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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Connecticut

Mortgage Deed. Note: A statutory short form mortgage may be used pursuant to Connecticut General Statutes (hereinafter “CGS”) &sect;&nbsp;47-36c. There is special statutory language required for (i)&nbsp;mortgages securing future advances set forth in CGS &sect;&nbsp;49-2(c), (ii)&nbsp;mortgages securing future advances for construction or repairs set forth in CGS &sect;&nbsp;49-3, and (iii)&nbsp;mortgages securing guaranties of open-end loans set forth in CGS &sect;&nbsp;49-4b.

SECURITY INSTRUMENT USED

2 witnesses and acknowledgment before a notary public or Commissioner of the Superior Court (i.e., an attorney admitted to practice in Connecticut) or other authorized person. CGS &sect;&sect;&nbsp;1-29, 1-30 and 47-5. The recording fees consist of the following: (1)&nbsp;a $60 fee for the first page of the document being recorded; and (2)&nbsp;a $5 fee for each additional page of the document being recorded. These fees apply to mortgages and all other documents being recorded, including assignments of mortgages and releases of mortgages. Note that there is an additional $2 charge for a deed recorded where consideration is being paid. See CGS &sect;&nbsp;7-34a. CGS &sect;&nbsp;7-24(f) requires that the borders of documents contain a blank margin of at least &frac34;” in width and that the top of an instrument to be sent for recording must contain on the first page a return address and addressee. CGS &sect;&nbsp;7-35cc permits the use of electronic documents when the law requires, as a condition of recording, that a document be an original, be on paper or another tangible medium, or be in writing. This section also permits the use of electronic signatures by the signer, any required notary or witness when such signatures are required. CGS &sect;&sect;&nbsp;7-34a(a)(2)(A) and (B)&nbsp;increased recording fees for a “nominee of a mortgage,” which is defined in CGS &sect;&nbsp;7-34a(a)(2)(C) as “any person who (i)&nbsp;serves as mortgagee for a mortgage loan registered on a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential mortgage loans on behalf of its members, and (ii)&nbsp;is a nominee or agent for the owner of the promissory note or the subsequent buyer, transferee or beneficial owner of such note.” The recording fee for a document where Mortgage Electronic Registration Systems Inc. (“MERS”) is the grantor is $159 regardless of the number of pages. Where MERS is the grantee, the fee is $159 for the first page of the document and $5 for each additional page. CGS &sect; 7-34a. The assignment of mortgage in which a “nominee of a mortgagee” appears as assignor and a release of mortgage is a $159 flat fee for the entire assignment of mortgage or release. The Connecticut Supreme Court has upheld the constitutionality of the bifurcated filing-fee system and the higher recording fees imposed on a “nominee of a mortgage.” See MERSCORP Holdings, Inc. v. Malloy, 320 Conn. 448 (2016).

RECORDING REQUIREMENTS

None for residential loans. For commercial loans, waivers of the borrower's rights to prior notice and a hearing regarding a pre-judgment remedy pursuant to CGS &sect;&sect;&nbsp;52-278a through 52-278n are frequently included in commercial loan documents. In addition, it is commonplace for open-end mortgage loans permitting future advances to include a waiver of the borrower's right to terminate the right to make optional future advances secured by such mortgage pursuant to CGS &sect;&nbsp;49-2(c)(7) and record a written notice evidencing such termination.

STATUTES TO BE WAIVED

Residential Mortgage Prepayment penalties. “High-cost home loans” are subject to the Connecticut Abusive Home Loan Lending Practices Act, which prohibits prepayment penalties. CGS &sect;&sect;&nbsp;36a-746 - 36a-746g. Residential Escrow Accounts. Connecticut's residential mortgage servicing law, CGS &sect;&sect;&nbsp;36a-715 to 36a-719l, restricts the ability of a mortgage servicing company to recoup any deficiency in an escrow account. The mortgage servicing law requires mortgage servicing companies to give mortgagors the option of paying a “shortage” (which is a deficiency under the Real Estate Settlement Procedures Act (“RESPA”) and Regulation X) over at least 1 year if the mortgage servicing company underestimates the proper amount of funds to be held in the escrow account. CGS &sect;&nbsp;36a-716(c). The standard provisions in the FannieMae/FreddieMac residential mortgages regarding escrow accounts are nonetheless permissible. Residential Mortgage Prepaid Finance Charges trigger limit on acceleration. Also, CGS &sect;&nbsp;36a-498a prohibits mortgage lenders from including in any residential secondary mortgage loan agreement upon which loan fees, points, commissions, transaction fees, or similar prepaid finance charges have been assessed any provision that permits the lender to demand payment of the entire loan balance prior to the scheduled maturity, except that such loan agreement may contain a provision that permits the lender to demand payment of the entire loan balance if any scheduled installment is in default for more than 60 days or if any condition of default set forth in the mortgage note exists.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Open-end mortgages to secure future advances made pursuant to commercial future advance loans or consumer revolving loans should be made subject to the requirements and restrictions of CGS &sect;&nbsp;49-2(c) to obtain statutory lien priority. Common law mortgages to secure obligatory future advances may also be used. See below regarding securing future advances for construction loans.

SECURING FUTURE ADVANCES

Advances for insurance premiums, taxes, and assessments and payments on prior mortgages are a part of the debt secured by the mortgage. CGS &sect;&nbsp;49-2(a). Advances up to $5,000 can be made for repairs, alterations, and improvements. CGS &sect;&nbsp;49-2(b).

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL

Advances for the construction or repair of buildings or improvements is valid to secure all money actually advanced pursuant to the terms and conditions of the mortgage up to the full amount of the loan authorized by the mortgage, with the same priority as if such money had been advanced at the time the mortgage was delivered, so long as the mortgage contains the specific language required by CGS &sect;&nbsp;49-3. The time to complete the construction or repair may be modified without affecting the priority of the mortgage. See CGS &sect;&nbsp;49-3.

SECURING FUTURE ADVANCES FOR CONSTRUCTION LOANS

A mortgage given to secure payment of a note, which furnishes information from which there can be determined the date, principal amount and maximum term of the note, is deemed to give sufficient notice of the nature and amount of the obligation to constitute a valid lien securing payment of all sums owed under the terms of the note. In the event that the note provides that the interest rate is variable, care should be taken to ensure that the mortgage conforms to the requirements of CGS &sect;&nbsp;49-31b(b). Typically, attaching the note as an exhibit to the mortgage (or attaching the relevant provisions of the loan agreement if such matters are not included in the note) has become customary in Connecticut to satisfy the “safe harbor” requirements of CGS &sect;&nbsp;49-31b.

SAFE HARBOR

TRUSTEE UNDER DEED OF TRUST: Not applicable.

TRUSTEE UNDER DEED OF TRUST

Connecticut law requires judicial foreclosure of mortgages. When judgment is entered in a foreclosure action, CGS &sect;&nbsp;49-24 gives the court the discretion of entering a judgment of foreclosure by sale or a judgment of strict foreclosure. If there is equity in the property, the court generally will order a foreclosure by sale. See Voluntown v. Rytman, 27 Conn. App. 549, 555 (1992) (“&hellip; when the value of the property substantially exceeds the value of the lien being foreclosed, the trial court abuses its discretion when it refuses to order a foreclosure by sale.”). The court must also order a foreclosure by sale if the United States is a party to the foreclosure (i.e., there are federal tax liens filed against the property). 28 U.S. Code &sect;&nbsp;2410. If there is no equity, the court generally will enter a judgment of strict foreclosure. In a foreclosure by sale, the court appoints a Committee to arrange for the sale of the property. The court also schedules a sale date (typically, on a Saturday). The Committee then obtains an appraisal, advertises the auction, obtains liability insurance, and conducts the auction. The property is then sold subject to court approval to the highest bidder on the auction date. Foreclosure bid requirements are determined by the court. Typically, each bidder must provide a certified or cashier's check for 10% of the appraised value in order to bid in the auction. The Committee then makes a report to the court and moves the court for an order approving the sale. After the sale is approved, the successful bidder is required to close (i.e. pay the remaining 90%) within 30 days. Thereafter, the Committee provides the successful bidder with a court approved Committee deed evidencing transfer of the ownership and returns the proceeds of the sale to the court for disbursement to the lien holders in accordance with their respective priorities (after payment of the committee fees and expenses, which typically include the appraiser's fee). CGS &sect;&nbsp;49-25. If the plaintiff is paid the total judgment debt and costs before the sale, further proceedings are stayed, and the sale is cancelled. Furthermore, the owner has the equitable right of redemption up until the court issues an order of confirmation approving the sale. If the foreclosure sale does not close, the committee may arrange for another auction or opt for strict foreclosure, and the owner's equitable right of redemption remains. If a judgment of strict foreclosure is entered, the court sets “law days” for the owner of the property and the holder of each encumbrance that is subsequent to the mortgage held by the foreclosing party (encumbrances prior in right to the foreclosing party are not subject to the foreclosure action). The first law day is assigned to the owner of the property and subsequent law days are assigned to the holders of encumbrances on the property in the inverse order of their priorities. If a party does not redeem (i.e., pay the amount due under the mortgage being foreclosed) on the date assigned as its respective law day, that party's interest in the property is foreclosed and that party no longer has an interest in the property. If no party redeems, title to the property vests in the foreclosing party at 5:00 PM after the expiration of the final law day passing without redemption. CGS &sect;&nbsp;49-19. A foreclosure generally takes approximately 6 to 18 months. Uncontested foreclosures take a minimum of 4 months. Contested foreclosures generally have taken 12 to 24 months but increasingly residential foreclosures have taken longer since the subprime mortgage crisis in 2007 and the ensuing foreclosure mediation legislation (see Ezequiel Santiago Foreclosure Mediation Program section). Since January 1, 2015, an additional method of foreclosure by market sale is available (CGS &sect;&sect;&nbsp;49-24a to 49-24g). Limited to owner-occupied 1-4-family properties in default where foreclosure has not commenced, the market sale option permits lenders and sellers to agree to a market sale. The parties determine a listing price and the property is marketed using a standard listing agreement. Once an offer to contract is made that is acceptable to seller and lender; the lender may commence foreclosure and, on or after 10 days from return date, file a motion for judgment by market sale. The court then orders a foreclosure by market sale and appoints a Committee who conducts the closing, in much the same manner as a foreclosure by sale. Subordinate lienholders are provided a law day to redeem the property for the agreed upon sales price. In addition, other processes affecting underwater residential mortgages were enacted effective October 1, 2016, which allow certain underwater mortgages to be modified without a junior lienholder's consent, or for the borrower to satisfy his or her obligation by conveying the property to a third party (i.e., a short sale) or to the lender (i.e., a deed in lieu of foreclosure). See Public Acts 16-65, &sect;&sect;&nbsp;73-80 & 91.

BRIEF DESCRIPTION OF PROCEDURE

Since 2008, Connecticut has mandated the mediation of foreclosures of mortgages constituting first or second consensual liens (including, reverse mortgages and home equity conversion mortgages) of residential real property. CGS &sect;&sect;&nbsp;49-31l et seq., as amended by Public Act No. 21-44, An Act Concerning The Ezequiel Santiago Foreclosure Mediation Program And Other Alternatives To Foreclosure (effective October 1, 2021). Note: All statutory references in this section reflect the amendments made by Public Act 21-44. The Ezequiel Santiago Foreclosure Mediation Program (“Mediation Program”) is available to owner-occupants of 1-4-family residential real property (including, a single-family unit in a common interest community). Participants must be the homeowner and the borrower of the mortgage, and the property must be the borrower's primary residence. For all foreclosure actions that meet these eligibility requirements with return dates from July 1, 2009, to June 30, 2029, the foreclosure mediation process is mandatory if the borrower chooses to participate. The Mediation Program has the effect of staying action in the foreclosure case (except for necessary filings, such as answers and special defenses, and motions directly related to the Mediation Program) for a period of up to 8 months from the return date of the action. In these situations, no judgment of strict foreclosure or foreclosure by sale can be entered, until the mediation period has expired or otherwise terminated or 15 days after such expiration or termination (or a court order denying a request to extend the mediation period) if the same occurs prior to the end of the stay period. CGS &sect;&nbsp;49-31l (f) and Public Act Nos. 15-124 and 21-44. Foreclosure mediators are employed by the Judicial Branch, trained in mediation and all relevant aspects of the law, as determined by the Chief Court Administrator, have knowledge of the community-based resources that are available in the judicial district in which they serve, have knowledge of the mortgage assistance programs, must be unbiased, and may not give legal advice to any of the parties. CGS &sect;&nbsp;49-31m. In any residential foreclosure action with a return date before June 30, 2029, the lender must attach to the foreclosure complaint a notice of foreclosure mediation, a foreclosure mediation certificate, and a blank appearance form (all of which must be in a form prescribed by the Chief Court Administrator), together with a mediation information form and a notice containing contact information for authority-approved consumer credit counseling agencies. The mediation information form shall instruct the mortgagor to gather the financial information that will be needed to participate in the Mediation Program. CGS &sect;&nbsp;49-31l (c). The notice and certificate should be attached to the front of the writ of summons. CGS &sect;&nbsp;49-31l(b). The borrower must file its appearance and the mediation certificate within 15 days of the return date. CGS &sect;&nbsp;49-31l(c). If the borrower does not timely file its forms, the court cannot schedule the case for the Mediation Program absent a showing of good cause. CGS &sect;&nbsp;49-31l(d). Within 3 business days of receiving the borrower's appearance and properly completed mediation forms or at least 5 business days after the return date, the court will notify all parties that the case has been assigned to the Mediation Program. CGS &sect;&nbsp;49-31l(d). The lender will than have a period of time to provide the mediator and the borrower with a package of financial information including, without limitation, an account history of the loan and any associated escrow account for the 12-month period preceding the foreclosure, a copy of the note and relevant mortgage documents, the lender's required forms for the borrower to apply for mortgage assistance, and all documentation reasonably necessary for the parties to evaluate common alternatives to foreclosure. CGS &sect;&nbsp;49-31l(d). After receiving the information package from lender, the mediator must schedule the first mediation date. CGS &sect;&nbsp;49-31l(d). Under CGS &sect;&nbsp;49-31n(a), the mediation period commences when the court sends the notice of mediation to all parties scheduling the first session. CGS &sect; 49-31l(d) requires that the mediation commence within 49 days of the return date of the complaint. The borrower and lender must attend each mediation session in person, but the lender's attorney can attend in the lender's place if the attorney has the authority to agree to a proposed settlement and if the lender is available by telephone. Additionally, the mediator may elect to conduct a mediation session on a virtual platform or grant permission to a party to attend virtually. The borrower may be excused from appearing upon a showing of good cause, including but not limited to, the borrower no longer owning the property following a divorce, or that the borrower no longer resides in the home. CGS&nbsp;&sect;&nbsp;49-31n(b). The court may impose sanctions (e.g., fines, terminating mediation, forbidding an award of attorney's fees) on any party who engages in a pattern or practice of conduct during the mediation process that is contrary to the objectives of the Mediation Program. CGS&nbsp;&sect;&nbsp;49-31n(b). The chief court administrator has established policies and procedures for the Mediation Program, which include provisions requiring the mediator to advise the borrower at the first mediation session that: (i) the mediation does not suspend the borrower's obligation to respond to the foreclosure action in accordance with the court's rule; and (ii) a judgment of strict foreclosure or foreclosure by sale can cause the borrower to lose the residential real property to foreclosure. In addition to the minimum procedure requirements, CGS &sect;&nbsp;49-31n(b) requires the mediator to file a report with the court within 3 business days after each mediation session. The report must include, inter alia, a summary of the parties' compliance with the program's requirements and an indication of whether the parties will benefit from further mediation. The Mediation Program does not require the lender to modify the mortgage or change the terms of payment. Additionally, determinations issued by mediators cannot form the basis of an appeal of any foreclosure judgment. CGS &sect;&nbsp;49-31n(f). None of the mortgagor's or mortgagee's rights in the foreclosure action shall be waived by participation in the Mediation Program.

Ezequiel Santiago Foreclosure Mediation Program

There is no statutory redemption period (except in the case of a tax foreclosure). Redemption may be exercised in a strict foreclosure until the debtor's “law day” (as discussed above) has passed or in a foreclosure by sale until the court issues an order confirming the sale. Following entry of judgment of foreclosure, there is only a 20-day appeal period. The court can, however, select a distant date for the foreclosure sale or law day to enable the owner the opportunity to tender payment of the mortgage debt and redeem the property before the owner's law day or the foreclosure sale. The court may also move out the sale or law days upon request of the parties and a showing of good cause.

REDEMPTION PERIOD AND PRICE

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

A motion for a deficiency judgment must be made within 30 days of passing of owner's law day in the case of a strict foreclosure. CGS &sect;&nbsp;49-12. There is no statutory time period for a motion for a deficiency judgment following a foreclosure by sale. Connecticut's one-action rule, found in CGS &sect;&nbsp;49-1, generally provides that the foreclosure of a mortgage is a bar to any further action upon the mortgage debt, note, or obligation against the person or persons who are liable for the payment thereof who are or who could have been made parties to the foreclosure action.

DEFICIENCIES

Foreclosure terminates subordinate leases whether or not the tenants are parties to the foreclosure action, assuming there is no privity between tenant and lender as to attornment. However, extinguishment of the lease does not make the tenant a trespasser, but rather a tenant at sufferance, so that the lender must bring a summary process action in order to obtain possession (whereas, if the lender had named the tenant in the foreclosure action, ejectment in the foreclosure action would have been available to obtain possession). For residential properties under CGS &sect;&nbsp;47a-20e, though, all acts for ejectment or eviction against tenants holding such subordinated leasehold interests, if the interest was obtained from either the property owner or the mortgagor, are stayed for no more than 60 days for written rental agreements and 30 days for other rental agreements. Mortgagees or other lien holders may induce such tenants to vacate the property before eviction or ejectment may take place (i.e., “cash for keys”), but CGS &sect;&nbsp;47a-20f, requires that the offer to vacate “shall be at least equal in amount or value to the greater of (1)&nbsp;the security deposit and interest that would be due such tenant pursuant to chapter 831 upon the termination of the tenancy plus any such security deposit and interest, (2)&nbsp;two months' rent, or (3)&nbsp;two thousand dollars.” Note: The 2010 Public Act Summary Book of the Connecticut Office of Legislative Research states that the statute requires an offer to the tenant that is at least equal to the greater of (i)&nbsp;double the security deposit and interest legally due to the tenant, (ii)&nbsp;2 months' rent, or (iii)&nbsp;$2,000. Note also that recently enacted legislation protects tenants of properties involving federally-related mortgage loans or any residential property occupied by a Section 8 tenant, which mandates that the immediate successor in interest takes the foreclosed property subject to (1) the lease between the tenant and prior owner and (2) the housing assistance payments contract between the prior owner and the public housing agency administering the program. See Public Acts 16-65, &sect;&sect;&nbsp;43-44. Effective July 1, 2021, the legislature established a statewide “right to counsel program” to provide free legal representation to income-eligible tenants, lessees and occupants of any residential building or land (i.e., “covered individuals”) in an eviction proceeding or administrative proceeding necessary to preserve a state or federal housing subsidy or prevent a proposed lease termination initiated on or after July 1, 2021. See Public Act 21-34.

EFFECT OF FORECLOSURE UPON LEASES

12%. See CGS &sect;&nbsp;37-4; however, note the exemption below for any bona fide mortgage of real property for a sum in excess of $5,000.

USURY CEILING

CGS &sect;&nbsp;37-9 provides a usury exemption for: (1)&nbsp;any loan made by (A)&nbsp;a Connecticut chartered bank, a federally chartered bank that has its principal office in Connecticut, or an out-of-state bank that maintains a branch in Connecticut, (B)&nbsp;any wholly-owned subsidiary of such a bank, except a loan for consumer purposes, or (C)&nbsp;any Connecticut credit union or federal credit union; (2)&nbsp;any bona fide mortgage of real property for a sum in excess of $5,000; and (3)&nbsp;commercial loans in excess of $250,000 made to a foreign or domestic corporation, statutory trust, limited liability company, general, limited or limited liability partnership or association organized for a profit or any individual, provided that any such entity or individual is engaged primarily in commercial, manufacturing, industrial or non-consumer pursuits and provided further that the proceeds of the loan are used in the entity's business or investment activities and not for consumer pursuits. The rate of interest on commercial loans between $10,000 and $250,000 made to a corporation, partnership, for-profit association, or individual engaged primarily in commercial manufacturing, industrial or non-consumer pursuits may not exceed: (a)&nbsp;the deposit index published annually by the Banking Commissioner under CGS &sect;&nbsp;49-2a(c) (the interest rate index for the required interest on escrows for residential mortgage loans) plus (b)&nbsp;17%.

USURY EXEMPTIONS

Secretary of State's Office (30 Trinity Street, Hartford, CT 06106) for personal property (other than fixtures). Land records maintained by town clerk for town or city in which property is located for fixtures. Note: There are 169 towns in Connecticut.

LOCATION(S) FOR FILING

Permissible. CGS &sect;&nbsp;42a-9-501 provides that a mortgage that grants a security interest in goods that are or are to become fixtures is an effective filing as to said goods when recorded in the office of the town clerk where the fixtures are located. The mortgage must comply with the requirements of CGS &sect;&nbsp;42a-9-502 for a financing statement. Connecticut adopted the revised Article 9 of the Uniform Commercial Code effective October&nbsp;1, 2001.

SECURITY INSTRUMENT USED AS FIXTURE FILING

Mortgages securing guaranties of open-end loans should describe the loan terms and the mortgagor's liability as prescribed by CGS &sect;&nbsp;49-4b.

UNUSUAL PROVISIONS OR REQUIREMENTS

For commercial loans, waivers of the guarantor's rights to prior notice and a hearing regarding a pre-judgment remedy pursuant to CGS &sect;&sect;&nbsp;52-278a through 52-278n are frequently included in commercial loan guaranties. Waiver of those statutory rights is not available for residential loans. See also, HOMESTEAD ISSUES section.

Lenders are permitted to pursue guarantors personally for the deficiency (loan balance) due on the loan after foreclosure. To do so, a deficiency judgment must be obtained by the lender. Thereafter, the lender can collect the deficiency judgment from assets of the guarantor including real estate, personal property (e.g., bank accounts, jewelry, other goods) and wage executions. The procedure to obtain a deficiency judgment is set forth in CGS &sect;&sect; 49-1, 49-14, 49-28 and Conn. Practice Book &sect; 23-19. Based on Connecticut's one-action rule (CGS &sect;&nbsp;49-1), deficiency judgments may be sought against guarantors in the foreclosure action, so long as the guarantor is made a party defendant in the foreclosure action. In 2014, the Connecticut Supreme Court held in JP Morgan Chase Bank, N.A. v. Winthrop Props., LLC, 312 Conn. 662, 686 (2014) that Connecticut's one-action rule does not prevent a mortgagee from obtaining judgment on a separate cause of action in a foreclosure complaint against a guarantor for breach of his/her/their personal guarantee.

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

CGS &sect; 52-576 sets forth a 6-year statute of limitations for contracts (including notes). Despite this 6-year statute of limitations to enforce a note, an action may be commenced to foreclose a mortgage which secures a note that is more than 6 years old. Under CGS &sect; 49-13a, a mortgage is deemed invalid, and thus unenforceable when either; (a) the mortgage is more than 40 years old and there is no maturity date stated; or (b) more than 20 years have elapsed beyond the stated maturity date.

STATUTE OF LIMITATIONS PERIOD

CGS &sect;&nbsp;49-9 sets forth the statutory form of release of mortgage. CGS &sect;&nbsp;49-8 requires mortgagees to execute and deliver a release upon the satisfaction of the mortgage. It also requires that the mortgagee shall execute and deliver a release within 60 days from the date a written request for a release was sent to the mortgagee. (If the request is sent by registered or certified mail, the 60-day period accrues from the date the written request was sent to the mortgagee. However, if the written request is sent by another means of communication, the 60-day period accrues from the date the mortgagee receives the written request.) A mortgagee is liable for damages at the rate of $200 per week for the failure of the mortgagee to execute and deliver a release (subject to a maximum of the greater of $5,000 or the actual loss sustained by the aggrieved person), plus costs and reasonable attorney's fees. A violation of CGS &sect;&nbsp;49-8 constitutes a tort action with a 3-year statute of limitations. Bellemare v. Wachovia Mortgage Corp., 894 A.2d 335 (2006), 931 A.2d 916 (2007). In connection with residential secondary mortgage loans made by non-depository mortgage lenders, CGS &sect;&nbsp;36a-498b requires that such lenders deliver to the mortgagor a release of a second mortgage: (1)&nbsp;upon receipt by the lender of cash or a certified check in the amount of the outstanding balance of the loan; or (2)&nbsp;upon payment by the payor bank of any check that is payable to the lender or its assignee in the amount of the outstanding balance of the loan.

REQUIREMENTS FOR RELEASE OF LIEN

CGS &sect;&nbsp;52-352b, as amended by Section 1(21) of Public Act 21-161, provides for an exemption from attachment and execution for, among other property, the homestead of the exemptioner (i.e.,&nbsp;homeowner) to the value of $75,000 or $125,000 in the case of a money judgment arising out of services provided at a hospital, provided value shall be determined as the fair market value of the real property less the amount of any statutory or consensual lien that encumbers it. As a result, the homestead exemption would not impede the foreclosure of a mortgage. CGS 52-352a defines “homestead” as owner-occupied real property, co-op, or mobile manufactured home used as a primary residence. Under Connecticut caselaw, nonconsensual liens cannot be waived from the homestead exemption, but consensual liens (e.g., a mortgage granted by debtor to creditor) may be waived unless contradictory to public policy. See Tuxis-Ohr's Fuel, Inc. v. Trio Marketers, Inc., 2005 Conn. Super. LEXIS 2848 (Super. Ct. Oct. 26, 2005) (the waiver of the homestead exemption in a personal guaranty agreement is void on the basis that it violates public policy); Rockstone Capital, LLC v. Sanzo, 332 Conn. 306, 210 A.3d 554 (2019) (upholding the homestead waiver in a consensual mortgage granted by the debtor in connection with a forbearance agreement).

HOMESTEAD ISSUES

COMMUNITY PROPERTY

MORTGAGE TAX

DOCUMENTARY STAMP TAX

State and municipal conveyance taxes apply pursuant to CGS &sect;&nbsp;12-494 et seq. Connecticut imposes a conveyance tax based on the consideration for the transfer. The assumption of a mortgage may be considered to be part of the consideration for a transfer. There are a number of exemptions contained in CGS &sect;&nbsp;12-498. Municipal Conveyance Tax: 0.25% of the consideration for the transfer except that in the City of Stamford the municipal conveyance tax is 0.35% of the sales price up to $999,999.99 and 0.50% for any amount of the sales price at or above $1,000,000.00. In addition, CGS &sect;&nbsp;12-494 permits any “targeted investment community” (a distressed municipality with a designated “enterprise zone”), and any municipality that has designated any property as a “manufacturing plant” to impose an additional municipal conveyance tax on a conveyance of any property in such municipality, at the rate of 0.25% of the consideration. State Conveyance Tax: The state conveyance tax for residential property is currently a tiered tax. For transactions of residential property in which the consideration for the transfer is $800,000 or less, the state conveyance tax is 0.75% for the full amount. For transactions of residential property in which the consideration for the transfer is greater than $800,000, the state conveyance tax is the sum of (a)&nbsp;0.75% of the consideration up to $800,000, (b)&nbsp;1.25% of the remaining consideration in excess of $800,000 up to $2,500,000, and (c)&nbsp;2.25% of the consideration in excess of $2,500,000. For transfers of non-residential real property (other than unimproved land such as farm, forest, or open space land, pursuant to CGS &sect; 12-494(b)), the state conveyance tax is 1.25% of the consideration. If the commercial real estate is so-called unimproved commercial real estate, the conveyance tax rate is 0.75% of the consideration for the transfer. On Foreclosure Sale: CGS &sect;&nbsp;12-498(a)(9) exempts conveyances pursuant to a foreclosure sale from the conveyance taxes imposed by CGS &sect;&nbsp;49-24. Transfers in Lieu of Foreclosure and “Short Sales”: CGS &sect;&nbsp;12-494 provides that, in the case of any conveyance of real property for which mortgage payments have been delinquent for no less than 6 months to a financial institution or its subsidiary that holds such a delinquent mortgage on such property, the state conveyance tax shall be imposed at the rate of 0.75%. However, CGS &sect;&nbsp;12-498(a) exempts from the state and municipal real estate conveyance taxes all transfers in lieu of foreclosure that transfer the principal residence of the transferor and all short sales of the transferor's principal residence in which the gross purchase price is insufficient to pay the sum of (a)&nbsp;the mortgages encumbering the property and (b)&nbsp;any real property taxes or other charges for which the municipality may place a lien on the property and that have priority over the mortgages encumbering the property transferred.

TRANSFER TAX

Connecticut courts generally enforce choice of law provisions, unless either (a)&nbsp;the chosen state has no substantial relationship with the parties or the transaction, and there is no other reasonable basis for the parties' choice or (b)&nbsp;the application of the law of the chosen state would be contrary to the fundamental policy of a state with a materially greater interest than the chosen state in the determination of the particular issue and which would be the state of the applicable law in the absence of an effective choice of law of the parties.

ENFORCEABILITY OF AGREEMENTS AS TO CHOICE OF LAW

CGS &sect;&nbsp;52-504 permits parties to apply to the court for a receiver, but the statutes do not specify any conditions precedent. Instead, based on the court rules in the Connecticut Practice Book, the decision to appoint a receiver lies within the court's equitable jurisdiction and is subject to the court's discretion. Court rules distinguish between and impose different conditions on a party seeking a temporary receiver, a permanent receiver, and/or a receiver of rents. Public Act 21-80 adopts the Uniform Commercial Real Estate Receivership Act in Connecticut, which became effective July&nbsp;1, 2022.

RECEIVERSHIP

Residential Disclosures. In connection with first and secondary (i.e. second and more junior) residential mortgage loan transactions, mortgage lenders must provide mortgage loan applicants with disclosures relating to legal representation and the availability of appraisal reports. In connection with residential first mortgage loans, mortgage lenders must also provide disclosures to applicants regarding the lender's interim financing policy (i.e., the availability of bridge loans) and mortgage insurance requirements. Residential Mortgage Processing. Connecticut's mortgage processing law (CGS &sect;&sect;&nbsp;36a-705 through 36a-708) requires that rate lock-in agreements for residential first mortgage loans be in writing and contain certain terms. This law also requires that residential first mortgage loan applications be processed within 90 days for loans with loan to values of 80% or less or within 120 days for loans with LTVs of over 80%. Brokers cannot lock rates but can forward a lender's rate lock to applicants. Residential Mortgage Refundability of Advance Fees by First and Secondary Mortgage Lenders and Brokers. Nondepository residential first and secondary mortgage lenders must make their advance fees (i.e.,&nbsp;fees payable in advance of closing) refundable to the borrower unless the advance fee is set forth in a separate agreement signed by the borrower prior to payment of the fee and in a specific format required by CGS &sect;&nbsp;36a-498. The agreement must conspicuously state the conditions under which the advance fee will be retained by the lender or broker and use the term “non-refundable” to describe each such advance fee. The agreement must contain a heading in at least 10-point bold face type with the title “Agreement Concerning Non-Refundability of Advance Fee.” An “Advance Fee” is any consideration paid or given, directly or indirectly, to a mortgage lender or mortgage broker prior to the closing of a mortgage loan. An Advance Fee includes loan fees, points, commissions, transaction fees, or similar prepaid finance charges. Limit on Prepaid Finance Charges for Residential First Mortgage Loans. CGS &sect;&nbsp;36a-498a prohibits any mortgage lender from making a first mortgage loan and charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate the greater of 5% of the principal amount of the loan or $2,000. If the proceeds of the loan are used to refinance an existing loan, the aggregate of the prepaid finance charges for the current refinancing and any previous financings by such lender within 2 years of the current refinancing cannot exceed the greater of 5% of the principal amount of the initial loan or $2,000. Limit on Prepaid Finance Charges for Secondary Residential Mortgage Loans. CGS &sect;&nbsp;36a-498a provides that residential secondary mortgage lenders cannot charge, impose, or cause to be paid, directly or indirectly, in connection with any secondary mortgage loan transaction, prepaid finance charges that exceed in the aggregate 8% of the principal amount of the loan. Residential Predatory Lending Law. The Connecticut Abusive Home Loan Lending Practices Act (CGS &sect;&sect;&nbsp;36a-746 through 36a-746g) is similar to the federal law known as “The Home Ownership and Equity Protection Act” (“HOEPA”). This law applies to “high cost home loans.” A “high cost home loan” means a residential loan for which the APR equals or exceeds the HOEPA “rate” trigger (i.e., for which the APR at consummation will exceed the yield on Treasury securities having comparable periods of maturity to the loan maturity plus 6.5 percentage points for first mortgage loans or plus 8.5 percentage points for secondary mortgage loans). When triggered, this law requires HOEPA-like disclosures, prohibits balloon payments on loans with terms of less than 7 years, prohibits negative amortization, and limits prepayment penalties. This law also prohibits any residential mortgage lender from charging, imposing, or causing to be paid, directly or indirectly, prepaid finance charges that exceed the limits on prepaid finance charges for residential first mortgage loans (described above) on any high cost home loan (either first or subordinate lien). Unlike HOEPA, the Abusive Home Loan Lending Practices Act applies to purchase money loans and construction loans used to finance the borrower's initial acquisition or construction of the property and home equity lines of credit. Responsible Lending/Nonprime Home Loan Law. Public Act 08-176, An Act Concerning Responsible Lending and Economic Security, significantly revised Connecticut's residential mortgage lending law. This Act, as codified in CGS &sect;&nbsp;49-31 et seq.: (1)&nbsp;established a foreclosure mediation program; (2)&nbsp;classified certain loans as “nonprime home loans” and imposed new requirements and restrictions on such loans, (3)&nbsp;authorized the Banking Commissioner to participate in the “National Mortgage Licensing System”, and (4)&nbsp;amended existing mortgage lending laws, including those provisions relating to mortgage professionals. Definition of Nonprime Home Loans. Under CGS &sect;&nbsp;36a-760, a “nonprime home loan” is any loan or extension of credit (other than an open-end line of credit secured by the consumer's dwelling and a reverse mortgage transaction): <ol>
 <li>where the borrower is a natural person;</li>
 <li>the proceeds are primarily for personal, family, or household purposes;</li>
 <li>that is secured by a mortgage on a 1-4-family residential property located in Connecticut that is, or is intended to be, used or occupied by the borrower as a principal residence;</li>
 <li>where the principal does not exceed $417,000;</li>
 <li>that is not a CHFA loan; and</li>
 <li>where, at the time the loan is consummated, the difference between (a)&nbsp;the annual percentage rate (APR) for the loan or extension of credit and (b)&nbsp;the yield on United States Treasury securities having comparable periods of maturity is either: (i)&nbsp;1.50% or more on first mortgage loans, or (ii)&nbsp;3.50% or more on second mortgage loans. The Act requires the difference between the APR and the yield to be determined using the procedures and calculation methods applicable to loans that are subject to the reporting requirement of the federal Home Mortgage Disclosure Act.</li>
</ol> Restrictions/Requirements Applicable to Nonprime Home Loans. CGS &sect;&nbsp;36a-760a et&nbsp;seq. places the following requirements and prohibitions upon nonprime loans. Lenders are prohibited from engaging in any misleading, deceptive, or untruthful conduct in any transaction, practice, or course of business in connection with making a nonprime home loan. Connecticut law also imposes a good faith duty (i.e., reasonable common standards of fair dealing) on mortgage brokers and lenders in favor of nonprime home loan borrowers. For nonprime first mortgage home loans, lenders must give borrowers: (1)&nbsp;a notice or letter that generally describes the transaction's terms within 3 business days of the closing and (2)&nbsp;within a reasonable time period, a notification of any subsequent material changes to the transaction's terms. Lenders also are prohibited from making nonprime home loans (excluding FHA loans) unless they reasonably believe, when the loan is consummated, that 1 or more of the people who are incurring the debt will be able, individually or collectively, to make the scheduled payments and pay the related taxes and insurance. Lenders cannot make nonprime home loans where any of the proceeds are used to fully or partially pay off a “special mortgage” on the same property (such as a loan originated, subsidized, or guaranteed by or through a state, federal, tribal, or local government or a nonprofit organization). Lenders must also generally collect a monthly escrow for payment of property taxes and homeowner's insurance for first-mortgage nonprime home loans. Lenders cannot make, and brokers cannot offer, a nonprime home loan that refinances a mortgage unless the loan provides the borrower with a tangible net benefit. Except for FHA loans, lenders cannot offer nonprime home loans that contain a prepayment penalty. Finally, Public Act 09-207, as codified in CGS &sect;&nbsp;36a-760e, significantly expanded the list of provisions that are prohibited in nonprime home loans: (a)&nbsp;For loans with a term of less than 7 years, a payment schedule where the aggregate payments do not equal the outstanding principal balance (excluding bridge loans connected with the acquisition or construction of a borrower's principal dwelling with a term of less than 1 year); (b)&nbsp;a payment schedule with regular periodic payments that cause the principal balance to increase; (c)&nbsp;a payment schedule that consolidates more than 2 periodic payments and pays them in advance from the proceeds, unless such payments are required to be escrowed by a governmental agency; (d)&nbsp;default charges in excess of 5% of the amount in default; and (e)&nbsp;a call provision that permits the lender, in its sole discretion, to accelerate the indebtedness (unless acceleration is precipitated by a bona fide default pursuant to any provision unrelated to the payment schedule, such as a due-on-sale provision). Residential Mortgage Default Rates of Interest. Public Act 09-207, as codified in CGS &sect;&nbsp;36a-498(h), prohibits the use of default rates of interest in all residential mortgage loans except for a default for failure to maintain an automated payment feature and then only to the extent that the rate increases do not exceed the rate reduction provided in return for the automated payment feature. Residential Mortgage Loan Policy. CGS &sect;&nbsp;36a-498c requires that 1-4-family residential mortgage lenders annually adopt a mortgage loan policy for subprime and nontraditional loans made by the lenders. The policy must be based on and consistent with the most current version of the Conference of State Bank Supervisors, American Association of Residential Mortgage Regulators and National Association of Consumer Credit Administrators “Statement on Subprime Mortgage Lending”, and the Conference of State Supervisors and American Association of Residential Mortgage Regulators “Guidance on Nontraditional Mortgage Product Risks.”

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

CGS &sect;&nbsp;36a-486 prohibits any person from making residential mortgage loans or acting as a mortgage broker (for 1-4-family owner-occupied residential property) unless such person has first obtained the required license for its main office and each branch office where such business is conducted in accordance with CGS &sect;&sect;&nbsp;36a-485 through 36a-498f, 36a-534a and 36a-534b. All new applications must be submitted to the Connecticut Department of Banking via the National Mortgage Licensing System. These provisions do not apply to a bank, an out-of-state bank, a Connecticut credit union, a federal credit union, an out-of-state credit union, a person to the extent that such person makes loans for agricultural, commercial, industrial or governmental use. The Connecticut Department of Banking also licenses mortgage servicers under CGS &sect;&sect; 36a-717 et seq. and residential mortgage lead generators under CGS &sect;&sect; 36a-488 et seq. Effective October 1, 2021, Section 5 of Public Act 21-138 amends the definition of “residential mortgage loans” under CGS &sect;&nbsp;36a-485 to include “shared appreciation agreements” as defined under that amended statute. Effective July 1, 2021, the Connecticut Banking Commissioner issued an Order Establishing Requirements for Conducting Business from a Remote Office Location in order to extend the ability of mortgage loan originators and other individuals engaged in licensable activity to work from remote office locations pursuant to the authority set forth in Section 205 of Senate Bill 1202 of the June 2021 Special Session of the Connecticut General Assembly. MODIFICATION - UNUSUAL PROVISIONS OR REQUIREMENTS FOR MODIFICATIONS OF EXISTING MORTGAGE LOANS: None.

LENDER QUALIFICATION AND/OR LICENSURE

CGS &sect;&nbsp;22a-133dd (entry onto property to perform environmental site assessment or investigation on behalf of municipality) allows, among other things, a municipality that holds a tax lien, or a licensed environmental professional employed or retained by said municipality, to enter without liability upon any property within such municipality for the purpose of performing an environmental site assessment or investigation. This statute does not in itself confer the right to impose a lien. Connecticut does not have a similar statute allowing such access rights to a private party to perform remediation. Further, under CGS &sect;&sect; 22a-133aa through 22a-133cc, a “Covenant Not to Sue” is available from the State under certain circumstances and subject to certain requirements. CGS &sect;&nbsp;22a-134 et seq., the Connecticut Transfer Act, places certain responsibilities upon any party that transfers an “establishment” at which hazardous waste has been generated, to which hazardous waste from a different location was brought, or that has been used for certain business activities. An “establishment” is defined under the Act as any real property at which or any business operation from which: (A)&nbsp;on or after November 19, 1980, there was generated, unless it meets one of this subparagraph's exceptions, more than 100 kilograms of hazardous waste in any month; (B)&nbsp;hazardous waste generated at a different location was recycled, reclaimed, reused, stored, handled, treated, transported, or disposed of; (C)&nbsp;the process of dry cleaning was conducted on or after May 1, 1967; (D)&nbsp;furniture stripping was conducted on or after May 1, 1967; or (E)&nbsp;a vehicle body repair facility was located on or after May 1, 1967. Conveyances of real property constituting an “establishment” by foreclosure or a deed in lieu of foreclosure are exempt from the Connecticut Transfer Act pursuant to CGS &sect;&sect;&nbsp;22a-134(1)(B) and (C). However, the obligations imposed by the Connecticut Transfer Act would apply to any subsequent conveyance of the real property or transfer of the business constituting the “establishment,” unless otherwise exempted. The Connecticut General Assembly passed legislation in October 2020 authorizing the development of a release-based remediation program and eventual sunset of the Transfer Act. Under certain circumstances, CGS &sect;&nbsp;22a-133o(a) authorizes the recording of environmental land use restrictions (“ELURs”) or notice of activity and use limitations (“NAULs”), which may be used in conjunction with an alternative remediation standard to remediate certain properties. An ELUR is an easement that is granted to the Commissioner of the Connecticut Department of Energy and Environmental Protection (“CTDEEP”) by the property owner and is recorded on the municipal land records. The ELUR statute does not provide a right to impose a lien, but it explicitly provides that an ELUR shall survive the foreclosure of a lien. Therefore, a party foreclosing on a lien will take the property subject to any restrictions imposed under the ELUR. A NAUL can be approved by the Commissioner of CTDEEP or a Licensed Environmental Professional and does not create an easement. A NAUL also does not provide a right to impose a lien, but if a NAUL is extinguished by a foreclosure of a lien, the owner of the property must remediate the pollution that was the subject of the NAUL within one year of the date of the foreclosure (or other schedule approved by the Commissioner of CTDEEP). In addition, in the event a NAUL is extinguished by a foreclosure, the owner must provide written notice of the Commissioner of CTDEEP of such foreclosure, the name of the owner, the address of the land, and the identification of the NAUL within 30 days of the foreclosure. Further, under CGS &sect;&nbsp;22a-133aa through &sect;&nbsp;22a-133cc, a “Covenant Not to Sue” is available from the State under certain circumstances and subject to certain requirements. CGS &sect;&nbsp;22a-133u established a Special Contaminated Property Remediation and Insurance Fund, which may be used by the Commissioner of CTDEEP to remediate a spill, provide loans to municipalities and private parties to perform investigations and/or cleanups, and provide for related administrative costs. The amount of the funds thus loaned to any entity other than a municipality constitute a lien against the real property, provided that the required recording and notice are performed. Under CGS &sect;&nbsp;22a-452a, if the State of Connecticut expends funds to clean up or mitigate a spill of hazardous waste, the State has a lien to secure reimbursement. The State must file a Certificate of Lien in each town where the affected real estate is located, but once filed, the lien takes precedence over all transfers and encumbrances recorded on or after June&nbsp;3, 1985. The super priority shall not apply to real estate that consists exclusively of residential real estate or residential units in a common interest community. On residential real estate the lien takes priority from its recording.

ENVIRONMENTAL LIEN LAW ISSUES

The Special Committee on Borrowers' Counsels' Opinion Letters for Real Estate Transactions of the Real Property Section of the Connecticut Bar Association promulgated a form borrowers' counsel legal opinion to be used in a commercial mortgage loan transaction in 10 Conn. Real Est. L.J. 6 (1993); however, it is rarely used in practice.

LEGAL OPINIONS

LABOR AND MATERIAL LIEN CLAIMS—PRIORITY ISSUES

CGS &sect;&nbsp;49-33 entitles any person who has a claim for more than $10 for materials furnished or services rendered in the construction, raising, removal or repairs of any building or any lot by virtue of an agreement with or by consent of the owner of the land or an agent of the owner to a lien against the building or land for the payment of the claim. The mechanic's lien will have lien priority over any other encumbrance (such as a mortgage) that is recorded after the commencement of the services or the furnishing of the materials. A mechanic's lien is not valid however unless the person performing the services or furnishing the materials (1)&nbsp;within 90 days after he has ceased to do so, records with the town clerk of the town in which the building or lot is situated a mechanic's lien certificate describing the premises, the amount claimed as a lien thereon, the name(s) of the person whom the lien is being filed and the date of the commencement of the performance, stating the amount claimed is justly due, and subscribed and sworn by the claimant and (2)&nbsp;within 30 days of recording the mechanic's lien certificate, serves a true and attested copy of the certificate upon the owner of the building or lot. CGS &sect;&nbsp;49-34. CGS &sect;&nbsp;49-36(c) provides that in determining the amount to which any lien may attach, the owner of the land or building is allowed whatever payments he has made, in good faith, to the original contractor before receiving notice of the lien or liens. Payments made in advance of the time stipulated in the original contract, however, cannot be considered as made in good faith unless a notice of the intention to make the payment has been given in writing to each person known to have furnished materials or rendered services. That notice must be given at least 5 days before the payment is made. CGS &sect;&nbsp;49-39 limits the duration of a mechanic's lien to 1 year unless the claimant commences an action to foreclose the lien and records a notice of lis pendens on the land records of the town in which the lien is recorded within 1 year from the date the lien is recorded or within 60 days of any final disposition of an appeal, whichever is later. Limits on Terms of Construction Contracts, including Prohibition on Advance Lien Waivers. Connecticut's Fairness in Financing in the Construction Industry Act (codified in CGS &sect;&sect;&nbsp;42-158i through 42-158o) applies to a “construction contract” or “contract” between a property owner and a contractor, a contractor and a subcontractor or subcontractors, and also between subcontractors. This Act applies, however, only to real property upon which a commercial or industrial building, or a building intended for residential occupancy containing 5 or more units, is to be or is being constructed. As amended in 2003 and 2004, this Act affects the construction process for such property by: (a) requiring owners to pay for labor performed and materials furnished within 30 days after receiving a payment request from a contractor, subcontractor, or supplier; (b) requiring contractors to pay subcontractors and suppliers within 30 days after the contractor has received payment from the owner; (c)&nbsp; subjecting a person not making a payment within 10 days after receiving notice from the person entitled to payment to interest at the rate of 1% per month; (d) limiting retainage to 5% of the amount of a progress payment for the life of a construction contract and requires that the retainage be placed in an escrow account at a bank in Connecticut; and (e) voiding any construction contract provision, or periodic lien waiver issued pursuant to a construction contract, that waives a contractor's subcontractor's or supplier's right to claim a mechanic's lien or make a claim against a payment bond for services, labor, or materials that have not yet been (a)&nbsp;performed and (b)&nbsp;paid for.

INCEPTION OF LIEN

Construction mortgages will generally have priority over competing security interests in fixtures. CGS &sect;&nbsp;42-a-9-334(h). CGS &sect;&nbsp;42-a-9-334(d) (Revised UCC &sect;&nbsp;9-334) sets forth an exception to this rule and states that a perfected security interest in fixtures has priority over the conflicting security interest of an encumbrancer (e.g., mortgagee) or owner of the real estate and: <ul>
 <li>the security interest is a purchase money security interest, the interest of the encumbrancer or owner arises before the goods become fixtures, the security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter and the debtor has an interest of record in the real estate or is in possession of the real estate;</li>
 <li>the security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record and the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner and the debtor has an interest of record in the real estate or is in possession of the real estate;</li>
 <li>the fixtures are readily removable factory or office machines, equipment that is not primarily used or leased for use in the operation of the real property, or replacements of domestic appliances that are consumer goods, and the security interest is perfected before the goods become fixtures;</li>
 <li>the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the security interest was perfected;</li>
 <li>the security interest is created in a manufactured home in a manufactured home transaction (e., as a purchase money security interest in the manufactured home where the manufactured home is the principal collateral) for which the security interest was perfected under a certificate of title statute (e.g., by the inclusion of a notation of the security interest on the certificate of title issued by the Connecticut Department of Motor Vehicles); or</li>
 <li>the encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or (2)&nbsp;the debtor has a right to remove the goods as against the encumbrancer or owner.</li>
</ul> CGS &sect;&nbsp;42-a-9-334(h) provides, however, that except as provided in (e) and (f) above, a security interest in fixtures is subordinate to a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent that a mortgage is given to refinance a construction mortgage, a mortgage has this priority to the same extent as the construction mortgage. A mortgage is a “construction mortgage” to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if the recorded record of the mortgage so indicates. See also CGS &sect;&nbsp;49-3.

PRIORITY AS TO REMOVABLE FIXTURES

Most title insurers use the 2006 ALTA Form Policy (including endorsements).

FORMS USUALLY REQUIRED BY LENDER

Most ALTA endorsement forms are generally available. Lenders typically require, if applicable, an ALTA 9 endorsement, variable rate/negative amortization endorsement, environmental lien endorsement, a zoning endorsement, a survey endorsement, a condominium endorsement, a pending disbursement/future advance endorsement, an access and entry endorsement, a usury endorsement, waiver of arbitration endorsement, a single/multiple tax lot endorsement, a subdivision endorsement, and a utilities endorsement. Specific to Connecticut is a form of construction loan/pending disbursement/future advance endorsement available for residential and commercial construction loans providing favorable coverage for lenders based on Connecticut's statutory safe harbor for construction mortgages contained in CGS &sect;&nbsp;49-3, as discussed above. Commercial lenders often have a standard list of required endorsements. Residential lenders have also generally required affirmative language - secondary mortgage market endorsement, which insures against claims based on covenants, conditions and restrictions and against easements interfering with right of ways. For residential home equity lines of credit, a “consumer revolving loan” endorsement is also available and is frequently required by lenders when a title policy is requested. An environmental lien endorsement (an ALTA 8.1) is also available for residential properties and is generally required by residential lenders. The pending disbursement/future advance endorsement provides coverage for all advances against mechanic's liens provided that the construction mortgage is recorded prior to the rendition of services or delivery of materials. Only Connecticut attorneys in good standing may be title insurance agents (see CGS &sect;&nbsp;38a-402(13)). Conn. Sup. Ct-Gen. Prov. &sect;&nbsp;2-44A defines the practice of law. &sect;&nbsp;2-44A(a)(5) specifically references real estate transactions. Public Act 19-88 provides that no person shall conduct a real estate closing unless such person has been admitted as an attorney in this State under the provisions of section 51-80 of the general statutes and has not been disqualified from the practice of law due to resignation, disbarment, being placed on inactive status, or suspension. For the purposes of this subsection, “real estate closing” means a closing for (1)&nbsp;a mortgage loan transaction, other than a home equity line of credit transaction or any other loan transaction that does not involve the issuance of a lender's or mortgagee's policy of title insurance in connection with such transaction, to be secured by real property in this State, or (2)&nbsp;any transaction wherein consideration is paid by a party to such transaction to effectuate a change in the ownership of real property in this State. Section 98 of Senate Bill 1202 narrows the coverage of this law to “residential real estate closings,” defined as closings on improved one-to-four family residential real property containing up to four residential dwelling units effective as of July 1, 2021. Prior to enactment of this law, it was not clear whether commercial real estate closings were covered by this law.

ENDORSEMENTS AVAILABLE

Public Act 09-207, as codified in CGS &sect;&sect;&nbsp;53-379a et seq., establishes the crime of residential mortgage fraud. A person commits residential mortgage fraud when, for financial gain and with the intent to defraud, that person: (1) knowingly makes any material written misstatement, misrepresentation or omission during the mortgage lending process with the intent that a mortgage lender, a mortgage correspondent lender or mortgage broker, a borrower or any other person involved in the process rely on it; (2) knowingly uses or facilitates the use of (or knowingly attempts to facilitate or use) any written misstatement, misrepresentation, or omission during the mortgage lending process with the intent that a mortgage lender, a mortgage correspondent lender, a borrower or any other person involved in the process rely on it; (3) receives or attempts to receive proceeds or any other funds in connection with a residential mortgage closing that the person knew or should have known resulted from an act or acts constituting residential mortgage fraud; or (4) conspires with or solicits another to engage in residential mortgage fraud. As used in the Act, “mortgage lending process” means the process through which an individual seeks or obtains a residential mortgage loan, including solicitation, application, origination, negotiation of terms, underwriting, signing, closing and funding of a residential mortgage loan and services provided incident to such mortgage loan, including the appraisal of the residential property. In a prosecution for residential mortgage fraud, it is sufficient to show that the party accused committed the act with the intent to deceive or defraud. The Act does not require the prosecution to prove that any financial harm resulted to any particular person or that the party to whom any deliberate misstatement, misrepresentation, or omission was made actually relied on it. The Act provides for liens securing the payment of fines to the state to be placed on all real and personal property of every kind used or intended for use in the course of, or derived from or realized through, the prohibited act(s). The Act also permits courts to order restitution to any person who has suffered financial loss due to the fraudulent acts, and protects from civil liability persons who provide information regarding suspected residential mortgage fraud to any regulatory or law enforcement agency. A single act of residential mortgage fraud is a Class D felony, while 2 or more such acts committed by a person constitute a Class C felony. &nbsp; &nbsp;

Connecticut

Mortgage Law Summary

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Mortgage Law Summary for Connecticut

Connecticut

Mortgage Law Summary

Continue reading theMortgage Law Summary for Connecticut

Continue reading the
Mortgage Law Summary for Connecticut