTIS Nancy Loftis Law Office

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Tax Deferred Exchanges Under IRC § 1031

Nancy Loftis, Esq.

Jennifer Strand, Esq.President, Nebraska Title Company

1031 Tax Deferred Exchange

Section 1031 provides that gain or loss is notrecognized when property held for productive use intrade or business or for investment is exchanged forlike-kind property to be held for productive use intrade or business or for investment.

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Basic 1031 Terminology Taxpayer or Exchanger - The party seeking non-recognition

treatment in an exchange.

Relinquished Property – The property that the taxpayer seeks to dispose of in the exchange.

Replacement Property – The property that the taxpayer seeks to acquire in the exchange.

Qualified Intermediary – The person who acts as the middleman in the exchange and who acquires the relinquished property to convey to the buyer, and acquires the replacement property to convey it to the taxpayer. In most circumstances, direct conveyancing is used.

Basic 1031 RulesIn order for an exchange to be completely tax deferred, the taxpayer must trade up in value and up in equity.

The Replacement Property must have a fair marketvalue equal or greater than the RelinquishedProperty.

ANDThe taxpayer’s equity in the Replacement Property

must equal or exceed the taxpayer’s equity in theReplacement Property.

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Requirements for a Valid Exchange

1. Real property;

2. Property must be held for a qualified purpose;

3. Property relinquished must be like-kind withreplacement property; and

4. An exchange is required.

Requirements for a Valid Exchange#1 - Real Property

Property excluded from nonrecognition treatment includes: Stock in trade (inventory) or property held

primarily for sale (dealer property) Interests in partnerships or multi-member limited

liability companies Interests in a real estate investment trust (“REIT”) Personal property

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Requirements for a Valid Exchange#2 - Qualified Purpose

Held for productive use in a trade or business or for investment. Determination made when the exchange takes place.

Property held primarily for personal use, such as a personalresidence, does not meet requirement.

To meet the investment requirement, taxpayer must (i) own adwelling unit for 24 months prior to the exchange for relinquishedproperty and 24 months after the exchange for replacementproperty, AND (ii) rent it for at least 14 days for each of those 2years and the taxpayer’s personal use per year may not exceedthe greater of 14 days or 10% of the number of days rentedduring the year.

Requirements for a Valid ExchangeHolding Period for Investment:No specific holding period requirement.Taxpayer has burden of proof of intent that property

was held for qualified purpose.One year is commonly used as a rule of thumb.Two years is generally considered the rule under the

safe harbor.

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Requirements for a Valid Exchange#3 - Like-KindLike-kind means “similar in nature or character,

notwithstanding differences in grade or quality.”All real property is like-kind, improved or unimproved

and regardless of type of improvement or use.Real property is not like-kind to personal property.Fee interest in land is like-kind to a leasehold

interest in land with a remaining term of 30 years ormore (including renewal periods).

Requirements for a Valid Exchange#4 - Exchange

Taxpayer Seller

Replacement Property

Relinquished Property

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Requirements for a Valid ExchangeSame Taxpayer Requirement If Relinquished Property is held by husband and wife, Replacement

Property should also be held in the name of both spouses.

If Relinquished Property is held as a spouse’s separate property, theReplacement Property should also be held as his or her separateproperty.

If a taxpayer dies during the exchange period, the taxpayer’s estate ortrustee may complete the exchange.

If a taxpayer elects to have a single-member LLC be taxed as a soleproprietorship for federal tax purposes, the taxpayer could hold theRelinquished Property as an individual and the Replacement Propertyas a single-member LLC.

Types of Exchanges

Simultaneous Exchange with Intermediary

IntermediaryTaxpayer

Relinquished Property

ReplacementProperty

Cash

Cash

Buyer

Seller

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Types of Exchanges

Deferred Exchange with Intermediary

First Leg:

Taxpayer

Buyer

Intermediary

Relinquished Property

Cash

Types of ExchangesDeferred Exchange with Intermediary

Second Leg:

Taxpayer

Seller

Intermediary

Replacement Property

Cash

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Time Limits for Deferred ExchangeTaxpayer is required to identify the Replacement

Property within 45 days after the transfer of theRelinquished Property ; ANDTaxpayer must close on the Replacement Property

before the earlier of (i) 180 days after the transfer ofthe Relinquished Property, or (ii) the due date of thetaxpayer’s federal income tax return (includingextensions) for the year in which the RelinquishedProperty is transferred.

Identification of Replacement PropertyThe number of properties that may be identified is:Up to 3 properties, without regard to fair market value (3

Property Rule);More than 3 properties, if the total fair market value of all

properties identified does not exceed 200% of the totalfair market value of all Relinquished Properties (200%Rule); orAny number of properties as long as the replacement

properties acquired amount to at least ninety-five percentof the fair market value of all identified properties (95%Rule).

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New Construction or Improvements In order for new construction, repairs or

improvements to be included in the value of theReplacement Property the work must be completedprior to the date the taxpayer acquires title to theReplacement Property.QI or EAT may acquire title to the Replacement

Property, use the exchange funds to complete thework, and transfer title to the improved property tothe taxpayer before the expiration of the 180 daytime period.

Reverse Exchanges

Option when the taxpayer must close on theReplacement Property prior to the sale of theRelinquished Property.Revenue Procedure 2000-37 provides a safe harbor

for a parking style exchange and allows anExchange Accommodation Titleholder (“EAT”) toacquire either the Relinquished Property or theReplacement Property in an exchange and hold it forup to 180 days.

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Reverse ExchangesRelinquished Property Parked

No more than 180 days later:

Taxpayer

Seller

Intermediary

EAT

Replacement Property

Cash

Cash

Relinquished Property

EAT

Buyer

Relinquished Property

Cash

Reverse ExchangesReplacement Property Parked

No more than 180 days later:

Seller

EAT

ReplacementProperty

Cash

Taxpayer

EAT

Intermediary

Buyer

Replacement Property

Cash

Cash

Relinquished Property

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Reverse Exchanges

The MechanicsEAT cannot be the taxpayer or a disqualified person

(a person related to the taxpayer, including an entityin which the taxpayer owns 10% or more or thetaxpayer’s attorney, CPA, real estate agent oremployee).Taxpayer and EAT must enter into a written

agreement under which property is held in a qualifiedexchange accommodation arrangement (“QEAA”).

Reverse Exchanges

EAT must be treated as the beneficial owner of theproperty for all federal income tax purposes.EAT may lease the parked property to the taxpayer

or the taxpayer may manage it.Taxpayer must identify Relinquished Property within

45 days after EAT’s acquisition of the ReplacementProperty (3 Property/200% Rules apply).Relinquished Property must be sold no later than

180 days after the reverse exchange begins.

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Combination Exchanges

A reverse exchange may be combined with a forward exchange. For example: Taxpayer acquires 50% TIC interest in the Replacement

Property in a forward exchange. EAT acquires theremaining 50% TIC interest and holds it for up to 180days while the taxpayer sells a second RelinquishedProperty to exchange for the remaining TIC interestparked in the EAT. Taxpayer may identify additional Replacement Property to

acquire during 180-day period after the sale of theRelinquished Property.

Tax Consequences of Exchanging

Step 1:

Determine the taxpayer’s “basis” in the Relinquished Property. In most cases, a taxpayer’s basis is the cost of the property.

Step 2:

Establish the “adjusted basis” of the Relinquished Property. To determine adjusted basis, take the basis (the cost of the property) and add the cost of any capital improvements made to the property during the taxpayer’s ownership, and subtract any depreciation taken on the property during that same time period.

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Tax Consequences of ExchangingStep 3:

Determine the gain. There are two types of gain: “realized gain” and “recognized gain”.

Realized Gain = Purchase Price – Adjusted Basis (closings costs such as commissions and recording fees may be deducted from realized gain)

Recognized Gain = That portion of the Realized Gain which is taxable.

Tax Consequences of ExchangingRealized gain is not taxable until it is recognized.

Gain is usually, but not always, recognized in theyear in which it is realized.

A 1031 Exchange allows the taxpayer to defer thetax that otherwise would be due on the realized gain.

However, realized gain is recognized to the extentthat “boot” is received by the taxpayer.

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Tax Consequences of ExchangingAny consideration received by the taxpayer other than real property is “boot.”

There are two types of boot – “cash boot” and “mortgageboot.”Cash boot – Cash or anything else of value received.Mortgage boot – Any liabilities assumed in the

exchange.

Tax Consequences of ExchangingBasis in Replacement Property

In an exchange, the tax is deferred by carrying overthe taxpayer’s adjusted basis in the RelinquishedProperty to the Replacement Property.

The realized gain is deferred until the ReplacementProperty is transferred in a later taxable transaction.

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Simple Rule of Thumb

To totally defer gain,

the taxpayer must

trade up or equal

in fair market value

and equity.

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What Real Estate Lawyers Need to Know About Hemp

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

DAVID BRACHT Kutak Rock LLP

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9/17/2019

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Industrial Hemp –2018 Farm Bill

and the Nebraska Hemp

Farming Act

2019 REAL ESTATE INSTITUTENebraska State Bar Association 

September 13, 2019

David BrachtDavid.Bracht@KutakRock.com

About Kutak Rock

• National law firm• 550 attorneys• 18 locations, coast‐to‐coast

• Offices in Washington, DC and Richmond, VA• Serves local, regional and national clients in public finance, business and corporate, litigation and real estate law

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Kutak Rock: Legal Services for Cannabis + Hemp• Agribusiness• Banking and Financial Institutions; 

• Bankruptcy, Restructuring and Creditor’s Rights;

• Business Litigation;• Commercial Leasing;

• Construction and Development;• Corporate & Securities;• Corporate Finance;• Corporate Governance; • Employment and Labor Law;• Government Services;

• Intellectual Property;• Land Use and Zoning;• Mergers & Acquisitions;• Private Investment Funds;• Regulatory and Compliance; and• Taxation.

2014 ‐ 2018 Activity• Projects in 16 states• Representative projects:o License Applicationso Investments & Acquisitionso Bond Offeringso CDB Distribution Agr.o Equipment & Technologyo Development Agreements

Introductory Question:

Q:  What is the difference between marijuana and hemp?

A:  Answer• Both are derived from the plant Cannabis sativa L.• Difference is % concentration of delta‐9 tetrahydrocannabinol (THC)

• Hemp has THC content under 0.3% (and is non‐psychoactive)• As defined under federal law (following passage of 2018 Farm Bill)• As defined under laws of every state except West Virginia (under 1% THC)

• Material with THC content over 0.3% is marijuana• Some strains of marijuana today can get up to 30% THC 

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Background on marijuana in the U.S.

• 36 states have legalized medical marijuana • Includes 4 state programs not yet fully functioning• Includes 13 states with CBD only allowed• Increase from 23 states in 2016.

• 11 states have legalized adult‐use recreational marijuana• Increase from 4 states in 2016.

Background on marijuana in the U.S.

What is recreational marijuana?• Legal to purchase, possess and consume marijuana if 21 years or older.• Restrictions on amount that can be purchased or possessed.

• Colorado – up to 28 grams.• Nevada – up to 1 ounce flower (1/8 ounce of concentrate).

• Public consumption still illegal.• Transportation across state lines is still illegal.• Still illegal under federal law.

• Marijuana remains a Schedule I controlled substance under Controlled Substance Act.

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Marijuana laws in the U.S.

State vs. Federal Law• Federal law:

• Marijuana remains a Schedule I drug under the Controlled Substance Act.• Illegal to cultivate, manufacture, distribute, dispense and possess.• Anti‐money laundering laws make it illegal for financial institutions to engage in transactions with property that represents proceeds from unlawful activity.• Includes sale of marijuana in violation of the Controlled Substance Act.

• State laws:• Legalized medical or recreational marijuana depending on the state.• Issue licenses for businesses to grow, manufacture and sell marijuana under state laws.

Federal Law Controlled Substances Act – Principal Prohibition21 U.S.C. §841(a)(1): Except as authorized by this subchapter, it shall be unlawful for any person knowingly or intentionally— (1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance;

Controlled Substances Act – Select Additional Offenses21 U.S.C. §843(a)(7): It shall be unlawful for any person knowingly or intentionally—(7) to manufacture, distribute, export, or import . . . any equipment, chemical, product, or material which may be used to manufacture a controlled substance or listed chemical, knowing, intending, or having reasonable cause to believe, that it will be used to manufacture a controlled substance or listed chemical in violation of this subchapter . . . ;

21 U.S.C. §846: Any person who attempts or conspires to commit any offense defined in this subchapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.

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Federal Law

Money Laundering18 U.S.C. §1956(a)(1)Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity‐‐(A)(i) with the intent to promote the carrying on of specified unlawful activity . . . shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.

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Marijuana Banking Update

FinCENFinancial Crimes Enforcement Network

U.S. Department of Treasury

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Federal legislative developmentsSAFE Banking Act of 2019• Creates safe harbor for depository institutions: federal banking regulators may not take adverse action solely because the depository institution provides financial services to a cannabis‐related legitimate business or service provider

• Proceeds from a transaction conducted by a cannabis‐related legitimate business or service provider shall not be considered proceeds from unlawful activity

• Cannabis‐related legitimate businesses are those that involve “handling” cannabis or cannabis products (including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing or purchasing) pursuant to state law

• Service providers are those that sell goods or services to a cannabis‐related legitimate business or provide any business services legal or other licensed services or any other ancillary service relating to cannabis (including the sale/lease of real or other property) 

Federal legislative developments

STATES Act (Strengthening the Tenth Amendment Through Entrusting States Act)Controlled Substances Act as applied to “marihuana” shall not apply to any person acting in compliance with state law or tribal law* relating to the manufacture, production, possession, distribution, dispensation, administration or delivery of marihuana

*if within a state that has legalized cannabisSome exceptionsRequires study on traffic safety

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Federal legislative developments

Other recent news and activity on Cannabis in DC• “The Most Marijuana Friendly Congress in History”? (Forbes)

• 60 + bills introduced so far• MORE Act (Nadler & Gaetz)

• Most comprehensive pot reform bill ever introduced according to NORML• SAFE Act hearing in Senate (Crapo)

• But primary dynamics may impact short term prospects• NCUA Policy

Background on hemp in the U.S.

Legal Developments• 1937:  Congress enacts Marijuana Tax Act

• Placed a tax on all cannabis sales, including hemp.• Strongly hampered growth of hemp industry in the U.S.

• 1970:  Congress enacts Controlled Substance Act• Classified marijuana as a Schedule 1 controlled substance.• Included hemp within the definition of marijuana.• Resulted in decades of prohibition on cultivation of hemp and manufacturing of hemp‐based products.

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Background on hemp in the U.S.

Legal Developments (cont’d):• 2014 Farm Bill

• Defined hemp as not more than 0.3% THC concentration.• Allowed “institutions of higher education” or “state department of agriculture” to grow or cultivate industrial hemp under certain circumstances:• Research conducted under an agricultural pilot program or other academic research; or• If allowed under the laws of the state where the growing or cultivation occurs.

• Resulted in state agricultural departments or state colleges establishing hemp research and development pilot programs.

• Expired in September 2018 but research program provisions extended by 2018 Farm Bill

Background of hemp in the U.S.State hemp programs following 2014 Farm Bill:

• When 2014 Farm Bill expired:• 41 states had passed some sort of hemp‐related legislation –

• Defining hemp • Issuing licenses for hemp cultivation and growing.

• 39 states had passed legislation that allowed for establishment of hemp cultivation and production programs.

• Currently 46 states permit hemp farming in some form under extended 2014 Farm Bill pilot program rules

https://www.cincinnati.com/story/money/2019/07/29/mike‐dewine‐signs‐hemp‐bill‐legalizes‐cbd/1796853001/

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Background of hemp in the U.S.2018 retail sales of CBD products alone est. $600 million ‐ $2.0 billion*

• Estimated retails sales in 2025 of $16 billion*Colorado hemp statistics:

• 386 licensed growers as of 2018.• 12,000+ acres of outdoor cultivation as of 2018.• 2.35 million square fee of indoor cultivation as of 2018.

Kentucky hemp statistics:• 209 licensed growers as of 2018.• 12,000+ acres of outdoor cultivation as of 2018.• $16.7 Million in sales of hemp products in 2018.*Cowen Washington Research Group estimate, February 2019

2018 Farm Bill

December 20, 2018 – President Trump signed the 2018 Farm Bill• Removed hemp from definition of marijuana in the Controlled Substance Act.

• Essentially decriminalized hemp under federal law.• Defined hemp as no more than 0.3% THC content.• Established parameters for states, tribes and U.S. Department of Agriculture to establish licensing and regulatory framework for hemp operations.

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2018 Farm Bill2018 Farm Bill not only legalized hemp, but established framework for state, tribal and USDA hemp programs:

• States or tribes seeking regulatory authority over hemp production must submit a hemp plan to the USDA for approval.

• State / tribal hemp plans must include (at a minimum):• Methods of retaining relevant information regarding land where hemp production occurs;

• Procedures for testing for THC concentrations;• Procedures for disposing of hemp or hemp‐based products with more than 0.3% THC;

• Procedures for complying with enforcement requirements of 2018 Farm Bill; and

• Procedures for conducting random annual inspections.

2018 Farm Bill• USDA authorized to issue regulations and guidelines to provide additional guidance on hemp operations under the 2018 Farm Bill.• Authorized to work with the U.S. Attorney General on establishment of state, tribal and federal hemp plan, regulations and guidance.

• USDA held online listening session March 30, 2019 • Recording available online on USDA website

• USDA expects to issue regulations late 2019 for 2020 growing season• USDA required to establish a federal hemp plan to monitor and regulate hemp production in states and tribes without approved hemp plans.• Same requirements as state and tribe hemp plans.

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2018 Farm Bill2018 Farm Bill also established parameters for violations of state, tribal and federal hemp plans:

• 3 types of violations:• Negligent Violations

• Negligently failing to provide description hemp production lands.• Negligently producing hemp without a license.• Negligently producing hemp in excess of 0.3% THC.

• Negligent Violation Punishments:• Allowed to cure violation through implementation of approved corrective plan of action.• Violate 3 times in a 5‐year period = ineligible to produce hemp for 5 years from last violation.• Not subject to criminal or civil enforcement action by federal, state or tribal government.

2018 Farm Bill

• Culpable State of Mind Violations• If federal, state or tribal plan violated “with a culpable mental state greater than negligence,” then regulatory body must immediately report to U.S. Attorney and state / tribal chief law enforcement officer.

• U.S. Attorney or law enforcement has discretion on whether to commence enforcement action against violating party.

• Repeat Violations• Allowed 2 negligent violations every 2 years.

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2018 Farm BillHemp legalization is currently in a state of transition:• 2014 Farm Bill expired but –

• Research programs authority extended by 2018 Farm Bill.• Extension expires 12 months after USDA plan and regulations established. 

• 2018 Farm Bill passed:• Regulations under development; publication expected fall 2019. 

• USDA online listening session held March 13, 2019; recording on USDA website. • State / tribal hemp plans approved 60 days after submission to USDA.  

• BUT – USDA will not review/approve submitted hemp plan until regulations implemented.• In states without plans (and if no state law prohibiting)

• Individuals may submit production plans to USDA • USDA will issue license based on USDA published plan

2018 Farm BillHemp transition (cont’d):

• Changes in hemp operations from 2014 Farm Bill to 2018 Farm Bill requirements.• Commercial operations vs. research operations.

• Transportation of hemp products:• Idaho State Troopers seize shipment of Oregon hemp en route to Colorado• https://q13fox.com/2019/02/06/police‐seize‐almost‐7000‐pounds‐of‐cannabis‐from‐a‐truck‐but‐the‐company‐that‐bought‐it‐says‐its‐all‐legal/

• Oklahoma• https://www.tulsaworld.com/news/local/marijuana/biggest‐marijuana‐bust‐of‐all‐time‐no‐just‐legal‐hemp/article_f8e59c4e‐dc26‐5ee3‐81c7‐3da033db4f8d.html

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Nebraska Hemp Farming Act

• The Nebraska Legislature passed the Nebraska Hemp Farming Act (LB657); became effective May 31, 2019 • Removes hemp from controlled substances act, • Requires Nebraska Department of Agriculture (NDA) to develop and submit state hemp production plan to USDA

• Requires NDA permit & license agreement to grow or process hemp• Pilot program administered by NDA for 2019 crop year

• Lottery selection process ‐ 176 applicants / 10 license agreements with NDA• State plan to be developed following USDA guidelines

• Program under development by NDA pending release by USDA• Full program expected for 2020 growing season

Hemp – Real Estate Issues

Hemp is a legal if it’s hemp otherwise it is illegal cannabis• Cannabis use may cause default under other agreements

• Tenant’s loan documents and other business agreements may include covenants that if violated result in lack of financing or ability to operate (or pay rent)

• Zoning Issues / Environmental Compliance • Zoning regulations may include restrictions on Cannabis• Other potential environmental compliance issues triggered by Cannabis 

• Hemp regulations require destruction of non‐compliant product• Failed THC testing results in destroyed crop and loss of ability to pay

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What about CBD?

If Hemp is legal does that make CBD legal??

Depends who you ask and what used for . . .

• FDA has approved one CBD based drug – Epidiolex (epilepsy treatment)• CBD oil, as FDA approved drugs substance, must have FDA approval for use in other drugs, food ingredients and supplements• FDA has issued multiple warning letters to manufacturers with CBD products

• CBD oil can be used for cosmetics and personal care products, but state laws may restrict.

Industrial Hemp –2018 Farm Bill and the

Nebraska Hemp Farming Act

Questions?

David Bracht(402) 346‐6000

David.Bracht@KutakRock.com

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Operation of Condominium Ownersand Homeowners Associations

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

ROBERT DAILEY McGrath North Mullin & Kratz, PC LLO

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NSBA REAL ESTATE SEMINAR

OVERVIEW FOR LAWYERS ON THE LEGAL FRAMEWORKS FOR AND

RESPONSIBILITIES OF CONDOMINIUM AND HOMEOWNERS’ ASSOCIATIONS

SEPTEMBER 13, 2019

1. What Law Controls.

The statutes involved are as follows:

First, there is the Condominium Property Act created pursuant to Neb. Rev. Stat.

§§ 76-801 - 76-824. This is the old condominium act that I will refer to as the “Old Condo

Act”. This was superseded by the Nebraska Condominium Act, Neb. Rev. Stat. § 76-825

- § 76-894 on January 1, 1984. I will refer to this as the “New Condo Act”.

Notwithstanding that division line between the two Condo Acts, the New Condo

Act will apply to pre-1984 condominiums with respect to certain events. This is pursuant

to Neb. Rev. Stat. § 76-824.01. For the most part, I will refer to the New Condo Act.

Next is the Nebraska Non-Profit Corporation Act under 21-1901 et. seq. This

relates to the formation and operation of a non-profit corporation. This is mostly

applicable to homeowners’ associations since the New Condo Act is very specific as to

the creation and operation of a condominium association.

Also relevant is Section 52-2001 concerning collection and foreclosure of

homeowners’ association assessments. Assessments are very specifically dealt with

under the New Condo Act. But there really isn’t a homeowners’ association act, so this

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statute basically follows the New Condo Act with respect to the collection of assessments

for homeowners’ associations.

Finally, there is the Municipal Custodianship for Dissolved Homeowners

Associations Act, at Neb. Rev. Stat. §18-3101 et seq.

2. Creating a Condominium.

A condominium is created by preparing and filing a Declaration with the register of

deeds office for the county in which the property is located. Neb. Rev. Stat. §76-838(a)

This has to be signed and notarized. It must be signed by the fee title owner of the real

estate. There can be multiple owners of the same real estate.

It is important to remember that the term used for this document is called a

“Declaration”. Prior to the enactment of the New Condo Act, condominiums were created

pursuant to a Master Deed. That is now an antiquated and incorrect term.

Notwithstanding, the term “Master Deed” gets used a lot and is often used in addition to

or in place of a Declaration. I’ve seen this done in the last year in Douglas County. In

fact the Douglas County Register of Deeds actually indexes Declarations as “Master

Deeds”.

The Declaration sets forth the rights and responsibilities of the Association, but

does not create the Association itself. The Association is created separately by Articles

of Incorporation filed with the Nebraska Secretary of State. An Association is typically

incorporated and that is certainly the best practice. But there is no requirement for the

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Association to be an official corporation. It can be unincorporated. Many Associations in

Omaha are in fact not incorporated.

Like most other corporations, this corporation-Association has By-laws. Under the

Old Condo Act, the Bylaws had to be attached to the Master Deed. However, pursuant

to the New Condo Act, the Bylaws are no longer attached to the Declaration.

One of the advantages of creating a condominium, that I think is not used enough,

is that a condominium in effect is a subdivision of real estate. However, there is no

subdivision approval required. Therefore, you could have a shopping center with four

different shops and convert those to condominiums with each of the separate shops being

separately owned. This was recently done in Omaha with an existing shopping center.

There are 3 separate shops in this shopping center. It was converted into a condominium

and then those 3 separate shops were sold off individually.

3. Creating a Homeowners’ Association.

A homeowners association is typically created by the recording of a Declaration of

Covenants, Conditions and Restrictions. This would be recorded against all of the real

estate encompassed in a subdivision. The Declaration of Covenants, Conditions and

Restrictions does not create the Association. The Association is incorporated with the

Nebraska Secretary of State, but the various rights and responsibilities of the

Homeowners’ Association are created pursuant to the Declaration of Covenants,

Conditions and Restrictions.

4. Transition Phase.

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In the period between when the developer has full control of a condominium Association

and when the owners have full control of that Association, is a transition phase. Important

terminology to know during this transition period are as follows:

a. Development Rights. Development rights means any right reserved by the

Declarant in the Declaration to add real estate to the condominium, create units, common

elements or limited common elements, subdivide or convert units into common elements,

or withdraw a portion of the real estate from the condominium.

To exercise any Development Right, the Declarant must prepare and record an

amendment to the Declaration. This amendment must assign an identifying number to

each new unit created and the Declarant must reallocate the common elements among

units. The amendment must describe any common elements and limit common elements

thereby created.

The “Development Right” ability to withdraw real estate from a condo is subject to

an expiration date where all of the real estate is subject to withdrawal from a

condominium. This right expires after an individual unit has been sold to a purchaser. If

a portion of the real estate is subject to withdrawal, no portion may be withdrawn after a

unit in that portion has been sold to a purchaser.

b. Special Declarant Rights. A special declarant right is reserved for the

benefit of a Declarant. These rights include: (a) the right to complete improvements; (b)

the right to execute Development Rights, which we discussed previously; (c) the right to

maintain sales offices; (d) the right to use easements through the common elements; (e)

the right to make the condominium part of a larger condominium; (f) the right to make the

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condominium subject to a master condominium Association; (g) the right to appoint or

remove any officer of the Association or any Board member during any period of

Declarant Control.

c. Period of Declarant Control; Transition of Board Control. Related to this is

the “Period of Declarant Control”. During this period the Declarant has control over

selecting the officers and board members of the Association. The Declarant will establish

what this period is in the Declaration. Regardless of this period as established by the

Declaration, the period is still limited. No matter what, the period of Declarant Control

ends the earlier of: (a) 60 days after conveyance of 90% of the condo units; or (b) 2 years

after the Declarant has ceased to offer units for sale in the ordinary course of business.

This period of Declarant Control relating to appointment of Board members

terminates partially over time. No later than 60 days after transfer of 25% of the units, at

least one board member and not less than 25% of the board members shall be elected

exclusively by the unit owners (other than the Declarant).

Within 60 days after conveyance of 50% of the units, not less than 1/3 of the

directors shall be elected exclusively by the unit owners (other than the Declarant).

Once the period of Declarant Control terminates, the entire board shall be elected

by the unit owners.

5. What can Condo and HOA Boards do and not do.

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The standards for condo association and HOA Boards to meet are first and

foremost established by the Nebraska Nonprofit Corporation Act. Neb. Rev. Stat §21-

1986(a).

An attorney should advise a director to discharge his or her duties as a director in

good faith and with the care an ordinarily prudent person in a like position would exercise

under similar circumstances and in a manner he or she reasonably believes to be in the

best interests of the corporation.

When discharging these duties, a director is entitled to rely on reports, statements,

etc., prepared by the following people or groups:

(1) Officers or employees of the corporation that the director believes to be

reliable and competent;

(2) Legal counsel, public accountants; and

(3) A Board committee of which the director is not a member.

The New Condo Law also provides that: “In the performance of their duties, the officers

and members of the executive board are required to exercise ordinary and reasonable

care”. Section 76-861(a).

And it’s important to remember that directors are required to put their individual

interests and agendas aside and act solely in the best interest of the entire membership.

Board members are obligated to make informed decisions and exercise

reasonable business judgment when managing the affairs of the Association. While the

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law provides protection to Board members who uphold their fiduciary duty, Board

members who knowingly do not uphold this fiduciary duty may be held personally

accountable.

An attorney should advise Board members to be aware of these concepts:

a. Duty of Care. The duty of care requires Board members to exercise

reasonable business judgment by making informed decisions. When making decisions,

Board members should seek advice from professionals.

b. Duty of Good Faith. The duty of good faith requires Board members to put

the best interest of the Association ahead of their own interests.

c. Exercising Fair Treatment. Board members must exercise fair treatment in

their dealings with each member of the Association and preferential treatment must be

avoided.

d. Maintaining Confidentiality. Board members are privy to confidential

information concerning the financial and legal affairs of the Association and its members.

With the exception of professionals engaged by the Association, such information must

not be discussed with non-Board members.

e. Avoiding Conflicts of Interest. Board members should avoid participating in

Board decisions when a potential conflict of interest exists. If voting on a specific action

could benefit a Board member to the detriment of other members, the Board member

should abstain from voting on that action.

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f. Acting Within the Scope of Authority. Board members are obligated to

perform those duties which they were elected to perform. On the other hand, Board

members are prohibited from making decisions or acting on matters which exceed the

scope of the authority granted to the Board by law or the Association’s Declaration or

Bylaws.

The Board of a condo association has all powers to act on behalf of the

Association. Neb. Rev. State §76-861(a). Likewise, all corporate powers (with certain

exceptions) are to be exercised by the Board of Directors of the HOA. Section 21–

1968(b).

However, there are certain actions that a condo Board does not have the authority

to do. This would include:

Amending the Declaration, terminating the condominium regime, electing

members of the Board, although the Board may fill vacancies in its membership for the

unexpired portion of the term. Neb. Rev. Stat. §76-861(b).

The most important thing the condo association Board does is prepare and

approve the budget. After a condo Board adopts a proposed budget, the condo Board

has to provide a summary of the budget to the unit owners and set a date for the meeting

of the owners to consider ratification of the budget not less than 14 days but no more than

30 days after mailing of the summary of the budget to the owners. The owners don’t

really ratify the budget even though that language is used in the statute. Rather, the

owners have to reject the budget and that rejection has to be done by a majority of all

owners in the Association. Neb. Rev. Stat. §76-861(e).

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In a homeowner’s association, there is no statute that specifies how a budget is

approved and ratified. Rather, that’s usually controlled by the Declaration for the

subdivision and the bylaws of the corporation Association. Therefore, there’s not a

standard statutory approach. Nonetheless, most Declarations and bylaws follow this

format: The Board of Directors of the Association simply approves a budget for the

Association. There is no ratification process or vote for the members, except any

assessments above a certain amount have to be approved by a minimum vote of the

members. That amount is usually 75% of the members.

6. Special Issues for Counsel to a Condominium Association to Consider.

a. Loans. A condo association can borrow money. Usually a lender will

require that the Association assign its right to receive assessments from the members.

That is, the Association would assign to the bank the right to collect assessments. If it is

a substantial loan, the bank will want a legal opinion from the Association’s lawyer that

the Association is entitled to assign the right to collect assessments from the members.

But there is a bit of a catch here. The Declaration must explicitly authorize the

Association the right to assign this assessment income to a lender. Neb. Rev. Stat. §76-

860(a)(14). So before the Association can assign this right to collect assessments, you

need to make sure the Declaration specifically gives the Association the ability to do this.

If not, you would have to have an amendment to the Declaration providing for this.

b. Fair Housing Act. The Fair Housing Act protects a buyer of a dwelling from

discrimination. It also applies to all types of mandatory membership real estate

agreements, such as a condo association. Its primary prohibition makes it unlawful to

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refuse to sell (or to own) to any person because of that person’s inclusion in a protected

class. Specifically, it is unlawful to refuse to allow a person to live in a dwelling because

of race, color, religion, sex, familial status or national origin. These are the protected

classes and it is unlawful to discriminate based on these same classifications.

There are a lot of issues surrounding the Fair Housing Act, but two areas that we

see a lot of discussion concern “hostile environment harassment” and “covenants

preventing children from living at the premises”.

(i) Hostile Environment Harassment. “Hostile Environment

Harassment” refers to unwelcome conduct that is sufficiently severe as to interfere with

the availability, sale, rental or use or enjoyment of a dwelling. Hostile Environment

Harassment does not require a change in the economic benefits, terms or conditions of

the dwelling or housing related services or facilities, or of the residential real estate

transaction.

An example of where this comes into play was a case where an African American

woman was being harassed by another unit owner who was white. She went to the

Association with a complaint about how she was being harassed. The Association took

the position that this was simply a neighbor to neighbor problem and that the Association

would not get involved. That was a mistake on the Association’s part.

It would seem as though the Association can’t do anything about this harassment

and that there was nothing in the Declaration which would give the Association the power

to control these acts. And in fact, these types of harassments, especially racial

harassment, aren’t discussed in your typical Declaration.

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However, the Court in this case looked at the Declaration and saw that these acts

were both an offensive activity and a nuisance, both of which were violations of the

Declaration. As such, the Association did have the ability to stop this activity. Therefore,

the failure of the Association to protect this woman from these actions was a violation of

the Fair Housing Act and subjected the Association to liability.

(ii) Children. Remember, it is unlawful to refuse to sell a dwelling unit

because of that person’s familial status. That status is a protected class. As a result, a

condominium regime can’t have any type of restriction which prevents a party from

purchasing a unit due to the fact that that person has children. There is an exemption we

will talk about in just a minute.

Therefore, you can’t have any restrictions on family. The definition of family is

children under the age of 18 living with parents or legal custodians, pregnant women and

people with custody of children under the age of 18.

As previously mentioned, there is an exemption to this rule. Congress passed the

Housing for Older Persons Act (“HOPA”) in 1995. HOPA lays out specific requirements

for housing that is designed to accommodate 55 years and older persons in order to fall

under the exception to the Fair Housing Act.

HOPA requires that a facility seeking to claim the 55 and older exemption must

show 3 factors:

a) That the housing be intended and operated for persons 55

years of age and older;

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b) That at least 80% of the occupied units be occupied by at least

one person who is 55 years of age or older; and

c) The housing facility must publish and adhere to policies and

procedures that demonstrate its intent to qualify for the

exemption.

c. ADA. The Americans with Disabilities Act (“ADA”) prohibits discrimination

on the basis of a person’s disability. When an Association property is open to the public,

even if only for an occasional and limited events, the ADA might apply. If an Association

is only residential and the Association property is not open to the general public (for

instance, nonmembers), then that Association is probably not subject to the ADA. The

ADA will only apply to an Association if it is a place “public accommodation” and then the

Association must comply. If a condominium association or HOA hosts local public events,

such as charity events where the general public is invited, then that Association is opening

itself up to regulation under the ADA. Moreover, Associations that permit short-term

rentals, giving it characteristics similar to that of a hotel, may fall under the ADA.

Obviously, this is more of an issue for a condominium than a HOA. If an Association is

subject to the ADA, then it must make reasonable modifications in its policies, practices,

and procedures in order to accommodate individuals with disabilities. The Association

may also be required to take further action as to its existing facilities to comply with the

law. This can include installing ramps, making curb cuts at sidewalks, widening

doorways, etc.

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d. Concentration of Condo Ownership Affecting Ability to Get Loans. There

are two government rules concerning concentration of unit ownership that might affect a

buyer’s ability to obtain a loan to purchase a condo unit. Again, this is only applies to a

condo association and not to a HOA.

The first concern is in obtaining a FHA guaranteed loan. The FHA may not

guarantee a loan where any investor/entity owns more than 50% of the units.

A second restriction affects the ability obtain a loan that would be purchased by

Fannie Mae or Freddie Mac. In any project in which an individual or a single entity owns

more than the following total number of units, a loan may not be purchased by Fannie

Mae or Freddie Mac:

When there are 2 to 4 units in the complex, more than one unit owned by an

individual will prevent Fannie Mae or Freddie Mac from purchasing a new loan. When

there are 5 to 20 units in a complex, only 2 units may be owned by an individual or a

single entity. When there are 21 or more units, no more than 10% of the units may be

owned by an individual or single entity.

Of course, when the lender is just going to hang onto the loan, these rules do not

apply.

7. Enforcing Assessments.

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With respect to a condominium, all common area expenses are assessed against

the units in accordance with the allocations set forth in the Declaration. Any past due

common expense assessment bears interest at the rate established by the Association,

not exceeding 18% per annum. Section 76 – 873(c).

The Association has a lien on a unit for any assessment levied against that unit

from the time the assessment becomes due and a notice describing the dollar amount of

such lien is recorded with the register of deeds. This lien is extinguished unless

proceedings to enforce the lien are instituted within 3 years after the full amount of the

assessment becomes due. Section 76 - 874(d).

The Association lien may be foreclosed like a mortgage. However, the Association

has to give reasonable notice of its action to all lienholders of the unit whose interests

would be affected. Section 76-874(a).

All assessments are junior to any lien filed before the Declaration is recorded. The

assessment is also junior to a first mortgage recorded before the date on which the

assessment becomes delinquent. Real estate taxes of course have priority against all

assessments. Section 76 - 874(b).

The procedure for enforcing HOA assessments is almost identical to those relating

to a condo association. This procedure is set forth in Section 52-2001(1) - (6).

Likewise, a condo association and a HOA must furnish, upon written request, a

recordable statement setting forth the amount of unpaid assessments against a unit or

lot. This must be furnished within 10 days after request, and is binding on both a condo

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Association and a HOA. Section 76-874(g) & 52-2001(7). This is done so that any

purchaser of any unit or home knows if any assessments are delinquent.

8. Dissolved Homeowners Associations.

There is a mechanism for taking control of a homeowners association where that

association has been dissolved and is no longer carrying out its responsibilities. First, we

need to discuss what is meant by a “homeowners association” under this statute. This is

usually an all-inclusive term that picks up the more particular homeowners associations

and condo associations. However, with respect to this statute, I think this only applies to

HOAs for houses and doesn’t apply to a condo association. I say this because

“homeowners association” is defined as an organization composed of members who are

owners of “lots”. “Lot” means a designated parcel of land within a plat or subdivision.

Therefore, I think a condo association is excluded.

This statute comes into play when the homeowners association meets four criteria:

a. The Association has been dissolved by the Secretary of State.

b. The Association has failed in one or more of the following ways:

(i) Maintaining the common area;

(ii) Maintaining property outside of the common area; or

(iii) Complying with laws pertaining to maintenance of the common area

such that the noncompliance is adverse to the interests of the city.

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c. The city has made a demand to the members to hold a meeting to elect new

directors and submit of an application for reinstatement with the Secretary of State; and

d. The members have failed to reinstate the Association within six months after

the demand. Neb. Rev. Stat. §18-3104(1)

If all of this occurs, then the city can petition the district court to give a custodian

exclusive jurisdiction over the Association and its property. §18-3104(2)

The court can then order the custodian to take control of the Association. The

custodian then has all authority granted to the Association and its directors. §18-3104(3)

If the custodian incurs any cost, the custodian can sell the assets of the Association

and file a lien against all lots in the subdivision for costs. Then that lien can be foreclosed

like a mortgage. Remember that a homeowners association usually owns property. But

a condo association usually does not own any assets.

9. Taxes.

Let’s make this clear upfront: every condo Association and HOA must file a tax

return on an annual basis, even if it doesn’t owe any tax.

The IRS does not tax the assessments of an HOA when those assessments are

used for the core purposes of an Association – in this case, the management of the HOA

and the maintenance of the common property. This is not the same thing as the IRS

saying that an HOA is a nonprofit in the tax code. HOAs don’t typically file the same

paperwork or tax forms as a nonprofit, like a church. The IRS still views HOAs like

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corporations. However, the IRS declares most HOAs to be corporations without a profit

motive.

The IRS has recognized the legitimacy of HOAs by creating a separate type of

corporate tax form with its own rules just for HOAs that do not have a profit motive. The

vast majority of HOAs file form 1120H. This form exempts all member assessments from

taxation. However, this doesn’t mean these HOAs will not pay taxes. These organizations

will still pay taxes on incidental income, such as interest earned on bank accounts or fees

charged to members for using the community room, even if the HOA files form 1120H.

There are three tests to see whether you qualify for form 1120H or form 1120.

(i) The organization must be a condo association or a homeowners’

association.

(ii) 60% of the Association’s gross income must consist of exempt

function income. Exempt function income consists of membership dues, assessments

and fees paid as homeowners of the Association. The fees a member pays are exempt

from taxes only if they are paid by virtue of being a member of the organization.

(iii) At least 90% of the Association’s expenses must be spent to acquire,

build, manage, maintain and care for the property of the Association.

10. New Matters. I wanted to mention a couple of changes in the law:

Every condo association must file with the register of deeds, every year, a notice

of the names and addresses of the current officers of the Association. It has to be filed

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prior to December 31 of each year. If the Association fails to do so, the Association could

be notified of any claim by posting a notice at the entrance to the building.

Also, a new law prohibits cities from creating ordinances that outlaw the use of a

property as a short-term rental. This law will not apply to regulations of a private entity

(such as a condo association).

Both statutes went into effect September 6, 2019.

There is only one recent Nebraska Supreme Court case concerning condos or

HOAs. That is Estates at Prairie Ridge Homeowners Association, 904 NW2d 1 (2017).

In this case, an HOA was trying to enforce a restrictive covenant against one of the lot

owners. The Court ruled that the restrictive covenant was not ambiguous. And a clear

reading of the unambiguous restrictive covenant did not prohibit the lot owner’s action.

THIS PAGE INTENTIONALLY LEFT BLANK

Deeds of Trust: Procedure and Litigation

2019 REAL ESTATE INSTITUTE

SEPTEMBER 13, 2019 EMBASSY SUITES LA VISTA

ANDREW BIEHL Walentine O’Toole, LLP

MATTHEW MCKEEVER Copple, Rockey, McKeever & Schlecht P.C, L.L.O.

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Deeds of Trust: Parties and Terms

Part 1Andrew R. Biehl

September 13, 2019NSBA REPT Section Annual Seminar

ANDREW R. BIEHL BIOGRAPHY

EDUCATION:

University of Nebraska – Lincoln, B.A.

University of Nebraska – Lincoln, J.D., with distinctionUniversity of Nebraska – Lincoln, M.B.A.

ADMITTED:

Iowa, 2012

Nebraska, 2013

South Dakota, 2018

*All state and federal courts in those states

AFFILIATION:

WALENTINE O’TOOLE, LLP

PRACTICE AREAS:

Banking, Creditors’ Rights (Transactional and Litigation), Creditor Bankruptcy, General Commercial, Real Estate, Landlord/Tenant

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Overview: The Legal “Fiction” of the Deed of Trust

BlackAcre

Borrower/Trustor

In Trust

Trustee

For thebenefit of Lender/

BeneficiaryBlackAcre

Power of Sale

General Information• Functions as Deed for purposes of Recording Act, but exempt

from stamp tax (Exemption No. 3).• Deeds of Trust (and Mortgages) have a shelf life:

• 10 years from maturity of debt secured thereby if ascertainablefrom the record of such deed of trust

• If maturity not ascertainable, 30 years from date of instrument• Can extend for 10 years by affidavit (signed only by holder of

DOT) or extension agreement (signed by both parties)-Neb. Rev. Stat. § 76-239• Note also 10-year statute of limitations under § 25-202

• Trustee can only exercise power of sale within 5 years of cause ofaction under § 76-1015

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Trustor• Trustor – party conveying in trust

• Not necessarily the “Borrower”• Don’t trip up on defined terms in DOT

• Ex: “Securing the Note from Trustor…”• Rule of thumb: always include same name as in Warranty

Deed• John Q. Public vs. John Quincy Public vs. John Public• Even better, use “aka” for different variations

• Individuals: state marital status• Entities: state type and state of incorporation/organization• Homestead rights

• Neb. Rev. Stat. § 40-104: Homestead of a married person cannotbe conveyed unless instrument is executed and acknowledged byboth spouses.

Trustee• Limited universe of eligible persons/entities

• Neb. Rev. Stat. § 76-1003 – Trustee Qualifications• Member of NSBA or licensed RE Broker• Bank, S&L, Credit Union authorized to do business in Nebraska,

or Dept. of Ag agency involved in lending• Any corporation authorized to conduct a trust business in

Nebraska• Title insurer

• Fiduciary to creditors secured by the DOT

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Beneficiary

• Lender or lender’s nominee (ex: MERS)• Reserve power to substitute Trustee

• Jane Q. Lawyer, a Nebraska lawyer, as Trustee• Jane dies

• Beneficiary needs to be able to substitute in a new trustee

More Indispensable Terms

• Must identify the property pledged• Must provide for “power of sale”

• Main difference between Mortgage and Deed of Trust

• Must identify the debt or obligation it secures• Do not rely on a DOT that states it secures “a $1,000,000 note

dated January 2, 2010” to secure, e.g., a $200,000 line of creditdated September 13, 2019.

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Future Advances

• Neb. Rev. Stat. § 76-1002: A trustor may pledge DOT tosecure:• Existing debts or obligations (i.e., no new “consideration”)

• O’Neill Production Credit Ass’n v. Mitchell, 209 Neb. 206 (1981)

• Debts or obligations created simultaneously with execution ofthe mortgage

• Future advances to protect the security*• I.e., taxes, insurance, condo assessments, etc.

• Any future advances up to any amount, unless instrument statesa maximum amount of total indebtedness

Future Advances

• Neb. Rev. Stat. § 76-1002• Trustor can “freeze” the amount secured by the DOT by

recording a notice and sending it to the Beneficiary.• Subsequent lienholders can also “freeze” amount secured by a

1st DOT by sending written notice of the recording of asubsequent DOT to the Beneficiary.• If an optional future advance is made by 1st DOT holder after

receiving notice of the subsequent DOT, then amount of suchoptional future advance is junior to the subsequent DOT.

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Future Advances

• Neb. Rev. Stat. § 76-1002 hypotheticals:• Example 1:

• 1st DOT states it secures Note 1 and “all future advances”• 2nd DOT records, but does not send notice to 1st DOT holder• Future advances on Note 1 are secured up to any amount

• Example 2:• 1st DOT states it secures Note 1 and “all future advances”• 2nd DOT records, sends written notice to 1st DOT holder

• Balance of Note 1 at the time of notice is $1,000,000• Future advances on Note 1 above $1,000,000 are junior to 2nd

DOT

Future Advances

• Neb. Rev. Stat. § 76-1002 hypotheticals:• Example 3:

• 1st DOT states it secures Note 1 and “all future advances up to amaximum amount of $1,000,000”

• 2nd DOT records, sends written notice to 1st DOT holder• Balance of Note 1 at the time of notice is $500,000

• Future advances on Note 1 up to $1,000,000 are senior 2nd DOT

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Cross-Collateralization

• Usually a separate paragraph:• “In addition to the Note, this Deed of Trust secures all debts and

obligations of Trustor [Borrower] owing to Lender now or in thefuture.”

• Two issues:• Enforcing cross-collateralization against parties to the

instrument• Enforcing cross-collateralization against subsequent

lienholders/interested parties of record

Cross-Collateralization

• Issues:• Mortgage given by co-mortgagors (e.g., husband and wife)• Subsequent debt owed by only one of the co-mortgagors

• Courts have uniformly held that unless the clause specificallystates it applies to both joint and individual debts of the co-mortgagors, the mortgage only secures co-debts.

• Surety mortgage (mortgage given by non-borrower party)• Pre-existing debts of borrower must be known to surety mortgagor

or identified in the mortgage instrument.

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Cross-Collateralization

• Issues:• Modifying mortgage to cross-collateralize:

• Are you securing additional indebtedness?• Did you do a title search?• See future advance issues identified above.

Cross-Collateralization

• Example:• Note with co-borrowers Alpha Corp. and Beta Corp.• Secured by DOT pledged by Gamma Corp.

• DOT defines “Borrower” as “Alpha Corp. and Beta Corp.”• Cross-secures all loans to “Borrower”

• At the time of the loan, Alpha Corp. guaranteed debt of DeltaCorp.

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Cross-Collateralization

• Issues:• Does definition of “Borrower” include “any one or more of

them” language?• Best language: “If definition of ‘Borrower’ consists of more than

one person or entity, any one or more of the persons or entitiesincluded in the definition of Borrower…”

• Was Alpha Corp.’s guaranty of Delta Corp.’s debt known toGamma Corp. at the time of the DOT?

• Was Alpha Corp.’s guaranty liability liquidated at the time ofthe DOT?

• What does the “future advance” language in the DOT state?• Does it provide for a maximum amount secured?

Assignment of Rents/Leases

• Neb. Rev. Stat. § 52-1702, et seq.• Rents vs. Leases

• Can be included in DOT, or separate instrument• Issues – existing leases:

• Do existing leases allow for assignment by Landlord?• Are existing leases subordinate to DOT?

• Subordination, non-disturbance and attornment• Existing Leases are subordinate to DOT, but• If tenant is not in default, Lease/Tenant will “attorn” to Lender• Lender will not “disturb” Lease if not in default.• Also, Tenant Estoppel Certificate

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Construction Finance

• Notice of Commencement (Neb. Rev. Stat. § 52-145)• Acts as a cutoff point for materialman’s liens.

• Record immediately after security instruments.• Ensures materialman’s liens won’t “reach back” to point in time

prior to security instruments, thereby gaining priority.

Sources

Collins, Dennis, Trust Deeds: Boring? Or Loaded with History? Or Both?, Nebraska Lawyer Magazine, January 2001.

Collins, Dennis, Trust Deeds – The Practical and the Esoteric, Nebraska REPT Section Annual Seminar, 1999.

Hawk, Camille, Foreclosure and Loan Workout Procedures, NBI, Inc., 2012

Mortgage Law Summary, American College of Mortgage Attorneys

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Deeds of Trust:Procedure and Litigation

Part 2Matthew S. McKeever

Copple, Rockey, McKeever & Schlecht, P.C., L.L.O.

NSBA REPT Section Annual Seminar

September 13, 2019

MATTHEW S. McKEEVER BIOGRAPHY

EDUCATION: University of Nebraska – Lincoln, B.A.,1993Brooklyn Law School, J.D., 1996

ADMITTED:New York State Bar, 1997Nebraska State Bar, 1999U.S. District Court, District of Nebraska, 2000U.S. Court of Appeals, 8th Circuit, 2010

AFFILIATION:Copple, Rockey, McKeever & Schlecht, P.C., L.L.O., Shareholder

LITIGATION PRACTICE AREAS:Commercial, Creditors’ Rights, Creditor Bankruptcy, Estates/Probate, Trusts, Guardianships, Conservatorships, Real Estate, Landlord/Tenant, Domestic Relations, Construction, Personal Injury

NON-LITIGATION PRACTICE AREAS:Estate Planning, Probate, Trusts, Guardianships, Conservatorships, Real Estate Transactions, Commercial Transactions, Secured Transactions, Digital Currency Regulation & Compliance

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Sources:

Butler, Richard P., Trust Deeds in Nebraska: A Survey and Analysis, 29 Creighton L. Rev. 99.

Butler, Richard P., Foreclosures, NCLE Nebraska Real Estate Practice Manual (1995).

Collins, Dennis, Trust Deeds: Boring? Or Loaded with History? Or Both?, Nebraska Lawyer Magazine, January 2001.

Collins, Dennis, Trust Deeds – The Practical and the Esoteric, Nebraska REPT Section Annual Seminar, 1999.

Garden, Richard P., Jr., In Deed an Alternative Security Device: The Nebraska Trust Deeds Act, 64 Neb. L. Rev. (1985).

Overview: Enforcement of the Power of Sale1. Preparation2. Notice of Default3. Notice of Sale4. The Sale5. The Trustee’s Deed6. Right to Redemption7. Deficiencies8. Dilemma of Junior Lienholders9. Defenses10. Effects of Bankruptcy11. Judicial vs. Non-Judicial Foreclosures

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I. Preparation for Notice of Default1. Title Search: Title Insurance Company?

Lienholders, present owners and real estatetaxes due.

2. Check for ag restrictions. See Section 2-4807.3. Check for Bankruptcies.4. Check for rent status, assignments or liens. See

§52-17065. Practice Pointer: Due diligence from lender

and any other sources.6. Practice Pointer: Share and follow your

checklist.

II. Notice of Default1. Prepare Notice of Default.2. Record with Register of Deeds.

See §76-1006.3. Practice Pointer: Get the recorded Deed

back.4. Calendar Deadline for Mailing: 10 days.5. Calendar 30 Days to proceed (or 60 days

for agricultural property)

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II. Notice of Default6. Prepare the Affidavit of Service7. Within ten (10) days after recording Notice of

Default, mail recorded copy of the Notice ofDefault to Trustors, Beneficiary and filedRequests for Notice.

8. Practice Pointer: Certified Mail and CertifiedMail RRR

9. Attach the recorded copy of the Notice ofDefault, mail certification and return receiptsto the Affidavit of Service

II. Notice of Default10. Agricultural Land: Special notice required.11.Recipients: Notice must be sent to Trustor. If

more than one, each gets a separate copy evenif they are husband and wife.

12.Recipients: Notice must be sent to all whofiled a Request for Notice (and no one else).

13. Publication: If there is no address for theTrustee in the trust deed or on record, see§76-1008.

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III. Notice of Sale1. Pick the Date of Sale: Last publication

must be 10-30 days prior to the sale.2. Practice Pointer: Calendar all deadlines,

including sale date and Affidavit ofMailing Notice deadline

3. Mail Notice of Trustee’s Sale.4. Publish Notice of Trustee’s Sale for 5

consecutive weeks

III. Notice of Sale6. Obtain copy of the first publication from

publisher7. Obtain proof of publication from publisher and

file with Register of Deeds.8. Mail copy of Notice of Sale to Trustor(s),

recorded Requests for Notice and USA (ifthere’s a tax lien).

9. Practice Pointer: Certified/Registered Mail andCertified Mail RRR

10. Record Affidavit of Mailing Notice withrecorded copy of Notice as Exhibit “A”.

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IV. The Trustee Sale

1. Read the notice of sale aloud (see checklist).2. The highest bidder with money down.3. Beneficiary’s bid: Includes fees and expenses.3. Continuing the sale: No need to publish again if

up to 45 days. See §76-1009, as recentlyamended.

4. Practice Pointer: “The usual suspects.”5. Distribute proceeds. §76-1011.

V. The Trustee’s Deed1. Highest bidder gets the Trustee’s Deed.

See §76-1010.2. Highest bidder should get the Deed

immediately (after payment).3. Deed Recitals: Simple or descriptive?

They are prima facie evidence ofcompliance and bona fide purchasers mayrely upon them.

4. Practice Pointer: Consider the simple,short story in the Trustee’s Deed.

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VI. The Right to Redeem1. Has the Trustor waived the designation of

a farm homestead? See §76-1904.2. If not, then Trustor may redeem prior to

sale. See §76-1906(2).3. May reinstate the loan if “entire amount

then due” is paid within 30 days of thefiling of the Notice of Default (or 60 daysif farm ground). §76-1006.

4. IRS may redeem if it has a lien.

VII. Dealing with Deficiencies1. Calendar three (3) months after the date of

Trustee’s Sale to file Complaint.2. Determine amount of deficiency:

Difference between (a) the debt owed plusexpenses of sale and trustee’s fees and (b)the fair market value on date of thetrustee’s sale See §76-1013.

3. Anyone else? Co-Debtors, guarantors,partners of business. And does the three-month deadline apply to them?

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VIII. Dilemma of Junior Lienholders

1. No entitlement to Notice of Default.

2. Should file Requests for Notice in theirlien documents and update them.

3. No state action means no due process.

4. Cope with extinguished liens.

5. “In for a Penny”: Bid at the sale.

IX. Defenses1. Defects (like in those long recitals).

See Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003)holding that defects must be prejudicial.

2. Fraud.

3. Mistake.

4. Unconscionability

5. Constitutionality: No state or judicial action, then no due processrequired. The statutes are sufficient and constitutional.

6. Reinstatement made within 10 days after Notice of Default. See§76-1012.

7. Equitable Redemption: Must you take the offer after the deadline?

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IX. Defenses

1. Complaint in District Court2. Causes of Action: Set aside sale and

quiet title.3. Ex Parte Motion for Temporary

Restraining Order.4. Interacts with County Court evictions.

X. Effects of Bankruptcy

1. Automatic Stay of 11 U.S.C. §362.2. Timing of the Notice of Bankruptcy will

be unfortunate for the beneficiaries.3. No effect on completed Trustee’s Sales.4. Practice Pointer: Check the Bankruptcy

Court docket before you decide to cancelor continue the Trustee’s Sale for up to 45days. Debtor’s prior filings may mean ashort stay or no stay. 11 USC §362(c).

5. Relief from the Stay. 11 USC §362(a)(20).

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XI. Eviction After Foreclosure

1. Complaint for Forcible Entry andDetainer.

2. Nebraska Landlord Tenant Act does notapply.

3. Too Late for Defenses?

4. Suggestion in Bankruptcy – Not anAppearance.

XII. Judicial Foreclosures1. Judicial Sales hold more weight.2. Receiverships.3. Resolution of other title issues.4. Resolution of liens and priorities.5. Trust Deed defects that need reformation.6. Trustee’s Sale and deficiency deadlines.7. Special allowances possible: Pick and

choose what you foreclose upon.8. Ten-year statute of limitations.

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XII. Non-Judicial Foreclosures

1. Reduced Cost.

2. Speed (certainly less than 6 – 18 months).

3. No trial.

4. No forum for defenses or counterclaims.

5. No confirmation hearing.

6. Bankruptcy less likely.

7. No right of redemption unless ag land.

Thank you:Dennis Collins

Richard P. Garden, Jr.Richard J. Butler

Questions?

Matthew S. McKeeverCopple, Rockey, McKeever & Schlecht, P.C., L.L.O.

(402) 493-5675msmckeever@greatadvocates.com

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