Rockstone Capital, LLC v. Sanzo

***********************************************
The “officially released” date that appears near the be-
ginning of each opinion is the date the opinion will be pub-
lished in the Connecticut Law Journal or the date it was
released as a slip opinion. The operative date for the be-
ginning of all time periods for filing postopinion motions
and petitions for certification is the “officially released”
date appearing in the opinion.
All opinions are subject to modification and technical
correction prior to official publication in the Connecticut
Reports and Connecticut Appellate Reports. In the event of
discrepancies between the advance release version of an
opinion and the latest version appearing in the Connecticut
Law Journal and subsequently in the Connecticut Reports
or Connecticut Appellate Reports, the latest version is to
be considered authoritative.
The syllabus and procedural history accompanying the
opinion as it appears in the Connecticut Law Journal and
bound volumes of official reports are copyrighted by the
Secretary of the State, State of Connecticut, and may not
be reproduced and distributed without the express written
permission of the Commission on Official Legal Publica-
tions, Judicial Branch, State of Connecticut.
***********************************************
ROCKSTONE CAPITAL, LLC
v. JOHN SANZO ET AL.
(SC 20041)
Robinson, C. J., and Palmer, McDonald, D’Auria,
Mullins, Kahn and Ecker, Js.
Syllabus
The plaintiff brought an action seeking to foreclose judgment liens on certain
real property owned by the defendants J and M. The liens had been
recorded to secure a debt owed in connection with a prior judgment
rendered against J and M. The parties thereafter entered into a forbear-
ance agreement pursuant to which J and M were to make payments on
the debt owed and to grant the plaintiff a mortgage on their property
securing those obligations, and the plaintiff was to refrain from pursuing
the foreclosure action for as long as J and M made their required pay-
ments. The mortgage included a waiver of the statutory (§ 52-352b [t])
homestead exemption for J and M’s property. When J and M defaulted
on their payments under the forbearance agreement, the plaintiff filed
a motion to foreclose on the judgment liens. J and M objected to the
motion and invoked the homestead exemption, and the plaintiff with-
drew its claim as to the judgment liens and amended its complaint,
seeking instead to foreclose on the mortgage. The trial court determined
that the forbearance agreement was void as against public policy and
denied the plaintiff’s claim to foreclose on the mortgage. The trial court
also determined that the homestead exemption should apply. The court
rendered judgment for the plaintiff on the judgment liens, subject to
the homestead exemption, but did not determine the amount of the
debt, the manner of foreclosure or set law days. The plaintiff appealed
to the Appellate Court from the denial of its request to foreclose on the
mortgage, and J and M cross appealed from that portion of the judgment
granting foreclosure of the judgment liens. The Appellate Court con-
cluded that it had jurisdiction over the plaintiff’s appeal because the
trial court’s denial of the plaintiff’s claim to foreclose on the mortgage
constituted a final judgment and reversed the trial court’s judgment on
the ground that the homestead exemption did not apply to a consensual
lien such as a mortgage. The Appellate Court also concluded that it had
jurisdiction over the cross appeal filed by J and M because, although it
was not based on a final judgment, it was inextricably intertwined with
the plaintiff’s appeal, which was based on a final judgment. The Appellate
Court reversed the trial court’s judgment on the merits of the cross
appeal because the plaintiff’s operative complaint did not seek foreclo-
sure of the judgment liens. On the granting of certification, J and M
appealed to this court. Held:
1. The Appellate Court had jurisdiction over the plaintiff’s appeal from the
trial court’s denial of its request to foreclose on the mortgage, as the
trial court’s denial of that request, which was the only relief the plaintiff
sought in its operative complaint, constituted a final judgment, and,
contrary to the claim made by J and M that the trial court did not render
a final judgment because it ruled sua sponte for the plaintiff on the
judgment liens and failed to set the amount of debt, manner of foreclo-
sure or law days, that ruling did not defeat the final judgment rendered
on the mortgage, as the plaintiff did not seek foreclosure of the judgment
liens in its operative complaint; moreover, this court concluded, after
examining the record and considering the briefs and arguments of the
parties, that certification was improvidently granted on the issue of
whether the Appellate Court had jurisdiction over the cross appeal from
the trial court’s ruling on the judgment liens, and, therefore, the present
appeal was dismissed as to that issue.
2. The plaintiff having sought, in its operative complaint, to foreclose on
the mortgage that J and M voluntarily had granted to it, which was a
consensual lien, rather than to foreclose on the nonconsensual judgment
liens that previously had been filed, the Appellate Court correctly con-
cluded that the homestead exemption did not apply, and, contrary to
the claim of J and M, the mortgage was enforceable and was not contrary
to the text of § 52-352b (t) or public policy: this court’s plain reading
of the text of § 52-352b (t) led it to reject the claim of J and M that a
mortgage securing preexisting judgment debt could not be a consensual
lien under that statute, and nothing in the statute (§ 52-350f) limiting a
judgment creditor’s collection efforts to nonexempt assets prohibits
parties from restructuring a judgment debt into a consensual lien, to
which the homestead exemption would not apply, as the parties did in
the present case; moreover, waiver of the homestead exemption through
a mortgage is routinely permitted, and practical considerations sup-
ported the allowance of such a waiver inasmuch as disallowing it would
severely restrict the availability of much needed credit to debtors, and
as J and M appeared to deliberately choose to mortgage their home and
receive forbearance from foreclosure on the judgment liens in exchange
for the mortgage.
Argued January 15—officially released July 16, 2019
Procedural History
Action to foreclose judgment liens on certain real
property owned by the named defendant et al., and for
other relief, brought to the Superior Court in the judicial
district of Fairfield and tried to the court, Hon. Richard
P. Gilardi, judge trial referee, who, exercising the pow-
ers of the Superior Court, rendered judgment in part
for the plaintiff, from which the plaintiff appealed and
the named defendant et al. cross appealed to the Appel-
late Court, DiPentima, C. J., and Beach and Bishop, Js.,
which reversed the trial court’s judgment and remanded
the case for further proceedings; thereafter, the named
defendant et al., on the granting of certification,
appealed to this court. Affirmed in part; appeal dis-
missed in part.
Matthew K. Beatman, with whom, on the brief, was
John L. Cesaroni, for the appellants (named defendant
et al.).
Houston Putnam Lowry, with whom, on the brief,
was Dale M. Clayton, for the appellee (plaintiff).
David Lavery and Loraine Martinez filed a brief for
the Connecticut Fair Housing Center as amicus curiae.
Opinion
D’AURIA, J. If a creditor forecloses on a debtor’s
home, the debtor might be entitled to keep a portion
of the home’s value, whatever the amount of the debt.
This debtor protection, known as the homestead
exemption, is available when the creditor forecloses on
a judgment lien, but not on a consensual lien. See Gen-
eral Statutes § 52-352b (t).1 In this case, the plaintiff,
Rockstone Capital, LLC (Rockstone), held judgment
liens against the defendants John Sanzo and Maria
Sanzo.2 The parties later agreed to a consensual lien in
the form of a mortgage to secure the debt. Now, the
Sanzos have defaulted on the mortgage payments, and
Rockstone seeks to foreclose on the mortgage. The
primary issue on appeal is whether the Sanzos are enti-
tled to the homestead exemption. We conclude they
are not.
The trial court found the following facts, as stipulated
by the parties and contained in exhibits submitted to
the court. The Sanzos’ primary residence is in Monroe
and most recently was valued at $500,000. In 2000, Fleet
National Bank (Fleet) secured a judgment against them
for about $100,000. To secure the debt, it recorded judg-
ment liens on the Monroe property. Fleet later assigned
its interests in the judgment and judgment liens to
Rockstone.
In 2008, Rockstone initiated this action to foreclose
on the judgment liens because the Sanzos had defaulted.
The parties, however, entered into a forbearance agree-
ment that halted the action. Under the agreement, the
Sanzos were to make regular payments on the amount
outstanding on the judgment liens and additional inter-
est, costs, and fees, and to grant Rockstone a mortgage
on the Monroe property securing these obligations. In
exchange, Rockstone agreed to refrain from pursuing
this foreclosure action for as long as the Sanzos made
their payments. The parties stipulated that they were
represented by counsel and that their agreement was
a commercial agreement.
The record also reflects the following procedural his-
tory. In 2014, Rockstone resumed this action, filing a
motion to foreclose on the judgment liens because the
Sanzos had defaulted on their obligations under the for-
bearance agreement. The Sanzos objected to the motion
and invoked the homestead exemption. In response,
Rockstone amended its complaint to seek foreclosure
on the mortgage, instead of on the judgment liens. The
Sanzos filed an answer, including a special defense that
claimed the mortgage was a de facto waiver of the home-
stead exemption, which was contrary to public policy.
The action was submitted to the trial court on stipula-
tions and exhibits submitted by the parties. Following
an initial decision that the parties agreed was improper,3
the court issued a corrected memorandum of decision.
In it, the court acknowledged that the Sanzos had ‘‘vol-
untarily enabled [Rockstone] to seek recovery without
the homestead exemption’s applicability’’ and that ‘‘the
homestead exemption would ordinarily not be applica-
ble to a mortgage created by a voluntary agreement
such as the one at hand.’’ But based on the ‘‘unique
procedural history’’ of the case, in which ‘‘the progres-
sion of this action has been to get around the homestead
exemption,’’ the court decided that the exemption
should apply nonetheless. It held that the forbearance
agreement was void as against public policy and there-
fore denied Rockstone’s claim to foreclose on the mort-
gage. It also rendered judgment for Rockstone on the
judgment liens, subject to the homestead exemption,
even though Rockstone had amended its complaint to
withdraw its claim regarding the judgment liens. The
court did not determine the amount of debt, manner
of foreclosure or law days for the judgment lien fore-
closure.
Rockstone appealed and the Sanzos cross appealed
to the Appellate Court. Rockstone appealed from the
denial of its request to foreclose on the mortgage, and
the Sanzos cross appealed from the judgment on the
judgment liens. Because the trial court had not deter-
mined the amount of debt, manner of foreclosure or
law days for the judgment lien foreclosure, the Appel-
late Court ordered a hearing to determine whether it
should dismiss the appeals for lack of a final judgment.
Following that hearing, the Appellate Court ordered the
trial court to articulate its ruling and, after receiving
the articulation, ordered the parties to address the final
judgment question in their merits briefs to that court.
The Appellate Court concluded that it had jurisdiction
over Rockstone’s appeal because the trial court’s denial
of Rockstone’s claim to foreclose on the mortgage con-
stituted a final judgment. Rockstone Capital, LLC v.
Sanzo, 175 Conn. App. 770, 778, 171 A.3d 77 (2017). It
reversed the judgment of the trial court on the merits
of Rockstone’s appeal, holding that the homestead
exemption did not apply to a consensual lien such as
a mortgage. Id., 784. The Appellate Court also concluded
that it had jurisdiction over the Sanzos’ cross appeal
because, although it was not based on a final judgment,
it was inextricably intertwined with Rockstone’s
appeal, which was based on a final judgment. Id., 786.
Finally, it reversed the judgment of the trial court on
the merits of the cross appeal because Rockstone’s
operative complaint had not sought foreclosure on the
judgment liens. Id., 788–89.
The Sanzos petitioned this court for certification to
appeal, which we granted, limited to the following
issues: ‘‘1. Did the Appellate Court properly conclude
that the appeal and cross appeal were taken from a
final judgment of the trial court? 2. If the answer to the
first question is yes, did the Appellate Court properly
conclude that the plaintiff’s postjudgment mortgage
encumbering the same property and the same debt as
the plaintiff’s judgment liens was a consensual lien, and
not a de facto waiver of the homestead exemption; see
General Statutes § 52-352b (t); that would be void as a
matter of public policy?’’ Rockstone Capital, LLC v.
Sanzo, 327 Conn. 968, 173 A.3d 391 (2017). We affirm
the judgment of the Appellate Court with respect to
its conclusions that the appeal was taken from a final
judgment and that the mortgage was a consensual lien.
We conclude that certification was improvidently
granted with respect to whether the cross appeal was
taken from a final judgment and dismiss that portion
of the appeal.
I
As threshold issues, we must address whether the
Appellate Court had jurisdiction over the appeal and
cross appeal. ‘‘The lack of a final judgment implicates
the subject matter jurisdiction of an appellate court to
hear an appeal. A determination regarding . . . subject
matter jurisdiction is a question of law [and, therefore]
our review [as to whether the Appellate Court had juris-
diction] is plenary.’’ (Internal quotation marks omitted.)
Ledyard v. WMS Gaming, Inc., 330 Conn. 75, 84, 191
A.3d 983 (2018). Subject to certain exceptions, an appel-
late court’s subject matter jurisdiction ‘‘is limited to
final judgments of the trial court.’’ (Internal quotation
marks omitted.) Id. A final judgment exists ‘‘[w]hen
judgment has been rendered on an entire complaint
. . . .’’ Practice Book § 61-2. In this case, Rockstone’s
operative complaint exclusively sought foreclosure of
the mortgage, and the trial court denied the relief
requested. We conclude that this constitutes a final
judgment and, thus, that the Appellate Court had juris-
diction over the appeal.
Once the trial court denied Rockstone’s request to
foreclose on the mortgage, it then sua sponte ruled in
favor of Rockstone on the judgment liens, but did not
set the amount of debt, manner of foreclosure or law
days. Therefore, the Sanzos argue, the trial court did
not render a final judgment. See Morici v. Jarvie, 137
Conn. 97, 103, 75 A.2d 47 (1950) (‘‘[a final] judgment
[in a foreclosure action] must either find the issues for
the defendant or [find the issues for the plaintiff and]
determine the amount of the debt, direct a foreclosure
and fix the law days’’). We disagree. This argument
ignores the undisputed predicate fact that Rockstone
did not seek foreclosure on the judgment liens in its
operative complaint. As stated previously, the com-
plaint sets the parameters for determining a final judg-
ment. See Practice Book § 61-2. Particularly ‘‘under the
unusual circumstances of this case’’; Rockstone Capital,
LLC v. Sanzo, supra, 175 Conn. App. 786; in which the
parties agree that there was no basis to rule on the
judgment liens; id., 788; the trial court’s ruling on the
judgment liens, which fundamentally exceeded the
scope of the complaint, does not defeat the final judg-
ment it rendered on the mortgage.
After examining the entire record on appeal and con-
sidering the briefs and oral arguments of the parties,
we also conclude that certification was improvidently
granted on the question of whether the Appellate Court
had jurisdiction over the Sanzos’ cross appeal from the
trial court’s ruling on the judgment liens. The parties
agree that the ruling on the judgment liens was
improper. Id. Moreover, the trial court stated in its artic-
ulation: ‘‘Once the court voided the forbearance
agreement and underlying mortgage, the remaining mat-
ter to be resolved involved judgment on the original
judgment liens. . . . It was the court’s intention to pre-
serve the [Sanzos’] right to the homestead exemption
while preserving [Rockstone’s] right to sue on the origi-
nal judgment liens.’’ (Citations omitted.) In other words,
if the trial court had concluded, as we do, that the
mortgage was enforceable, it never would have reached
the judgment liens. Therefore, the appeal is dismissed
as to that issue.
II
The primary issue in this case is whether the mort-
gage that the Sanzos granted to Rockstone is enforce-
able. The Sanzos argue it is not because it deprives
them of the homestead exemption, which is contrary
to both the text of § 52-352b (t) and public policy. We
disagree. Under the plain language of the statute, a
homestead exemption is not available to a mortgagor.
Nor, on the facts of this case, is the granting of a mort-
gage a violation of public policy. Therefore, we con-
clude that the mortgage is enforceable.
‘‘We exercise plenary review over questions of statu-
tory interpretation, guided by well established princi-
ples regarding legislative intent. See, e.g., Kasica v.
Columbia, 309 Conn. 85, 93, 70 A.3d 1 (2013) (explaining
plain meaning rule under General Statutes § 1-2z and
setting forth process for ascertaining legislative
intent).’’ State v. Daniel B., 331 Conn. 1, 12–13, 201 A.3d
989 (2019). Exemptions are construed liberally in the
debtor’s favor. See In re Caraglior, 251 B.R. 778, 782–83
(Bankr. D. Conn. 2000).
Under our statutes governing postjudgment collec-
tion, a creditor may enforce a money judgment ‘‘against
any property of the judgment debtor unless the property
is exempt . . . .’’ General Statutes § 52-350f. It may do
so via ‘‘foreclosure of a real property lien . . . .’’ Gen-
eral Statutes § 52-350f. ‘‘ ‘Exempt’ ’’ means ‘‘unless oth-
erwise specified, not subject to any form of process or
court order for the purpose of debt collection . . . .’’
General Statutes § 52-352a (c). Under the homestead
exemption, a judgment debtor’s ‘‘homestead’’ is exempt
‘‘to the value of seventy-five thousand dollars . . . .’’
General Statutes § 52-352b (t). A ‘‘ ‘[h]omestead’ ’’ is
‘‘owner-occupied real property . . . used as a primary
residence.’’ General Statutes § 52-352a (e). ‘‘Value’’ is
‘‘determined as the fair market value of the real property
less the amount of any statutory or consensual lien
which encumbers it . . . .’’ General Statutes § 52-352b
(t). ‘‘[T]hese statutory provisions . . . mean that a
judgment lien can attach on a homestead, but that such
a lien cannot be enforced up to the amount of the
exemption.’’ KLC, Inc. v. Trayner, 426 F.3d 172, 175
(2d Cir. 2005).
Plainly, though, the homestead exemption does not
apply to a consensual lien. See General Statutes § 52-
352b (t) (‘‘fair market value of the real property less the
amount of any . . . consensual lien which encumbers
it’’). A mortgage is a consensual lien. E.g., In re Wolmer,
494 B.R. 783, 784 (Bankr. D. Conn. 2013) (‘‘consensual
liens [here, the mortgages]’’); L. Suzio Asphalt Co. v.
Ferreira Construction Corp., Superior Court, judicial
district of New Haven, Docket No. 351912 (October 19,
1993) (10 Conn. L. Rptr. 264, 265) (‘‘consensual liens,
such as . . . a mortgage’’); see also 4 Collier on Bank-
ruptcy (R. Levin & H. Sommer eds., 16th Ed. 2019) ¶
506.03 [1] [a], p. 506-11 (‘‘[c]ommon examples of volun-
tary [or consensual] liens include real property mort-
gage liens’’).
In this case, Rockstone does not seek to foreclose on
the nonconsensual judgment liens initially filed against
the Sanzos. Rather, it seeks to foreclose on the consen-
sual mortgage later voluntarily granted to it by the San-
zos. Therefore, we agree with the Appellate Court that
the homestead exemption does not apply.
Although the Sanzos concede the general point that
the homestead exemption does not apply to mortgages,
they make two arguments as to why the particular mort-
gage they granted to Rockstone should not be enforced.
We find neither argument persuasive.
First, the Sanzos argue that their mortgage—a mort-
gage securing preexisting judgment debt—is not the
type of mortgage contemplated by § 52-352b (t). This
argument is not supported by a plain reading of the
statute’s text. The statute does not define ‘‘consensual
lien,’’ but could hardly refer to the concept more
broadly: ‘‘any . . . consensual lien’’ is subtracted from
the property’s value in calculating the homestead
exemption. (Emphasis added.) General Statutes § 52-
352b (t). We disagree with the Sanzos that § 52-350f,4
which limits a judgment creditor’s collection efforts to
nonexempt assets, is inconsistent with this reading of
the homestead exemption. Nothing in § 52-350f prohib-
its parties from restructuring a judgment debt into
another form, such as a consensual lien, to which the
exemption would not apply. In fact, the Sanzos appear
to concede that they could have properly restructured
their judgment debt if they had only done so through
third-party financing, rather than directly through their
creditor, Rockstone. Thus, we find no textual basis for
holding that a mortgage securing judgment debt is
excluded from the meaning of ‘‘consensual lien.’’5
Second, the Sanzos argue that a debtor may not waive
the homestead exemption and that, on the facts of this
case, the mortgage agreement they entered into with
Rockstone, their judgment creditor, should properly be
viewed as a de facto waiver of the exemption. We are
not persuaded by either point.
‘‘Waiver is the intentional relinquishment or abandon-
ment of a known right or privilege.’’ (Internal quotation
marks omitted.) Dinan v. Patten, 317 Conn. 185, 195,
116 A.3d 275 (2015). A statutory right generally may be
waived. Id. However, ‘‘a statutory right conferred on a
private party, but affecting the public interest, may not
be waived or released if such waiver or release contra-
venes the statutory policy.’’ (Internal quotation marks
omitted.) Pereira v. State Board of Education, 304
Conn. 1, 49–50, 37 A.3d 625 (2012).
Although there is considerable variation among the
states as to the contours of and legal purposes underly-
ing homestead exemptions; see, e.g., Chames v.
DeMayo, 972 So. 2d 850, 856–57 (Fla. 2007); homestead
exemptions are typically driven by interrelated policies
that consider the welfare of both individual private citi-
zens and the public at large. ‘‘The principal objective
of the homestead laws is generally regarded as the
security of the family, which in turn benefits the com-
munity to the extent that such security prevents pauper-
ism and provides the members of the family with some
measure of stability and independence.’’ G. Haskins,
‘‘Homestead Exemptions,’’ 63 Harv. L. Rev. 1289, 1289
(1950). More specifically, these laws seek to achieve
security for debtors and their families by protecting
their ability to remain in their homes, providing a finan-
cial cushion for those who would otherwise be unable
to support themselves, or both. See R. Rivera, ‘‘State
Homestead Exemptions and Their Effect on Federal
Bankruptcy Laws,’’ 39 Real Prop. Prob. & Tr. J. 71,
101–102 (2004) (noting homestead exemptions that are
intended ‘‘to protect debtors’ homes in bankruptcy
because when debtors retain their homes, they are more
likely to spend money in the local economy, which is
in the state’s best interest,’’ and homestead exemptions
that are intended to provide monetary relief ‘‘to prevent
a debtor from becoming completely dependent on the
state for financial support’’).
In addressing whether an individual may waive a
homestead exemption, a court usually considers the
form of the waiver. Waivers via mortgage are routinely
permitted.6 See 1 The Law of Debtors and Creditors
(2019) § 6:70 (‘‘perhaps the most common form of
waiver involves the homestead exemption, which may
typically be waived by the debtor granting a creditor a
mortgage’’); 40 C.J.S., Homesteads § 102 (2019) (‘‘[a]s
a general rule, homestead rights may be waived by the
parties entitled thereto by an act which evidences an
unequivocal intention to do so’’ [footnote omitted]).
Some courts permit a waiver via mortgage because
granting a mortgage on specific property allows the
mortgagor to consider the specific consequences of
default. For example, the Sanzos repeatedly cite a
Florida Supreme Court decision barring a prospective
waiver of the homestead exemption in an executory
contract. See Chames v. DeMayo, supra, 972 So. 2d 857
(citing constitutional provisions, statutes and case law
prohibiting ‘‘a general waiver of homestead or personal
property exemptions in an executory contract’’). But
they omit from their discussion that court’s express
acknowledgment that a waiver via mortgage is enforce-
able: ‘‘[Our cases] do not prohibit a waiver of the home-
stead exemption; they simply require that such waivers
be accomplished . . . by mortgage, sale, or gift . . . .
Those who truly wish to waive their homestead exemp-
tion . . . can do so.’’ (Citations omitted.) Id., 861–62.
A waiver via mortgage is permitted because it ‘‘is made
knowingly, intelligently, and voluntarily . . . with eyes
wide open . . . .’’ (Citation omitted.) Id., 861. ‘‘In
obtaining a mortgage, a homeowner is well aware that if
the payments are not made, the home may be foreclosed
upon. . . . [T]he very nature of the transaction implies
the exercise of discretion and the contemplation of
inevitable consequences.’’ (Internal quotation marks
omitted.) Id.; cf. Beneficial Finance Co. of Colorado v.
Schmuhl, 713 P.2d 1294, 1297 (Colo. 1986) (‘‘Our holding
[that a judgment debtor may waive an exemption by
granting a security interest] is supported by the expecta-
tions of the parties in secured transactions. A debtor
who grants a security interest in specific property to
a creditor expects foreclosure of that interest upon
default.’’); Lingle State Bank of Lingle v. Podolak, 740
P.2d 392, 396 (Wyo. 1987) (‘‘[t]he debtor cannot waive
the privilege of claiming the exemption in advance’’
[emphasis added; internal quotation marks omitted]).
Other courts permit a debtor to waive an exemption
on the theory that prohibiting such a waiver would go
too far in restricting an individual’s right to encumber
property. For instance, the New York Court of Appeals
has held that a debtor’s exemptions are not meant to
serve the ‘‘paternalistic function’’ of prohibiting a debtor
from disposing of exempt property, or ‘‘the less drastic
step’’ of encumbering it in exchange for consideration.
Matter of New York v. Avco Financial Service of New
York, Inc., 50 N.Y.2d 383, 388, 406 N.E.2d 1075, 429
N.Y.S.2d 181 (1980). It recognized that ‘‘the law has not
forbidden a debtor to execute a mortgage upon the
property so protected and thus create a lien which may
be foreclosed despite the property’s exempt status
. . . .’’ (Citations omitted.) Id.; see also, e.g., United
Bank of Bismarck v. Selland, 425 N.W.2d 921, 925 (N.D.
1988) (‘‘although the exemption statutes are designed
to protect debtors from becoming destitute as a conse-
quence of unforeseeable indebtedness, the statutes
should not be construed to deprive an individual of his
rights of ownership in exempt property . . . among
which is the power to encumber, to sell, or otherwise
dispose of it’’ [internal quotation marks omitted]); cf.
Moyer v. International State Bank, 404 N.W.2d 274, 277
(Minn. 1987) (‘‘[t]he statute does not forbid a debtor to
mortgage protected property and to create a lien against
identified property which can be foreclosed despite the
property’s exempt status’’).
Practical considerations support the reasoning in
these cases. ‘‘[A] determination that a statutory exemp-
tion cannot be waived by a security agreement would
severely restrict the availability of [much needed] credit
to debtors who, in many cases, have few assets to use
as collateral.’’ Beneficial Finance Co. of Colorado v.
Schmuhl, supra, 713 P.2d 1297; see also Hernandez v.
S.I.C. Finance Co., 79 N.M. 673, 675, 448 P.2d 474 (1968)
(‘‘[o]ften, such property is the poor man’s only source
of cash in an emergency and, if the law permits him to
sell his exempt property, surely it permits the less dras-
tic step of encumbering it’’).
This concept applies particularly to homestead
exemptions because a homestead is often a debtor’s
best potential source of credit. ‘‘A debtor’s equity in
residential real property subject to a homestead exemp-
tion is often substantial. Thus, permitting the debtor to
encumber the homestead through execution of a second
mortgage or similar instrument is economically justi-
fied.’’ J. Haines, ‘‘Security Interests in Exempt Person-
alty: Toward Safeguarding Basic Exempt Necessities,’’
57 Notre Dame Law. 215, 220 n.35 (1981); see W. Vukow-
ich, ‘‘Debtors’ Exemption Rights,’’ 62 Geo. L.J. 779, 852
(1974) (‘‘[p]ermitting waivers of exemptions and secu-
rity interests in the more substantial exempt assets . . .
is sound, since it permits persons to use the more sub-
stantial assets as collateral; in fact, these are the types
of assets which represent the best collateral and which
are most commonly used as such’’); see also Benchmark
Bank v. Crowder, 919 S.W.2d 657, 661 (Tex. 1996)
(‘‘[h]omestead owners must have the ability to renew,
rearrange, and readjust the encumbering obligation to
prevent a loss of the homestead through foreclosure’’).
In some scenarios, therefore, waiver of the homestead
exemption actually serves the public policies underly-
ing it by allowing a debtor to remain in his home and
providing him with a source of funds to support himself.
In support of their argument that a debtor may not
waive the homestead exemption, the Sanzos ignore the
form of their waiver: a mortgage. Although the Sanzos’
mortgage in this case involved an executory contract
(the forbearance agreement), and therefore presents a
scenario not addressed by the cases previously dis-
cussed, we are persuaded that the same principles still
apply. We are not convinced that a waiver of the home-
stead exemption always contravenes the public policy
behind it, such that it may never be waived.
The Sanzos find little support for their argument in
Connecticut law. They rely primarily on TuxisOhr’s
Fuel, Inc. v. Trio Marketers, Inc., Superior Court, judi-
cial district of New Haven, Docket No. CV-XX-XXXXXXX-
S (October 26, 2005) (40 Conn. L. Rptr. 203), and Hag-
gerty v. Williams, 84 Conn. App. 675, 855 A.2d 264
(2004), as examples of statutory rights that an individual
may not waive in every circumstance. Tuxis-Ohr’s Fuel,
Inc., concerned a provision in a personal guarantee
contract that waived the homestead exemption. Tuxis-
Ohr’s Fuel, Inc. v. Trio Marketers, Inc., supra, 204.
Haggerty involved a provision in a mortgage that
waived the relevant statute of limitations. Haggerty v.
Williams, supra, 676–77. In each case, the court was
concerned that allowing a debtor to waive a statutory
protection ‘‘at the inception’’ of an agreement; id., 681;
would mean a waiver was the result of ‘‘ignorance,
improvidence, an unequal bargaining position or was
simply unintended.’’ (Internal quotation marks omit-
ted.) Id., 682. These courts also feared that the public
policy advanced by the granting of these statutory rights
would erode by encouraging similar waivers ‘‘ ‘as a mat-
ter of routine.’ ’’ Id., 681; accord Tuxis-Ohr’s Fuel, Inc.
v. Trio Marketers, Inc., supra, 205.
The present case does not involve a scenario, as in
Tuxis-Ohr’s Fuel, Inc., and Haggerty, in which a debtor
waived statutory protection ‘‘at the inception’ ’’ of an
agreement; Haggerty v. Williams, supra, 84 Conn. App.
681; without a realistic chance to consider the conse-
quences. When the Sanzos decided to grant a mortgage,
they had already defaulted on the judgment debt and
were actually (not just theoretically) facing foreclosure.
They had the aid of counsel. They entered into a negoti-
ated commercial agreement. They are not relying on a
provision buried within the mortgage but, rather, on
the mortgage itself. It was ‘‘obvious,’’ they concede, that
the purpose of this mortgage was to contract around
the homestead exemption.
Nor, unlike Tuxis-Ohr’s Fuel, Inc., and Haggerty, is
this a situation in which mortgages would be granted,
and thus public policy would be undercut, merely ‘‘ ‘as
a matter of routine.’ ’’ Haggerty v. Williams, supra, 84
Conn. App. 681. Before entering into the agreement, the
Sanzos could choose between invoking the homestead
exemption in the face of the foreclosure action and
granting a mortgage. For the reasons just stated, they
appear to have made this choice deliberately. It is not
self-evident that judgment debtors in similar situations
would routinely make the same choice to mortgage
their homes, particularly if they had few other exempt
assets and a homestead exemption represented their
best financial outcome. Moreover, as described pre-
viously, restructuring judgment debt might often work
in a debtor’s favor. Indeed, in 2009, the Sanzos received
forbearance from foreclosure in exchange for the mort-
gage. Until 2014, they apparently complied with the
terms of the forbearance agreement and remained in
their home because of it.
Finally, the Sanzos and the amicus curiae, the Con-
necticut Fair Housing Center, urge us to look beyond
the form of the mortgage to its substance, which they
argue was merely a de facto general waiver. They con-
tend that the mortgage did not secure any debt beyond
the original judgment liens. They also note that it was
not a novation or release of the judgment liens. There-
fore, they argue, the only real effect of the mortgage
was to waive the homestead exemption in the same
manner as one would through a general contractual
waiver. We disagree for two reasons.
First, Rockstone’s interest secured by the mortgage
was not identical to the interest secured by the judg-
ment liens. The mortgage secured the judgment lien
debt, as well as additional fees and costs stemming
from the forbearance. The mortgage also had the effect
of subordinating Rockstone’s security interest, as two
superior liens had been filed and recorded after Rock-
stone’s judgment liens, but before the mortgage.
Second, although the forbearance agreement could
have more clearly distinguished between the old debt
(secured by the judgment liens) and the new (secured
by the mortgage) by, for instance, granting a novation,
the Sanzos were well informed about the consequences
of default, and the purpose of the mortgage was clear.7
The judgment of the Appellate Court is affirmed inso-
far as that court determined that Rockstone’s appeal
was taken from a final judgment and that the mortgage
was a consensual lien to which the homestead exemp-
tion does not apply, and insofar as that court reversed
the trial court’s judgment with respect to the denial of
Rockstone’s claim to foreclose on the mortgage and
remanded the case for further proceedings; that portion
of the appeal concerning whether the Appellate Court
correctly concluded that the Sanzos’ cross appeal was
taken from a final judgment of the trial court is dis-
missed.
In this opinion the other justices concurred.
1
Connecticut’s homestead exemption is embodied in General Statutes
§ 52-352b, which provides in relevant part: ‘‘The following property of any
natural person shall be exempt . . . (t) The homestead of the exemptioner
to the value of seventy-five thousand dollars . . . provided value shall be
determined as the fair market value of the real property less the amount
of any statutory or consensual lien which encumbers it . . . .’’
2
The Housatonic Lumber Company also was named as a defendant but
was defaulted for failure to plead and is not involved in this appeal.
3
In its original memorandum of decision, the trial court relied on an
express waiver of the homestead exemption contained within the mortgage
itself. It concluded that the express waiver was void as against public policy,
but that it was severable from the rest of the mortgage. It therefore granted
foreclosure of the mortgage, subject to the homestead exemption.
Neither party had relied on the express waiver, however, because they
agreed that it was unnecessary. In its motion to reargue, Rockstone stated
that it ‘‘was not relying upon the express waiver language contained in the
[m]ortgage since the [m]ortgage, being a consensual lien, is not within the
purview of the homestead exemption statute and thus no waiver argument
is necessary.’’ In their own motion to reargue, the Sanzos agreed that ‘‘the
[c]ourt ruled in a manner not addressed by either party . . . .’’ Conceding
that the express waiver in the mortgage was ‘‘actually an extraneous term,’’
they reiterated their argument that ‘‘the [m]ortgage itself is a de facto waiver
of the [h]omestead [e]xemption under the unique facts of this case.’’
The parties do not rely on the express waiver on appeal. See Rockstone
Capital, LLC v. Sanzo, 175 Conn. App. 770, 782, 171 A.3d 77 (2017).
4
General Statutes § 52-350f provides: ‘‘A money judgment may be enforced
against any property of the judgment debtor unless the property is exempt
from application to the satisfaction of the judgment under section 52-352a,
52-352b, 52-352d or 52-361a or any other provision of the general statutes
or federal law. The money judgment may be enforced, by execution or by
foreclosure of a real property lien, to the amount of the money judgment
with (1) all statutory costs and fees as provided by the general statutes, (2)
interest as provided by chapter 673 on the money judgment and on the costs
incurred in obtaining the judgment, and (3) any attorney’s fees allowed
pursuant to section 52-400c.’’
5
Legislative history is also, at best, unhelpful to the Sanzos, as debate
did not distinguish between prejudgment and postjudgment mortgages. The
homestead exemption for residential real property was enacted in No. 93-301,
§ 2, of the 1993 Public Acts. During debate in the House of Representatives,
Representative Lee A. Samowitz did emphasize, however, that the homestead
exemption was not intended to impair mortgages: ‘‘I want to clarify this.
[The homestead exemption] does not affect mortgages. Mortgages are
secured. They are not impaired. They won’t be impaired to bankruptcy, they
won’t be impaired to foreclosure.’’ 36 H.R. Proc., Pt. 30, 1993 Sess., p.
10,852; see also id., p. 10,826 (‘‘consensual liens are not impaired by this
amendment’’); id., p. 10,832 (‘‘[t]his is intended not to impair the statutory
and the [consensual] lien’’).
6
Several legislatures also have considered the form of the waiver. E.g.,
Alaska Stat. § 09.38.105 (2006) (‘‘[a] waiver of exemption executed in favor
of an unsecured creditor before levy on an individual’s property is unenforce-
able, but a valid security interest may be given in exempt property’’); Tenn.
Code Ann. § 26-2-301 (c) (2017) (‘‘[t]he homestead exemption shall not
operate against . . . any debt secured by the homestead when the exemp-
tion has been waived by written contract’’); W. Va. Code Ann. § 38-9-6 (a)
(LexisNexis 2011) (‘‘[a]ny waiver of the rights conferred by this article shall
be void and unenforceable except to the extent that [1] such waiver is
accompanied by a consensual security interest in the property in which the
homestead exemption is asserted’’).
Connecticut’s homestead exemption statute is silent on whether, or under
what circumstances, a homeowner may waive the exemption. See General
Statutes § 52-352b (t); see also 36 H.R. Proc., Pt. 30, 1993 Sess., p. 10,853,
remarks of Representative Lee A. Samowitz (‘‘[t]he proposed bill does not
deal with the statutory right of waiver’’).
7
We do not consider the other arguments advanced by the amicus because
they were not raised by the parties. See Dow & Condon, Inc. v. Brookfield
Development Corp., 266 Conn. 572, 595, 833 A.2d 908 (2003).