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Legislative Update - Condominium / HOA

Prepared by Lori J. Samele-Bates, Law Office of Brown Rudnick on behalf of Imagineers LLC

The 2012 Legislative Session convened on February 8th and will adjourn at midnight on May 9th. At the beginning of session, Governor Malloy delivered his State of the State address to a joint session of the General Assembly where he revealed the details of his Fiscal Year 2013 Midterm Budget Adjustments. His ambitious agenda, during an election year, included issues ranging from reforming public education to selling alcohol on Sundays. The Governor's call for radical reform in these areas, as well as repealing the death penalty and sweeping housing initiatives, were just some of the monumental changes that the legislature has to address during the "short" three month session.

The Legislature is considering over 1,000 bills during this brief and challenging session. The Judiciary and Housing Committees have considered several bills that affect the condominium industry. Only two of these condominium industry related bills received public hearings and were approved by the Legislature's Judiciary Committee. Therefore, they are the only bills that can be acted upon by the full General Assembly prior to the May 9th adjournment.

The following is a summary of the content and status of these several pieces of legislation:

1.)HB 5511, "An Act Concerning the Budget, Special Assessment and Assignment of Future Income Approval Process in Common Interest Communities." This bill was introduced by Representative Arthur O'Neill (Republican, Southbury). It proposes to amend the Common Interest Ownership Act regarding the adoption of budgets and special assessments. It makes a major change to the budget approval process for some common interest communities. The bill requires that unless the association's documents specify a higher number, the budget and a special assessment of a common interest community must be approved by a majority of the unit owners voting instead of a majority of all unit owners. The proposed legislation also includes a provision that a quorum is not required to vote on the budget. The bill also reforms the voting process used in a common interest community concerning approval of an assignment of a right to future income when used as security in a loan agreement. It proposes to amend the current requirement so that the assignment is deemed approved unless rejected by the unit owners having a majority of the total voting power in the association. The condominium industry testified in opposition to the bill at the Judiciary public hearing on March 29, 2012. The bill was approved by the Judiciary Committee on April 2, 2012 and members of the Legislative Action Committee are currently working with Representative O'Neill to modify this proposal prior to the Legislature's May 9th deadline.

2.) HB 5536, "An Act Concerning Requirements for Certification as a Community Association Manager, Licensure as a Real Estate Broker or Salesperson and Organization of a Unit Owners' Association." This proposal was introduced by Representative James Albis, (Democrat, East Haven). The purpose of the bill is to revise requirements concerning certifications as a community association manager; continuing education for a licensed real estate broker or salesperson; and the organization of a unit owner's association. In regard to certifications as a community association manager, the bill imposes educational requirements on association managers. It distinguishes between managers who obtained registration certificates from the Department of Consumer Protection before October 1, 2012, and those who obtained registration certificates on or after October 1, 2012. The bill also requires real estate agents to successfully complete educational courses approved by the Real Estate Commission, regarding the practices and laws concerning common interest communities. Lastly, the bill would require any association created on or after October 1, 2012, to be organized as either a business or non-stock corporation. It would have no impact on associations formed prior to October 1, 2012. The proposal was heard for a public hearing by the Judiciary Committee on March 29, 2012 and Attorney General Jepsen submitted written testimony in support of the bill. The condominium industry also supported this legislation and will continue to work with Representative Albis to modify some of the changes that were approved by the Judiciary Committee on April 2, 2012. It remains uncertain if this bill will pass the full General Assembly prior to the May 9th adjournment.

In addition to the specific condominium related bills outlined above, the Governor's mid-term budget adjustments include housing initiatives which contain substantial increases to the state's long-term commitment to affordable housing. These initiatives are as follows: