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statutes is repealed and the following is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