Substitute Senate Bill No. 212
Substitute Senate Bill No. 212
PUBLIC ACT NO. 97-267
AN ACT CONCERNING ATTORNEYS AND THE CLIENT
SECURITY FUND.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. (NEW) (a) Upon the payment in
settlement of any third-party liability claim in
excess of ten thousand dollars where the claimant
is a natural person, the insurer shall mail to the
claimant notice of such payment at the same time
payment is made by the insurer.
(b) The notice required pursuant to subsection
(a) of this section shall be mailed to the last
known address of such claimant as furnished by
such claimant's attorney or representative at the
time of settlement.
(c) Nothing in subsection (a) or (b) of this
section shall (1) create any cause of action or
proceeding for any person or entity against an
insurer based upon a failure to provide notice as
required by this section or defective notice, or
(2) establish a defense for any party to any cause
of action based upon a failure to provide notice
as required by this section or defective notice.
Sec. 2. (NEW) (a) For the purposes of this
section:
(1) "Notification agent" means: (A) The
buyer's attorney, where the buyer is represented
by an attorney and the seller is represented by a
separate attorney who assumes the responsibility
for transmitting the mortgage payoff funds to the
mortgage holder; (B) the new lender, in a
refinance situation where the attorney
representing the mortgagor is also the attorney
representing the new lender; (C) the seller, where
the seller is not represented by an attorney and
the attorney representing the buyer has taken the
responsibility for transmitting the payoff funds
to the mortgage holder; or (D) the seller's
attorney, where the buyer is represented by a
separate attorney who assumes the responsibility
for disbursing the mortgage payoff funds to the
mortgage holder;
(2) "Mortgage holder" or "holder of the
mortgage" means the owner of the mortgage or the
mortgage servicer as set forth in the mortgage
payoff letter provided to the notification agent;
(3) "Residential real estate transaction"
means any real estate transaction involving a
one-to-four family dwelling.
(b) At any residential real estate transaction
involving the payoff of a mortgage loan, a
disclosure statement shall be prepared by the
notification agent and shall be executed by all
parties to the transaction or their attorneys and
shall be sent by the notification agent by
certified mail, return receipt requested or by
overnight carrier, to the holder of the mortgage
which is to be paid off, within two business days
from the date of completion of the closing. The
disclosure statement shall include a copy of the
payoff statement or other written authorization
provided by the mortgage lender. The person or
entity charged with the responsibility of securing
the mortgage payoff statement shall transmit a
copy of such payoff statement in a timely manner
to the notification agent but, in any event, not
later than the date of closing. To the extent not
shown on the payoff statement, the disclosure
statement shall identify the mortgage, the names
of the mortgagors, the loan number, the property
address and the date of payoff. The disclosure
statement shall direct that, if funds are not
received by the mortgage holder within five
business days from the date of payoff, notice of
that fact shall be given to the notification
agent. Such statement shall include the name,
address, telephone and fax number, if available,
of the notification agent. Such disclosure
statement may be in substantially the following
form:
NOTIFICATION
(lender)
(mortgagor)
(address)
on the attached payoff statement, was paid at
(payoff date)
mortgage payoff funds within five business days of
the payoff date, you are directed to notify this
office immediately as follows:
Sec. 3. (NEW) (a) The Superior Court, in
accordance with rules established by the judges of
the Superior Court, may (1) establish a Client
Security Fund to reimburse claims for losses
caused by the dishonest conduct of attorneys
admitted to the practice of law in this state and
incurred in the course of an attorney-client
relationship, and (2) assess any person admitted
as an attorney by the Superior Court, in
accordance with section 51-80 of the general
statutes, an annual fee to be deposited in said
Client Security Fund.
(b) The Commissioner of Revenue Services shall
collect any fee established pursuant to subsection
(a) of this section, record such payments with the
State Comptroller and deposit such payments
promptly with the State Treasurer, who shall
credit such payments to the Client Security Fund.
The Treasurer shall maintain the Client Security
Fund separate and apart from all other moneys,
funds and accounts.
(c) The Client Security Fund shall be used
only to satisfy the claims approved in accordance
with procedures established pursuant to rules of
the Superior Court and to pay the reasonable costs
of administration of the Fund.
(d) The Commissioner of Revenue Services shall
notify the Chief Court Administrator or his
designee of the failure of any person to pay any
fee assessed in accordance with subsection (a) of
this section.
Approved June 27, 1997