Sec. 47-210. Unconscionable contracts or contract clauses. Leases involving land or facilities in residential common interest communities that are presumed to be unconscionable. - Connecticut Statutes

      Sec. 47-210. Unconscionable contracts or contract clauses. Leases involving land or facilities in residential common interest communities that are presumed to be unconscionable. (a) The General Assembly expressly finds that many leases involving the use of land or recreational or other common facilities by residents of a residential common interest community were entered into by parties wholly representative of the interests of a residential common interest developer at a time when the residential common interest community unit owners not only did not control the administration of their residential common interest community, but also had little or no voice in such administration. Such leases often contain numerous obligations on the part of either or both a residential common interest community association and residential common interest community unit owners with relatively few obligations on the part of the lessor. Such lease may or may not be unconscionable in any given case. Nevertheless, the General Assembly finds that a combination of certain onerous obligations and circumstances warrants the establishment of a rebuttable presumption of unconscionability of certain leases, as specified in subsection (d) of this section. The presumption may be rebutted by a lessor upon the showing of additional facts and circumstances to justify and validate what otherwise appears to be an unconscionable lease under this section. Failure of a lease to contain the required number of specified elements shall not preclude a determination of unconscionability of the lease. It is the intent of the General Assembly that this section is remedial and does not create any new cause of action to invalidate any residential common interest community lease, but shall operate as a statutory prescription on procedural matters in actions brought on one or more causes of action existing at the time of the execution of such lease.

      (b) The court, on finding as a matter of law that a contract or contract clause was unconscionable at the time the contract was made, may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause or limit the application of any unconscionable clause in order to avoid an unconscionable result.

      (c) Whenever it is claimed, or appears to the court, that a contract or any contract clause is or may be unconscionable, the parties, in order to aid the court in making the determination, shall be afforded a reasonable opportunity to present evidence as to:

      (1) The commercial setting of the negotiations;

      (2) Whether a party has knowingly taken advantage of the inability of the other party reasonably to protect his interests by reason of physical or mental infirmity, illiteracy, inability to understand the language of the agreement or similar factors;

      (3) The effect and purpose of the contract or clause; and

      (4) If a sale, any gross disparity, at the time of contracting, between the amount charged for the property and the value of that property measured by the price at which similar property was readily obtainable in similar transactions. A disparity between the contract price and the value of the property measured by the price at which similar property was readily obtainable in similar transactions does not, of itself, render the contract unconscionable.

      (d) A lease entered into prior to January 1, 1984, pertaining to use of land or facilities by unit owners in a residential common interest community, is presumed to be unconscionable if:

      (1) The lease by its terms requires the lessee to pay an annual rental and other expenses that exceed fifteen per cent of the appraised value of the leased property as improved, provided for the purposes of this subdivision, "annual rental and other expenses" means the amount paid by the lessee during the twelve months immediately preceding the filing of an action under this section as rent and for real estate taxes, insurance, capital improvements and other expenses required to maintain the property under the lease terms, and "appraised value" means the appraised value placed upon the leased property by a licensed or certified real estate appraiser on a date during the twelve months immediately preceding the filing of an action under this section, and

      (2) Seven of the following eight elements exist:

      (A) The lease was executed by persons none of whom at the time of the execution of the lease were elected by unit owners, other than the declarant;

      (B) The lease requires either the association or the unit owners to pay all real estate taxes on the subject real property;

      (C) The lease requires either the association or the unit owners to insure buildings or other facilities on the subject real property against fire or any other hazard;

      (D) The lease requires either the association or the unit owners to perform some or all maintenance obligations pertaining to the subject real property or facilities located upon the subject real property;

      (E) The lease requires either the association or the unit owners to pay rents to the lessor for a period of twenty-one years or more;

      (F) The lease provides that failure of the lessee to make payments of rents due under the lease creates, establishes or permits establishment of a lien upon individual units to secure claims for rent;

      (G) The lease provides for a periodic rental increase based upon reference to a price index; and

      (H) The lease or other common interest community documents require that any transferee of a unit must assume obligations under the lease.

      (e) The presumption set forth in subsection (d) of this section may be rebutted by a lessor upon the showing of additional facts and circumstances to justify and validate what otherwise appears to be an unconscionable lease under this section.

      (f) Failure of a lease to contain the required number of elements specified in subsection (d) of this section shall not preclude a determination that the lease is unconscionable.

      (g) Notwithstanding any provision of the general statutes, neither the statute of limitations nor laches shall prohibit unit owners of a residential common interest community from maintaining a cause of action under this section.

      (h) If a court finds that a lease contract or lease contract clause was unconscionable at the time the contract was made, in determining whether to enforce the contract, or enforce the remainder of the contract without the unconscionable clause, or whether to limit the application of any unconscionable clause in order to avoid an unconscionable result, the court shall consider evidence regarding the adverse impact, if any, of any such determination on the interests of third parties, including lenders who may have, in good faith, relied upon such lease provisions, and the court, in formulating such a determination, shall seek to avoid an unjust impact on such third parties and shall make no such determination, the effect of which would be to terminate the common interest community.

      (P.A. 83-474, S. 11, 96; P.A. 95-187, S. 27.)

      History: P.A. 95-187 added new Subsec. (a) making legislative findings re leases involving the use of land or recreational or other common facilities by residents of a residential common interest community, relettering former Subsecs. (a) and (b) as Subsecs. (b) and (c), respectively, added Subsec. (d) re when a lease entered into prior to January 1, 1984, pertaining to use of land or facilities by unit owners in a residential common interest community is presumed to be unconscionable, added Subsec. (e) re the manner in which a lessor may rebut the presumption, added Subsec. (f) to provide that a determination that the lease is unconscionable is not precluded by the failure of the lease to contain the required number of elements specified in Subsec. (d), added Subsec. (g) to provide that neither the statute of limitations nor laches shall prohibit unit owners maintaining a cause of action and added Subsec. (h) requiring the court to consider the impact on third parties when determining an appropriate remedy upon finding that a lease contract or lease contract clause was unconscionable at the time the contract was made, requiring the court to seek to avoid an unjust impact on third parties and prohibiting the court from making a determination the effect of which would be to terminate the common interest community.

      Subsec. (a):

      Cited. 237 C. 123.

      Subsec. (d):

      Determination of unconscionability is to be made based on a certain time frame after claim is filed, not after the contract is formed. 265 C. 579.