- 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.
