House Bill No. 5857

Public Act No. 00-160

An Act Concerning Commercial Real Estate Transactions And Brokers' Liens.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 20-311 of the general statutes, as amended by section 1 of public act 99-229, is amended by adding subdivision (9) as follows:

(NEW) (9) "Commercial real estate transaction" means any transaction involving the sale, exchange, lease or sublease of real property other than real property containing any building or structure occupied or intended to be occupied by no more than four families or a single building lot to be used for family or household purposes.

Sec. 2. Section 20-325a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) No person who is not licensed under the provisions of this chapter, and who was not so licensed at the time [he] the person performed the acts or rendered the services for which recovery is sought, shall commence or bring any action in any court of this state, after October 1, 1971, to recover any commission, compensation or other payment [in respect of] with respect to any act done or service rendered by [him] the person, the doing or rendering of which is prohibited under the provisions of this chapter except by persons duly licensed under this chapter.

(b) No person, licensed under the provisions of this chapter, shall commence or bring any action [in respect of] with respect to any acts done or services rendered after October 1, 1995, as set forth in subsection (a), unless the acts or services were rendered pursuant to a contract or authorization from the person for whom the acts were done or services rendered. To satisfy the requirements of this subsection any contract or authorization shall: (1) Be in writing, (2) contain the names and addresses of the real estate broker performing the services and the name of the person or persons for whom the acts were done or services rendered, (3) show the date on which such contract was entered into or such authorization given, (4) contain the conditions of such contract or authorization, (5) be signed by the real estate broker or the real estate broker's authorized agent, (6) if such contract or authorization pertains to any real property, include the following statement: "THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO [SUBSECTION (d) OF] SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES", and (7) be signed by the person or persons for whom the acts were done or services rendered or by an agent authorized to act on behalf of such person or persons, pursuant to a written document executed in the manner provided for conveyances in section 47-5, except, if the acts to be done or services rendered involve a listing contract for the sale of land containing any building or structure occupied or intended to be occupied by no more than four families, be signed by the owner of the real estate or by an agent authorized to act on behalf of such owner pursuant to a written document executed in the manner provided for conveyances in section 47-5.

(c) Notwithstanding the provisions of subsection (b) of this section, no person licensed under the provisions of this chapter, shall commence or bring any action with respect to any acts done or services rendered after October 1, 2000, in a commercial real estate transaction, unless the acts or services were rendered pursuant to (1) a contract or authorization meeting the requirements of subsection (b) of this section, or (2) a memorandum, letter or other writing stating for whom the licensee will act or has acted, signed by the party for whom the licensee will act or has acted in the commercial real estate transaction, the duration of the authorization and the amount of any compensation payable to the licensee, provided (A) the licensee provides written notice to the party, substantially similar to the following: "THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES" and (B) the notice is provided at or before the execution of the contract, authorization, memorandum, letter or other writing, and may be made part of the contract, authorization, memorandum, letter or other writing.

[(c)] (d) Nothing in subsection (a) of this section, [or] subdivisions (2) to [(6)] (7), inclusive, of subsection (b) of this section or subsection (c) of this section shall prevent any licensee from recovering any commission, compensation or other payment [in] with respect to any acts done or services rendered, if [such person] it would be inequitable to deny such recovery and the licensee (1) has substantially complied with subdivisions (2) to [(6)] (7), inclusive, of subsection (b) of this section [and it would be inequitable to deny such recovery] or (2) with respect to a commercial real estate transaction, has substantially complied with subdivisions (2) to (6), inclusive, of subsection (b) of this section or subdivision (2) of subsection (c) of this section.

[(d)] (e) A licensed real estate broker who has performed acts or rendered services relating to real property upon terms provided for in a written contract or agreement between such broker and the owner or buyer for whom such acts were done or services rendered shall have a lien upon such real property. Such lien shall be in the amount of the compensation agreed upon by and between the broker and the owner or buyer for whom such acts were done or services rendered.

[(e)] (f) Except as provided in subsections [(f), (g) and (h)] (g), (h) and (i) of this section, the lien provided for in this section shall not attach until the broker is entitled to compensation, without any contingencies, other than closing or transfer of title, under the terms set forth in the written listing or buyer representation contract and the broker has recorded the claim for lien prior to the actual conveyance or lease of such real property with the town clerk of the town where such property is located.

[(f)] (g) Except as provided in subsection [(g)] (h) of this section, when a broker is entitled to compensation from the owner of real property in instalments, a portion of which is due only after the conveyance or lease of the real property, any claim for lien for those payments due after the conveyance or lease may be recorded at any time subsequent to the conveyance or lease of the real property and prior to the date on which the payment is due but shall only be effective as a claim for lien against the real property to the extent moneys are still owed to the transferor by the transferee. A single claim for lien recorded prior to conveyance or lease of the real property claiming all moneys due under an instalment payment agreement shall not be valid or enforceable as it pertains to payments due after the conveyance or lease. The lien shall attach as of the recording of the claim for lien.

[(g)] (h) In the case of a lease for real property the claim for lien must be recorded within thirty days after the tenant takes possession of the leased premises unless written notice of the intended signing of the lease is delivered to the broker entitled to claim a lien by registered or certified mail, return receipt requested, or by personal service, at least ten days prior to the date of the intended signing of the lease for the real property in which case the claim for lien must be recorded before the date indicated for the signing of the lease in the notice delivered to the broker. The lien shall attach as of the recording of the claim for lien.

[(h)] (i) If a broker's written contract for payment is with a prospective buyer, then the lien shall attach only after the prospective buyer accepts the conveyance or lease of the real property and the claim for lien is recorded by the broker with the town clerk of the town in which such property is located. Any claim for lien shall be filed by the broker no later than thirty days after the conveyance or the tenant takes possession of the real property.

[(i)] (j) The broker shall serve a copy of the claim for lien on the owner of the real property. Service shall be made by mailing a copy of the claim for lien by registered or certified mail, return receipt requested, or by personal service upon the owner by any indifferent person, sheriff or other proper officer, by leaving with such owner or at the owner's usual place of abode a true and attested copy thereof. A copy of the claim for lien may be served at the same time as the notice required by subsection [(q)] (r) of this section. The broker's lien shall be void and unenforceable if recording does not occur within the time period and in the manner required by this section.

[(j)] (k) A broker may bring suit to enforce a claim for lien in the superior court in the judicial district where the real property is located by filing a complaint and sworn affidavit that the claim for lien has been recorded in accordance with this section. The person claiming a lien shall, unless the claim is based upon an option to purchase the real property, within one year after recording the claim for lien, commence foreclosure by filing a complaint. Failure to commence foreclosure within one year after recording the lien shall extinguish the lien. No subsequent claim for lien may be given for the same claim nor may that claim be asserted in any proceedings under this section. A person claiming a lien based upon an option to purchase shall, within six months after the conveyance or lease of the real property under the exercise of the option to purchase, commence foreclosure by filing a complaint and a sworn affidavit that the claim for lien has been recorded in accordance with this section. Failure to commence foreclosure within this time shall extinguish that claim for lien. No subsequent claim for lien may be given for the same claim nor may that claim be asserted in any proceedings under this section. The plaintiff shall issue summons and provide service as in actions to foreclose a mortgage. When any defendant resides out of the state or is temporarily located out of the state, or on inquiry cannot be found, or is concealed within this state so that process cannot be served on that defendant, the plaintiff shall cause a notice to be given to that defendant, or cause a copy of the complaint to be served upon that defendant, in the manner and upon the same conditions as in actions to foreclose a mortgage. Except as otherwise provided in this section, all liens claimed under this section shall be foreclosed in the manner in which mortgage foreclosures are conducted.

[(k)] (l) The claim for lien shall state the name of the claimant, the name of the owner, a description of the real property upon which the lien is being claimed, the amount for which the lien is claimed, and the real estate license number of the broker. The claim for lien shall contain a sworn statement by the signatory that the information contained in the notice is true and accurate to the knowledge of the signatory. The claim for lien shall be signed by the broker.

[(l)] (m) Whenever a claim for lien has been recorded with the town clerk and a condition occurs that would preclude the broker from receiving compensation under the terms of the broker's written contract or agreement, the broker shall provide within thirty days of demand to the owner of record a written release or satisfaction of the lien.

[(m)] (n) Upon written demand of the owner or the owner's authorized agent, served on the broker claiming the lien requiring suit to be commenced to enforce the lien, a suit shall be commenced within forty-five days thereafter, or the claim for lien shall be extinguished. Service of any such written demand shall be by registered or certified mail, return receipt requested, or by personal service upon the broker by any indifferent person, sheriff or other proper officer, by leaving with such broker or at the broker's usual place of abode a true and attested copy thereof.

[(n)] (o) Whenever a claim for lien has been recorded with the town clerk and is paid, or where there is failure to foreclose to enforce the lien within the time provided by this section, the broker shall acknowledge satisfaction or release the claim for lien, in writing, on written demand of the owner within thirty days after payment or expiration of the time in which to commence foreclosure on the lien.

[(o)] (p) Except as otherwise provided in this section, whenever a claim for lien has been recorded with the town clerk, that would prevent the closing of a conveyance or lease, an escrow account shall be established from the proceeds of the conveyance or lease in the amount of the compensation agreed upon by the parties. Upon the establishment of the escrow account the broker shall immediately release the claim for lien. The establishment of an escrow account, as provided for in this section, shall not be the sole cause for the owner to refuse to complete the conveyance or lease. These moneys shall be held in escrow by the attorney for the lessor in the case of a lease for real property and by the attorney for the owner in the case of the actual conveyance or lease of such real property until the parties' rights to the escrowed moneys have been determined by the written contract or agreement of the parties, a determination by the Superior Court, or some other process which may be agreed to by the parties. When there are sufficient funds in the amount of the claimed lien, there shall be a release of the claim for lien which would allow completion of the conveyance or lease on such terms as are acceptable to the parties involved in the conveyance or lease. If the proceeds from the conveyance or lease are insufficient to release all liens claimed against the real property, including the broker's claim for lien, then the parties are not required to establish the escrow account under this section.

[(p)] (q) The provisions of subsections (a) and (b) of this section shall not apply to any person excepted from the provisions of this chapter by section 20-329 with respect to any acts performed by [him] the person which are included in such exception; or to any real estate broker or real estate salesperson who has provided services to the federal government, any political subdivision thereof, or any corporation, institution or quasi-governmental agency chartered by the federal government.

[(q)] (r) No broker is entitled to claim any lien under this section, unless, after the broker is entitled to compensation, without contingencies, other than closing or transfer of title, under the terms set forth in the written contract and not later than three days prior to the later of the date of the conveyance or lease as set forth in the real estate sales contract or lease or the actual date of the conveyance or the date when the tenant takes possession, the broker gives written notice of the claim for lien to the owner of the real property and to the prospective buyer or tenant that [he] the broker is entitled to compensation under the terms set forth in the written contract and intends to claim a lien on the real property. The notice shall be served upon the owner and the prospective buyer or tenant, by any indifferent person, sheriff or other proper officer, by leaving with such owner and prospective buyer or at their usual place of abode a true and attested copy thereof. When there are two or more owners, or two or more buyers, the notice shall be served on each owner and on each buyer.

Approved May 26, 2000