Connecticut: If a Co-Tenant Refinances or Takes a Home Equity Loan Without Your Approval

If you inherited real property with one or more co-owners and a co-tenant obtains a home equity loan or refinances without your approval, you have several possible legal consequences and remedies under Connecticut law. The exact result depends on whether the non-consenting co-tenant actually signed a valid mortgage or deed, whether any signature was forged, what the lender knew or could have discovered in a title search, and whether the loan encumbers only the co-tenant’s share or the whole property.

How co-ownership and mortgages usually work

When multiple people own property together as tenants in common (the most common situation for heirs), each owner holds an undivided share of the whole property. Under general Connecticut property principles, a co-tenant may mortgage or sell the interest that they actually own — that is, their undivided share. A mortgage signed only by one co-tenant typically attaches to that co-tenant’s interest, not automatically to the interests of the other co-owners.

In practice, most lenders who want the entire property as collateral will require all owners to sign loan and closing documents. A lender will also run a title search and expect clear chain-of-title and recorded signatures. If a lender proceeded without all owners’ signatures, the lender may still have remedies, and your protections depend on whether the lender acted in good faith and what the public land records show.

Common scenarios and likely outcomes

• Co-tenant signed the loan documents themselves. If your co-tenant executed a mortgage or HELOC in their own name only, that mortgage generally encumbers only that co-tenant’s undivided interest. The lender may foreclose on that interest if the borrower defaults. A foreclosure sale of a single co-tenant’s interest can lead to a buyer owning only that undivided share — which can create pressure for a partition (sale) action.
• Co-tenant forged your signature or recorded a false deed. Forgery or fraud is a crime and a civil wrong. You can seek to have a forged instrument declared void, file a police report, and sue to quiet title or to set aside the fraudulent instrument. If you prove forgery, the mortgage or deed based on the forged signature will likely be voidable or void as to you.
• Lender accepted a forged or defective signature but was a good-faith purchaser. If a lender paid value and reasonably relied on the recorded documents, a court’s analysis can be complex. A lender who conducted a proper title search and closing may be treated more favorably than a lender that failed to follow standard procedures. You may still have equitable claims against the co-tenant who committed the fraud and possibly against parties that knowingly participated.
• Lender forecloses on the mortgaged share. Foreclosure of a single co-tenant’s interest can result in the sale of that interest. The buyer at a foreclosure sale takes the interest subject to the rights of the remaining co-owners. Often, a lender who ends up owning a mortgaged share will seek a partition action or force a sale of the entire property to satisfy the debt. That can result in the entire parcel being sold and your share of the sale proceeds being reduced by liens and sale costs.

Legal remedies and steps you can take

Act promptly. Typical remedies and protective steps include:

• Get a copy of the recorded documents. Search the land records in the town where the property lies (the Registry of Deeds/land records) and obtain copies of any recorded mortgage, deed, or assignment.
• Contact the lender or loan servicer in writing. Request copies of the loan package, signed documents, and any disclosure that shows whose signature is recorded.
• If a signature looks forged, file a police report for forgery and identity fraud. Preserve originals and copies of all documents and communications.
• Talk to a Connecticut real estate attorney right away. Remedies may include filing a quiet title action, a declaratory judgment, an injunction to stop sale or foreclosure, an action to set aside a fraudulent conveyance, or seeking damages from the co-tenant who acted improperly.
• Consider a partition action. If a lender forecloses on a co-tenant’s interest or a buyer takes that share, either you or the lender may file a partition action to divide or sell the property. Partition can lead to a court-ordered sale and distribution of proceeds. A sale may be the practical outcome even where only one co-tenant’s interest was encumbered.
• Monitor your credit. If your name is involved with loan documents or identity theft, check your credit reports and place fraud alerts if necessary.

Practical considerations

Even when the law is on your side, practical results can be messy. Foreclosure or partition actions are time-consuming and expensive. If a co-tenant’s debt is large, the lender may push for sale of the whole property. Sometimes resolving the situation by negotiating a buyout, refinancing properly with all owners, or selling the property voluntarily can save time and costs.

Timing and urgency

Don’t delay. If a foreclosure is already underway or a foreclosure sale is scheduled, you have limited time to seek emergency relief (such as an injunction or a temporary restraining order). Preserve evidence and consult a Connecticut attorney immediately to protect your ownership rights.

Summary

In short: a co-tenant can typically encumber only the share they actually own, but a mortgage on that share can lead to foreclosure or a partition sale that affects all owners. If any signature was forged or obtained by fraud, you can pursue criminal and civil remedies to void the instrument and protect your interest. The best next steps are to check the land records, contact the lender, document any irregularities, and consult an attorney promptly.