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Legislative Review 2007
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2007 LEGISLATIVE UPDATE
By Scott J. Sandler, Esq.

            The regular 2007 legislative session has recently ended.  This year, more than any other previous year, the Connecticut Legislature looked at a number of bills that, if enacted, would affect the operation and governance of condominium and homeowner associations.

            The legislative action committee of CAI-CT worked extensively with members of the Connecticut State Legislature to protect community associations and their unit owners from poorly drafted and ill-conceived bills.  CAI-CT is also working to propose bills designed to better serve associations and unit owners.

 


New Laws Regarding Insurance

            House Bill #5286, which was proposed by Representative Robert Megna, amends the provisions of the Connecticut Common Interest Ownership Act and the Connecticut Condominium Act that govern the kind of insurance that associations must purchase. 


Intent of the Bill
.

Rep. Megna intended for this bill to do the following:

1.         Clarify the issue of what the association is required to insure under the master policy, as opposed to what unit owners may insure on their own;

2.         Clarify the issue of how to allocate costs of repairs that are not covered by the master policy by virtue of a deductible; and

3.         Empower unit owners to direct their associations to purchase flood insurance if the community is located in a flood plain. 


Problems With the Bill as Proposed
.

The intent behind the bill was honorable.  However, the drafters of the proposed language of the amendments to the relevant statutes based the language on commonly held misconceptions regarding insurance coverage. 

The proposed language would have had unintentional, yet very serious, results.  The proposed language of the bill would have made the process of repairing or rebuilding damaged or destroyed units in some condominiums much more complicated and difficult to accomplish.  It also would have exposed associations and unit owners to an increased risk of uninsured losses.


Working to Address the Problems
.

            In an effort aimed at protecting Connecticut associations and unit owners, CAI-CT, through its legislative action committee, actively lobbied against the adoption of the proposed bill.  The Connecticut Bar Association (“CBA”), recognizing the problems that the bill would cause if enacted, joined CAI-CT in these efforts. 

Representatives from CAI-CT and the CBA met with Rep. Megna to discuss the potential impact of the proposed bill.  This meeting resulted in a cooperative effort between Rep. Megna, CAI-CT and the CBA to revise the language of the proposed amendments in a fashion that honored Rep. Megna’s intentions while protecting the associations and unit owners.


The New Law
.

The bill, as revised, has been enacted as a law and becomes effective on October 1, 2007.  The new law does the following:

1.         Assuming the declaration of the community contains appropriate language, the revised bill continues to allow associations to allocate repair or replacement costs, not covered by virtue of a deductible under the master policy, solely against the damaged units. 

2.         The revised bill empowers unit owners to direct the association to purchase flood insurance.

3.         The revised bill permits all associations created since January 1, 1977 to allocate the cost of insurance among the units based on risk.  Under this provision, if a particular unit posed a greater threat, which results in an increase in the insurance premium payable by the association, then the association can assess the difference in the cost of the premium solely against that unit.  Previously, only associations created since January 1, 1984 could make this kind of allocation.

 

New Laws Regarding Budget Ratification, Association Records and Association Loans

            Senate Bill #1089 was originally proposed to address concerns over the safekeeping of consumer information.  However, as is frequently the case with proposed bills, Senate Bill #1089 was amended as it passed through the State Legislature.  Included in this amendment are modifications to the process by which many associations adopt and ratify budgets, revisions to the statutory requirements regarding the inspection of association records by unit owners, and new disclosure requirements for when associations enter into loan transactions.

           
The modifications contained in the amendment had originally been part of a separate bill, which the State Legislature did not adopt.  While that bill was pending, representatives of CAI-CT testified in its favor before the judicial committee of the State General Assembly.  This testimony included suggestions for revising the language of the bill to better serve Connecticut associations and unit owners.  CAI-CT is proud to say that these suggestions were incorporated into the language now contained in Senate Bill #1089.

           
At the time of the writing of this article, Governor M. Jodi Rell had not yet been signed into law.  However, we have every reason to expect that Governor Rell will sign the bill.  The new laws would be effective October 1, 2007.


Budget Adoption and Ratification
.

           
Currently under Subsection 47-245(c) of the Connecticut Common Interest Ownership Act, which applies to communities created on or after January 1, 1984, the board of the association adopts a proposed budget.  It must then send a summary of the budget to all unit owners, together with the notice of a meeting of the association to ratify the budget.  At the meeting, the unit owners may vote to veto the proposed budget.  A veto requires the approval of a majority of the entire voting power in the association, unless the declaration requires a higher percentage.  If the unit owners do not veto the budget, then it is deemed ratified. 

           
Under the new law, the association is required to ensure that, at the meeting to ratify the budget or anytime before hand, each unit owner has an opportunity to express their views on the proposed budget.  Furthermore, a copy of the proposed budget, rather than a summary, must be available at the meeting for inspection by unit owners.  This new law applies to all communities created on or after January 1, 1977, even though the documents of most communities created prior to 1984 do not require the unit owners to ratify, nor empower them to veto, the budget.


Association Records
.

           
Under Subsection 47-81(b) of the Connecticut Condominium Act and Subsection 47-260(a) of the Connecticut Common Interest Ownership Act, the unit owners are entitled to inspect the records of the association. 


The new law specifies that this right to inspect applies to accounting and financial books and records, minutes of meetings and the voting records of the board.  The new law provides that unit owners may also copy these records.


Association Loans
.

           
 Under the new law, the association will be required to make certain disclosures, in writing, to all unit owners, prior to entering into a loan transaction.  These disclosures include the following:

            1.         The amount and terms of the loan; and

            2.         The estimated effect of the loan on any assessment for common charges.

            The association must provide these disclosures at least 14 days prior to entering into the loan. 


Along with these disclosures, the association must provide the unit owners with an opportunity to submit written comments to the board regarding the loan transaction.

 

Other Proposed Bills That Did Not Become Law

           
During the 2007 legislative session, the Connecticut Legislature considered, but did not adopt, many other proposed bills that would have impacted the operation and governance of common interest communities in Connecticut.  Below is a list of some of these bills.


Manager Licensing
.


This bill would have required individual community association managers to meet certain educational requirements in order to obtain a license.  Without the license, the individual could not provide management services to associations.  The bill would have also created a commission that would oversee the licensure of managers.


Representatives from CAI-CT testified before the judicial committee of the State General Assembly in favor of this bill.  Unfortunately, the bill did not make it past the appropriations committee because it would have required funding from the State of Connecticut.  Nonetheless, due to the desire of the general population of unit owners to require manager licensing, CAI-CT is confident that this bill will be enacted in the near future.


Dog Catchers
.

CAI-CT, working with Representative Christopher Stone, proposed a bill that would empower the local animal control officer to enter into a common interest community to catch dogs that are running loose (referred to as “roaming”).  The statute that gives the animal control officer the power to enter onto private property to catch roaming dogs, which originally went into effect in 1925, was not drafted to empower the officer to enter onto the land of a condominium or other common interest community.  CAI-CT expects to propose the bill again next year.


Term Limits for Directors and Officers
.

           
This bill would have set limits on the number of terms that someone may serve on the board of their association.  However, there were several problems with the bill.

First, the bill was unnecessary because the officers and directors of the association ultimately serve at the pleasure of the unit owners.  Connecticut law currently contains adequate provisions governing the election and removal of directors, which enable unit owners to control the make up of both officers and directors.


Second, the bill would have made it much more difficult for associations to find good leadership because it limits the pool of potential volunteers.  Over time, these limitations may actually make it impossible for associations to comply with other laws, and their own documents, governing the election of directors.


Representatives of CAI-CT testified before the judicial committee of the State General Assembly in opposition to this bill.  After hearing this testimony, the State Legislature decided not to adopt this bill.

 

Your Help is Needed

During the course of this past legislative session, CAI-CT made great progress in being heard by the State Legislature.  However, we need the continued support of our members. 

Nothing gets the attention of our elected representatives like a group of their constituents banding together on an issue.  Acting as a group, we have the power to successfully propose new laws that benefit and protect associations and unit owners, and to defeat proposed laws that will harm them. 

If you are interested in assisting CAI-CT in its legislative efforts, either by volunteering your time or through monetary donations to its legislative action committee, please contact us at LAC@caict.org .

 

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