An Act Reducing Interest Due On Certain Delinquent Municipal Property Taxes.
SB 1316 revises Connecticut law governing the assignment of municipal tax liens on real property. Under current law, municipalities may sell or assign liens securing unpaid property taxes; this bill keeps that framework but adds new consumer-protection and disclosure requirements for assignees, and changes the interest rate that applies to certain assigned delinquent tax obligations. For assignments executed on or after July 1, 2026, interest on the delinquent principal would accrue at 12% per year, rather than under the existing statutory interest provisions referenced in the bill.
The bill also requires that any lien assignment be memorialized in a written contract with detailed terms. Those terms must address how property owners can contact the assignee, when foreclosure or suit may begin, attorney’s fees, reporting to the municipality, third-party beneficiary rights for the property owner, limits on further assignment, and extensive disclosure of the assignee’s litigation, criminal, ethics, and related history. The assignee must also provide notice to property owners and mortgage holders after assignment and before foreclosure, and all foreclosure or disposition activity must be commercially reasonable.
The bill amends Section 12-195h of the general statutes, effective October 1, 2025, and changes the legal rules for municipalities that assign delinquent real property tax liens. It lowers and standardizes the interest rate for certain assigned tax debts beginning with assignments executed on or after July 1, 2026, while imposing new contractual, notice, and enforcement requirements on lien purchasers. Municipalities would retain the ability to sell liens, but assignees would face more regulation, including limits on foreclosure timing, disclosure obligations, and obligations similar to those of mortgagees in providing payoff information.
The available vote history shows strong support: the bill received a 20-0 joint favorable vote in committee. No committee transcript excerpts were provided, so there is no recorded debate to indicate organized opposition in the materials supplied. Overall, the bill appears to have been viewed favorably as a consumer-protection and municipal finance measure, with broad agreement on the need to regulate lien assignees more closely.
The main points of potential contention are the bill’s treatment of interest on delinquent tax liens and the added compliance burdens on lien purchasers. Property owners and consumer advocates would likely favor the lower interest rate, notice requirements, and foreclosure protections, while municipalities and lien investors may be concerned that the new restrictions reduce lien-sale proceeds or make enforcement less efficient. The bill also imposes extensive disclosure requirements about an assignee’s legal, criminal, and ethics history, which could be seen as burdensome or intrusive by prospective assignees.