Connecticut Seal

General Assembly

 

Raised Bill No. 1059

January Session, 2013

 

LCO No. 4147

 

*04147_______JUD*

Referred to Committee on JUDICIARY

 

Introduced by:

 

(JUD)

 

AN ACT CONCERNING A MODERN METHOD OF FORECLOSURE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 49-24 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):

All liens and mortgages affecting real property may, on the written motion of any party to any suit relating thereto, be foreclosed by (1) a decree of sale instead of a strict foreclosure at the discretion of the court before which the foreclosure proceedings are pending or, (2) if the property affected is real property containing any building or structure occupied or intended to be occupied by not more than four families, a decree of market sale in accordance with the provisions of section 2 of this act and sections 49-26 and 49-27, as amended by this act.

Sec. 2. (NEW) (Effective October 1, 2013) (a) Any party to a foreclosure action may file a motion for a foreclosure by market sale. Such motion shall include the moving party's proposed marketing plan to market the property. The court, if it approves the marketing plan, shall grant such motion and issue a decree fixing a date, not earlier than one hundred twenty days from the date of granting such motion, for the receipt of an offer to purchase the property being foreclosed. A proposed marketing plan (1) may include listing the property for sale with a person licensed under chapter 392 of the general statutes, provided such plan includes the proposed compensation to be paid to such person, (2) shall describe the advertisement to be performed for purposes of marketing the property and the proposed cost of such advertisement, and (3) shall require that all offers received be provided to the court as soon as possible after such offers have been received and prior to the date fixed for the presentation of an offer and be subject to the approval of the court.

(b) Upon the receipt of a written offer, the court, after a hearing, shall determine whether it is in the best interests of the parties to the foreclosure to approve such offer. The court shall not reject an offer solely on the basis that the offer contains contingencies for mortgage financing or building or other inspections of the property but may consider the absence of contingencies to an offer in deciding which of several competing offers is in the best interests of the parties. The court may extend the deadline for the receipt of offers set in accordance with subsection (a) of this section upon a finding of good cause shown which includes, but is not limited to, allowing an offeror a reasonable time to meet contingencies set forth in an offer.

(c) If no offers are received or are acceptable to the court by the set date fixed for the receipt or presentation of an offer in accordance with subsection (a) of this section, the court may extend such date or issue a decree of sale in accordance with section 49-24, as amended by this act, or a decree of strict foreclosure.

(d) If the court approves an offer, it shall issue a decree ordering a sale date not earlier than ninety days following the date of such decree by which the offeror shall complete the sale, which date may be extended for good cause shown upon the order of the court. The court shall determine and approve the payment of conveyance taxes, encumbrances having priority over the interests to be foreclosed, marketing expenses, including compensation to persons licensed pursuant to chapter 392 of the general statutes, recording fees and reasonable attorney's fees for the attorney closing the sale for the seller, to be paid from the closing proceeds on the date of closing.

Sec. 3. Section 49-26 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):

When a sale has been made pursuant to a judgment therefor and ratified by the court, a conveyance of the property sold shall be executed by the person appointed to make the sale, or, in the event of a foreclosure by market sale, by the mortgagors, which conveyance shall vest in the purchaser the same estate that would have vested in the mortgagee or lienholder if the mortgage or lien had been foreclosed by strict foreclosure, and to this extent such conveyance shall be valid against all parties to the cause and their privies, but against no other persons. The court, at the time of or after ratification of the sale, may order possession of the property sold to be delivered to the purchaser and may issue an execution of ejectment after the time for appeal of the ratification of the sale has expired.

Sec. 4. Section 49-27 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):

The proceeds of each such sale or, in the event of a foreclosure by market sale, the proceeds of such market sale less any expenses for marketing and sale approved in accordance with section 2 of this act, shall be brought into court, there to be applied if the sale is ratified, in accordance with the provisions of a supplemental judgment then to be rendered in the cause, specifying the parties who are entitled to the same and the amount to which each is entitled. If any part of the debt or obligation secured by the mortgage or lien foreclosed or by any subsequent mortgage or lien was not payable at the date of the judgment of foreclosure, it shall nevertheless be paid as far as may be out of the proceeds of the sale as if due and payable, with rebate of interest where the debt was payable without interest, provided, if the plaintiff is the purchaser at any such sale, he shall be required to bring into court only so much of the proceeds as exceed the amount due upon his judgment debt, interest and costs.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2013

49-24

Sec. 2

October 1, 2013

New section

Sec. 3

October 1, 2013

49-26

Sec. 4

October 1, 2013

49-27

Statement of Purpose:

To support the Attorney General's settlement with five large mortgage servicers by providing a faster mechanism of short sales and discouraging double-tracking of short sale and foreclosure matters by all mortgage lenders.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]