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Connecticut: Statutory Authority to Discharge a Mortgage is based on the Deed and Not Acceleration

Posted By USFN, Tuesday, October 10, 2017
Updated: Friday, October 6, 2017

October 10, 2017

by Jeffrey M. Knickerbocker
Bendett and McHugh, PC – USFN Member (Connecticut, Maine, Vermont)

Conn. Gen. Stat. § 49-13 provides that when a “mortgagor or those owning the mortgagor’s interest therein have been in undisturbed possession of the property for at least six years after the expiration of the time limited in the mortgage for the full performance of the conditions thereof . . . the person owning the property, or the equity in the property, may bring a petition to the superior court for the judicial district in which the property is situated, setting forth the facts and claiming a judgment as provided in this section.”

In a recent case, the plaintiff-borrower argued to the trial court that, as the loan had been accelerated for more than six years, the borrower could obtain a judgment finding the mortgage was no longer enforceable pursuant to Conn. Gen. Stat. § 49-13. [Fitzpatrick v. U.S. Bank National Association, Trustee, 173 Conn. App. 686, 164 A.3d 832 (June 6, 2017)].

The mortgage in Fitzpatrick has a maturity date of September 1, 2037. The Bank moved to strike the complaint based on prior appellate case law and the wording of the statute. According to the Bank, the statute could not be invoked until six years after September 1, 2037. The trial court agreed and struck the complaint. [Fitzpatrick v. U.S. Bank National Association as Trustee, Super. Ct., Docket No. FBT CV15–6050335 (Nov.23, 2015), 2015 WL 9242410, 51 Conn. L. Rptr. 287 (“Under the plaintiff’s interpretation of § 49-13(a), a defendant who elects the remedy of acceleration to cure a plaintiff’s default under a mortgage contract would cause the time limited in a mortgage for its full performance to change from the date of final payment to the acceleration date as a matter of law. Such an interpretation would flout the well-recognized principle that ‘[t]he terms of [a] mortgage determine [a bank’s] right to foreclose the mortgage’ and, by extension, to elect remedies in the event of a borrower’s default”)].

Appellate Review
In reviewing the trial court’s decision, the appellate court observed that “no appellate authority has addressed this precise issue.” On appeal, it concluded “that the phrase ‘time limited in the mortgage for the full performance of the conditions thereof’ clearly and unambiguously refers to the maturity date specified in the mortgage, which the defendants argue is the appropriate date, and not the acceleration date, which the plaintiff argues is the appropriate date.” In an order dated September 20, 2017, the Connecticut Supreme Court (the state’s highest appellate court) has refused to consider the appellate court’s decision.

Foreclosure Case
In an action bearing docket number FBT-CV-16-6056902-S (Foreclosure Action), the Bank sought to foreclose on the very same mortgage that was the subject of the case discussed above. The Bank commenced the Foreclosure Action before the appellate decision in that case.

In the Foreclosure Action, the borrower filed a counterclaim in which he made the identical claims as raised in the case that he brought as a plaintiff against the Bank. In response, the Bank filed another motion to strike. On the day that the appellate case decision was made available to the public, the court in the Foreclosure Action had oral argument on the motion to strike the counterclaim. In a memorandum of decision dated September 21, 2017, the trial court found that the appellate court had already decided the issue in the previous case, which was binding precedent on the counterclaim.

Closing Words
These cases show that while there is no requirement to immediately commence a foreclosure after default and acceleration of the debt, a prompt foreclosure can often avoid unnecessary litigation.

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Note for consideration of the USFN Award of Excellence: This article is not a "Feature."


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