Banking Committee
JOINT FAVORABLE REPORT
Bill No.: HB-6369
AN ACT CONCERNING ISSUES RELATING TO MORTGAGES AND
Title: MECHANIC'S LIENS.
Vote Date: 2/23/2021
Vote Action: JOINT FAVORABLE Substitute
PH Date: 2/9/2021
File No.: 70
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
Banking Committee
REASONS FOR BILL:
There was a need to simplify and make more transparent the process of mortgage releases
and to allow property owners to substitute bonds in place of mechanic's liens without a
lengthy and sometimes expensive court process.
JFS language is basically some clarifying language requested by Judicial Dept re: the
procedure for mechanic's liens. Passed on consent
RESPONSE FROM ADMINISTRATION/AGENCY:
Judicial Branch External Affairs Division "This bill results in a change to existing
processes surrounding mechanics liens and creates confusion as drafted. Currently, a party
seeking to dissolve a mechanics lien upon substitution of bond must file an action in Superior
Court, and if the lien is ordered dissolved upon substitution, the clerk holds the bond. Under
the proposed bill, the cause of action in Superior Court is removed (lines 26-27) and an
owner or interested party instead lodges the bond with the town clerk who records it on the
land records. Although the bill eliminates the cause of action, it appears to retain the
procedures that would have been applied to these actions (line 58 et seq.). Clarification on
this new process would be helpful." These are the changes we made in the JFS language
NATURE AND SOURCES OF SUPPORT:
Bruce Adams, President & CEO Credit Union League of Connecticut Support the
section that simplifies the process for allowing property owners to substitute bonds for
mechanic's liens without judicial intervention do have some concerns that mandating a
mortgagee to deliver the mortgage release to the town clerk and a certified copy of such
release to the mortgagor may create unintended costs for filing and for certification of mailing
releases.
ABC Buildings and Contractors "It was never the intention of our mechanic's lien laws to
prevent the free transfer of real property". Statute allows persons interested in improved
property to substitute a surety bond for a mechanic's lien but the process if cumbersome and
time consuming. This bill takes the lengthy court process out of the mix and is fair and
necessary. This is consistent with laws in neighboring states. They also support that this bill
solves a problem that exists with respect to making atty fees recoverable by making clear
that, when a bond is substituted for a mechanics lien, the penal sum of the bond must cover
the principal amount of the mechanics lien, plus interest, attorneys fees and costs.
NATURE AND SOURCES OF OPPOSITION:
Connecticut Bankers Association - Tom Mongellow, Art Corey, Fritz Conway Concerns
about Section 1 of this bill - The language does not say that the delivery to the town clerk
would be for recording, but we assume that is the intent. Requiring a mortgagee to record a
mortgage release and to send a certified copy of the release to the mortgagor will result in
significant operational changes for banks and increase mortgage lending costs by requiring
banks to incur recording fees and fees for obtaining certified copies. Opposed to Section 2 of
this bill "Mandating forms of payment a mortgage servicer must accept restricts a banks
ability to adapt their mortgage loan payoff process to changing business and risk factors.
Fraud against financial institutions, including mortgage payoffs, is on the rise. Banks need
flexibility in the methods they choose to combat ever changing types of fraud, by allowing
them to choose the most secure forms of payment, consistent with their operational systems
and requirements. Banks also need the flexibility to respond to rapidly evolving payment
methods"
Matt Gunter RCN Capital - RCN Capital is opposed to Section 1 (only) of HB 6369. "With
respect to delivery of the mortgage release. While it is commonplace to deliver mortgage
releases directly to the town clerk for recording, it is also relatively common for closing
attorneys/title companies and/or the mortgagors to request the mortgage releases to be
prepared prior to the transaction that pays off the mortgage note such that the attorney/title
company/mortgagor may hold such release in escrow and record it themselves after closing
the transaction. This section of the Bill would prohibit the mortgagee from complying with
such a request. While it appears that clarification language is necessary to add to the existing
text of Section 49-8(a), it should not require delivery directly to the town clerk when a request
is made by the mortgagor or a title company to hold that mortgage release in escrow to later
record themselves. Suggested replacement language is thus: The mortgagee or a person
authorized by law to release the mortgage shall, unless requested in writing by the
mortgagor, his attorney, or other lawful representative to provide a release to the mortgagor,
his attorney, or other lawful representative, execute and deliver, or cause to be delivered, to
Page 2 of 3 HB-6369
the town clerk a release With respect to certified copies of the mortgage release.
Obtaining certified copies of a release are not necessary since such a copy would have no
impact on the validity or existence of the recording itself. Moreover, it would be just as easy, if
not easier, for the mortgagor to make such a request to the town clerk themselves. To the
extent anything should be provided by the mortgagor, a non-certified copy would suffice. It is
RCNs view that the mortgagee should not have any obligation to provide a copy of the
release as it would only be superfluous. To the extent a copy should be made available, it
should be limited to upon the written request of the mortgagor. It is worth noting that the
existence of this section of the Bill is indicative of our serious need in Connecticut of a
requirement for all town clerks to provide viewable, non-certified images of recorded
documents on-line, free of charge. RCN Capital encourages the members of this Committee
and the General Assembly at large to reject this section of the Bill, in this legislative session,
or to amend its language consistent with the recommendations above."
Houston Putnam Lowry Attorney opposed with opinions
"First, this bill requires the releasing party to deliver a mortgage release to the town clerk
(presumably instead of the mortgagee). This implies the releasing party pay the recording
fee. Lenders will tend to escrow this fee for the life of the loan (unless they absorb it as part of
the transaction). I am not aware of this being a problem. If a mortgage release is delivered to
a borrower, the borrower can easily record the mortgage release. This bill requires the
releasing party to deliver a certified copy of the mortgage release to the borrower. Who is to
certify this copy? A certification requirement makes no sense in this context". As far as
requiring a mortgagee to accept certain kinds of payment, he has no position except to say
he was not aware this was a problem. The section allowing the substitution of a bond for the
mechanic's lien should specify a commercial surety bond.
Reported by: Dawn Marzik Date: 3/24/2021
Page 3 of 3 HB-6369


Statutes affected:
Raised Bill: 49-37
BA Joint Favorable Substitute: 49-37
File No. 70: 49-37