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USFN 25th Anniversary

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Foreclosures not Time-Barred

by Patrick Crook and Geoffrey Milne
Hunt Leibert — USFN Member (CT)

Foreclosure of Mortgage Can Be Enforced Even When

Underlying Note May be Unenforceable

by Patrick Crook

Hunt Leibert — USFN Member (CT)


In Home Equity v. Jensen (CV-04-4001381), the New London Superior Court held that foreclosure of a mortgage can be enforced even in situations where the underlying note might be unenforceable. 


The lender recently sought to foreclose a mortgage where the default in payment had occurred in 1997 and where in the intervening period, the defendant had received a Chapter 7 discharge. The borrower filed defenses alleging that the statute of limitations on enforcing the underlying note had expired and that the Chapter 7 discharge prevented foreclosure of the mortgage. Under Connecticut law, a suit on a term note (with some exceptions) must be brought within five years of a payment default. 


The lender argued that the mortgage could be foreclosed even if a suit could not be brought on the underlying note and that the lien of a mortgage, as a secured claim, was enforceable after a Chapter 7 discharge. 


The court agreed with the lender and granted summary judgment. The court ruled that the mortgage was a separate instrument from the note, given for a separate purpose, and could still be enforced when the note was time-barred. The court also held that the lien of a mortgage was not voided by a Chapter 7 discharge. It is important to remember that a deficiency judgment cannot be sought in that situation. The plaintiff’s complaint expressly waived a deficiency in any case where it was precluded by a bankruptcy discharge.


Editor’s Note:  The author’s firm represented the lender in the case discussed.



Appellate Court Affirms Judgment of Strict Foreclosure

by Geoffrey Milne

Hunt Leibert — USFN Member (CT)


The Connecticut appellate court recently affirmed a foreclosure judgment in which the borrowers alleged that the foreclosure of the mortgages was barred by the statute of limitations. In FDIC as Receiver of Saybrook Bank and Trust Company v. Owen, AC 25216, 2005 Conn. App. LEXIS 181 (May 10, 2005), the appellate court affirmed the trial court’s entry of a judgment of strict foreclosure.


The borrowers argued at trial and on appeal that the complaint alleged collection on the underlying promissory notes, rather than a foreclosure of the mortgages. The borrowers further contended that the statute of limitations rendered all of the claims time-barred. However, the court construed the complaint as alleging foreclosure of the mortgages and proceeded to affirm the trial court’s decision by stating that a statute of limitations defense does not bar a mortgage foreclosure.


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