Update On Pending Condo Legislation In The General Assembly
They await action by the full House and Senate.
Senate Bill 1103 makes it easier for boards to borrow money secured by the Association’s right to future income (common charges) by making the loan effective unless at least a majority of unit owners vote to reject it.
Substitute Senate Bill 1145 1) makes boards responsible for making sure association managers comply with condominium law and the association’s bylaws, 2) requires boards to give unit owners at least 5 days notice of the time, date, place and agenda for board meetings even if the board has made available a schedule of board meetings including the dates, times, and locations; 3) prohibits Associations that provide proxy voting forms to unit owners from including the name of the proxy holder unless the unit owner asks the Association to do so; 4) specifies that Associations must maintain records relating to reserve accounts; 5) requires unit owner’s insurance policies to provide primary coverage for losses also covered by the Association’s policy; and 6) provides immunity from criminal liability for board members and officers for any conduct that is within the scope of their authority.
House Bill 6513 makes it easier for unit owners to disapprove a proposed budget or special assessment by eliminating the requirement that at least a majority of all unit owners must vote to reject the proposal in order for the proposal to be disapproved, and by instead allowing a budget or special assessment to be disapproved by a majority of those voting on the issue as long as at least one third of all those eligible voted.
Substitute House Bill 6662 gives condominium and other common interest associations a priority lien on each unit over previously recorded first and second mortgages in an amount equal to 9 months instead of 6 months of common charges on that unit. The bill specifies that this priority lien does not include any late fees, interest, or fines that the association assesses during that 9-month period. Also, the bill requires Associations to give first and second mortgage holders at least 60 days prior written notice before beginning a foreclosure action against a unit.
The Judiciary Committee did not take action on two other condominium related bills that were before it. House Bill 6666 authorizes the creation of a pilot program, within available appropriations, for the non-binding mediation of a dispute between one or more unit owners and an association. Senate Bill 1101 allows unit owners to place a security camera on the outside of the unit under certain circumstances. At this point it is not clear if any of these bills will be enacted by the full House and Senate and if so weather they will be amended.
Following is a more detailed summary of each of these bills with comments.
SB 1103, AN ACT CONCERNING THE APPROVAL PROCESS FOR ASSIGNMENTS OF FUTURE INCOME IN COMMON INTEREST COMMUNITIES (Effective Date: July 1, 2013)
Under current law, a board cannot borrow money using the associations right to future income (common charges) as security unless at least a majority of unit owners vote to approve the loan. This bill instead authorizes boards to enter into such loan agreements unless at least a majority of unit owners vote against it. By doing so it puts the burden on unit owners who oppose the loan to get a majority of unit owners to vote against it, instead of putting the burden on the board to convince at least a majority of unit owners to vote to approve the loan.
Current law requires the board, at least 14 days before entering into any loan agreement, to disclose in a record to all unit owners the loan amount and terms and the estimated effect on common expense assessments and provides unit owners a reasonable opportunity to submit comments to the board. The bill requires the voting by unit owners on the acceptance or rejection of the assignment to occur at a meeting of unit owners that is held at least 10 but no more than 60 days after the board has complied with its duty to notify the unit owners and give them a reasonable opportunity to submit comments. The absence of a quorum at such meeting does not affect the approval or disapproval of an assignment.
SUBSTITURE SB 1145, AN ACT CONCERNING REVISIONS TO THE COMMON INTEREST OWNERSHIP ACT AND THE CONDOMINIUM ACT (Effective Date: October 1, 2013)
Duty of Association Managers to Comply with the Association By-laws and with Condominium Laws (Section 1)
The bill requires an association’s board of directors to make sure that their manager any community association manager fully complies with the association’s bylaws, as well as the provisions of the Common Interest Ownership Act and the Condominium Act.
Comment: This should not be the responsibility of the association or the board. This should either be removed from the bill or amended to make managers responsible for their own compliance.
Notice of Board or Committee Meetings (Section 2)
Under current law, unless a committee or board meeting is included in a schedule given to the unit owners, or a meeting is called to deal with an emergency, each unit owner must at least five days before the meeting of the time, date, place and agenda of the meeting, The bill requires that this notice be given even if the meeting is included in a schedule given to unit owners. Current law, unchanged by this bill requires a longer notice period for certain issues.
Proxy Voting (Section 3)
The bill specifies that any voting proxy provided by an association to a unit owner may not include the name of the proxy holder, unless the unit owner requests that the name of the proxy holder be included on the proxy.
Records of Reserve Accounts (Section 4)
Current law requires an association shall retain certain information including detailed records of receipts and expenditures affecting the operation and administration of the association and other appropriate accounting records. The bill specifies that these records must include records relating to reserve accounts.
Comment: This provision is a step in the right direction but much more can and should be done. For example, the law should explicitly require boards to have separate accounts and keep separate records for each special assessment indicating all receipts and all expenditures, and this should be periodically reported to unit owners.
Insurance (Section 5)
The bill eliminates the requirement the association’s policy provides primary insurance if, a unit owner has insurance covering the same risk. (Effective October 1, 2013)
Comment: This provision needs more study. This shift in responsibility from the association’s policy to the unit owner’s policy might result in a higher insurance premiums for unit owners as well as uncertainty and confusion when it comes to distributing insurance proceeds for necessary repairs.
Immunity from Criminal Liability (Sections 6 and 7)
The bill relieves any Association officer or board member from criminal liability for any conduct performed on behalf of the association, provided the conduct is within the scope of the board member’s or officer’s authority.
Comment: As presently drafted, this immunity from criminal liability seems too broad. While courts might narrowly construe this language, that is not certain. For example, what if the association gives a board member or officer the authority to engage in illegal conduct? How can an association immunize someone from knowingly violating a criminal law?
HB 6513, AN ACT CONCERNING THE BUDGET AND SPECIAL ASSESSMENT APPROVAL PROCESS IN COMMON INTEREST COMMUNITIES (Effective Date: October 1, 2013)
By law the executive board must seek approval by unit owners for a proposed budget. The board must also seek approval by unit owners for a proposed special assessment unless 1) the special assessment is necessary to respond to an emergency or 2) the special assessment, together with all other special and emergency assessments the executive board proposed during the same calendar year, do not exceed 15% of the association’s last adopted periodic budget for that calendar year.
Under current law, proposed annual budgets and special assessments are deemed approved unless a majority of all unit owners, or a larger number specified in the association’s declaration, votes to reject them. The bill instead provides that a proposed budget or assessment is rejected only if (1) a majority of all unit owners participating in the vote, instead of a majority of all unit owners, vote to reject it, and (2) at least one-third of unit owners entitled to vote on the measure vote to reject it. (Emphasis added.)
By law, the absence of a quorum in the vote does not affect the approval or rejection of the budget or assessment, and the last approved budget continues to apply until a new budget is approved.
Substitute HB 6662, AN ACT CONCERNING THE RECOUPMENT OF MONEYS OWED TO A UNIT OWNERS’ ASSOCIATION DUE TO NONPAYMENT OF ASSESSMENTS (Effective Date: October 1, 2013)
This bill gives condominium and other common interest associations a priority lien on each unit over previously recorded first and second mortgages in an amount equal to 9 months instead of 6 months of common charges on that unit. The bill specifies that this priority lien does not include any late fees, interest or fines that the association assesses during that 9-month period. Under current law the priority lien also includes the association’s costs and attorney’s fees in enforcing the lien. The bill specifies that the priority lien only include the association’s reasonable attorney’s fees.
The bill also specifies that this 9-month priority lien applies even if there is any provision in the declaration or bylaws to the contrary.
Comment: As presently drafted it is not clear whether this provision applies to foreclosures that were commenced before October 1, 2013.
Required Written Notice to Lenders
The bill requires associations give first and second mortgage holders at least 60 days prior written notice before commencing a foreclosure action against a unit.
The written notice must specify:
- the amount of unpaid common expense assessments owed to the association as of the date of the notice;
- the amount of any attorney’s fees and costs incurred by the association in the enforcement of its lien as of the date of the notice; and
- a statement of the association’s intention to foreclose its lien if the amount owed is not paid to the association within 60 days of the date on which the notice is mailed.
The bill authorizes the association to rely on the last-recorded mortgage in delivering or mailing notice to the mortgage holder, unless the holder is the plaintiff in an action pending in the Superior Court to enforce that mortgage, in which case the association must send the written notice to the attorney appearing on the mortgage holder’s behalf.
Under the bill, the failure of the association to provide the written notice before commencing an action to foreclose its lien will not affect the priority of its lien for an amount equal to nine months common expense but the priority would no longer include any costs or attorney’s fees if the notice were not given.
BILLS NOT VOTED OUT OF COMMITTEE
The Judiciary Committee did not vote on either of the following two condominium-related bills. These bills are dead for the session unless they are added as an amendment to one of the four bills that were voted out of committee or to some other condominium-related legislation.
HB 6666, AN ACT ESTABLISHING TWO PILOT PROGRAMS FOR THE MEDIATION OF CONDOMINIUM-RELATED DISPUTES AND RELIEVING A COMMUNITY ASSOCIATION MANAGER OF ANY RESPONSIBILITY FOR CERTIFYING THAT A CONDOMINIUM UNIT OWNER IS COMPLIANT WITH A MUNICIPAL ORDINANCE REQUIRING THE INSTALLATION OF CARBON MONOXIDE DETECTORS AND SMOKE DETECTORS (Effective Date: October 1, 2013)
The bill authorizes the Probate Court Administrator and the Chief Court Administrator, within available appropriations, to establish a pilot program for the non-binding mediation of a dispute between one or more unit owners and an association. The pilot program would be administered in two administrative regions as determined by the Probate Court Administrator and in one Judicial District where a housing session had already been established.
The bill also would relieve community association managers from any duty to provide to a local fire chief or local fire marshal a written verification on behalf of a unit owner, certifying the unit owner’s compliance with a municipal ordinance requiring the installation of smoke and carbon monoxide detection and warning equipment in the unit owner’s private dwelling.
Comment: The pilot program portion of the bill would have been a first step toward a very needed reform. Unit owners need an equitable, quick, and less expensive way to try to resolve disputes. Based on the oral and written testimony concerning this proposal it seems to have a great deal of support. If you support the idea of a pilot program, contact your state senator and representative and also talk to other unit owners and ask them to do the same. I believe there is a chance to have this provision adopted this year.
SB 1101, AN ACT PERMITTING THE AFFIXING OF SECURITY CAMERAS TO UNITS WITHIN A COMMON INTEREST COMMUNITY (Effective Date: October 1, 2013)
This bill allows the unit owner of a common interest community to affix a security camera to the exterior of his or her unit but authorizes associations to adopt rules governing the size of, number of, and manner of affixing or removing security cameras.
Hartford Atty George Coppolo is a member of the Connecticut Condo Owners Coalition (CCOC) Advisory Committee.
This article is for general informational purposes only, does not constitute and should not be relied upon as legal advice and does not create an attorney-client relationship between the author or the author’s law firm (Gordon, Muir and Foley, LLP 860-525-5361) and any party. Statutes and case law vary from jurisdiction to jurisdiction and may change from time to time. You should consult a licensed attorney for legal advice relating to your specific situation.
(Attorney Pat Ayers, who is a legal adviser to CCOC made many valuable contributions to this update and I very much appreciate her assistance.)