Substitute Bill No. 5144 proposes amendments to the laws governing the assignment of liens for unpaid taxes, interest, and fees on real property by municipalities. The bill allows municipalities to assign these liens to third parties, who will then have the same rights and powers as the municipality, including the right to enforce the liens through foreclosure. For assignments executed on or after July 1, 2025, the bill sets the interest rate on the delinquent portion of the principal at twelve percent per annum from the date of the assignment. The assignee is not protected from liability under section 42-110c and must provide a payoff statement as a mortgagee would. The bill also requires that assignments executed on or after July 1, 2022, be memorialized in a written contract with specific terms, including communication methods with the property owner, foreclosure timelines, attorney's fees structure, and the rights of the property owner as a third-party beneficiary. Additionally, the contract must include provisions that attorney's fees cannot be claimed until foreclosure or suit on the debt commences, and such fees cannot exceed fifteen percent of any judgment entered. The assignee must provide written notice of the assignment to the property owner and mortgage holders and give notice before commencing foreclosure actions.

The bill also addresses the collection of delinquent sewer assessments and unpaid water charges by municipalities, allowing for the assignment of these liens to third parties. It specifies that the interest on delinquent installments shall be the greater of the amount provided in subsection (a) or five dollars, and that such unpaid assessments and interest will constitute a lien on the real estate from the date of levy. The assignee must provide a payoff statement and is not protected from liability under section 42-110c. The bill outlines the requirements for a valid and enforceable assignment of liens, including a written contract detailing communication methods, timelines for foreclosure or suits on the debt, attorney's fees structures, and disclosures regarding the assignee's legal and arbitration history. The bill also mandates that the assignee provide written notice of the assignment to the property owner and any mortgage holders within sixty days, and a separate notice to security interest holders at least sixty days before commencing foreclosure actions. The bill ensures that all aspects of foreclosure or sale are commercially reasonable and caps attorney's fees at fifteen percent of any judgment entered for actions commenced on or after July 1, 2025. These changes are effective October 1, 2024, and aim to provide clarity and fairness in the process of lien management and enforcement.

Statutes affected:
Raised Bill: 12-195h, 7-254, 7-258, 7-239, 49-92o, 49-92p
BA Joint Favorable: 12-195h, 7-254, 7-258, 7-239, 49-92o, 49-92p
File No. 168: 12-195h, 7-254, 7-258, 7-239, 49-92o, 49-92p
PD Joint Favorable: 12-195h, 7-254, 7-258, 7-239, 49-92o, 49-92p