Bulletin: CT000014

Date:
February 14, 2007
To:
All Issuing Offices in Connecticut
RE:
Marketability Of Title--Undischarged Mortgages (NEW CGS Section 49-13a)

Dear Associates:

We have all been presented with an abstract that reports a very old (sometimes decades old) unreleased mortgage of record. When researched, it becomes clear the underlying note has been paid-in-full for many years. There are numerous factual reasons why such a mortgage goes unreleased for so many years including the death or relocation of the mortgagor or the parties never understood a release or discharge needed to be recorded on the land records.

In 1969, in an effort to clear titles of "ancient" or "abandoned" undischarged mortgages, the Connecticut Legislature passed a statute, Connecticut General Statute Section 49-13a, which provided that undischarged mortgages of sixty (60) years could be released if the owner filed an affidavit on the land records stating they have been in undisturbed possession of the property for at least sixty (60) years from the maturity date of the debt. In 1995, the statute was amended reducing the time period to forty (40) years.

Thanks to Senate Bill 549, effective October 01, 2006, Connecticut General Statutes Section 49-13a was further  amended to reduce the time after which an undischarged mortgage can be deemed invalid from forty (40) years to twenty (20) years.

Previously, the former CGS Section 49-13a provided:

"When record title to real property remains encumbered by any undischarged mortgage, and the mortgagor or those owning his interest therein have been in undisturbed possession of the property for at least forty years after the expiration of the time limited in the mortgage for the full performance of the conditions thereof, the mortgage shall be invalid as a further lien against the real estate, provided an affidavit, subscribed and sworn to by the party in possession, stating the fact of such possession, is recorded on the land records of the town wherein the property is situated."

Thus an owner, in undisturbed possession for at least forty (40) years after an undischarged mortgage's maturity date, could file a sworn affidavit as to such possession on the land records, which would render the mortgage no longer valid.

The new CGS Section 49-13a reduces that time period in half from forty (40) years to twenty (20) years unless the mortgage does not state a date by which the note is payable, then the time period remains as forty (40) years from the date of the recording. A new subsection (b), offers protection to a lender by allowing a mortgagee to toll this time period for ten (10) years by filing a notice on the land records, prior to the end of the twenty (20) years, stating why the mortgage is still valid.

The new CGS Section 49-13a provides:

"(a) When record title to real property remains encumbered by any undischarged mortgage, and the mortgagor or those owning the mortgagor's interest therein have been in undisturbed possession of the property for at least twenty years after the expiration of the time limited in the mortgage for the full performance of the conditions thereof, or for at least forty years from the recording of the mortgage if the mortgage does not disclose the time when the note or indebtedness is payable or the time for full performance of the conditions of the mortgage, unless a notice is recorded pursuant to subsection (b) of this section, the mortgage shall be invalid as a further lien against the real property, provided an affidavit, subscribed and sworn to by the party in possession, stating the fact of such possession, is recorded on the land records of the town in which the property is situated.

(b) The record holder of an undischarged mortgage on real property may, prior to the expiration of the applicable time period specified in subsection (a) of this section, record a notice, on the land records of the town in which the property is situated, that contains: (1) The name or names of the mortgagors; (2) the recording information for the mortgage and any assignment of the mortgage; and (3) a statement of the reasons why the mortgage is valid and effective. Upon the recording of such notice in accordance with this subsection, the applicable time period after which the mortgage shall be invalid as a further lien against the real property as provided in subsection (a) of this section shall be tolled for a period of ten years from the recording of such notice. Any such notice shall be indexed in the grantor's index under the name or names of the mortgagors and in the grantee's index under the name of the record holder of the mortgage."

Please keep in mind there are three other statutory means of discharging an unreleased mortgage that has been paid in full. Please consult Connecticut Standards of Title, Standard 18.7 for a full discussion of the "Effect of Unreleased Mortgages on Marketability of Title."  Please do not hesitate to contact our State Office about Unreleased Mortgages or any other real estate questions.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None