Vermont Foreclosure Law Summary
Stop Vermont Foreclosure
Quick Facts
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Typically 210 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Yes
In Vermont, lenders may foreclose on mortgages or deeds of trust
in default using the strict or the power of sale foreclosure process.
Strict Foreclosure
The strict foreclosure process is based on the premise that the
lender owns the property until the mortgage has been paid in full. If the borrower
breaks any of the conditions established in the mortgage prior to the time the loan
is paid in full, he or she will lose any right to the property and the lender will
either take possession of the property or arrange for it's sale. In Vermont, a suit
must be filed in the county where the property is located before either of these
actions can occur. The borrower will be served a summons to appear before the court
and informed of his rights, at which time the lender may move for a summary judgment
and avoid the trial altogether.
Regardless, the borrower has either a six (6) month (post-1968
mortgages) or a twelve (12) month (pre-1968 mortgages)
redemption period.
Power of Sale Foreclosure
A "power of sale" clause is the clause in a deed of trust or mortgage,
in which the borrower pre-authorizes the sale of property to pay off the balance
on a loan in the event of the their default. In deeds of trust or mortgages where
a power of sale exists, the power given to the lender to sell the property may be
executed by the lender or their representative, typically referred to as the trustee.
In Vermont, power of sale foreclosures are conducted either judicially
or non-judicially, depending on the type of property securing the deed of trust
or mortgage.
Judicial Foreclosure
In Vermont, lenders who wish to obtain a foreclosure using the
power of sale clause in the deed of trust must first file a complaint in a court
having jurisdiction in the county where the property is located to try and obtain
a decree of sale. This form of foreclosure must be used when the property includes
a dwelling of two units or less, with the owner using said property as their principal
residence. The sale of this type of property may not be held until seven (7) months
after the decree of sale has been issued.
Non-Judicial Foreclosure
In Vermont, when a power of sale is contained in a mortgage relating
to any property except for a dwelling house of two units or less, that is occupied
by the owner as a principal residence, or farmland, the lender may exercise the
power of sale without first commencing a foreclosure action or obtaining a foreclosure
decree.
Power of Sale Guidelines
- At least thirty (30) days prior to the publication of a notice
of sale, a notice of intent to foreclose must be sent to the borrower by registered
or certified mail at his or her last known address. The notice of intent must
include information on the mortgage to be foreclosed, state the condition breached
and the lenders right to accelerate the mortgage, and include the total amount
necessary to cure the default. The borrower must also be informed that he or
she is entitled to receive a notice of sale at least sixty (60) days prior to
the date of sale.
- The borrower may redeem the property at any time prior to
the foreclosure sale by paying the full amount due on the mortgage, plus costs.
- The sale must be held on the property itself, unless otherwise
ordered by the court, and the property must be sold to the highest bidder. Anyone
may bid at the sale, including the lender. The borrower is entitled to receive
any surplus from the sale, but they may also be sued for deficiency if the sale
price is not enough to cover the amount of the mortgage in default.
- If the property is sold without court action, as in non-judicial
foreclosure by power of sale, the notice of sale must include the following
language:
- "The mortgagor is hereby notified that at any time before
the foreclosure sale, the mortgagor has a right to petition the superior court
for the county in which the mortgaged premises are situated, with service upon
the mortgagee, and upon such bond as the court may require, to enjoin the scheduled
foreclosure sale. Failure to institute such petition and complete service upon
the foreclosing party, or their agent, conducting the sale prior to sale shall
thereafter bar any action or right of action of the mortgagor based on the validity
of the foreclosure, the right of the mortgage holder to conduct the foreclosure
sale, or compliance by the mortgage holder with the notice requirements and
other conditions of section 4532 of Title 12. An action to recover damages resulting
from the sale of the premises on the date of the sale may be commenced at any
time within one year following the date of the sale, but not thereafter."
More information on Vermont foreclosure laws.
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