Property Mortgage Laws in Connecticut

Connecticut is often referred to as a lien theory state wherein the title of a property will stay as guarantee, the operational documents of mortgage, though, would have similar lawful effects as of the deed of trust where the creditor holds the title to the property with the debtor holding equitable title, which is known as the equity of redemption. A mortgage is the document through which the lien on the property is placed.

Lenders in Connecticut follow a judicial foreclosure process that is pursued through the court. Two versions of the judicial foreclosure process exist, one is called a foreclosure by sale and the other is called a strict foreclosure, with a court pronouncing the final verdict on the foreclosure.

The foreclosure by sale process has the property being sold as part of a sale that has been publicly announced. The complaint, along with a lis pendens, needs to be filed in the court. A recorded document, which is used to provide public notice about the property being foreclosed upon, is known as a lis pendens.

A strict foreclosure is a proceeding to summarize and generally involves a property that has little or absolutely no equity. A set time-table is given to all the parties who are interested in the mortgage so that they can redeem or make the complete payment, in case redemption conditions aren’t met at the end of this, the property’s title passes to the lender directly.

LEGAL INSTRUMENTS

The documents are generally referred to as the mortgage or note, and a security agreement in the case of commercial transaction. The security agreement is, at times, merged with the mortgage document. A mortgage is filed to substantiate the loan in question and its repayment terms, which find a mention in the note.

TIME PERIOD

It generally takes about 60 to 75 days to bring into effect a strict foreclosure that is not contested; this does depend of the schedule of the court and foreclosure method. If the action is contested by the borrower, if delays or adjournments of hearings are sought, if the borrower files for bankruptcy or if a motion is filed for foreclosure by sale, the process can be stalled.

RIGHT OF REDEMPTION

Connecticut usually has no specific statutory right of redemption through which a foreclosed property can be reclaimed by the owner upon payment of the unpaid loan and costs. The court provides a small window period after the sale to redeem the property and the cut-off period in a strict foreclosure is referred to as a ‘law day’, after which redemption cannot be made. A time limit exists for redemption like this to take place before the date of the sale.

DEFICIENCY JUDGMENT

If a property sells for less than the outstanding amount on the loan in question at the public sale the lender can obtain a deficiency judgment. This results in the borrower owing to the lender the difference of what the property was sold for and the loan amount. Deficiency in Connecticut is governed by §49-14 General Statutes of Connecticut. A process of appraisal and a hearing has to be held for all applications of deficiency judgments.

STATUTES

Foreclosures in Connecticut are governed by laws that are part of Title 49 (Mortgages and Liens), Chapter 846 (Mortgages), §49-1 to §49-31j of the General Statutes of Connecticut.