Connecticut Real Estate Attorney Law Blog


Debt Negotiators on Short Sales now Require a License to do Business in Connecticut

The Connecticut legislature has recently passed legislation that was effective October 1, 2009 which will for the first time explicitly regulate people and companies that (for a fee) assist consumers in negotiating their mortgage debt, including fee assisting with short sale negotiations.  The legislation is Senate Bill 950.

This legislation applies to all in state and out of state companies and individuals who charge a fee for negotiating someone's debt.  The new law prohibits advance fees, and requires licensing and bonding for those who want to engage in this type of activity.

What this means is that if a fee is charged to a consumer in the course of settling or negotiating a debt, that activity is now regulated by the state and a license to perform it is required.  The license will be obtained from the State Department of Banking.  Attorneys admitted to practice law in Connecticut are exempt from the new law (attorneys NOT admitted in CT do not appear to come within this exemption).

So lets say you are a Realtor and have a short sale listing, and you help the owner negotiate with their bank.  Do these activities come within this new legislation?  I must say I do not know the answer to that question.  The statute is written very broadly and does not provide a specific exception for Realtors.  The argument the Realtor would make is that they are not expecting a "fee, commission or other valuable consideration" from the act of the debt negotiating, but rather from the sale of the property for which they have a separate commission agreement,and the short sale negotiations are ancillary to that.

So if you are a Realtor and have a separate business doing fee-based debt negotiation or the like, you will  have to be licensed and your contracts and activities will be regulated.  If you are a Realtor and doing short sales but do not charge extra for the service, I would get a legal opinion or advice from an attorney to verify that such activities are OK.

I have the text of the relevant portion of the proposed statute if anyone is interested in reading it in detail.   Just contact me and I will email it to you.  It is also available on the web site for the CT legislature,

If you are interested in becoming licensed under this new law, or want further information about its applicability, please contact me.


About the author:  Attorney Begemann is a member of the Connecticut Bar and practices real estate and business law in Connecticut.  As an experienced real estate attorney he represents individuals and lenders in residential and commercial loan closings across Connecticut, including the purchase, sale and refinance of real estate.

Attorney Paul H. Begemann, 2764 Whitney Avenue, Hamden, CT  06518

Phone 203-230-8739                                       Fax 800-483-1904



6 commentsPaul Begemann • October 01 2009 05:02PM


I will look into this. Thank You for posting this information.

Posted by Frank Chirkinian (Short Sale Army) 10 months ago

You are welcome.  Pleae feel free to contact me directly if you have any questions.


Posted by Paul Begemann (Attorney Paul H. Begemann) 10 months ago

 Mr:Paul Begemann I was enduring

Can I negotiate my own   short sale with the bank and get a good discount on the property  buy the property from the Bank and resale the property immediately for profit ? 

Can I double closing in short sale or foreclosure properties? I mean here is Ct? Thank you very much for your time I really appreciate .Genis

Posted by Genis F Tavares 6 months ago

Banks are very restrictive when approving a short sale to make sure the borrower is not making money on the deal outside of the closing "under the table" or has any relationship to the buyer.  People have been prosecuted for providing fictitious information to banks on short sales.  The banks have also  been adding resale restrictions on some short sales so that  the short sale buyer cannot immediately flip the property for more money.  So you may or may not be able to do a flip transaction on a short sale, each deal and short sale approval is different.  On foreclosure properties banks also sometimes try to restrict what the buyer can do, i.e. prevent contract assignment or prohibit resale for a certain period (like 90 days).  You would want to see the bank's contract or addendum to see what restrictions they would add.

Posted by Paul Begemann (Attorney Paul H. Begemann) 5 months ago
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