§ 20-325a — Actions to recover commissions arising out of real estate transactions. Real estate broker's lien for real property. Claim for lien. Provisions re commercial real estate transactions.

Connecticut § 20-325a

• Jurisdiction: Connecticut
• Title 20: Professional and Occupational Licensing, Certification, Title Protection and Registration. Examining Boards
• Ch. 392: Real Estate Licensees

Text

(a) Except for an out-of-state real estate licensee who is an individual and seeking to recover agreed compensation authorized under subsection (e) of section 20-325 l, no person who is not licensed under the provisions of this chapter, and who was not so licensed at the time the person performed the acts or rendered the services for which recovery is sought, shall commence or bring any action in any court of this state, after October 1, 1971, to recover any commission, compensation or other payment with respect to any act done or service rendered by the person, the doing or rendering of which is prohibited under the provisions of this chapter except by persons duly licensed under this chapter. (b) No person, licensed under the provisions of this chapter, shall commence or bring any action with respect to any acts done or services rendered after October 1, 1995, as set forth in subsection (a), unless the acts or services were rendered pursuant to a contract or authorization from the person for whom the acts were done or services rendered. To satisfy the requirements of this subsection any contract or authorization shall: (1) Be in writing, (2) contain the names and addresses of the real estate broker performing the services and the name of the person or persons for whom the acts were done or services rendered, (3) show the date on which such contract was entered into or such authorization given, (4) contain the conditions of such contract or authorization, (5) be signed by the real estate broker or the real estate broker's authorized agent, (6) if such contract or authorization pertains to any real property, include the following statement: “THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES”, and (7) be signed by the person or persons for whom the acts were done or services rendered or by an agent authorized to act on behalf of such person or persons, pursuant to a written document executed in the manner provided for conveyances in section 47-5 , except, if the acts to be done or services rendered involve a listing contract for the sale of land containing any building or structure occupied or intended to be occupied by no more than four families, the listing contract shall be signed by the owner of the real estate or by an agent authorized to act on behalf of such owner pursuant to a written document executed in the manner provided for conveyances in section 47-5 . (c) Notwithstanding the provisions of subsection (b) of this section, no person licensed under the provisions of this chapter shall commence or bring any action with respect to any acts done or services rendered after October 1, 2000, in a commercial real estate transaction, unless the acts or services were rendered pursuant to (1) a contract or authorization meeting the requirements of subsection (b) of this section, or (2) a memorandum, letter or other writing stating for whom the licensee will act or has acted, signed by the party for whom the licensee will act or has acted in the commercial real estate transaction, the duration of the authorization and the amount of any compensation payable to the licensee, provided (A) the licensee provides written notice to the party, substantially similar to the following: “THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES”, and (B) the notice is provided at or before the execution of the contract, authorization, memorandum, letter or other writing, and may be made part of the contract, authorization, memorandum, letter or other writing. (d) Nothing in subsection (a) of this section, subdivisions (2) to (7), inclusive, of subsection (b) of this section or subsection (c) of this section shall prevent any licensee from recovering any commission, compensation or other payment with respect to any acts done or services rendered, if it would be inequitable to deny such recovery and the licensee (1) has substantially complied with subdivisions (2) to (7), inclusive, of subsection (b) of this section or (2) with respect to a commercial real estate transaction, has substantially complied with subdivisions (2) to (6), inclusive, of subsection (b) of this section or subdivision (2) of subsection (c) of this section. (e) A licensed real estate broker who has performed acts or rendered services relating to real property upon terms provided for in a written contract or agreement between the broker and the owner or buyer for whom such acts were done or services rendered shall have a lien upon such real property. The lien shall be in the amount of the compensation agreed upon by the broker and the owner or buyer for whom such acts were performed or services rendered. (f) Except as provided in subsections (g), (h) and (i) of this section, the lien provided for in this section shall not attach until the broker is entitled to compensation, without any contingencies, other than closing or transfer of title, under the terms set forth in the written listing or buyer representation contract and the broker has recorded the claim for lien prior to the actual conveyance or lease of such real property with the town clerk of the town where such property is located. (g) Except as provided in subsection (h) of this section, when a broker is entitled to compensation in installments, a portion of which is due only after the conveyance or lease of the real property, any claim for lien for those payments due after the conveyance or lease may be recorded at any time subsequent to the conveyance or lease of the real property and prior to the date on which the payment is due but shall only be effective as a claim for lien against the real property to the extent moneys are still owed to the transferor or lessor by the transferee or lessee. A single claim for lien recorded prior to conveyance or lease of the real property claiming all moneys due under an installment payment agreement shall not be valid or enforceable as it pertains to payments due after the conveyance or lease. The lien shall attach as of the recording of the claim for lien. (h) In the case of a lease for real property where the broker's compensation will not be paid in installments, the claim for lien must be recorded no later than thirty days after the tenant takes possession of the leased premises unless written notice of the intended signing of the lease is delivered to the broker entitled to claim a lien by registered or certified mail, return receipt requested, or by personal service, at least ten days prior to the date of the intended signing of the lease for the real property in which case the claim for lien must be recorded before the date indicated for the signing of the lease in the notice delivered to the broker. The lien shall attach as of the recording of the claim for lien. (i) If a broker's written contract for payment is with a prospective buyer, then the lien shall attach only after the prospective buyer accepts the conveyance or lease of the real property and the claim for lien is recorded by the broker with the town clerk of the town in which the property is located. Any claim for lien shall be filed by the broker no later than thirty days after the conveyance or the tenant takes possession of the real property. (j) The broker shall serve a copy of the claim for lien on the owner of the real property. Service shall be made by mailing a copy of the claim for lien by registered or certified mail, return receipt requested, or by personal service upon the owner by any indifferent person, state marshal or other proper officer, by leaving with such owner or at the owner's usual place of abode a true and attested copy thereof. A copy of the claim for lien may be served at the same time as the notice required by subsection (r) of this section. The broker's lien shall be void and unenforceable if recording does not occur within the time period and in the manner required by this section. (k) (1) A broker may bring suit to enforce a claim for lien in the superior court in the judicial district where the real property is located by filing a complaint and sworn affidavit that the claim for lien has been recorded in accordance with this section. (2) A person claiming a lien shall, unless the claim is based upon an option to purchase the real property, within one year after recording the claim for lien, commence foreclosure by filing a complaint. Failure to commence foreclosure within one year after recording the lien shall extinguish the lien. No subsequent claim for lien may be given for the same claim nor may that claim be asserted in any proceedings under this section. (3) A person claiming a lien based upon an option to purchase real property shall, within six months after the conveyance or lease of the real property under the exercise of the option to purchase, commence foreclosure by filing a complaint and a sworn affidavit that the claim for lien has been recorded in accordance with this section. Failure to commence foreclosure within six months after the conveyance or lease shall extinguish the claim for lien. No subsequent claim for lien may be given for the same claim nor may that claim be asserted in any proceedings under this section. (4) The plaintiff shall issue summons and provide service as in actions to foreclose a mortgage. When any defendant resides out of the state or is temporarily located out of the state, or on inquiry cannot be found, or is concealed within this state so that process cannot be served on that defendant, the plaintiff shall cause a notice to be given to that defendant, or cause a copy of the complaint to be served upon that defendant, in the manner and upon the same conditions as in actions to foreclose a mortgage. Except as otherwise provided in this section, all liens claimed under this section shall be foreclosed in the manner in which mortgage foreclosures are conducted. (l) The claim for lien shall state the name of the claimant, the name of the owner, a description of the real property upon which the lien is being claimed, the amount for which the lien is claimed, and the real estate license number of the broker. The claim for lien shall contain a sworn statement by the signatory that the information contained in the notice is true and accurate to the knowledge of the signatory. The claim for lien shall be signed by the broker or the real estate broker's authorized agent. (m) Whenever a claim for lien has been recorded with the town clerk and a condition occurs that would preclude the broker from receiving compensation under the terms of the broker's written contract or agreement, the broker shall provide within thirty days of demand to the owner of record a written release or satisfaction of the lien. (n) Upon written demand of the owner or the owner's authorized agent, served on the broker claiming the lien requiring suit to be commenced to enforce the lien, a suit shall be commenced within forty-five days thereafter or the claim for lien shall be extinguished. Service of any such written demand shall be by registered or certified mail, return receipt requested, or by personal service upon the broker by any indifferent person, state marshal or other proper officer, by leaving with such broker or at the broker's usual place of abode a true and attested copy thereof. (o) Whenever a claim for lien has been recorded with the town clerk and is paid, or where there is failure to foreclose to enforce the lien within the time provided by this section, the broker shall acknowledge satisfaction or release the claim for lien, in writing, on written demand of the owner within thirty days after payment or expiration of the time in which to commence foreclosure on the lien. (p) Except as otherwise provided in this section, whenever a claim for lien has been recorded with the town clerk that would prevent the closing of a conveyance or lease, an escrow account shall be established from the proceeds of the conveyance or lease in the amount of the compensation agreed upon by the parties. Upon the establishment of the escrow account the broker shall immediately release the claim for lien. The establishment of an escrow account, as provided for in this section, shall not be the sole cause for the owner to refuse to complete the conveyance or lease. The moneys shall be held in escrow by the attorney for the lessor in the case of a lease for real property, and by the attorney for the owner in the case of the actual conveyance or lease of such real property, until the parties' rights to the escrowed moneys have been determined by the written contract or agreement of the parties, a determination by the Superior Court, or some other process which may be agreed to by the parties. When there are sufficient funds in the amount of the claimed lien, there shall be a release of the claim for lien which would allow completion of the conveyance or lease on such terms as are acceptable to the parties involved in the conveyance or lease. If the proceeds from the conveyance or lease are insufficient to release all liens claimed against the real property, including the broker's claim for lien, then the parties are not required to establish the escrow account under this section. (q) The provisions of subsections (a) and (b) of this section shall not apply to any (1) person excepted from the provisions of this chapter by section 20-329 with respect to any acts performed by the person which are included in such exception; or (2) real estate broker or real estate salesperson who has provided services to the federal government, any political subdivision thereof, or any corporation, institution or quasi-governmental agency chartered by the federal government. (r) No broker is entitled to claim any lien under this section unless (1) after the broker is entitled to compensation, without contingencies other than closing or transfer of title, under the terms set forth in the written contract and not later than three days prior to the later of the date of the conveyance or lease as set forth in the real estate sales contract or lease or the actual date of the conveyance or the date when the tenant takes possession, the broker gives written notice of the claim for lien to the owner of the real property and to the prospective buyer or tenant that the broker is entitled to compensation under the terms set forth in the written contract and intends to claim a lien on the real property, or (2) the broker is unable to give written notice pursuant to subdivision (1) of this subsection because the identity of the prospective buyer or tenant cannot be ascertained by the broker after due diligence and reasonable effort. The notice shall be served upon the owner and upon the prospective buyer or tenant by any indifferent person, state marshal or other proper officer, by leaving with such owner and prospective buyer or at their usual places of abode a true and attested copy thereof. When there are two or more owners, or two or more prospective buyers, the notice shall be served on each owner and on each prospective buyer unless the identity of the prospective buyer cannot be ascertained by the broker after due diligence and reasonable effort. See Sec. 20-325e re hearings re commercial real property claims for liens, foreclosures and judicial intervention. See Sec. 20-325k re commissions on commercial real estate lease transactions.

Legislative History

(1971, P.A. 378, S. 1–3; 1972, P.A. 175; P.A. 73-29; P.A. 84-137; P.A. 85-166, S. 1, 2; P.A. 93-355, S. 1; P.A. 94-240, S. 3, 14; P.A. 95-164; 95-186, S. 1; P.A. 00-21, S. 1; 00-99, S. 58, 154; 00-160, S. 2; P.A. 02-24, S. 12, 13; P.A. 04-131, S. 1; P.A. 23-84, S. 27.) History: 1972 act deleted word “such” in Subsec. (b) modifying “person”, “action” and “acts”; P.A. 73-29 made Subsec. (b) applicable to persons “licensed under the provisions of this chapter” and added phrase “as set forth in subsection (a)”; P.A. 84-137 amended Subsec. (b) to require that the authorization or contract be signed by the seller or his duly authorized agent and the broker or his authorized agent rather than by the “parties thereto”; P.A. 85-166 amended Subsec. (b) to require that the contract or authorization be signed by the owner, rather than the seller, and clarified the scope of authority of any agent permitted to act on his behalf; P.A. 93-355 added provisions re real estate broker's liens on commercial real property as Subsec. (b)(6) and Subsecs. (c) to (n), inclusive, and Subsec. (p), relettering former Subsec. (c) as (o); P.A. 94-240 amended Subsec. (b) by requiring that contract be signed by the real estate broker or the broker's authorized agent, added a new Subsec. (b)(6) requiring a lien rights statement to be included in a commercial real property contract or authorization and (b)(7) requiring the listing contract for the sale of real estate be signed by the owner of the property or an agent authorized to act on his behalf, inserted new Subsec. (c) regarding the recovery of commission, compensation or other payment with respect to acts done or services rendered if the broker has substantially complied, relettered the remaining Subsecs., redefined “commercial real property” in Subsec. (d), added a provision in Subsec. (i) regarding the service of a claim for lien and made minor changes for clarity, effective July 1, 1994; P.A. 95-164 amended Subsec. (b)(7) to eliminate the requirement that the listing contract for the sale of real estate be signed by the owner of the property or an agent authorized to act on his behalf and substituted a provision requiring a signature by the person or persons for whom the acts were done or services rendered, except in the sale of land intended for residential use, in which case the owner of the real estate or an authorized agent is required to sign the contract; P.A. 95-186 amended Subsec. (b) by changing the applicable date from July 1, 1994, to October 1, 1995, deleted references to “commercial real property” and substitute “any real property” in Subsecs. (b), (d) to (k), inclusive, (o) and (q), in Subsec. (d) deleted definition of “commercial real property” and in Subsec. (h) made a technical correction by changing the reference to “(8)” to “(q)”; P.A. 00-21 amended Subsecs. (a), (b) and (c) by substituting “the person” for “him” and “he” and substituting “with respect to” for “in respect of”; P.A. 00-99 replaced references to sheriff with state marshal in former Subsecs. (i), (m) and (q), redesignated as Subsecs. (j), (n) and (r), effective December 1, 2000; P.A. 00-160 deleted reference to Sec. 20-325a(d) in Subsec. (b), inserted new Subsec. (c) re commercial real estate transactions, redesignated former Subsecs. (c) to (q), inclusive, as Subsecs. (d) to (r), respectively, amended Subsec. (d) to insert proviso re inequity of denying recovery and provisions re substantial compliance with certain provisions of section with respect to commercial real estate transaction, substituted “owner or buyer” for “owner” in Subsec. (e), amended Subsec. (f) to substitute “written listing or buyer representation contract” for “written contract”, amended Subsec. (r) to require written notice after the later of the conveyance date set forth in the contract or lease or the actual date of conveyance or date when the tenant takes possession, and substituted “with respect to” for “in respect of” in Subsecs. (a), (b) and (d) and made other technical changes throughout the section; P.A. 02-24 amended Subsec. (b)(7) to provide that the listing contract be signed for acts or services that involve a listing contract, and made technical changes in Subsecs. (c) and (r); P.A. 04-131 amended Subsec. (g) to delete “from the owner of real property” re broker entitled to compensation and referenced the lessor or lessee re moneys still owed, amended Subsec. (h) to add “where the broker's compensation will not be paid in installments”, amended Subsec. (k) to add Subdiv. designators (1) to (4), inclusive, and amended Subdiv. (3) to add “real property” re purchase and substitute “six months after the conveyance or lease” for “this time”, amended Subsec. (l) to allow claim for lien to be signed by real estate broker's authorized agent, inserted Subdiv. designators (1) and (2) in Subsec. (q), amended Subsec. (r) to insert Subdiv. designators (1) and (2), insert in Subdiv. (2) an exception if broker is unable to give written notice because identity cannot be ascertained after due diligence and reasonable effort, make conforming changes and substitute “prospective buyer” for “buyer”, and made technical changes in Subsecs. (e), (i), (k), (n), (p), (q), and (r); P.A. 23-84 amended Subsec. (a) by adding exception re individual out-of-state real estate licensee seeking to recover agreed compensation authorized under Sec. 20-325 l (e), effective April 1, 2024. Section pertains only to listing contracts and not to the sales contract. 186 C. 82. Plaintiff's cause of action arose out of his employment contract with defendant and was not an action seeking to recover a commission from a real estate transaction. 190 C. 808. Cited. 191 C. 276; 203 C. 475; 213 C. 612; 218 C. 512; 232 C. 645; 236 C. 746. Although plaintiff, a corporate broker licensee, was not duly licensed as a real estate broker because its president was not licensed as a real estate broker, trial court improperly granted summary judgment on the ground that plaintiff's license was automatically void, which alone was insufficient to deprive plaintiff of its right to recover a commission; trial court failed to consider language and legislative history of former Subsec. (c), which permits licensee who is not duly licensed to recover if, in light of all facts and circumstances of the case, it would be inequitable to deny the right to recover commission that was otherwise earned. 273 C. 766. Section eliminates a separate equitable recovery under common law theory of unjust enrichment; substantial compliance requirement in Subsec. (d) is sole avenue to recovery that legislature chose to provide in circumstances wherein strict construction of section would lead to unfair results of unjust enrichment. 287 C. 706. Cited. 6 CA 720; 7 CA 709; 9 CA 293. Agreement between brokers is not subject to requirements of statute. 11 CA 557. Cited. 13 CA 527; 17 CA 294; 24 CA 250; 25 CA 51; 28 CA 563; 31 CA 682; 35 CA 31; 36 CA 653. Requirements of statute mandatory except where equitable estoppel applies and real estate broker believed the contract was validly extended. 50 CA 640. Trial court's determination that plaintiff had not established the statutorily required inequity in denying recovery of commission was not clearly erroneous or an abuse of discretion. 69 CA 220. Electronic mail correspondence that identified obligation to compensate realtor for services and contained names of both real estate broker and person for whom services were rendered and that was signed by such person complied with requirements of section. 133 CA 445. Listing agreements in which parties are bound to a time period that can be calculated only by reference to an uncertain future event is of an indefinite duration and does not comply with provisions of section and is contrary to public policy and custom in the commercial real estate industry. 205 CA 299. Section acts as a restriction on the conduct of an occupation which, were it not for statute, would be allowed, and must be strictly construed. 35 CS 220. Cited. 38 CS 509; 41 CS 225. Subsec. (a): Cited. 215 C. 316; 218 C. 396. Although section sets forth a necessary condition for filing action to recover a commission, namely, that person filing action be licensed under chapter's provisions, compliance with that condition is not, in and of itself, sufficient to permit recovery. 266 C. 572. Cited. 3 CA 675; 5 CA 76. Subsec. (b): Cited. 178 C. 381; 184 C. 228; 185 C. 463; 186 C. 74. Requirements of section apply to listing contract, not sales contract. Id., 237. Cited. 189 C. 52. Requirements of statute concerning actions to recover real estate commissions are not applicable to action by real estate salesman seeking a share of commissions from his employer. 190 C. 808. Cited. 197 C. 264; 213 C. 612. “Owner” as used in Subsec. refers to owner of the property interest that is the subject of the listing agreement. 232 C. 645. Requirement that the agent signatory to a listing agreement be authorized by written document to act on behalf of the owner applies where owner may act individually or through an agent and chooses to act through an agent. 258 C. 121. Cited. 7 CA 120; 8 CA 371; 9 CA 87. Subdiv. (4): Location and price of units not necessary in order to state “conditioning of such contract or authorization” in this instance where owner reserved right to determine price and specific unit. Id., 293. Cited. 23 CA 688. Listing agreement was unenforceable because it was not in strict compliance with statute and did not reflect any authorization for general partners to sign as agents authorized to act on behalf of the owner; statute, as amended by P.A. 94-240 which permits recovery of commissions in cases of substantial compliance with statute, applies prospectively only because there is no clear and unequivocal language in act or legislative history that supports an inference in favor of retrospective application. 56 CA 815. Where listing agreement was mistakenly filled in but was nevertheless signed by the authorized agent of the broker, held that agreement complied with section. 75 CA 546. Subdiv. (7): Although decedent had not signed the listing agreement, by application of exception set forth in Subsec. (d), plaintiff was not precluded from recovering real estate commission. 124 CA 752. Legislature did not intend to require the lien notice set forth in Subdiv. (6) to be capitalized in contract. 162 CA 840. Separate documents, rather than a single contract, may collectively meet statutory requirements of Subsec. 35 CS 24. Cited. Id., 220. Action by broker to recover commission prohibited due to failure to comply with requirement that addresses of all parties be contained in contract. Id., 617. Merely obtaining a binding executory contract is insufficient to entitle broker to a commission where the commission was expressly made dependent upon the actual sale of the property; broker was not entitled to a commission where the listing agreement made the commission conditional upon the actual consummation of the sales transaction and the sale never took place. 36 CS 532. Cited. 37 CS 703; 38 CS 703. Legislature in enacting statute made no distinction between straight real estate sales and those integrated with commercial transactions. 39 CS 95. Subsec. (c): Subdiv. (2): Brokerage agreement that expired ten years from date of first sale or lease of unit satisfied statutory requirement that duration of agreement be specified despite lack of firm expiration date. 346 C. 391. Subsec. (d): Substantial compliance allowance under Subsec. contemplates written agreements only. 287 C. 706. On basis of Subsec., it would be inequitable to deny plaintiff recovery on basis of mistaken name of the partnership in an exclusive agreement with respect to commercial real property. 88 CA 445.