|AN ACT CONCERNING FORECLOSURE PROCEDURES. |
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OLR Bill Analysis
AN ACT CONCERNING FORECLOSURE PROCEDURES.
This bill permits strict foreclosure judgments to be reopened under certain circumstances.
Under current law, at any time before title has vested in the redeeming party, any judgment foreclosing the title to real estate by strict foreclosure may, at the discretion of the court rendering the judgment, upon the written motion of any person having an interest in the judgment, and for cause shown, be opened and modified, upon whatever terms as to costs the court deems reasonable. The bill authorizes that court to reopen the judgment after title vests if:
1. all parties to the foreclosure agree,
2. it is reopened within four months after title has vested, and
3. all rights and interests of the parties are restored to the status that existed on the date of the judgment (see BACKGROUND).
Also the bill makes a technical change regarding the service of process in a mortgage foreclosure on residential real estate by specifying that the required notice concerning the foreclosure mediation program be attached to the front of the writ, summons, and complaint that is served on the property owner in a foreclosure. Current law appears to require that the notice be attached to the front of the complaint. The writ and summons are separate documents and are presented on top of the complaint, which is on a separate document, when served on the property owner.
EFFECTIVE DATE: October 1, 2009 except the technical change takes effect July 1, 2009.
There are two types of foreclosure. One is called strict foreclosure and the other is foreclosure by sale.
In a strict foreclosure the party bringing the foreclosure (the plaintiff) must give the property owner and every person who has a mortgage, lien, or other recorded encumbrance on the property an opportunity to pay off what is owed the foreclosing party and take title to the property. This is called redeeming the plaintiff's interest in the property. If the property owner does not redeem, the plaintiff must give every other person who has a mortgage, lien, or other recorded encumbrance on the property, in inverse order of priority, the chance to redeem. The redeeming party takes title subject to any encumbrance that has priority over his.
In foreclosure by sale, the court orders the sale of the foreclosed property and applies the proceeds to the amount owed the foreclosing party. Any excess amount generated by the sale is applied to debts owed other parties and any balance is given to the debtor property owner.
Most often, foreclosure by sale is used when the owner has substantial equity in the property and strict foreclosure is used when the owner's equity levels are small. Before the property is sold or the title transferred, the borrower has the opportunity to redeem the property by paying the debt due plus interest and costs (CGS § 49-20).
By law, any judgment rendered in the Superior Court may be set aside, within four months following the date on which it was rendered, and the case reinstated on the docket, on such terms regarding costs as the court deems reasonable. It is done so upon the complaint or written motion of any party or person harmed by it, showing (1) reasonable cause or (2) that a good cause of action or defense existed at when the judgment was rendered, and that the plaintiff or defendant was prevented by mistake, accident, or other reasonable cause from prosecuting the action or making the defense (CGS § 52-212).
Joint Favorable Substitute