Across the country, the most common types of foreclosure are nonjudicial and judicial. But there is also another type of foreclosure, which is called a “strict” foreclosure. Strict foreclosure is only allowed in two states: Connecticut and Vermont.
If you live in either Connecticut or Vermont and there’s a possibility that you could lose your home to a foreclosure, you should educate yourself about this type of foreclosure process. Read on to learn more about strict foreclosure in general, along with details about how the process works in Connecticut and Vermont.
In a strict foreclosure, the foreclosing party (the "lender") goes to court to ask for an order declaring you to be in default on the mortgage. (Defaulting on the mortgage means you have failed to live up to the terms of the agreement. For example, if you fall behind in payments, you are in default.)
If the court agrees that you are in default, it will approve the foreclosure and give title to your home directly to the lender. There is no foreclosure sale like with a judicial or nonjudicial foreclosure. (Learn about the general steps in a judicial or nonjudicial foreclosure.)
In Connecticut, the lender may opt to pursue a strict foreclosure if you default on the mortgage. (Conn. Gen. Stat. § 49-24).
How strict foreclosure works in Connecticut. The lender begins a strict foreclosure by filing a complaint (lawsuit) with the court and serving it to you along with a summons. (Learn more about the difference between a foreclosure summons and complaint.) You’ll also get information about:
If you don’t respond to the suit—or if you respond, but don’t have a valid defense—and the court agrees with the lender that you’re in default, the lender gets ownership of your home.
You can stop the strict foreclosure by paying off the debt. The court will give you get a certain amount of time to make full payment on the debt—called “redeeming” your home—before you lose it. The last day to redeem is called a “Law Day.” If you don’t redeem by the deadline, and the Law Days for any other defendants pass, title to your property will go directly to the lender. (Learn more about redeeming your home in a Connecticut strict foreclosure in If I lose my home to foreclosure in Connecticut, can I get it back?)
What is a deficiency judgment? When your total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow a lender to seek a personal judgment (called a “deficiency judgment”) against you for this amount.
You could face a deficiency judgment after a Connecticut strict foreclosure. Even though there is no foreclosure sale in a Connecticut strict foreclosure, the lender may seek a deficiency judgment against you after the foreclosure. The deficiency amount will be the difference between the total outstanding debt and the property’s fair market value, as determined by the court. (Conn. Gen. Stat. § 49-14). (To learn more about deficiency law in Connecticut, see Deficiency Judgments After Foreclosure in Connecticut.)
Strict foreclosure is also allowed in the state of Vermont.
How strict foreclosure works in Vermont. In a Vermont strict foreclosure, the lender files a lawsuit in state court. As the homeowner, you’ll get a copy of the lawsuit (the complaint) along with a summons, which will let you know how much time you get to file an answer with the court, typically 20 days. If you are in default and don’t have a legal defense, the court will grant judgment in favor of the lender. (You can find a summary of some of the other key features of Vermont foreclosure law in Nolo’s Key Aspects of State Foreclosure Law: 50-State Chart.)
You can stop the strict foreclosure by paying off the debt. In Vermont, you get some time (called a “redemption period”) to pay off the debt and stop the strict foreclosure. Under Vermont law, you get six months from the date of the foreclosure decree to redeem the home, unless the court orders a shorter time. (Vt. Stat. Ann. tit. 12, § 4941). When the redemption period runs out, the lender becomes owner of the property.
You could face a deficiency judgment after a Vermont strict foreclosure. Following the strict foreclosure, the lender can get a deficiency judgment against you by filing a separate lawsuit in court. Like in Connecticut, the judgment amount will be limited by the fair market value of the property.
Restrictions on strict foreclosures in Vermont. In Vermont, strict foreclosure is allowed only if the court determines that the value of your property is less than the amount of your mortgage debt. (In common lingo, the home is "underwater.") Also, if you’re facing a strict foreclosure in Vermont, you can request that the court order a foreclosure sale instead of strict foreclosure. (Vt. Stat. Ann. tit. 12 § 4941).
To find Vermont’s strict foreclosure statute, go to Title 12, Chapter 172 of the Vermont Statutes and look at § 4941. You can find a link to the Vermont Statutes on the Vermont General Assembly’s website.
To find Connecticut’s strict foreclosure statutes, go to Title 49, Chapter 846 of the General Statutes of Connecticut and review § 49-24 et seq. You can find a link to the Connecticut Statutes on the Connecticut General Assembly’s website. (If you need help finding the statutes, see Nolo’s Legal Research FAQs & Basic Info area.)