July 18, 2024
By: Meghan A. Hayden
The Connecticut General Assembly 2024 Regular Session concluded on May 8, 2024, and with it came the passage of several public acts that will be of interest to real estate professionals. Below is a summary of some of the newly enacted laws. With the exception of Public Acts 24-101 and 24-151, which went into effect on July 1, 2024, all new legislation will be effective on October 1, 2024.
Prohibition of Unfair Real Estate Listing Agreements
Public Act No. 24-101 prohibits what the statute refers to as “unfair real estate listing agreements.” Unfair real estate listing agreements are listing contracts entered into on or after July 1, 2024, that do not require the real estate agent to perform any part of the agreement within the one-year period immediately following the date the agreement was entered into and (i) purport to run with the land and be binding on future property owners, (ii) are assignable by the agent without having to obtain consent from the property owner and (iii) purport to create a lien or encumbrance on the subject property. In addition to providing that such agreements are unenforceable, the new legislation goes a step further by providing that a violation of this statute will be deemed an unfair trade practice under C.G.S. § 42-110b et. seq. (Connecticut Unfair Trade Practices Act). The new law further provides that any person (or the attorney general) can petition the Superior Court for an order declaring such agreements void and unenforceable. This law resulted from an investigation undertaken by the Attorney General’s Office against a Florida-based real estate company known as MV Realty. MV Realty targeted lower income homeowners and offered exclusive listing agreements which they termed “Homeowner Benefit Agreements” and through these agreements, MV Realty provided a small cash payment of a few hundred dollars in exchange for an exclusive right to list the homes for sale for a period of 40 years. If a homeowner elects to sell the home during that period, MV Realty would list the home on the Multiple Listing Service but do nothing else to facilitate the sale. Moreover, if the homeowner sought to cancel the agreement or list the home with another agent, the homeowner would be subject to a draconian penalty of three percent (3%) of the market price of their home. MV Realty would also file the listing agreements on the land records and claim such filings to be a lien on the real property.
New Laws Promote the Development of Additional Housing
The 2024 Legislative session included numerous bills intended to incentivize the construction of housing (and in particular low- and middle-income housing). Public Act No. 24-143 is an omnibus housing bill that addresses a number of matters including the following:
Short-Term Rentals – This new bill specifically authorizes municipalities by the vote of their legislative bodies to adopt ordinances requiring the licensure, operation and use of “short- term rental properties.” Short-term rental properties are defined by the statute as a dwelling unit (houses or buildings or portions thereof that are occupied or designed to be occupied or rented as a home or residence) that are (1) the subject of a short-term rental. (i.e., the transfer, for consideration, of occupancy in a furnished residence or similar accommodation for a period of 30 days or less) and (2) not a hotel, bed and breakfast establishment, motel, motor court, motor inn or tourist court.
Nursing Home Conversions – The new law also requires municipalities that exercise their zoning powers under the statutes (rather than a special act) to allow eligible nursing homes to be converted to multifamily housing, subject only to “summary review.” Summary review means the conversion can be approved if it complies with zoning regulations and without requiring a public hearing, variance, special permit or exception, or any other discretionary zoning action, except for a determination that a site plan conforms with the applicable regulations (i.e., permitted “as of right”) and that public health and safety will not be substantially impacted. In order to be considered eligible for the summary review, the nursing home must be a freestanding structure and not a nonconforming use, the owner must declare in writing to the municipality that the home has been vacant for at least 90 days and the conversion must not result in the structure’s total demolition or in the substantial alteration of its footprint.
Municipal Blight Liens – Under prior law, the maximum daily penalty for violations of municipal blight lien ordinances was the same for violations at all residential and commercial properties but varied depending on whether the property was occupied or vacant and on the number of prior violations. Under the new legislation, the maximum daily penalty for violations at commercial properties and residential properties with seven or more units is instead based only on the square footage of buildings located on the properties (i.e. 10 or 12 cents per square foot, depending on the property type).
Municipal Liens for Zoning Violations – Under the new law, unpaid fines imposed under municipal ordinances establishing penalties for violation of local zoning regulations will result in liens on the affected real estate (in the same manner as unpaid blight fines).
Notices of Rent Increases – As of October 1, residential rent increases will be prohibited from taking effect unless the landlord provides the tenant with at least 45 days’ advance written notice. For leases with a term of one month or less, the notice must equal the full length of the lease.
Fixed Assessments – Existing law provides an incentive program under which municipalities can freeze a property’s assessed value if it is being developed for certain purposes, which allows owners to develop properties without paying taxes on the improvements during the frozen period. As of October 1, the maximum time period for the tax freeze will increase from 10 years to 30 years, and municipalities will be able to freeze assessments on personal property as well.
Assessments of Affordable Housing – The new law requires municipalities to assess properties used for low- and moderate-income housing based on the capitalized value of “net rental income” (rather than fair market value) if the property’s rents or carrying charges are regulated by the federal or state government (or limited by a government agreement).
Middle Housing Developments – As of October 1, there is express authorization for municipal zoning regulations to allow for middle housing (duplexes and triplexes) to be developed “as of right” on lots zoned for residential, commercial or mixed-use development. The new law also awards municipalities that adopt these types of zoning regulations points towards a moratorium under C.G.S. § 8-3-g affordable housing land use appeals procedure for each dwelling unit in middle housing developed "as-of-right." Specifically, a municipality is awarded 0.25 housing unit equivalent (HUE) points for each of these middle housing units for which the municipality issues a certificate of occupancy.
Housing Choice Vouchers – The new law establishes a 12-member task force to study the federal housing choice voucher program and its implementation in Connecticut, including any disparate impacts the program has on the development of at-risk children and youth families.
Failure to File
Public Act No. 24-151 was introduced on the day before the General Assembly adjourned under an “emergency certification.” Among other items addressed, it includes the annual “failure to file” enactments. This bill permits taxpayers in seven municipalities (Litchfield, Thomaston, West Haven, Manchester, Middletown, Waterbury and Meriden) to claim certain property tax exemptions for certain identified properties and grand lists even if they missed the initial filing deadlines or failed to provide the required documentation. These provisions are effective as of July 1, 2024, and require that any missing forms or documents be submitted within 30 days along with any late filing fee.
At Murtha Cullina, we have a team of attorneys experienced in representing clients owning, operating, leasing, acquiring, disposing and financing all types of real estate, who are able to help if there are any questions or concerns relative to any of the newly enacted legislation or otherwise.
Please feel free to contact Meghan Hayden at mhayden@murthalaw.com if you have any questions or require assistance.
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