After a Connecticut borrower fails to redeem on the law day set by the court in a strict foreclosure proceeding, the lender receives title to the property directly. The lender subsequently sells the property to an investor. Which deed type would a Connecticut court most likely expect the lender to use when conveying this foreclosed property to the investor, and why?
Correct Answer
D) A special warranty deed, because the lender warrants only against claims arising during its ownership after the law day
In Connecticut's strict foreclosure process, when the law day passes without redemption, the lender receives title directly from the court decree — not through a voluntary purchase. When the lender then sells the property to an investor, it typically uses a special warranty deed, warranting title only against claims arising from the lender's own acts during its period of ownership after the law day. This is the standard practice because the lender is unwilling to warrant against any title defects that may have existed before or during the borrower's ownership, but it can warrant against defects it may have created during its own ownership period.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
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