Connecticut Foreclosure Laws

Answers

How are mortgage liens treated in Connecticut?

Connecticut is known as a lien theory state where the property acts as security for the underlying loan, however the operative mortgage documents in Connecticut have the same legal effect as a deed of trust in that the mortgagee (creditor) has legal title to the mortgaged premises and the mortgagor (debtor) has equitable title, also called the equity of redemption. The document that places the lien on the property is called a mortgage.

How are Connecticut mortgages foreclosed?

In Connecticut, the lenders go to court in what is known as a judicial foreclosure proceeding. Connecticut has two (2) versions of judicial foreclosure one is known as strict foreclosure and the other is known as foreclosure by sale where the court must issue a final judgment of foreclosure. In the foreclosure by sale the property is sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon. A strict foreclosure is a summary proceeding that usually involves a property with little or no equity. Basically all parties in interest to the mortgage are given a set timetable to make full payment or redeem at the conclusion of which title to the property will pass directly to the lender without a sale if the conditions for redemption are not met.

What are the legal instruments that establish a Connecticut mortgage?

The documents are known as the mortgage, note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in Connecticut?

Depending on the court schedule and method of foreclosure, it usually takes approximately 60-75 days to effectuate an uncontested strict foreclosure. This process may delayed if the borrower contests the action, seeks delays and adjournments of hearings, files for bankruptcy or files a motion for a foreclosure by sale.

Is there a right of redemption in Connecticut?

Generally no. Connecticut has no specific post sale statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. After the sale the court will generally provide a short window for there to be a redemption and in a strict foreclosure the cutoff period is called a law day after which no redemption can be made. There is a time limit to undertake such redemption prior to the sale date.

Are deficiency judgments permitted in Connecticut?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. Deficiency is governed under §49-14 General Statutes of Connecticut. An appraisal process and hearing must be held on any application for a deficiency judgment.

What statutes govern Connecticut foreclosures?

The laws that govern Connecticut foreclosures are found in Title 49 (Mortgages and Liens), Chapter 846 (Mortgages), §49-1 to §49-31j of the General Statutes of Connecticut.