Substitute Senate Bill No. 577
          Substitute Senate Bill No. 577

              PUBLIC ACT NO. 98-147


AN ACT CREATING  A  MORTGAGOR'S GOOD FAITH DEFENSE
FOR PAYMENTS MADE TO AN ASSIGNOR WITHOUT NOTICE OF
THE ASSIGNMENT.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1.  Section   49-10  of  the  general
statutes  is  repealed   and   the   following  is
substituted in lieu thereof:
    (a) AS USED  IN  THIS SECTION, "MORTGAGE DEBT"
MEANS  A  DEBT  OR  OTHER  OBLIGATION  SECURED  BY
MORTGAGE,  ASSIGNMENT OF  RENT  OR  ASSIGNMENT  OF
INTEREST IN A LEASE.
    [(a)] (b) Whenever any MORTGAGE debt [or other
obligation secured by mortgage, assignment of rent
or assignment of interest in a lease,] is assigned
by  an  instrument   in   writing   containing   a
sufficient description to  identify  the mortgage,
assignment of rent  or assignment of interest in a
lease, GIVEN as  security  for  the MORTGAGE debt,
[or  obligation,] and  that  assignment  has  been
executed, attested and  acknowledged in the manner
prescribed by law  for  the execution, attestation
and acknowledgment of  deeds  of  land,  the title
held by virtue of the mortgage, assignment of rent
or assignment of  interest  in a lease, shall vest
in the assignee.  An  instrument  substantially in
the  following  form   is   sufficient   for  such
assignment:

hereby grant, bargain,  sell, assign, transfer and
set over a  certain  (mortgage, assignment of rent


Signed, sealed and delivered
in the presence of
                                            (SEAL)
                 (Acknowledged)

    [(b)  Whenever]  (c)   IN   ADDITION   TO  THE
REQUIREMENTS OF SUBSECTION  (c)  OF  THIS SECTION,
WHENEVER an assignment of any residential mortgage
loan (1) made  by  a lending institution organized
under the laws  of  or having its principal office
in any other  state and (2) secured by mortgage on
residential real estate  located  in this state is
made in writing,  the instrument shall contain the
name  and  business  or  mailing  address  of  all
parties to such assignment.
    (d) IF A  MORTGAGE  DEBT  IS ASSIGNED, A PARTY
OBLIGED TO PAY  SUCH  MORTGAGE  DEBT MAY DISCHARGE
IT, TO THE  EXTENT  OF  THE PAYMENT, BY PAYING THE
ASSIGNOR UNTIL THE  PARTY  OBLIGED TO PAY RECEIVES
SUFFICIENT NOTICE IN  ACCORDANCE  WITH  SUBSECTION
(f) OF THIS  SECTION  THAT  THE  MORTGAGE DEBT HAS
BEEN ASSIGNED AND  THAT  PAYMENT  IS TO BE MADE TO
THE  ASSIGNEE. IN  ADDITION  TO  SUCH  NOTICE,  IF
REQUESTED  BY  THE   PARTY  OBLIGED  TO  PAY,  THE
ASSIGNEE SHALL FURNISH  REASONABLE  PROOF THAT THE
ASSIGNMENT HAS BEEN  MADE,  AND UNTIL THE ASSIGNEE
DOES SO, THE  PARTY  OBLIGED  TO  PAY  MAY PAY THE
ASSIGNOR.  FOR  PURPOSES   OF   THIS   SUBSECTION,
"REASONABLE PROOF" MEANS  (1)  WRITTEN  NOTICE  OF
ASSIGNMENT SIGNED BY  BOTH  THE  ASSIGNOR  AND THE
ASSIGNEE, (2) A COPY OF THE ASSIGNMENT INSTRUMENT,
OR (3) OTHER  PROOF OF THE ASSIGNMENT AS AGREED TO
BY THE PARTY OBLIGED TO PAY SUCH MORTGAGE DEBT.
    (e) IF A  MORTGAGE  DEBT  IS ASSIGNED, A PARTY
OBLIGED TO PAY  SUCH  MORTGAGE  DEBT  WHO, IN GOOD
FAITH  AND  WITHOUT   SUFFICIENT   NOTICE  OF  THE
ASSIGNMENT IN ACCORDANCE  WITH  SUBSECTION  (f) OF
THIS  SECTION,  EXECUTES   WITH   THE  ASSIGNOR  A
MODIFICATION  OR  EXTENSION   OF   THE   MORTGAGE,
ASSIGNMENT OF RENT  OR ASSIGNMENT OF INTEREST IN A
LEASE, SHALL HAVE THE BENEFIT OF SUCH MODIFICATION
OR EXTENSION, PROVIDED, THE ASSIGNEE SHALL ACQUIRE
CORRESPONDING  RIGHTS  UNDER   THE   MODIFIED   OR
EXTENDED   MORTGAGE,   ASSIGNMENT   OF   RENT   OR
ASSIGNMENT OF INTEREST  IN A LEASE. THE ASSIGNMENT
MAY PROVIDE THAT  MODIFICATION OR EXTENSION OF THE
MORTGAGE,  ASSIGNMENT OF  RENT  OR  ASSIGNMENT  OF
INTEREST IN A  LEASE, SIGNED BY THE ASSIGNOR AFTER
EXECUTION OF THE  ASSIGNMENT,  IS  A BREACH BY THE
ASSIGNOR  OF  THE  ASSIGNOR'S  CONTRACT  WITH  THE
ASSIGNEE.
    (f) NOTICE OF  ASSIGNMENT  IS  SUFFICIENT  FOR
PURPOSES  OF  SUBSECTIONS  (d)  AND  (e)  OF  THIS
SECTION IF THE  ASSIGNEE  NOTIFIES A PARTY OBLIGED
TO PAY THE  MORTGAGE  DEBT  (1)  BY MAILING TO THE
PARTY OBLIGED TO  PAY, AT THE PARTY'S LAST BILLING
ADDRESS, A NOTICE  OF  THE  ASSIGNMENT IDENTIFYING
THE INSTRUMENT AND  MORTGAGE  DEBT  ASSIGNED,  THE
PARTY OBLIGED TO  PAY  SUCH DEBT, THE NAMES OF THE
ASSIGNOR AND ASSIGNEE, THE DATE OF THE ASSIGNMENT,
AND THE NAME  AND  ADDRESS  OF  THE PERSON TO WHOM
PAYMENTS SHOULD BE  MADE,  (2) BY GIVING NOTICE OF
THE ASSIGNMENT PURSUANT  TO  12  USC SECTION 2605,
SECTION 6 OF  THE  FEDERAL  REAL ESTATE SETTLEMENT
PROCEDURES  ACT  OF   1974   AND  THE  REGULATIONS
PROMULGATED PURSUANT TO SAID SECTION, AS FROM TIME
TO TIME AMENDED, OR (3) BY GIVING ACTUAL NOTICE OF
THE ASSIGNMENT, REASONABLY  IDENTIFYING THE RIGHTS
ASSIGNED, IN ANY OTHER MANNER. NO SIGNATURE ON ANY
SUCH NOTICE IS NECESSARY TO GIVE SUFFICIENT NOTICE
OF THE ASSIGNMENT  UNDER  THIS SUBSECTION AND SUCH
NOTICE MAY INCLUDE ANY OTHER INFORMATION.
    (g) RECORDATION OF  AN  ASSIGNMENT OF MORTGAGE
DEBT IS NOT SUFFICIENT NOTICE OF THE ASSIGNMENT TO
THE  PARTY  OBLIGED   TO   PAY   FOR  PURPOSES  OF
SUBSECTION (d) OR (e) OF THIS SECTION.
    Sec.  2.  Section  42a-3-602  of  the  general
statutes  is  repealed   and   the   following  is
substituted in lieu thereof:
    (a) Subject to  subsection  (b), an instrument
is paid to  the extent payment is made [(i)] by or
on behalf of a party obliged to pay the instrument
[, and (ii)]  (1)  to a person entitled to enforce
the instrument OR  (2) TO THE ASSIGNOR IN THE CASE
OF  A  MORTGAGE  DEBT  THAT  IS  ASSIGNED  WITHOUT
SUFFICIENT NOTICE TO  THE  PARTY OBLIGED TO PAY AS
PROVIDED IN SECTION 49-10, AS AMENDED BY SECTION 1
OF THIS ACT.  To  the  extent  of the payment, the
obligation  of  the   party  obliged  to  pay  the
instrument is discharged  even  though  payment is
made with knowledge  of  a claim to the instrument
under section 42a-3-306 by another person.
    (b) The obligation  of  a  party  to  pay  the
instrument is not  discharged under subsection (a)
if: (1) A  claim  to  the instrument under section
42a-3-306  is  enforceable   against   the   party
receiving payment and  (i)  payment  is  made with
knowledge by the  payor that payment is prohibited
by injunction or  similar  process  of  a court of
competent jurisdiction, or  (ii) in the case of an
instrument other than  a cashier's check, teller's
check,  or  certified   check,  the  party  making
payment accepted, from  the  person having a claim
to   the  instrument,   indemnity   against   loss
resulting from refusal  to pay the person entitled
to  enforce the  instrument;  or  (2)  the  person
making payment knows  that  the  instrument  is  a
stolen instrument and pays a person it knows is in
wrongful possession of the instrument.

Approved June 4, 1998