January 5, 2016
by Matthew J. Cholewa
Hunt Leibert – USFN Member (Connecticut)
The Connecticut legislature has enacted a lien on real property that runs in favor of the state of Connecticut for probate fees payable in decedent’s estates.
Those doing business in Connecticut are likely aware of the existing estate tax lien — an inchoate lien in favor of the state of Connecticut, which arises upon the death of an owner of Connecticut real property. Even though there is no recorded lien, anyone purchasing or financing real estate where an owner in the chain of title is deceased must be sure that the estate tax lien is cleared.
In section 454 of Public Act 15-05 (June Special Session) the Connecticut legislature created the probate fee lien, another inchoate lien that arises in connection with the death of a property owner. The probate fee lien relates to estates that were open on or after July 1, 2015.
The probate court shall issue a certificate of release of lien for any affected real property after receipt of payment in full, or if the court finds that payment is adequately assured. The certificate of release of lien may be recorded in the land records where the property is located.
For properties that are in foreclosure, if there is a deceased person in the chain of title and the probate fees have not been paid in full or the lien released, the state of Connecticut should be named as an additional defendant in the foreclosure action. It is important to note that the probate fee lien (like the estate tax lien) does not have priority over previously recorded mortgages. Thus, a recorded mortgage will hold priority over both the estate tax lien and the probate fee lien if a borrower dies after granting the mortgage, and a foreclosure of the mortgage can wipe out the probate fee lien (as well as the estate tax lien) as long as the state is named as a defendant.
The probate fee legislation can be found in section 454 of Public Act 15-05 (June Special Session), the “budget implementer” bill. It was enacted without the benefit of a public hearing. In the same legislation, Connecticut increased probate fees as a means of funding the probate court system. Unlike most states, Connecticut includes property passing outside probate in calculating its probate fees. The fees are, in effect, a tax on a person’s estate regardless of whether the property comprising the estate passes through — or outside of — probate.
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