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Realtors pushed to weaken drilling disclosure bill

TALLAHASSEE — A bill to protect home buyers from quietly losing the mineral rights beneath their homes was substantially weakened by lobbyists with the Florida Realtors, who feared it would lead to fewer sales.

The original bill would have demanded builders or sellers give notice that they were severing the underground drilling rights three days before buyers signed a sales contract and would have allowed buyers three days afterward to rescind their offer.

But the final bill passed late last month lacked those protections. Also missing: a provision forcing mineral-rights disclosure in future sales and a stipulation that buyers who were not notified could seek thousands of dollars in damages.

Rep. Ross Spano, R-Dover, who co-sponsored HB 489 with Sen. Jack Latvala, R-Clearwater, said Realtors' lobbyists pushed to remove protections they said could make it harder for real estate agents to do business.

"From a practical standpoint, you have to work with all the interested parties to get a bill that can become law," said Spano, a Riverview estate planning and probate attorney. "That includes, in some cases, making some compromises."

But Ann Pellegrino, a St. Pete Beach real estate attorney, said those compromises helped "neuter" the bill while preserving Realtors' home sales and bottom lines.

"Heaven forbid their sale implode because the buyer has suddenly realized, 'Oh my gosh, this isn't really good for me,' " Pellegrino said. "The removal of that language diminishes consumers' protection. It's as simple as that."

Lawmakers proposed the bill in response to a Tampa Bay Times investigation last year that found D.R. Horton, the nation's largest home builder, had quietly retained the rights to drill, mine or explore for oil, gas or minerals beneath more than 2,500 Tampa Bay home sites.

Buyers said they were never told the builder had given the underground rights to its energy subsidiary or learned of the severed rights at closing, when they thought it was too late to back out of the deal.

The Texas-based builder said in December it would no longer sever the mineral rights in Florida and offered to return them to homeowners. The Florida Attorney General's Office estimated about 18,000 homeowners were affected.

Passed unanimously by the House and Senate late last month, the bill will now head to Gov. Rick Scott's desk and could become law Oct. 1.

The Realtors are the largest trade group in the state and one of Tallahassee's biggest contributors, with statewide associations, councils and political action committees donating more than $1.6 million since the start of 2013.

The group suggested the changes because mineral-rights issues have largely been a problem in new-home sales, not in the larger market of existing home sales, Realtors legislative counsel Trey Goldman said.

The Realtors wanted to "make sure we're not casting a net that's bigger than the problem, because then you have unintended consequences," he said.

The Realtors joined the Attorney General's Office, the Real Property, Probate and Trust Section of the Florida Bar and a group of South Florida developers who had not retained mineral rights in suggesting how the bill could work, Spano said.

The final bill demands a "conspicuous, boldface" disclosure summary if the seller or an entity affiliated with the seller severed or plans to retain the subsurface rights. It also counsels buyers that those rights "may have a monetary value."

The initial bill required any seller who knew the underground rights had been previously severed to alert the buyer, but that requirement was removed so not to force traditional "Joe Sixpack sellers to have this heightened burden," Spano said.

The three days' notice provision, he said, was removed because separating the notice from sales contracts, which already include numerous notices, would have made it "procedurally … much more difficult" for Realtors to work.

The final bill, Latvala said, took "more of a rifle-shot approach" to the practice of tract developers' hoarding the rights beneath hundreds of neighboring home sites, as opposed to more traditional home sellers.

"I think that's going to help shut that practice down, quite frankly," he said. "Better to have this bill than no bill."

Contact Drew Harwell at (727) 893-8252 or dharwell@tampabay.com.

Realtors pushed to weaken drilling disclosure bill 05/06/14 [Last modified: Thursday, May 8, 2014 5:50pm]

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