Connecticut Foreclosure Laws

Foreclosure laws are the legal procedures by which a lender repossesses collateral for a loan which is in default. These laws are normally applied when one defaults on mortgage repayments. The lender therefore obtains legal right to sell off the property due to non payment by the owner.

Connecticut is known as a lien theory state. This means that property acts as security for the underlying loan and title is held in the name of the borrower. The lender has legal title to the property while the borrower has equitable title to the property also known as equity of redemption. The document that secures title is called a mortgage.

Non judicial foreclosure

This state only allows for a judicial foreclosure because the mortgage document does not contain any power of sale provisions that would allow for a non judicial foreclosure.

Judicial foreclosure

In Connecticut, the lender undertakes judicial foreclosure proceedings. There are two types of judicial foreclosure in this state:

• Strict foreclosure

The court allows the borrower time to pay up all outstanding arrears to redeem property. If he fails to do so, the title to the property will be passed directly to the lender without need for a public auction. After a strict foreclosure is effectuated, the lender is give a period of 30 days to record a certificate of foreclosure which indicated foreclosure proceedings, details of the mortgage and the date title was passed back to the lender.

• Foreclosure by sale

This is where property is sold in a pubic notice auction after the lender files a complaint a long with a lis pendens document in court. This is a public notice document stating that the property has a pending suit on it.

Process period

When a strict foreclosure is uncontested, it can take approximately 60-75 days to close depending on the length of time taken to process court documents. This process may take longer if the borrower contests the action in court seeking adjournment of hearings or files for bankruptcy.

Redemption

The state of Connecticut does not specify a statutory right of redemption for the borrower to redeem property. After foreclosure, a small window for redemption is provided. It a strict foreclosure this period is called a law day which gives the cut off date for redemption. The law day is decided by the court for each foreclosure. Once the law date passes, redemption is no longer possible.

Deficiency judgment

The state does allow for a deficiency judgment when property is sold in an auction for less than the outstanding loan amount. If this happens, the borrower still owes the amount outstanding after sale of property. The court carries out an appraisal and a hearing when a deficiency judgment is sought by the lender to ascertain the deficiency amount.

Notice of Sale

There are no provisions made by law on the issue of sale notification.

Foreclosure laws may change from time to time. It is therefore important to seek advice from a qualified attorney to ensure that you obtain up to date details on foreclosure laws in any state.