Strict Foreclosure in Connecticut: How the Process Works

Under Connecticut law, there are two different ways a mortgage company can foreclose on a property. One way is by selling the house to the highest bidder at a public sale — the way most people picture foreclosure. The other way is through a process called strict foreclosure. Courts typically apply strict foreclosure when a homeowner doesn’t have any equity in the property being foreclosed. Connecticut and Vermont are the only two U.S. states that allow strict foreclosures. This article explains how a Connecticut strict foreclosure works, a homeowner’s rights throughout the process, and where borrowers facing foreclosure can turn for help.

Foreclosure Process in Connecticut

Mortgage foreclosures are primarily governed by state laws, although some federal laws limit what mortgage lenders can do during the foreclosure process. Each state has unique foreclosure rules and procedures. They generally cover:

• What notices a mortgage servicer must send you.

• Whether you have the option to redeem the property — or pay off the debt — before the sale (or, in some states, after the sale).

• What scheduling guidelines apply. 

• How the sale or auction must work.

All states allow judicial foreclosures. In a judicial foreclosure, your lender files a lawsuit against you in court and must present evidence that you promised to pay the mortgage and then defaulted on the payments. If they do this successfully, the lender gets a court order against you allowing them to foreclose. Some states also allow nonjudicial foreclosures. Nonjudicial foreclosures take place entirely outside of court. These foreclosures are usually quicker and give homeowners fewer chances to defend against the sale.

In Connecticut, all foreclosures are judicial foreclosures. Connecticut law provides for two types of judicial foreclosures: foreclosure by sale or strict foreclosure. In a foreclosure by sale, the judge sets a sale date, and the property is sold at a public auction to the highest bidder. 

Most Connecticut foreclosures are also strict foreclosures. In a strict foreclosure, there is no foreclosure sale. Instead of a sale date, the judge sets a “Law Day.” To keep your house, you must pay your full mortgage debt on or before your Law Day. If you don’t pay in full by this date, your mortgage lender becomes the legal owner of the property.

How Strict Foreclosure Works in Connecticut

In Connecticut, when you buy real estate, you typically sign both a promissory note and an open-end mortgage deed. The promissory note is, as its name implies, the document you sign to promise to repay your mortgage loan according to certain terms. The promissory note also contains the repayment terms, such as the number of payments and the interest rate. Your open-end mortgage deed creates a security interest in the real property. In other words, the deed makes the mortgage loan a secured debt, with the property as the collateral securing the loan. Your mortgage deed also gives your lender the right to foreclose if you don’t pay as promised. 

Under federal law, your mortgage servicer can’t start foreclosing until your loan is more than 120 days past due, based on the payment schedule in your promissory note. Your lender starts the official foreclosure process by filing a complaint in a superior court. A marshal or process server will deliver you a copy of the complaint, a summons, and other foreclosure paperwork. You must complete an appearance form and file it with the court clerk within 15 days after the return date listed in the summons. If you don’t file an appearance on time, your lender automatically wins a judgment against you.

Otherwise, to get a judgment against you, your lender must present evidence that you owe the mortgage debt, that you’ve defaulted on your mortgage payments, and that the lender has the right to foreclose. This usually means that the lender must show the court the promissory note and mortgage deed that you signed. If the lender provides enough evidence, the court enters a liability judgment against you. 

Your lender can file a motion requesting either strict foreclosure or foreclosure by sale. The court generally allows strict foreclosure if you don’t have much equity in the property. If what you owe on your house is about the same as, or more than, what the house is worth, then you don’t have any equity. It usually takes about 60-75 days to get from the initial complaint to a judgment of strict foreclosure.

You can read more about Connecticut’s strict foreclosure law in the Connecticut General Statutes. You can also get more information, including financial counseling and help defending against foreclosure, from the Connecticut Housing Finance Authority (CHFA).

The Right of Redemption in Connecticut

When the court enters a judgment of strict foreclosure, the judge sets a Law Day date for you. Your Law Day could be as soon as 21 days after the judgment. Most of the time, though, it’s around 45-90 days after the judgment. If other creditors have liens on the property (not counting the lender that filed the foreclosure), each lienholder will also get a Law Day. These are given in order from the most recent to the oldest lien. 

The Redemption Period

The time between the judgment of strict foreclosure and your Law Day is called the redemption period. In a foreclosure by sale, the redemption period is the time between the judgment of foreclosure by sale and the sale date. During the redemption period, you can redeem the property by paying the full amount of the debt, including any lawful, related costs such as interest and attorneys fees. 

You can try to sell your house during this time to pay off the judgment debt and redeem the property. You could also sell other belongings to raise money or try to get a loan to pay the judgment. If you need more time to redeem your house, you can file a motion with the court to request additional time. The court will set your motion for hearing. You’ll have to go to court on the hearing date to explain to the judge how you plan to redeem the house and how the extra time will help. Keep in mind that, to be effective, the hearing on your motion must take place before your Law Day.

Your Law Day is the last day that you can redeem your house by paying the judgment. If you don’t redeem by your Law Day, then the next creditor has a chance to pay the judgment debt and become the owner. If there are no other creditors, or if no other creditor pays the judgment, then the property belongs to your mortgage lender. Your lender files a certificate of foreclosure in your local land records to document that it is the official owner of the property. Unlike in some other states, under Connecticut law, it’s not possible to get the house back after the foreclosure is complete.

Paying the Judgment Before Law Day

If you pay the full judgment balance on or before your Law Day, the foreclosure action stops. You’ll own the property outright, with no liens attached. If any other creditors had liens on the property, such as a tax lien, home equity loan, or second mortgage, you’ll still owe those debts, but they won’t be attached to your house anymore. In other words, these debts will become unsecured debts after the foreclosure.

Are Deficiency Judgments Allowed in Connecticut?

What happens if you owe more than your house is worth? This is called a deficiency. In a strict foreclosure, the amount of the deficiency is the total judgment debt (including related costs) minus the fair market value of the property. For example, if your judgment debt is $150,000 and your home’s fair market value is $125,000, there is a deficiency of $25,000. 

Deficiencies and Strict Foreclosures

If a deficiency exists, your lender can file a motion asking the court for a deficiency judgment against you. The motion must be filed within 30 days after the last Law Day. If you think your home’s fair market value is more than your lender claims, you can go to court for the motion hearing and explain to the judge why your property is worth more. If the court enters a deficiency judgment against you, your mortgage company can take action to collect the judgment, such as garnishing your wages or bank account. Under Connecticut law, a judgment debt remains valid for 20 years after it’s entered.

Deficiencies and Foreclosures by Sale

In a foreclosure by sale, the deficiency process works a little differently. Your house is sold at a public auction to the highest bidder. If the sale price is less than the amount of the foreclosure judgment, your lender can ask the court for a deficiency judgment against you. The deficiency amount is usually the amount of the foreclosure judgment minus the foreclosure sale price. 

There is one exception: If your home sells at the foreclosure auction for less than the home’s appraised value, your lender must credit you with half of the difference between the appraised price and the sale price. For example, let’s say your foreclosure judgment amount is $150,000, and your home’s appraised value is $125,000. At the foreclosure auction, your house sells for $100,000. The difference between the sale price and the appraised value is $25,000. Your lender can only request a deficiency judgment for half of this amount, which is $12,500.

Where To Get Help With Foreclosure

In Connecticut, as in other states, foreclosure laws can be complex. A foreclosure proceeding can have major consequences for you and your home, so it’s important to be sure you understand your rights and options during the process. If you’re facing foreclosure, it’s a good idea to consult with an experienced Connecticut foreclosure attorney. If you can’t afford an attorney, try contacting a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD). These professionals can often provide a wealth of helpful information at no cost to you.

Let's Summarize...

Under Connecticut law, there are two types of foreclosures: strict foreclosure and foreclosure by sale. Both types are judicial proceedings that begin with your mortgage servicer filing a lawsuit against you and proving to the court that your loan is in default. Your lender can request either type of foreclosure. The judge will usually apply strict foreclosure unless you have substantial equity in your home. In a strict foreclosure, there is no sale. Instead, the court sets a Law Day. You can keep your house if you pay off your mortgage debt by this date. Otherwise, your lender becomes the owner. If you owe more than your house is worth, your lender can ask the court for a deficiency judgment against you.