Connecticut Private Money Lending:
Licensing, Compliance & Documents

By Anthony Geraci, Managing Partner & CEO, Geraci LLP  |  February 2026

Connecticut's private money lending market is active in Fairfield County (proximity to New York City), Hartford, and New Haven. The state's strict foreclosure process — unique among U.S. states — can be advantageous for private money lenders who want to acquire properties through foreclosure. However, lenders should understand the differences between strict foreclosure and foreclosure by sale.

This guide covers the essential licensing, usury, foreclosure, and document requirements for private money lenders originating loans in Connecticut.

Related: Usury Laws by State  |  Deed of Trust vs. Mortgage Guide  |  How to Lend in Multiple States

Licensing Requirements

Connecticut requires a Mortgage Lender license or Small Loan license from the Department of Banking for consumer lending. Private money lenders making business-purpose loans should verify licensing requirements with Connecticut counsel, as the state's requirements can be broader than expected.

Key Compliance Considerations

Connecticut uses strict foreclosure as the primary method, which is unique among U.S. states. In strict foreclosure, the court sets a 'law day' by which the borrower must pay. If the borrower fails to pay by the law day, title vests directly in the lender without a foreclosure sale. This can be advantageous for lenders who want to acquire the property rather than sell it at auction.

Connecticut also allows foreclosure by sale, where the court appoints a committee to conduct a public sale. The lender can choose which method to pursue.

The state's 12% usury limit applies to consumer loans and must be considered when structuring loan terms.

Connecticut has specific notice and filing requirements for mortgage foreclosures, including mandatory mediation for certain residential properties.

Document Requirements for Connecticut Private Money Loans

Connecticut private money loans require a mortgage as the primary security instrument, along with a promissory note, loan agreement, personal guaranty (for entity borrowers), and state-specific disclosures and compliance riders. For fix-and-flip and construction loans, draw agreements, scope of work exhibits, and completion guarantees are also required.

Automate Loan Docs generates complete, Connecticut-specific document packages that comply with all applicable state requirements. Every template is drafted by the attorneys at Geraci LLP, whose team has over 30 years of combined experience advising private money lenders across all 50 states — including extensive experience with Connecticut lending transactions.