2019 Connecticut General Statutes
Title 36a - The Banking Law of Connecticut
Chapter 669 - Regulated Activities
Section 36a-785 - (Formerly Sec. 42-98). Foreclosure.

(a) Repossession. When the retail buyer is in default in the payment of any sum due under the retail installment contract or installment loan contract, or in the performance of any other condition that such contract requires the retail buyer to perform, or in the performance of any promise, the breach of which is by such contract expressly made a ground for the retaking of the goods, the holder of the contract may retake possession of such goods, provided the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle. Unless the goods can be retaken without breach of the peace, the goods shall be retaken by legal process, provided nothing contained in this section shall be construed to authorize a violation of the criminal law. In the case of repossession of any motor vehicle without the knowledge of the retail buyer, the local police department shall be notified of such repossession not later than two hours after repossession. In the absence of a local police department or if the local police department cannot be reached for notification, the state police shall be promptly notified of such repossession.

(b) Notice of intention to repossess. Not less than ten days prior to the retaking, the holder of such contract may serve upon the retail buyer, personally or by registered or certified mail, a notice of intention to retake the goods on account of the retail buyer's default. The notice shall state that the retail buyer is in default and the period at the end of which such goods will be retaken, and designate (1) the obligations required to be performed in order to cure the default, including the dollar amount of any required payment, and (2) the date by which such obligations must be performed. The notice shall briefly and clearly state the retail buyer's rights under this subsection in the event such goods are retaken. In the case of repossession of any motor vehicle, the notice shall inform the retail buyer that he or she is responsible for removing all of his or her personal property from the motor vehicle prior to the date such repossession can take place. If the notice is so served and the retail buyer does not perform the conditions and provisions required under the contract to cure the default before the day set for retaking, the holder of the contract may retake such goods and hold such goods subject to the provisions of subsections (d), (e), (f), (g) and (h) of this section regarding resale, but without any right of redemption.

(c) Redemption. If the holder of such contract does not give the notice of intention to retake, described in subsection (b) of this section, the holder shall retain such goods for fifteen days after the retaking within the state in which such goods were located when retaken. During such period the retail buyer, upon payment or tender of the unaccelerated amount due under such contract at the time of retaking and interest, or upon performance or tender of performance of such other condition as may be named in such contract as precedent to the retail buyer's continued possession of such goods, or upon performance or tender of performance of any other promise for the breach of which such goods were retaken, and upon payment of the actual and reasonable expenses of any retaking and storing, may redeem such goods and become entitled to take possession of such goods and to continue in the performance of such contract as if no default had occurred. The holder of such contract shall, not later than three days after the date of the retaking, furnish or mail, by registered or certified mail, to the last-known address of the retail buyer, a written statement indicating (1) the unaccelerated sum due under such contract and the actual and reasonable expense of any retaking and storing, and (2) in the case of repossession of any motor vehicle, the holder of such contract shall also, not later than three days after the date of the retaking, and without regard to whether notice of intention to retake was given to the buyer, send a written notice (A) that the buyer is responsible for retrieving items of personal property that may have been left in the motor vehicle, other than items that may have been turned over to law enforcement, (B) that such property, if any, will be available for retrieval for at least sixty days after the date on which the motor vehicle was repossessed, unless the holder of the contract specifies, or the terms of the contract specify a date at least sixty days after the repossession after which the buyer may no longer retrieve the property, and (C) the contact and business hours information that the buyer can use to make arrangements for retrieval of the property. If the buyer retrieves some or all of the personal property more than fifteen days after the date on which the motor vehicle was repossessed, the holder of the contract, or an agent thereof maintaining custody of the personal property, may charge the buyer a reasonable storage fee not to exceed twenty-five dollars. Failure to furnish or mail such statement as required by this section shall result in forfeiture of the holder's right to claim payment for the actual and reasonable expenses of retaking and storage, and the holder shall be liable for the actual damages suffered because of such failure. If such goods are perishable so that retention for fifteen days under this subsection would result in their destruction or substantial injury, the provisions of this subsection shall not apply and the holder of the contract may resell the goods immediately upon such retaking.

(d) Compulsory resale. If the retail buyer does not redeem such goods within fifteen days after the holder of the contract has retaken possession, the holder of the contract shall sell such goods at public or private sale not less than fifteen days and not more than one hundred eighty days after the retaking. When the holder of the contract retakes possession by legal process, and an answer is interposed, the holder of the contract may, at the holder's election, hold such retaken goods for a period not to exceed thirty days after the entry of final judgment by a court of competent jurisdiction entitling the holder of the contract to possession of such goods before holding such resale. The holder of the contract shall give the retail buyer not less than ten days' written notice of the time and place of any public sale, or the time after which any private sale or other intended disposition is to be made, either personally or by registered mail or by certified mail, return receipt requested, directed to the retail buyer at such retail buyer's last-known place of business or residence. The holder of the contract may bid for such goods at any public sale. The proceeds of the resale shall be considered to be either the amount paid for such goods at such sale or the fair cash retail market value of such goods at the time of repossession, whichever is the greater, except as otherwise provided in subsection (g) of this section.

(e) Proceeds of resale. Proceeds of the resale shall be applied in the following order of priority: (1) First, to the payment of the actual and reasonable expenses of such resale, (2) if, after application pursuant to subdivision (1) of this subsection, there are proceeds remaining, then to the payment of the actual and reasonable expenses of any retaking and storing of said goods, and (3) if, after application pursuant to subdivisions (1) and (2) of this subsection, there are proceeds remaining, then to the satisfaction of the balance due under the contract. Not later than thirty days after the resale, the holder of the contract shall give the retail buyer a written statement itemizing the disposition of the proceeds. Any sum remaining after the satisfaction of such claims shall be paid to the retail buyer.

(f) Deficiency on resale. Even if the proceeds of the resale are insufficient to defray the actual and reasonable expenses of such resale, and such actual and reasonable expenses of any retaking and storing of such goods and the balance due under the contract, the holder of the contract may not recover the deficiency from the retail buyer or any surety or guarantor for the retail buyer, or from anyone who has succeeded to the obligations of such retail buyer, except as provided in subsection (g) of this section.

(g) Fair market value. If the goods retaken consist of a motor vehicle the aggregate cash price of which was more than four thousand dollars, the prima facie fair market value of such motor vehicle shall be calculated by adding together the average trade-in value for such motor vehicle and the highest-stated retail value for such motor vehicle and dividing the sum of such values by two. Such average trade-in value and highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Used Car Guide, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest-stated trade-in value stated in said guide for the motor vehicle shall be used. If the goods retaken consist of a boat the aggregate cash price of which was more than four thousand dollars, the prima facie fair market value of such boat shall be calculated by adding together the average trade-in value for such boat and the highest-stated retail value for such boat and dividing the sum of such values by two. Such average trade-in value and highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Appraisal Guide for Boats, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest-stated trade-in value stated in said guide for the boat shall be used. In the event that the value of such motor vehicle or boat is not stated in such publication, the fair market value at retail minus the reasonable costs of resale shall be determined by the court. The prima facie evidence of fair market value of such motor vehicle or boat so determined may be rebutted only by direct in-court testimony. If such value of the motor vehicle or boat is less than the balance due under the contract, plus the actual and reasonable expenses of the retaking of possession, the holder of the contract may recover from the retail buyer, or from anyone who has succeeded to such retail buyer's obligations, as a deficiency, the amount by which such liability exceeds such fair market value, as defined in this subsection. If the actual resale price received by the holder exceeds such fair market value, as defined in this subsection, the actual resale price shall govern.

(h) Election of remedies. After the holder retakes possession as provided in subsection (a) of this section, or if the holder obtains a prejudgment remedy against the goods under chapter 903a, the retail buyer or anyone who has succeeded to such retail buyer's obligations shall not be liable for any balance due, except to the extent permitted by subsection (g) of this section. The holder may seek a monetary judgment on the contract against the retail buyer unless the goods have been repossessed, with or without judicial process. Goods purchased under the contract shall not be executed upon to satisfy such judgment. When such judgment becomes final, the holder's security interest in the goods shall be extinguished. If the contract covers a retail sale of a motor vehicle required to be registered, the holder shall comply with section 14-188.

(i) Recovery of part payments. If the holder of the contract fails to comply with the provisions of subsections (c), (d), (e), (f), (g) and (h) of this section, after retaking the goods, the retail buyer may recover from the holder of the contract such retail buyer's actual damages, if any, and in no event less than one-fourth of the sum of all payments which have been made under the contract.

(j) Waiver of statutory protection. No act or agreement of the retail buyer before or at the time of the making of a retail installment contract or installment loan contract nor any agreement or statement by the retail buyer in such contract shall constitute a valid waiver of the provisions of subsections (c), (d), (e), (f), (g), (h) and (i) of this section.

(k) Loss. After the delivery of the goods to the retail buyer and prior to any retaking of such goods by the holder of the contract, the risk of injury and loss shall rest upon the retail buyer.

(1949 Rev., S. 6700; 1957, P.A. 357, S. 2, 3; 1959, P.A. 301; 1961, P.A. 116, S. 22, 23; P.A. 76-258, S. 1, 2; P.A. 77-506; 77-614, S. 486, 587, 610; P.A. 78-303, S. 85, 136; P.A. 94-134, S. 2, 3; May 25 Sp. Sess. P.A. 94-1, S. 61, 130; P.A. 09-189, S. 1; P.A. 15-42, S. 7; P.A. 16-65, S. 18, 58; 16-193, S. 34.)

History: 1959 act added provisions re notification of police where vehicle is repossessed without its buyer's knowledge in Subsec. (a); 1961 act amended Subsecs. (d) and (e) for conformity with Uniform Commercial Code; P.A. 76-258 amended Subsec. (d) to require that sale be held within 180, rather than 90 days, to require that buyer be notified of “the time after which any private sale or other intended disposition is to be made”, deleted Subsec. (e) re procedure where contract holder not required to resell repossessed goods, relettering as necessary, required that contract holder notify buyer of disposition of proceeds in new Subsec. (e), formerly (f), changed force of Subsec. (f), formerly (g), so that deficiency is not recoverable from buyer (“except as provided in subsection (g)”) where previously deficiency was recoverable, added new Subsecs. (g) and (h), deleted former Subsecs. (h) and (i), and relettered former Subsecs. (j) to (l) as (i) to (k); P.A. 77-506 substituted “retail” buyer for “installment” buyer in Subsec. (a), referred to “unaccelerated” amounts due, required that buyer be notified of amount due within 3 days of retaking rather than “immediately” upon buyer's written demand and stated that failure to meet notice requirement resulted in forfeiture of right to claim payment for retaking and storage expenses rather than in forfeiture of $10 to the buyer, specified that Subsec. (h) is applicable where holder obtains a prejudgment remedy and made minor language changes in Subsecs. (e) and (g); P.A. 77-614 and P.A. 78-303 placed state police within the department of public safety, effective January 1, 1979; P.A. 94-134 amended Subsec. (g) to include a boat the aggregate price of which was more than $2,000 and reworded for clarity the formula for calculating a motor vehicle's fair market value, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 amended Subsec. (g) by making a technical change, effective July 1, 1994; Sec. 42-98 transferred to Sec. 36a-785 in 1995; P.A. 09-189 amended Subsec. (a) by adding proviso re “the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle” and by making a technical change; P.A. 15-42 amended Subsec. (a) by changing notification to police of motor vehicle repossession from “immediately thereafter” to “within two hours”; P.A. 16-65 amended Subsec. (b) by deleting “if he so desires”, adding Subdivs. (1) and (2) re designation of obligations required to be performed to cure default and date by which obligations must be performed, adding provision re notice in the case of repossession of any motor vehicle and replacing “conditions and provisions as to which he is in default” with “conditions and provisions required under the contract to cure the default”, amended Subsec. (c) by designating existing provision re unaccelerated sum due and expenses of retaking and storing as Subdiv. (1) and adding Subdiv. (2) re notice requirements in the case of repossession of any motor vehicle, and adding provision re personal property storage fee, amended Subsec. (e) by adding provisions re order of priority and proceeds remaining after application pursuant to Subdivs. (1) and (2), amended Subsec. (g) by replacing “two thousand dollars” with “four thousand dollars”, replacing “average retail value” with “highest-stated retail value” and adding provisions re use of highest-stated trade-in value if average trade-in value is not stated in guides, and made technical and conforming changes throughout; P.A. 16-193 made technical changes in Subsec. (f).

Annotations to former section 42-98:

Actual receipt of notice to resell repossessed automobile not necessary. 150 C. 631. Cited. 198 C. 34. Notification requirements mandatory. 209 C. 163. Cited. 216 C. 458; 231 C. 707.

Cited. 7 CA 613; 24 CA 455.

A bid is merely an offer to purchase; where plaintiff did nothing to consummate sale other than to place in its own file a bid to purchase, held no resale having taken place, plaintiff was not entitled to recover any deficiency. 23 CS 362. Cited. Id., 365. Compliance with section mandatory under act. 30 CS 604. Cited. 31 CS 152.

Cited. 2 Conn. Cir. Ct. 495, 499, 681. Court held day of retaking was to be excluded and last day included in computing the 15 days for redemption; sale by repossessor before statutory time limit defeated his right to deficiency judgment. Id., 708. Sale by holder of retail installment contract who repossessed automobile need not be given notice by publication nor be conducted by licensed auctioneer. 4 Conn. Cir. Ct. 351. Applicable only to retail buyers. 6 Conn. Cir. Ct. 709.

Annotation to present section:

Repossession under Subsec. (g) does not terminate operation of parties' contract or prohibit the recovery of postmaturity interest at either the contractual or legal rate under Sec. 37-1(b). 315 C. 433.