Judgment Lien Foreclosure in Connecticut
by Lucas B. Rocklin
December 7, 2021Foreclose Judgment Liens to Satisfy Money Judgments
Creditors can secure money judgments by filing judgment liens on debtor-owned real estate. Similar to a mortgage, judgment liens can be foreclosed, permitting liquidation of the debtor’s real estate to satisfy the judgment debt. For this reason, recording judgment liens should be among the first steps taken by judgment creditors after obtaining a money judgment.
Procedure to Foreclose a Judgment Lien
The procedure to foreclose a judgment lien on real estate is set forth by Connecticut General Statutes Sections 52-380a (judgment lien may be foreclosed in the same manner as a mortgage), 52-350f (money judgment may be enforced through foreclosure of a judgment lien), 52-352b (homestead exemption applicable to judgment lien foreclosure), 52-249 (recovery of legal fees and costs in judgment lien foreclosure).
There are unique differences to consider when foreclosing a judgment lien compared to a mortgage, including (i) whether there is adequate equity in the property to justify foreclosure of the judgment lien, (ii) whether there are co-owners of the property not liable on the judgment debt, and (iii) whether the debtor is in default on an installment payment order for the judgment. Each of these issues is discussed below.
Is there sufficient property equity to warrant foreclosure of the judgment lien, considering applicability of the homestead exemption
If the debtor is not an individual (e.g., corporation), or is an individual but the real estate is not their primary residence, the amount of equity in the property for the judgment lien is equal to the value of the property, less the total amount of prior liens on the property (e.g., mortgage, taxes).
However, if the debtor is an individual and the real estate is their primary residence, a homestead exemption (per 52-352b property exempt from creditors) of $250,000 per debtor may apply (if the real estate is owned by more than one debtor, multiple $250,000 homestead exemptions may apply). In such a case, the equity for the judgment lien is the value of the property, less prior liens and the homestead exemption amount. Profetto v. Lombardi, 2015 Conn. Super. LEXIS 487. Less clear, and beyond the scope of this article, is how the homestead exemption is applied.
Are there co-owners of the property who are not liable for the judgment debt
A creditor can only execute on property of its debtor. As a result, foreclosing a judgment lien on property co-owned by parties not liable on the judgment debt, can result in the creditor taking title to its debtor’s (undivided fee) interest in the real estate, whereafter, the creditor will need to commence a partition action (against the remaining non-debtor owners of the property) in order to force a sale of the property at auction. Canty v. Otto, 2010 Conn. Super. LEXIS 895.
Is the debtor in default on an installment payment order for the judgment
A judgment lien may not be foreclosed (52-380a) if the court ordered a stay of execution upon the debtor’s compliance with an installment payment order for the judgment (per 52-356d on a consumer judgment), and the debtor is not in default. LienFactors, LLC v. Beebe, 2007 Conn. Super. LEXIS 873 (court per 52-356d(b) can order a stay of foreclosure in a consumer judgment case, provided the debtor remains current with an installment payment order other than for nominal payments).
It should be noted that courts have prevented the foreclosure of judgment liens outside of the statutory limitations in 52-380a and 52-356d, including for example, where the debtor was current with a payment plan following a non-consumer judgment. First New Haven National Bank v. Rowan, 2 Conn. App. 114 (1984). For this reason, it is generally not advisable to foreclose a judgment lien when the debtor is current on a payment plan for the judgment.
Conclusion
Judgment lien foreclosure is a valuable post judgment collection remedy. Taking into account the unique considerations compared to mortgage foreclosure, creditors can satisfy money judgments through the foreclosure of judgment liens.
Disclaimer: This article is for educational purposes only and to give you a general understanding of the law, not to provide specific legal advice. No attorney-client relationship exists by reading this article. This article should not be used as a substitute for legal advice from a licensed professional attorney in your state.
Lucas B. Rocklin is a creditor rights attorney. He has extensive experience in representing financial institutions and creditors in workout and litigation matters (commercial and consumer) including collections, foreclosures, bankruptcy and landlord-tenant litigation. Attorney Rocklin also practices labor law including collective bargaining agreement negotiations and arbitrations.