New Priority Lien Legislation Increases Priority Lien & Resolves Evergreen Issue
The main goal of the Legislation Action Committee of CAI CT this legislative session was to address the evergreen issue which became a problem for some Connecticut associations during the past year. The main sponsor of the bill, Representative Matthew Ritter, was very clear when introducing the bill to his fellow legislators that the main intent of the bill was to resolve the evergreen issue. Associations can now have peace of mind that banks won't be able to use a questionable interpretation of the law to avoid paying what has been understood to be their responsibility since the lien first was put in place more than 25 years ago. The law now clearly applies to each foreclosure action brought by the mortgage holder and all actions the association brings to foreclose its lien for unpaid common charges.
Connecticut continues to separate itself from other states by not only having priority lien legislation, but now by having the lien increased from 6 months to 9 months. Only Florida has a lien that could potentially provide greater protection. The lien language was clarified to better define that the lien excludes late fees, interest and fines applied to the delinquent account during the priority lien period but includes reasonable attorney fees.
A new addition to the priority lien legislation which has been added with the passage of this year’s bill is the requirement that an association provide notice to the bank holding the mortgage on the unit before bringing an action to foreclose. The bank has 60 days to pay the debt before the association can move forward with its foreclosure effort. If the association fails to give the bank the notice and fails to allow 60 days for the bank to pay the debt, it would lose its ability to collect its reasonable attorney fees as part of the action. Since the notice to the bank will first require
The priority lien provisions increasing the lien from 6 to 9 months went into effect on June 6, 2013 and apply to pending actions. The requirements to provide the bank with notice and allow the 60 days for the bank to pay the debt are effective October 1, 2013 and apply to actions filed on or after October 1, 2013.
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