File No. 292

Senate, March 30, 2011

The Committee on Banks reported through SEN. DUFF of the 25th Dist., Chairperson of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT CONCERNING NEIGHBORHOOD PROTECTION.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 7-148hh of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):

As used in sections 7-148ff, 7-148ii, as amended by this act, 7-152c, 19a-206, 47a-52, 47a-53, 47a-58 and 49-73b, as amended by this act:

(1) "Registrant" means the owner of [vacant] residential or commercial property who is required to register such property pursuant to section 7-148ii, as amended by this act.

(2) "Residential property" means a [one-to-four family] building containing one or more dwelling units.

(3) ["Vacant" means uninhabited.] "Dwelling unit" means any house or building, or portion thereof, which is occupied, is designed to be occupied, or is rented, leased or hired out to be occupied, as a home or residence of one or more persons.

(4) "MERS" means the Mortgage Electronic Registration Systems.

Sec. 2. Section 7-148ii of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):

(a) Any person in whom title to a residential property has vested after October 1, 2009, through a foreclosure action or who, after October 1, 2011, commences a foreclosure action concerning residential or commercial property pursuant to sections 49-16 to 49-19, inclusive, or 49-26, or MERS, acting on behalf of such person, shall register such property with the town clerk of the municipality in which the property is located or with [MERS (1) no] such other municipal official as the town clerk may designate, not later than ten days after the date [title vests in such person if such residential property is vacant on the date title vests, or (2) if, as a result of an execution of ejectment pursuant to section 49-22 or a summary process action pursuant to chapter 832, such residential property becomes vacant before the date one hundred twenty days after the date title vests in such person, then no later than ten days after the date on which such property becomes vacant] on which a notice of lis pendens as to the residential or commercial property being foreclosed is recorded in accordance with section 52-325.

(b) [If the] The registration [is with the municipality, it] shall contain (1) the name, address, telephone number and electronic mail address of the registrant and, if the registrant is a corporation or an individual who resides out-of-state, the name, address, telephone number and electronic mail address of a direct contact in the state; and (2) the name, address, telephone number and electronic mail address of the person, local property maintenance company [responsible for the security and maintenance of the vacant] or other entity serving as the registrant's contact with the municipality for any matters concerning the residential or commercial property. [, if such a management company has been engaged by the registrant.] The registrant shall indicate on such registration whether it prefers to be contacted by first class mail or electronic mail and the preferred addresses for such communications. The registrant shall report any change in the information provided on the registration [no] not later than ten days following the date of the change of information. At the time of registration, the registrant shall pay a one-hundred-dollar fee to the municipality.

(c) [If the registration is with MERS, it shall contain (1) the name, address, telephone number and electronic mail address of the registrant, and (2) the name, address, telephone number and electronic address of the local property maintenance company responsible for the maintenance of the property, if such a management company has been engaged by the registrant.] Not later than ten days after absolute title vests in the registrant pursuant to the foreclosure action, the registrant, or MERS, acting on behalf of such registrant, shall update the information filed pursuant to subsection (b) of this section to include (1) the date on which absolute title vested in the registrant, and (2) the name, address, telephone number and electronic mail address of the person, local property maintenance company or other entity responsible for the security and maintenance of the residential or commercial property. Such entity may be the same entity that was designated as the contact pursuant to subsection (b) of this section. No fee shall be charged by the municipality for such updating.

(d) If a registrant required to register pursuant to subsection (c) of this section fails to comply with any provision of the general statutes or of any municipal ordinance concerning the repair or maintenance of real estate, including, without limitation, an ordinance relating to the prevention of housing blight pursuant to subparagraph (H)(xv) of subdivision (7) of subsection (c) of section 7-148, the maintenance of safe and sanitary housing as provided in subparagraph (A) of subdivision (7) of subsection (c) of section 7-148, or the abatement of nuisances as provided in subparagraph (E) of subdivision (7) of subsection (c) of section 7-148, the municipality may issue a notice to the registrant citing the conditions on such property that violate such provisions. Such notice shall be sent by either first class or electronic mail, or both, and shall be sent to the address or addresses of the registrant identified on the registration. A copy of such notice shall be sent by first class mail or electronic mail to the person, property maintenance company [if such a company has been identified] or other entity responsible for the security and maintenance of the residential or commercial property designated on the registration. Such notice shall comply with section 7-148gg.

(e) The notice described in subsection (d) of this section shall provide a date, reasonable under the circumstances, by which the registrant [may] shall remedy the condition or conditions on such registrant's property. If the registrant, registrant's contact or [property management company] registrant's agent does not remedy the condition or conditions on such registrant's property before the date following the date specified in such notice, the municipality may enforce its rights under the relevant provisions of the general statutes or of any municipal ordinance.

(f) A municipality shall only impose registration requirements upon registrants in accordance with this section, except that any municipal registration requirements effective on or before passage of public act 09-144 shall remain effective.

(g) Any person who violates any provision of this section shall be subject to a civil penalty of one hundred dollars for each day of such violation. An authorized official of such municipality may institute a civil action in Superior Court to collect such penalty, which shall be payable to the treasurer of such municipality.

Sec. 3. Subsection (h) of section 49-73b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):

(h) The provisions of this section shall not apply to policies on single-family or two-family dwellings, unless such dwellings are [vacant] residential properties owned by a registrant subject to section 7-148ii, as amended by this act.

Statement of Legislative Commissioners:

In section 2(a), the brackets around "in whom title to a" and "has vested after October 1, 2009, through a foreclosure action" were removed; the new language "or who, after October 1, 2011, commences a foreclosure action concerning" was moved from after "person" to after "foreclosure action"; the new language "or commercial" was stricken; and "residential or commercial property" was added after "foreclosure action concerning" for clarity to ensure that those who commence a foreclosure action prior to October 1, 2010, but in whom title to the property subject to foreclosure has not yet vested are still bound by the requirements of section 7-148ii of the general statutes.

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact: None

Municipal Impact:

Explanation

Municipalities will experience a revenue gain from the collection of a $100 fee from additional persons, as the bill: (a) expands the list of properties in foreclosure that are subject to mandatory registration to include commercial property, and residential property containing one or more dwelling units (under current law restricted to one-to-four family dwellings); (b) removes a requirement that the property be vacant; (c) requires notification when a foreclosure action is commenced; and (d) eliminates the option of registering with the Mortgage Electronic Registration Systems (MERS) instead of with the municipality. It is anticipated that revenues would not exceed $50,000 for the largest cities.¹

It is anticipated that each community will establish a registration method that can best be accommodated within local resources. It should be noted that the bill does not specify nor require a uniform registration protocol.

Local revenues may also be generated in response to a provision of the bill that establishes a civil penalty of $100 per day for a person violating any provision of Section 7-148ii CGS, as a municipality would be authorized to institute a civil action to collect the penalty.

Reporting of occupied properties that are subject to foreclosure may result in earlier identification of persons responsible for remediating housing code violations that render housing units unsafe. Local governments may experience savings to the extent that this mitigates the need to provide for tenant's housing or health needs at town expense.

The bill would also result in additional hearings before the Superior Court. It is anticipated that the number of additional hearings would be minimal, and would not result in additional costs to the Judicial Department.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to the number of foreclosed properties, and inflation.

OLR Bill Analysis

sSB 957

AN ACT CONCERNING NEIGHBORHOOD PROTECTION.

SUMMARY:

PA 09-144 created a registration system for tracking the owners of uninhabited one-to-four family residential property obtained by strict foreclosure or foreclosure by sale (“registrants”). It allowed municipalities to enforce against a registrant any statutory provision or municipal ordinance on property repair or maintenance after the municipality had provided notice and an opportunity to remedy the situation.

This bill amends this registration requirement in various ways. For example, it extends the requirement to commercial as well as residential property, expands the type of residential property that is subject to the requirement, and eliminates the requirement that the property be vacant. It also requires registration sooner, applying the requirement when someone commences a foreclosure action rather than when the person takes title to the property.

The bill requires registrants to update their information after title vests in them. It prohibits a municipality from issuing a violation notice to a registrant until that time, and makes other changes to the notice requirements following a violation.

The bill provides a $100 civil penalty for each day someone violates the registration requirements. It permits authorized municipal officials to bring a civil action to collect the penalties, which are payable to the municipality's treasurer.

The bill makes other changes to the mechanics of the registration process, including requirements regarding notice and required registration information.

The bill also makes conforming changes.

EFFECTIVE DATE: October 1, 2011

§ 1 — RESIDENTIAL AND COMMERCIAL PROPERTY

Under current law, the registration requirement applies only to one-to-four family residential property. In addition to requiring registration of commercial property, the bill requires registration of buildings containing at least one dwelling unit, which the bill defines as a house, building, or portion of either that is occupied or designed to be occupied, or is rented, leased, or hired out to be occupied, as a home or residence for at least one person.

§ 2 — REGISTRATION PROCESS

Current law requires an owner of a subject property to register it with the town clerk of the municipality where the property is located or with the Mortgage Electronic Registration Systems (MERS), an online system the real estate finance industry created for originating, selling, and servicing rights. The bill eliminates the option of registering with MERS, and instead requires the person bringing the foreclosure action to register the property with the town clerk or other municipal official the town clerk designates. It also allows MERS to register the property on the foreclosing person's behalf.

Under the bill, the registration requirement applies to someone who commences a foreclosure action concerning a subject property after October 1, 2011. For someone commencing a foreclosure action before then, the registration requirement continues to apply if title to a residential property vested in the person after October 1, 2009.

Under current law, the registration deadline depends on when the property becomes vacant. Instead, the bill requires registration within 10 days after the recording of the notice of lis pendens.

By law, the registrant must provide its name, address, telephone number, and electronic mail address (“contact information”). Under current law, the registrant must also provide contact information for the local property maintenance company responsible for the security and maintenance of the property, if there is one. The bill requires the registrant to provide contact information for the person, local property maintenance company, or other entity serving as the registrant's contact with the municipality for matters concerning the property.

Current law applies certain requirements to those who register with a municipality but not to those who register with MERS. The bill eliminates the option of registering with MERS, and thus applies these requirements to all registrants. These requirements include that the registrants:

1. pay a $100 fee to the municipality;

2. provide contact information for a direct contact in Connecticut, if the registrant is a corporation or an individual residing out of state;

3. indicate whether they prefer to be contacted by first class or electronic mail and the preferred addresses for such communications, and

4. report any changes in the registration information within 10 days after the date of the change.

§ 2 — INFORMATION UPDATE AFTER TITLE VESTS

The bill provides that within 10 days of absolute title vesting in the registrant pursuant to the foreclosure action, the registrant (or MERS acting on the registrant's behalf) must update the registration information. This update must include the date when absolute title vested in the registrant. It must also include contact information for the person, local property maintenance company, or other entity responsible for the property's security and maintenance. This entity may be the same as the one designated in the registration as the registrant's contact with the municipality.

The bill prohibits a municipality from charging a fee for this information update.

§ 2 — VIOLATION NOTICES

Under current law, if a registrant violates any state law or municipal ordinance on the repair or maintenance of real estate, the municipality can issue a notice citing the violating conditions. The bill permits a municipality to issue such a notice only after the registrant has updated its registration information after taking title to the property, as specified above.

By law, violation notices must be sent by first class or electronic mail, or both, to the registrant. Current law also requires a copy of the notice to be sent by first class or electronic mail to the identified local property maintenance company, if there is one. The bill instead requires a copy to be sent to the person, property maintenance company, or other entity designated on the registration as responsible for the property's security and maintenance. By law, the notice must also meet the same standards as notices to remedy a health, housing, or safety code violation (i.e., notice must be sent to the lienholder).

Current law requires the notice to provide a date by which the registrant may remedy the conditions in question. The bill instead requires a date by which the registrant must do so. As under current law, the date must be reasonable under the circumstances.

Current law provides that if the registrant or property maintenance company fails to remedy the violating conditions, the municipality can enforce its rights under the relevant statute or ordinance. The bill deletes this reference to property maintenance company and allows the municipality to enforce its rights if the registrant, or its contact or agent, fails to remedy the violation.

§ 3 — MUNICIPAL AUTHORITY TO RECOVER EXPENSES

By law, municipalities may recover from a property owner expenses incurred for the inspection, repair, demolition, maintenance, removal, or other disposition of real estate to secure the property, make it safe and sanitary, or remedy a blighted condition. The law allows the municipality to place a lien on the owner's interest in the real estate or on an insurance policy covering the real estate, but limits the insurance provisions to property other than single- or two-family dwellings. Under current law, the limitation does not apply to vacant residential properties subject to the registration requirements outlined above. The bill deletes the current requirement that the properties be vacant in order for the limitation not to apply.

COMMITTEE ACTION

Banks Committee

Joint Favorable Substitute

¹ According to realtytrac.com, the number of new foreclosures in Connecticut was 747 in February 2011.