Substitute Senate Bill No. 212
          Substitute Senate Bill No. 212

              PUBLIC ACT NO. 97-267


AN  ACT  CONCERNING   ATTORNEYS   AND  THE  CLIENT
SECURITY FUND.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1. (NEW)  (a)  Upon  the  payment  in
settlement of any  third-party  liability claim in
excess of ten  thousand dollars where the claimant
is a natural person, the insurer shall mail to the
claimant notice of  such  payment at the same time
payment is made by the insurer.
    (b) The notice required pursuant to subsection
(a) of this  section  shall  be mailed to the last
known address of  such  claimant  as  furnished by
such claimant's attorney  or representative at the
time of settlement.
    (c) Nothing in  subsection  (a) or (b) of this
section shall (1)  create  any  cause of action or
proceeding for any  person  or  entity  against an
insurer based upon  a failure to provide notice as
required by this  section  or defective notice, or
(2) establish a defense for any party to any cause
of action based  upon  a failure to provide notice
as required by this section or defective notice.
    Sec. 2. (NEW)  (a)  For  the  purposes of this
section:
    (1)  "Notification  agent"   means:   (A)  The
buyer's attorney, where  the  buyer is represented
by an attorney  and the seller is represented by a
separate attorney who  assumes  the responsibility
for transmitting the  mortgage payoff funds to the
mortgage  holder;  (B)   the   new  lender,  in  a
refinance    situation    where    the    attorney
representing the mortgagor  is  also  the attorney
representing the new lender; (C) the seller, where
the seller is  not  represented by an attorney and
the attorney representing  the buyer has taken the
responsibility for transmitting  the  payoff funds
to  the  mortgage  holder;  or  (D)  the  seller's
attorney, where the  buyer  is  represented  by  a
separate attorney who  assumes  the responsibility
for disbursing the  mortgage  payoff  funds to the
mortgage holder;
    (2)  "Mortgage  holder"   or  "holder  of  the
mortgage" means the  owner  of the mortgage or the
mortgage servicer as  set  forth  in  the mortgage
payoff letter provided to the notification agent;
    (3)  "Residential  real   estate  transaction"
means  any real  estate  transaction  involving  a
one-to-four family dwelling.
    (b) At any residential real estate transaction
involving  the  payoff   of  a  mortgage  loan,  a
disclosure  statement shall  be  prepared  by  the
notification agent and  shall  be  executed by all
parties to the  transaction or their attorneys and
shall  be  sent   by  the  notification  agent  by
certified mail, return  receipt  requested  or  by
overnight carrier, to  the  holder of the mortgage
which is to  be paid off, within two business days
from the date  of  completion  of the closing. The
disclosure statement shall  include  a copy of the
payoff statement or  other  written  authorization
provided by the  mortgage  lender.  The  person or
entity charged with the responsibility of securing
the mortgage payoff  statement  shall  transmit  a
copy of such  payoff  statement in a timely manner
to the notification  agent  but, in any event, not
later than the  date of closing. To the extent not
shown  on the  payoff  statement,  the  disclosure
statement shall identify  the  mortgage, the names
of the mortgagors,  the  loan number, the property
address and the  date  of  payoff.  The disclosure
statement shall direct  that,  if  funds  are  not
received  by  the   mortgage  holder  within  five
business days from  the  date of payoff, notice of
that  fact shall  be  given  to  the  notification
agent.  Such statement  shall  include  the  name,
address, telephone and  fax  number, if available,
of  the  notification   agent.   Such   disclosure
statement may be  in  substantially  the following
form:

                   NOTIFICATION
                                          (lender)
     (mortgagor)
           (address)
on the attached  payoff  statement,  was  paid  at
           (payoff date)
mortgage payoff funds within five business days of
the payoff date,  you  are directed to notify this
office immediately as follows:

    Sec.  3. (NEW)  (a)  The  Superior  Court,  in
accordance with rules established by the judges of
the Superior Court,  may  (1)  establish  a Client
Security  Fund  to  reimburse  claims  for  losses
caused  by  the  dishonest  conduct  of  attorneys
admitted to the  practice of law in this state and
incurred  in  the  course  of  an  attorney-client
relationship, and (2)  assess  any person admitted
as  an  attorney   by   the   Superior  Court,  in
accordance  with  section  51-80  of  the  general
statutes, an annual  fee  to  be deposited in said
Client Security Fund.
    (b) The Commissioner of Revenue Services shall
collect any fee established pursuant to subsection
(a) of this section, record such payments with the
State  Comptroller  and   deposit   such  payments
promptly  with  the  State  Treasurer,  who  shall
credit such payments  to the Client Security Fund.
The Treasurer shall  maintain  the Client Security
Fund separate and  apart  from  all  other moneys,
funds and accounts.
    (c) The Client  Security  Fund  shall  be used
only to satisfy  the claims approved in accordance
with procedures established  pursuant  to rules of
the Superior Court and to pay the reasonable costs
of administration of the Fund.
    (d) The Commissioner of Revenue Services shall
notify  the  Chief   Court  Administrator  or  his
designee of the  failure  of any person to pay any
fee assessed in  accordance with subsection (a) of
this section.

Approved June 27, 1997