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Connecticut: In Order to Properly Notice a Borrower of Default, Strictly Comply with the Requirements of the Note and Mortgage

Posted By Rachel Ramirez, Tuesday, May 15, 2018
Updated: Tuesday, May 8, 2018

May 15, 2018

by Sonja Bowser
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)

To date, the Connecticut legislature has not adopted a statutory requirement that a notice of default (also known as a breach letter, demand letter, or notice of acceleration) be given to borrowers before acceleration of the debt and foreclosure. Instead, longstanding case law relies on contract principles in defining notice requirements: if the note and/or mortgage require such notice, the notice of default must be given prior to the commencement of the foreclosure. Historically, substantial compliance with a loan’s notice requirements was sufficient to establish that the notice of default complied with the terms of the note and mortgage. However, the Connecticut Appellate Court took a more conservative approach in the recent decision of Aurora Loan Services, LLC v. Condron, No. AC 38934 (Conn. App. Ct. Apr. 24, 2018).

In Condron, the appellate court held that the contractual requirements set forth in the note and mortgage may require strict compliance, depending on the articulated requirements. The subject mortgage contained two provisions that memorialized the need for a notice of default and the details to be included in said notice. Section 22 provided “in relevant part: ‘Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument . . . .’” (emphasis added) and specified necessary information to be contained within the notice.

As the case cites, Section 15 dictated: ‘‘‘[a]ll notices given by Borrower or Lender in connection with this Security Instrument must be in writing. Any notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower’s notice address if sent by other means.’’’ (Emphasis added.)

It was undisputed at both the trial court and appellate court levels that the plaintiff mailed the requisite notice of default by certified mail, return receipt requested. The defendants alleged, however, that the notice of default was never received and, in the absence of any proof proffered by the plaintiff, the appellate court found that the plaintiff failed to meet its burden of establishing that the notice was actually received by the defendants as required by the plain language of Section 15, supra.

Appellate Court’s Analysis
In its analysis, the appellate court reiterated Connecticut precedent that the notice requirements of a note and mortgage create a condition precedent that must be satisfied prior to the commencement of a foreclosure action. Because Section 15 of the subject mortgage necessitated either the mailing of a notice of default by first class mail or actual delivery to the borrowers if sent by other means, the plaintiff was unable to establish that it strictly complied with the notice requirement of the mortgage.

The plaintiff testified at trial that it mailed the notice of default by certified mail in an effort to exercise thoroughness and to provide an extra layer of security, but it did not provide proof of delivery of the notice. While plaintiff’s efforts were well-intentioned, the appellate court found that the non-compliance with the strict terms of the mortgage justified overturning the trial court’s judgment of foreclosure. The appellate court was further unmoved by the plaintiff’s contention that it substantially complied with the requirements of the mortgage, specifically not “where there is a contractual provision requiring proof of actual delivery for a notice of default sent by certified mail, return receipt requested, and there is no evidence that the defendants actually received the notice of default.”

Importantly, the appellate court noted that the critical difference between first-class and certified mailing is that first-class mail is entitled to a presumption of actual delivery, whereas certified mailing requires proof of actual delivery. There is no presumption of delivery where proof of actual delivery is required.

Closing Words
The Condron decision is significant to Connecticut foreclosure practice because it reinforces the supposition that compliance with the terms of individual loan agreements can be more important than good intentions or best practices. This ruling confirms that lenders, servicers, and their counsel must be meticulously cognizant of the individual notice requirements contained in the note and mortgage documents to ascertain compliance with the contractual requirements created by the loan instruments before progressing a foreclosure. Failure to comply with a condition precedent to a foreclosure action undermines the validity of the action and will likely warrant judicial dismissal on jurisdictional grounds.

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