Substitute House Bill No. 5095
Substitute House Bill No. 5095
PUBLIC ACT NO. 91-341
AN ACT CONCERNING COMMON INTEREST COMMUNITIES AND
COMMUNITY ASSOCIATION MANAGERS.
Section 1. Section 20-450 of the general
statutes is repealed and the following is
substituted in lieu thereof:
For the purposes of sections 20-450 to 20-462,
inclusive:
(1) "Association" means (A) an "association"
as defined in section 47-202 and an "association
of unit owners" as defined in section 47-68a and
in section 47-68 of the general statutes, revised
to January 1, 1975, and (B) the mandatory owners
organization of any common interest community, as
defined in section 47-202, which community was not
created under chapter 825 or 828 or under chapter
825 of the general statutes, revised to January 1,
1975. "Association" shall not include an
association of a common interest community which
contains only units restricted to nonresidential
use;
(2) "Community association manager" means a
person who provides association management
services;
(3) "Association management services" means
services provided to an association for
remuneration including one or more of the
following: (A) Collecting, controlling or
disbursing funds of the association or having the
authority to do so; (B) preparing budgets or other
financial documents for the association; (C)
assisting in the conduct of or conducting
association meetings; (D) advising or assisting
the association in obtaining insurance; (E)
coordinating or supervising the overall operations
of the association; (F) advising the association
on the overall operations of the association. Any
person licensed in this state under any provision
of the general statutes or rules of court who
provides the services for which he is licensed to
an association for remuneration, shall not be
deemed to be providing association management
services. Any director, officer or other member of
an association who provides services specified in
this subsection to the association of which he is
a member shall not be deemed to be providing
association management services;
(4) "Commission" means the real estate
commission;
(5) "DEPARTMENT" MEANS THE DEPARTMENT OF
CONSUMER PROTECTION; AND
(6) "PERSON" MEANS AN INDIVIDUAL, PARTNERSHIP,
CORPORATION OR OTHER LEGAL ENTITY.
Sec. 2. Section 20-451 of the general
statutes is repealed and the following is
substituted in lieu thereof:
No person shall hold himself out to be a
community association manager without first
obtaining a certificate of registration [from the
commission] as provided in sections 20-450 to
20-462, inclusive.
Sec. 3. Section 20-452 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Any person seeking a certificate of
registration shall apply to the [commission]
DEPARTMENT in writing, on a form provided by the
[commission] DEPARTMENT. Such application shall
include the applicant's name, residence address,
business address, business telephone number and
such other information as the [commission]
DEPARTMENT may require.
(b) Each application for a certificate of
registration as a community association manager
shall be accompanied by [a] AN APPLICATION fee of
sixty dollars AND A REGISTRATION FEE OF ONE
HUNDRED DOLLARS. THE DEPARTMENT SHALL REFUND THE
REGISTRATION FEE IF IT REFUSES TO ISSUE A
CERTIFICATE OF REGISTRATION.
Sec. 4. Section 20-453 of the general
statutes is repealed and the following is
substituted in lieu thereof:
Upon receipt of a completed application and
[fee,] the APPROPRIATE FEES, THE DEPARTMENT, UPON
AUTHORIZATION OF THE commission, shall: (1) Issue
and deliver to the applicant a certificate [to
engage in the business for which the application
was made] OF REGISTRATION; or (2) refuse to issue
the certificate. The commission may suspend,
revoke or refuse to issue or renew any certificate
issued under sections 20-450 to 20-462, inclusive,
or may place a registrant on probation or issue a
letter of reprimand for any of the reasons stated
in section 20-456. No application for the
reinstatement of a certificate which has been
revoked shall be accepted by the [commission]
DEPARTMENT within one year after the date of such
revocation.
Sec. 5. Section 20-454 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Upon refusal to issue or renew a
certificate the [commission] DEPARTMENT shall
notify the applicant of the denial and of his
right to request a hearing within ten days from
the date of receipt of the notice of denial.
(b) In the event the applicant requests a
hearing within such ten days, the commission
shall give notice of the grounds for its refusal
and shall conduct a hearing concerning such
refusal in accordance with the provisions of
chapter 54 concerning contested matters.
(c) In the event the commission's denial of a
certificate is sustained after such hearing, an
applicant may make new application not less than
one year after the date on which such denial was
sustained.
Sec. 6. Section 20-455 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) The commission may [conduct investigations
and] hold hearings on any matter under the
provisions of sections 20-450 to 20-462,
inclusive. The commission OR DEPARTMENT may issue
subpoenas, administer oaths, compel testimony and
order the production of books, records and
documents. If any person refuses to appear, to
testify or to produce any book, record, paper or
document when so ordered, upon application of the
commission OR DEPARTMENT, a judge of the superior
court may make such order as may be appropriate to
aid in the enforcement of this section.
(b) The attorney general, at the request of
the commission OR DEPARTMENT, is authorized to
apply in the name of the state of Connecticut to
the superior court for an order temporarily or
permanently restraining and enjoining any person
from violating any provision of sections 20-450 to
20-462, inclusive.
Sec. 7. Section 20-456 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) The commission may revoke, suspend or
refuse to issue or renew any certificate of
registration as a community association manager or
place a registrant on probation or issue a letter
of reprimand for: (1) Making any material
misrepresentation; (2) making any false promise of
a character likely to influence, persuade or
induce; (3) failing, within a reasonable time, to
account for or remit any moneys coming into his
possession which belong to others; (4) conviction
in a court of competent jurisdiction of this or
any other state of forgery, embezzlement,
obtaining money under false pretenses, larceny,
extortion, conspiracy to defraud, or other like
offense or offenses provided suspension or
revocation under this subdivision shall be subject
to the provisions of section 46a-80; (5)
commingling funds of others in an escrow or
trustee account; (6) commingling funds of
different associations; (7) any act or conduct
which constitutes dishonest, fraudulent or
improper dealings; or (8) a violation of any
provision of sections 20-450 to 20-462, inclusive,
or any regulation issued under section 20-461.
(b) The commission shall not revoke or suspend
any certificate of registration except upon notice
and hearing in accordance with chapter 54.
Sec. 8. Section 20-457 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Each person engaged in providing
association management services shall (1) exhibit
his certificate of registration upon request by
any interested party, (2) state in any
advertisement the fact that he is registered, and
(3) include his registration number in any
advertisement.
(b) No person shall: (1) Present or attempt to
present, as his own, the certificate of another,
(2) knowingly give false evidence of a material
nature to the commission OR DEPARTMENT for the
purpose of procuring a certificate, (3) represent
himself falsely as, or impersonate, a registered
community association manager, (4) use or attempt
to use a certificate which has expired or which
has been suspended or revoked, (5) offer to
provide association management services without
having a current certificate of registration under
sections 20-450 to 20-462, inclusive, (6)
represent in any manner that his registration
constitutes an endorsement of the quality of his
services or of his competency by the commission OR
DEPARTMENT. In addition to any other remedy
provided for in sections 20-450 to 20-462,
inclusive, any person who violates any provision
of this subsection shall be fined not more than
five hundred dollars or imprisoned for not more
than one year or be both fined and imprisoned. A
violation of any of the provisions of sections
20-450 to 20-462, inclusive, shall be deemed an
unfair or deceptive trade practice under
subsection (a) of section 42-110b.
(c) Certificates issued to community
association managers shall not be transferable or
assignable.
(d) All certificates issued under the
provisions of sections 20-450 to 20-462,
inclusive, shall expire annually on the [first day
of the month corresponding to the individual
applicant's last name or, if the applicant is a
partnership or corporation, corresponding to the
first name of such applicant, excluding the words
"a", "an" or "the", in the following schedule:]
THIRTY-FIRST DAY OF JANUARY.
[Month First Letter of Name
January M
February S
March L
April Q, R
May U, V, W, X, Y, Z
June A, D
July B
August C, E
September F, G
October H, N
November I, T
December J, K, O, P]
The fee for renewal of a certificate shall be [the
same as the fee charged for an original
application] ONE HUNDRED DOLLARS.
[(e) The commission shall charge a prorated
fee, based on the original application fee, for
the first certificate, to provide for an equitable
charge to all applicants. Such prorated fee may be
more than the application fees set forth in
section 20-452, as determined by the length of
time from the effective date of such certificates
to their first renewal.]
[(f)] (e) A community association manager
whose certificate has expired more than one month
before his application for renewal is made shall
have his registration restored upon payment of a
fee of [twenty] TWENTY-FIVE dollars in addition to
his renewal fee. Restoration of a registration
shall be effective upon approval of the
application for renewal by the commission.
[(g)] (f) A certificate shall not be restored
unless it is renewed not later than one year after
its expiration.
[(h)] (g) Failure to receive a notice of
expiration or a renewal application shall not
exempt a community association manager from the
obligation to renew.
Sec. 9. Section 20-458 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) No contract between a person contracting
to provide association management services and an
association which provides for the management of
the association shall be valid or enforceable
unless the contract is in writing and:
(1) Provides that the person contracting to
provide management services shall BE REGISTERED AS
PROVIDED IN SECTIONS 20-450 TO 20-462, INCLUSIVE,
AND SHALL obtain a bond as provided in section
20-460; and
(2) Provides that the person contracting to
provide management services shall not issue a
check on behalf of the association or transfer
moneys exceeding a specified amount determined by
the association without the written approval of an
officer designated by the association; and
(3) Provides that the person contracting to
provide management services shall not enter into
any contract binding the association EXCEEDING A
SPECIFIED AMOUNT DETERMINED BY THE ASSOCIATION,
EXCEPT IN THE CASE OF AN EMERGENCY, without the
written approval of an officer designated by the
association.
(b) No contract to provide management services
may be sold or assigned to another person without
the approval of a majority of the executive board
of the association.
Sec. 10. Section 20-459 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) A community association manager [or
affiliate of a community association manager] may
not provide services other than association
management services for compensation to an
association for which the community association
manager also provides association management
services unless: (1) Such other services are
provided pursuant to a written agreement between
the person providing the other services and the
association; (2) the agreement discloses the
relationship between the community association
manager and [the affiliate] SUCH OTHER PERSON; and
(3) the agreement sets out the compensation for
such services or one or more rates or formulas for
which the compensation can be determined based on
the services actually rendered under the
agreement.
(b) A community association manager may not
enter into or offer to enter into any association
management agreement which requires an association
to obtain services other than association
management services from the community association
manager.
(c) Any discounts, rebates, commissions or
other consideration received by a community
association manager [or affiliate of any community
association manager] on account of any goods or
services furnished to an association OR A UNIT
OWNER OR OWNERS shall, except where prohibited by
applicable law, ordinance or regulation, be
credited to the association OR A UNIT OWNER OR
OWNERS, AS APPROPRIATE, and not retained by the
community association manager. [or affiliate of
the community association manager.]
Sec. 11. Section 20-460 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) No person who provides association
management services under the provisions of
sections 20-450 to 20-462, inclusive, shall
control, collect, have access to or disburse funds
of an association unless, at all times during
which the person controls, collects, has access to
or disburses such funds, there is in effect, a
fidelity bond complying with the provisions of
this section.
(b) The fidelity bond referred to in
subsection (a) of this section shall: (1) Be
written by [a surety] AN INSURANCE COMPANY
authorized to write such bonds in this state; (2)
EXCEPT AS PROVIDED IN SUBSECTION (c) OF THIS
SECTION, cover the maximum funds that will be in
the custody of the community association manager
at any time while the bond is in force, and in no
event be less than the sum of three months'
assessments plus reserve funds; (3) name the
association as obligee; (4) cover the community
association manager and all partners, officers,
employees of the manager and may cover other
persons controlling, collecting, having access to
or disbursing association funds as well; (5) be
conditioned upon the persons covered by the bond
truly and faithfully accounting for all funds
received by them, under their care, custody or
control, or to which they have access; (6) provide
that the [surety] INSURANCE COMPANY issuing the
bond may not cancel, substantially modify or
refuse to renew the bond without giving thirty
days' prior written notice to the association and
the [association management commission]
DEPARTMENT, except in the case of a nonpayment of
premiums, in which case ten days' prior written
notice shall be given; (7) contain such other
provisions as the [association management
commission] DEPARTMENT may, by regulation,
require.
(c) THE FIDELITY BOND OF A PERSON WHO IS
EMPLOYED FULL-TIME BY AND PROVIDES ASSOCIATION
MANAGEMENT SERVICES TO AN ASSOCIATION OF A COMMON
INTEREST COMMUNITY, OR TO A MASTER ASSOCIATION AS
DEFINED IN SECTION 47-239 EXERCISING THE POWERS ON
BEHALF OF ONE OR MORE COMMON INTEREST COMMUNITIES
OR FOR THE BENEFIT OF THE UNIT OWNERS OF ONE OR
MORE COMMON INTEREST COMMUNITIES, WHICH COMMUNITY
OR COMMUNITIES WERE ESTABLISHED PRIOR TO THE
EFFECTIVE DATE OF THIS ACT AND HAVE MORE THAN TWO
THOUSAND FOUR HUNDRED RESIDENTIAL UNITS, SHALL BE
IN AN AMOUNT WHICH IS NOT LESS THAN ONE-HALF THE
AMOUNT SPECIFIED IN SUBDIVISION (2) OF SUBSECTION
(b) OF THIS SECTION.
[(c)] (d) The community association manager
shall furnish a certificate of each bond required
under this section, and every renewal or
replacement thereof, on or before the date on
which he commences providing association
management services requiring a bond to any
association or prior to the expiration of any
prior bond furnished under this section.
[(d)] (e) Unless otherwise provided for in a
written agreement between the community
association manager and the association pursuant
to subsection [(e)] (f) of this section, the cost
of the bond shall be paid for by the community
association manager.
[(e)] (f) If, as of October 1, 1990, any
community association manager is providing
association management services, including the
handling of funds, or has entered into an
agreement to provide association management
services including the handling of funds, and has
no written agreement, concerning which party shall
pay the cost of fidelity bonds, the cost of the
bond shall be paid for in accordance with the
declaration and bylaws of the association, and if
the declaration and bylaws contain no such
provision, the cost of the bond shall be paid
one-half by the community association manager and
one-half by the association unless the parties
otherwise agree in writing.
[(f)] (g) A separate bond shall be furnished
for each association for which a community
association manager provides association
management services including the handling of
funds.
Sec. 12. Section 20-461 of the general
statutes is repealed and the following is
substituted in lieu thereof:
The DEPARTMENT, WITH THE ADVICE AND
ASSISTANCE OF THE commission, shall adopt
regulations in accordance with chapter 54 to carry
out the provisions of sections 20-450 to 20-462,
inclusive.
Sec. 13. Section 20-462 of the general
statutes is repealed and the following is
substituted in lieu thereof:
Any person aggrieved by an order or decision
of the commission under sections 20-450 to 20-462,
inclusive, may appeal therefrom in accordance with
the provisions of section 4-183.
Sec. 14. Subsection (7) of section 47-202 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(7) "Common interest community" means real
property described in a declaration with respect
to which a person, by virtue of his ownership of a
unit, is obligated to pay for (A) real property
taxes on, (B) insurance premiums on, (C)
maintenance of, or (D) improvement of, any other
real property other than that unit described in
the declaration. "Ownership of a unit" includes
holding a leasehold interest of forty years or
more in a unit, including renewal options.
"OWNERSHIP OF A UNIT" DOES NOT INCLUDE THE
INTEREST WHICH A RESIDENT HOLDS IN A MUTUAL
HOUSING ASSOCIATION, AS DEFINED IN SUBSECTION (b)
OF SECTION 8-214f, BY VIRTUE OF EITHER A STATE
CONTRACT FOR FINANCIAL ASSISTANCE OR AN INDIVIDUAL
OCCUPANCY AGREEMENT. An association of property
owners funded solely by voluntary payments from
those owners is not a common interest community.
Sec. 15. Subsection (b) of section 47-258 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(b) A lien under this section is prior to all
other liens and encumbrances on a unit except (1)
liens and encumbrances recorded before the
recordation of the declaration and, in a
cooperative, liens and encumbrances which the
association creates, assumes or takes subject to,
(2) a first or second security interest on the
unit recorded before the date on which the
assessment sought to be enforced became
delinquent, or, in a cooperative, a first or
second security interest encumbering only the unit
owner's interest and perfected before the date on
which the assessment sought to be enforced became
delinquent, and (3) liens for real property taxes
and other governmental assessments or charges
against the unit or cooperative. The lien is also
prior to all security interests described in
subdivision (2) of this subsection to the extent
of (A) AN AMOUNT EQUAL TO the common expense
assessments based on the periodic budget adopted
by the association pursuant to subsection (a) of
section 47-257 which would have become due in the
absence of acceleration during the [six] TWELVE
months immediately preceding institution of an
action to enforce either the association's lien or
a security interest described in subdivision (2)
of this subsection AND (B) THE ASSOCIATION'S COURT
COSTS AND ATTORNEY'S FEES IN ENFORCING ITS LIEN. A
LIEN FOR ANY ASSESSMENT OR FINE SPECIFIED IN
SUBSECTION (a) OF THIS SECTION SHALL HAVE THE
PRIORITY PROVIDED FOR IN THIS SUBSECTION IN AN
AMOUNT NOT TO EXCEED THE AMOUNT SPECIFIED IN
SUBPARAGRAPH (A) OF THIS SUBSECTION. This
subsection does not affect the priority of
mechanics' or materialmen's liens, or the
priority of liens for other assessments made by
the association.
Sec. 16. (NEW) (a) Not later than January 1,
1992, each unit owners' association, as defined
in section 47-202 of the general statutes, that
is not incorporated in this state shall have and
maintain a statutory agent for service in this
state as provided in this section. A statutory
agent for service shall be either (1) a natural
person who is a resident of this state, (2) a
domestic corporation with or without capital
stock, or (3) any corporation not organized under
the laws of this state which has procured a
certificate of authority to transact business or
conduct affairs in this state.
(b) A statutory agent for service of a unit
owners' association shall be appointed by filing
with the secretary of the state a written
appointment in such form as he prescribes setting
forth: (1) The name of the common interest
community and of the association; (2) the name of
the statutory agent for service; and (3) if the
statutory agent is a natural person, the business
and residence address thereof; if the statutory
agent is a domestic corporation, the address of
the principal office thereof; if the statutory
agent is a corporation not organized under the
laws of this state, the address of the principal
office thereof in this state, if any. In each
case the address shall include the street and
number or other particular designation.
(c) The written appointment shall be signed by
the president, vice president or secretary of the
appointing association. Each written appointment
shall also be signed by the statutory agent for
service therein appointed.
(d) If a statutory agent for service dies,
dissolves, withdraws from the state or resigns,
the unit owners' association shall forthwith
appoint another statutory agent for service. If
the statutory agent for service changes his or its
address within the state from that appearing upon
the record in the office of the secretary of the
state, the unit owners' association shall
forthwith file with the secretary of the state
notice of the new address. A statutory agent for
service may resign by filing with the secretary of
the state a signed statement in duplicate to that
effect. The secretary of the state shall
forthwith file one copy and mail the other copy of
such statement to the unit owners' association at
its principal office. Upon the expiration of
thirty days after such filing, the resignation
shall be effective and the authority of such
statutory agent for service shall terminate. A
unit owners' association may revoke the
appointment of a statutory agent for service by
making a new appointment as provided in this
section and any new appointment so made shall
revoke all appointments theretofore made.
(e) The secretary of the state shall charge
and collect a fee of forty-five dollars for filing
an appointment of a statutory agent, and a fee of
nine dollars for filing a change of address of
statutory agent or change of statutory agent.
Sec. 17. (NEW) (a) Any process, notice or
demand in connection with any action or proceeding
required or permitted by law to be served upon a
unit owners' association which is subject to the
provisions of section 16 of this act may be served
upon the association's statutory agent for service
by any proper officer or other person lawfully
empowered to make service.
(b) If it appears from the records of the
secretary of the state that such a unit owners'
association has failed to appoint or maintain a
statutory agent for service, or if it appears by
affidavit attached to the process, notice or
demand of the officer or other proper person
directed to serve any process, notice or demand
upon such an association's statutory agent for
service appearing on the records of the secretary
of the state that such agent cannot, with
reasonable diligence, be found at the address
shown on such records as the agent's address,
service of such process, notice or demand on such
association may, when timely made, be made by
such officer or other proper person by: (1)
Leaving a true and attested copy thereof together
with the required fee at the office of the
secretary of the state or depositing the same in
the United States mails, by registered or
certified mail, postage prepaid, addressed to
such office, and (2) depositing in the United
States mails, by registered or certified mail,
postage prepaid, a true and attested copy
thereof, together with a statement by such officer
or person that service is being made pursuant to
this section, addressed to such association at its
principal office.
(c) The secretary of the state shall file the
copy of each process, notice or demand received
by him as provided in subsection (b) of this
section and keep a record of the day and hour of
such receipt. Service made as provided in this
section shall be effective as of such day and
hour.
(d) Nothing herein contained shall limit or
affect the right to serve any process, notice or
demand required or permitted by law to be served
upon a unit owners' association in any other
manner now or hereafter permitted by law.
Sec. 18. Subsection (a) of section 47-270 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) Except in the case of a sale in which
delivery of a public offering statement is
required under either this chapter or chapter 825,
or unless exempt under subsection (b) of section
47-262, a unit owner shall furnish to a purchaser
or such purchaser's attorney, before conveyance, a
copy of the declaration, other than any surveys
and plans, the bylaws, the rules or regulations of
the association, and a certificate containing: (1)
A statement disclosing the effect on the proposed
disposition of any right of first refusal or other
restraint on the free alienability of the unit;
(2) a statement setting forth the amount of the
monthly common expense assessment and any unpaid
common expense or special assessment currently due
and payable from the selling unit owner; (3) a
statement of any other fees payable by the selling
unit owner; (4) a statement of any capital
expenditures in excess of one thousand dollars
approved by the executive board for the current
and next succeeding fiscal year; (5) a statement
of the amount of any reserves for capital
expenditures; (6) the current operating budget of
the association; (7) a statement of any
unsatisfied judgments against the association and
the existence of any pending suits in which the
association is a defendant; (8) a statement of the
insurance coverage provided for the benefit of
unit owners; (9) a statement of any restrictions
in the declaration affecting the amount that may
be received by a unit owner on sale, condemnation,
casualty loss to the unit or the common interest
community or termination of the common interest
community; [and] (10) in a cooperative, an
accountant's statement, if any was prepared, as to
the deductibility for federal income tax purposes
by the unit owner of real property taxes and
interest paid by the association; AND (11) IF THE
ASSOCIATION IS UNINCORPORATED, THE NAME OF THE
STATUTORY AGENT FOR SERVICE OF PROCESS FILED WITH
THE SECRETARY OF THE STATE PURSUANT TO SECTION 16
OF THIS ACT.
Sec. 19. This act shall take effect from its
passage, except that section 16 shall take effect
January 1, 1992.
Approved July 3, 1991