SB 1339 revises Connecticut law governing the assignment of certain municipal liens, primarily tax liens and liens tied to sewer, water, and related utility charges. The bill authorizes municipalities, regional sewer authorities, and regional water authorities to sell or assign these liens for consideration, and it preserves the assignee’s ability to enforce the lien through foreclosure or a suit on the debt. It also updates the statutes to clarify that assignees have the same basic rights the public entity would have had, while imposing additional obligations on the assignee.
The bill adds a detailed set of consumer- and process-protection requirements for lien assignments. For assignments made on or after July 1, 2022, the contract must spell out contact information, foreclosure timing, attorney’s fee structure, reporting duties, restrictions on further assignment, and disclosures about the assignee’s litigation, criminal, ethics, and ownership history. For assignments on or after July 1, 2026, the bill tightens the rules further by barring attorney’s fees from being collected until foreclosure or suit begins and capping attorney’s fees at 15 percent of any judgment in covered actions. It also requires notice to property owners and mortgage holders, a 60-day pre-foreclosure notice to senior lienholders, and commercially reasonable foreclosure practices.
In addition to lien-assignment changes, the bill amends the statutes governing sewer assessments, sewer connection and use charges, and water rates to align collection and enforcement procedures with property-tax lien practices. It also adds language directing municipalities setting water rates to consider conservation-oriented rate design, metering, demand management, and reduction of water losses. The effective date for most provisions is October 1, 2025, with some contract and fee limitations phased in for assignments or actions beginning July 1, 2026.
The overall sentiment appears generally favorable, at least in the legislative process reflected in the vote history. The bill received a unanimous 11-0 joint favorable vote in the Banking Committee and then passed the Senate 34-1, suggesting broad support for the framework. That said, the absence of committee transcripts limits insight into specific debate, and the near-unanimous votes indicate that any concerns were not strong enough to block the measure.
The main points of contention likely center on the balance between municipal revenue collection and borrower/property-owner protections. The bill’s detailed disclosure requirements, notice obligations, attorney-fee restrictions, and limits on lien resale appear designed to address concerns about aggressive lien purchasers and foreclosure practices. At the same time, municipalities and lien investors may view the new contract requirements and fee caps as constraints on the marketability and profitability of assigned liens.
The bill amends multiple sections of the General Statutes, including provisions governing municipal property-tax liens, sewer assessment liens, sewer connection and use charge liens, water liens, and regional sewer and water authority liens. It preserves the ability of public entities to assign liens for consideration, but it imposes new statutory conditions on those assignments, including written contract requirements, notice duties, disclosure obligations, and limits on attorney’s fees and lien transfers. It also adds conservation-focused considerations to municipal water-rate setting under section 7-239.
The legislative sentiment appears broadly supportive. The Banking Committee reported the bill favorably by an 11-0 vote, and the Senate later passed it 34-1, indicating strong bipartisan or near-unanimous agreement on the need to regulate lien assignments while preserving municipal collection tools. The vote pattern suggests the bill was viewed as a technical but important consumer-protection and municipal-finance measure rather than a highly divisive proposal.
The likely tension in the bill is between protecting homeowners and mortgage holders from opaque or aggressive lien-assignment practices and preserving municipal flexibility to monetize delinquent liens. The bill’s new disclosure requirements, mandatory notices, one-year minimum before foreclosure, third-party beneficiary language, and 15 percent attorney-fee cap may be welcomed by property-rights advocates and consumer-protection interests, but could be seen by municipalities, lien purchasers, and collection firms as reducing returns and increasing compliance burdens. No transcript is available here, so the specific objections are not recorded, but those are the most apparent policy fault lines.