AN ACT ESTABLISHING VARIOUS REQUIREMENTS REGARDING SHARED APPRECIATION AGREEMENTS.

LCO No. 1577 1 of 6

General Assembly Raised Bill No. 5209
February Session, 2026 LCO No. 1577

Referred to Committee on BANKING

Introduced by:
(BA)

AN ACT ESTABLISHING VARIOUS REQUIREMENTS REGARDING
SHARED APPRECIATION AGREEMENTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. Subsection (a) of section 36a-498i of the 2026 supplement to 1
the general statutes is repealed and the following is substituted in lieu 2
thereof (Effective October 1, 2026): 3
(a) As used in this section and section 2 of this act, "mortgage lender" 4
and "shared appreciation agreement" have the same meanings as 5
provided in section 36a-485. 6
Sec. 2. (NEW) ( Effective October 1, 2026 ) (a) (1) The interest charged 7
pursuant to a shared appreciation agreement shall be (A) simple 8
interest, and (B) calculated on the basis of the lump sum payment paid 9
by the borrower to the lender at the time when the loan matures. 10
(2) Notwithstanding the provisions of section 37 -9 of the general 11
statutes, e ach shared appreciation agreement shall be subject to the 12
provisions of sections 37-1 and 37-4 of the general statutes. 13

Raised Bill No. 5209

LCO No. 1577 2 of 6

(b) A shared appreciation agreement shall not: 14
(1) Contain any provision that requires the borrower to occupy the 15
property that is the subject of the shared appreciation agreement or 16
otherwise prevents the borrower from using such property as the 17
borrower chooses; 18
(2) Contain a ny provision that prevents the borrower from 19
refinancing a mortgage or lien or obtaining a subordinate mortgage or 20
lien against the property that is the subject of the shared appreciation 21
agreement; 22
(3) Require the borrower to pay more than half of any cost actually 23
paid to any third part y associated with the origination, servicing or 24
satisfaction of the shared appreciation agreement; 25
(4) Require the borrower to pay any fee or cost to any mortgage 26
servicer or the lender after origination, except for any bona fide charge 27
paid to a third party; 28
(5) Include a prepayment penalty or otherwise require payment of 29
any additional sum to satisfy or otherwise terminat e the shared 30
appreciation agreement at any point before its scheduled maturity date 31
or termination date; 32
(6) Contain any provision restricting or waiving the substantive or 33
procedural rights or remedies available to the borrower at law or in 34
equity; 35
(7) Charge the borrower for any attorney's fees or legal costs incurred 36
by the lender arising from any dispute, claim or legal proceeding related 37
to the loan, regardless of the outcome of such dispute, claim or 38
proceeding; 39
(8) Include a confidentiality provision regarding the terms of the 40
shared appreciation agreement or any dispute related to the shared 41
appreciation agreement; or 42

Raised Bill No. 5209

LCO No. 1577 3 of 6

(9) Contain a provision allowing the lender to alter any term of the 43
shared appreciation agreement without the express written consent of 44
the borrower. 45
(c) The terms of a shared appreciation agreement shall contain: 46
(1) A provision requiring the lender to provide to the borrower at 47
least ninety days' advance written advance notice of any action required 48
of the borrower under the terms of the shared appreciation agreement, 49
which, if not timely taken by the borrower, will affect the rights or 50
interests of the borrower under such agreement; 51
(2) A provision requiring the lender to provide to the borrower, not 52
later than three business days after the lender receives a request f rom 53
the borrower for the same and at no cost to the borrower, a payoff quote 54
that itemizes everything for which the borrower is liable to pay to the 55
lender; 56
(3) A provision requiring the lender to provide to the borrower, not 57
later than three business days after the lender receives a request from 58
the borrower for the same, a written description of the process for 59
terminating the shared appreciation agreement; 60
(4) A provision specifying that the borrower shall receive credit for 61
all improvements made to the property that is the subject of the shared 62
appreciation agreement in an amount equal to the total amount paid for 63
all such improvements or any increase in the appraised value of such 64
property resulting from such improvements, whichever is greater; 65
(5) A provision stating that the value of any adjustments for lack of 66
maintenance or for improvements shall be determined by a property 67
appraisal conducted by a certified or licensed appraiser in accordance 68
with the Uniform Standards of Professional Appraisal Practice issued 69
by the Appraisal Standards Board of the Appraisal Foundation 70
pursuant to Title XI of FIRREA, as amended from time to time; 71

Raised Bill No. 5209

LCO No. 1577 4 of 6

(6) A provision stating that any property valuation required by the 72
shared appreciation agreement, including, but not limited to , any such 73
valuation performed at or before origination or at the conclusion of such 74
agreement, shall be performed by a licensed or certified appraiser in 75
accordance with the Uniform Standards of Professional Appraisal 76
Practice issued by the Appraisal Standards Board of the Appraisal 77
Foundation pursuant to Title XI of FIRREA , as amended from time to 78
time. The appraiser shall not be affiliated with the lender. The valuation 79
may not be discounted or otherwise adjusted from the actual appraised 80
value; 81
(7) A right to cancel the shared appreciation agreement for three 82
business days after consummation or the delivery of all disclosures 83
required pursuant to section 36a-498i of the general statutes , as 84
amended by this act, whichever is later; 85
(8) A provision specifying that: 86
(A) If the borrower is unable to repay the loan in full at maturity 87
without selling the property that is the subject of the shared appreciation 88
agreement, the lender agrees to refinance the remaining balance due 89
with a fully amortizing, thirty-year, closed-end mortgage with a fixed 90
interest rate at the current market interest rate, using the current version 91
of the Fannie Mae-Freddie Mac uniform instruments; and 92
(B) If such refinancing is not completed by the maturity date through 93
no fault of the borrower, the lender agrees not to pursue foreclosure or 94
require sale of such property until the refinanc ing transaction is 95
completed, and only thereafter upon default on the refinanced loan; and 96
(9) A provision requiring that, if the borrower is successful in an 97
action disputing a provision of the shared appreciation agreement , the 98
lender shall be responsible for any reasonable attorney's fees and legal 99
costs incurred by the borrower in connection with such action. 100
(d) A mortgage, deed of trust or equivalent consensual security 101

Raised Bill No. 5209

LCO No. 1577 5 of 6

interest in the borrower's principal dwelling that secures any obligation 102
under a shared appreciation agreement shall state the maximum 103
amount, in dollars, that the borrower may be required to pay pursuant 104
to the agreement. 105
(e) (1) A lender shall not consummate a shared appreciation 106
agreement unless the lender receives documentation disclosing that: 107
(A) The borrower has obtained homeownership counseling from (i) a 108
counseling organization or counselor certified or approved by the 109
United States Department of Housing and Urban Development to 110
provide reverse mortgage or h ome equity conversion mortgage 111
counseling, or (ii) any other person authorized by the Department of 112
Banking; 113
(B) The borrower has received counseling on the cost, affordability 114
and risks of the loan; and 115
(C) The counseling organization, counselor or authorized person had 116
received by the time of the counseling session: 117
(i) A copy of the shared appreciation agreement; and 118
(ii) A cost disclosure form comparable to the loan estimate or final 119
disclosure described by the Real Estate Settlement Procedures Act of 120
1974, 12 USC 2601 et seq., as amended from time to time, and the Truth-121
in-Lending Act, 15 USC Section 1601 et seq., as amended from time to 122
time, and the regulations promulgated under said acts. 123
(2) The counseling organization, counselor or authorized person shall 124
not be liable for determining the accuracy or completeness of any 125
documents provided pursuant to subdivision (1) of this subsection. 126
(f) At the time of consummation of a shared appreciation agreement, 127
the lender shall provide the borrower with contemporaneous access to 128
a representative of the lender who is able to answer any questions the 129
borrower may have about the transaction. 130

Raised Bill No. 5209

LCO No. 1577 6 of 6

This act shall take effect as follows and shall amend the following
sections:

Section 1 October 1, 2026 36a-498i(a)
Sec. 2 October 1, 2026 New section

Statement of Purpose:
To establish various requirements regarding shared appreciation
agreements.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]