Connecticut Condominium/HOA 2012 Leglislative End of Session Wrap Up
Prepared by Lori J. Samele-Bates, Law Office of Brown Rudnick on behalf of Imagineers LLC
Several bills that impacted the condominium industry were introduced during the "short" three month legislative session which ended at Midnight on May 9th. Only two of these bills survived the legislative process and were approved by the General Assembly, however, one of these bills was vetoed by the Governor. This article is a summary of these two bills which impact the operations of condominium associations, the managers with whom they work, and real estate agents.
Public Act 12-180 entitled "An Act Concerning the Budget, Special Assessment and Assignment of Future Income Approval Process in Common Interest Ownership Communities" changes requirements under the Common Interest Ownership Act (CIOA) for approval of annual budgets and special assessments for certain large common interest communities and master associations. The condominium industry testified in opposition to this bill before the Legislature's Judiciary Committee. Specifically, the act creates an exception for common interest communities that have at least 2,400 units and were established prior to July 3, 1991. It also creates an exception for master associations exercising the powers on behalf of one or more common interest communities or for the benefit of the unit owners of one or more such communities, with the same size and establishment requirements as specified above. The act provides that, for these communities and master associations, a proposed budget or assessment is approved unless a majority of all unit owners participating in the vote rejects it and at least one-third of unit owners entitled to vote on the measure vote to reject it.
The act also changes the Common Interest Ownership Act's approval requirement for assignments of the right to future income as security for loan agreements in common interest communities. It provides that the assignment is approved unless a majority of unit owners vote against it, rather than approved only if a majority vote for it (although the declaration can specify higher numbers).
On June 15, 2012, the Governor vetoed Public Act 12-180, An Act Concerning the Budget, Special Assessment and Assignment of Future Income Approval Process in Common Interest Ownership Communities. In his veto message, the Governor states that the bill diminishes the control of unit owners in certain circumstances when an executive board of a common interest ownership community seeks to enter into a loan agreement on behalf of the association and assigns the communities' right to future income as security for such loan. Under the bill, if the majority of all unit owners, or an even larger number set by an association's declaration, do not vote to reject the board's proposal, the loan agreement will be deemed approved. The Governor states that this approval process imprudently removes financial control from unit owners and places it in the hands of the executive board.
With regard to association budgets and special assessments, the Common Interest Ownership Act currently presumes that a budget or special assessment presented by the executive board to unit owners is approved unless rejected by a majority of all unit owners. This too presumes that the absence of a unit owner's vote is an approval of a board's proposal. This bill contained language that would have allowed a majority of unit owners voting to reject such a proposal, however, this protection was extended only to unit owners in the largest communities and only under certain circumstances. The Governor states that even though the bill contained needed protections for unit owners, these were significantly watered down and cannot justify the significant amount of control that would be given to an executive board to assign an association's future income as security on loan agreements.
The second bill, which provides for the certification of community association managers was supported by the condominium industry and signed into law by Governor Malloy on June 8, 2012. Public Act 12-113, "An Act Concerning Certification as a Community Association Manager, Licensure as a Real Estate Broker or Salesperson and the Display of an Object Related to a Religious Practice or Belief on the Door or Door Frame of a Condominium Unit" requires new applicants for community association manager registration to submit to criminal background checks. It also establishes education and testing requirements for such managers and requires the Department of Consumer Protection to adopt regulations pertaining to these requirements. The testing requirement does not apply to anyone registered for at least 10 years as of October 1, 2012. The act also specifies that failure to comply with the education requirement is grounds for suspending or revoking a registration.
By law, to renew their licenses, real estate brokers and salespersons must generally complete continuing education requirements, which can be satisfied, among other things, by completing courses approved by the Real Estate Commission within the Department of Consumer Protection. The act provides that such courses must include practices and laws on common interest communities. It also makes a conforming change regarding the Department of Consumer Protection Commissioner's regulations on the approval of institutions offering such courses and course contents.
Lastly, the act generally prohibits anyone from prohibiting or hindering a condominium unit's owner, lessee, or sub lessee from attaching a religious item to the unit's entry door or entry door frame. Subject to the constitutional protection of religious liberty, the act provides certain exceptions, such as for items that are beyond a certain size or patently offensive. The act takes effect on October 1, 2012, except for the provision concerning religious items at condominiums which is effective July 1, 2012.
In summary, it was a relatively successful legislative session for the condominium industry. The industry applauded the General Assembly on passage of the bill which provides for certification of community association managers in our state and the bill which the industry originally opposed regarding budgets and special assessments, was vetoed by the Governor.
Thank you for reading the Imagineers Board Newsletter. If you have any question or need any additional information on any articles provided in this newsletter, please contact us at 1-800-560-7268.
Imagineers LLCEmail: Gpassacantando@imagineersllc.com
Phone: 1-800-560-7268
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