Connecticut Governor Dannel Malloy recently signed a new bill into law that helps Connecticut consumers understand how much they would need to pay in order to satisfy a judgement lien. The law, effective October 1, 2018, requires judgement lienholders to provide the debtor (or the debtor’s authorized representative) a written payoff statement if asked for one in writing. The payoff statement must be provided to the debtor by whatever date is specified in the written request, as long as that date is at least 21 business days after the receipt of the written request.

The new law also specifies that the debtor may rely on the last recorded lien of record securing the lienholder’s judgment in order to identify the name and mailing address for sending a written request. However, if the lienholder is currently a plaintiff in a case to enforce its interest in the property, the request for a payoff statement should be provided to the plaintiff’s attorney.

The lienholder may not charge the debtor for the payoff statement. However, the debtor may incur a charge if the debtor requests more than one payoff statement within a calendar year or if the debtor requests and agrees to pay for expedited delivery.

When the bill was introduced, it included a penalty for judgement lienholders that did not provide the payoff statement by the date requested. Damages were to be assessed at $200 per week, up to a maximum of $3,000, or actual damages incurred, whichever was greater, plus attorney’s fees. Interestingly, the bill that was signed into law did not include these prescribed penalties or damages. Without a mandated amount, debtors may only recover actual damages incurred from noncompliance with the new law.

Pepper Points

• It is imperative that mortgage servicers that service loans secured by Connecticut properties become aware of this new law, which was passed with limited fanfare.

• Twenty business days should be sufficient time to provide a payoff statement.

• The October effective date should provide adequate time for financial institutions to update their systems, policies, procedures, training materials and testing and monitoring protocols to comply with the new law.

• The statute does not delineate a time period to provide the payoff statement if the debtor does not specify one. Prudent lienholders will provide the statement as quickly as practicable, but no longer than 21 business days after receipt of the written request.

• The statute lacks specified damages for noncompliance. As a result, the penalty associated with this law would be limited to damages actually incurred and proven by the debtor.