Vermont Foreclosure Law
Vermont Foreclosure Law allows Judicial and Non-Judicial processes to foreclose deeds of trust or mortgages in default. Lenders may use either the strict or the power of sale process. The typical time of process last about 210 days and the deeds of trust and mortgages are the security instruments used. Deficiency Judgments and the Right of Redemption are both practiced in Vermont.
The Strict Foreclosure process is based on the premise that the lender owns the property until the time when the mortgage has been fully paid. Should the borrower fail in any of the conditions set in the mortgage before it is paid in full, the lender may take possession of the property and sell it. However, a lawsuit should be filed first before any foreclosure related action could take place. The lender may also move for a summary judgment and forego any trial. The borrower is given either a 6-month (post 1968 mortgage) or a 12-month (pre 1968 mortgage) period to exercise his right of redemption.
Power of Sale Foreclosure occurs when a “power of sale” clause is stipulated in the security instruments. It allows the lender or their representative, typically referred to as the trustee, to sell the property in order to settle the balance on a mortgage loan in case of default. This type of foreclosure may be done either through a judicial or non-judicial foreclosure process, depending on the type of property being foreclosed.
For a Judicial Foreclosure, lenders must first file a lawsuit to try and obtain a decree of sale. This form of foreclosure is used when the property includes a dwelling of 2 units or less, and is used by the borrower as their principal residence. Foreclosure sale of this type of property should only be held at least 7 months after the issuance of the decree of sale. For other types of properties the Non-Judicial Foreclosure is used. Here, the lender may exercise the power of sale without the need for court order or filing a lawsuit.
Power of Sale Guideline:
- At least 30 days before the publication of a Notice of Sale, a Notice of Intent to Foreclose must be sent to the borrower through registered mail at his last known address. The Notice of Intent must include information on the mortgage, conditions breached, the lender’s right to accelerate the mortgage, and the total amount required to cure the default. The borrower must be informed that he is entitled to receive a notice of sale at least 60 days before the foreclosure sale.
- The borrower may redeem the property before the foreclosure sale by settling the total amount due plus interests and other expenses.
The sale must be held within the property grounds, unless otherwise ordered by the court, through a public auction. The bidding process is open to anyone, including the lender. The borrower is entitled to any surplus from the sale but may be sued for deficiency if the selling price of the property is less than the total amount owed.
Local Vermont Hud Office : Burlington Field Office
159 Bank Street, 2nd Floor
Burlington, VT 05401-4411
Phone: (802) 951-6290
Fax: (802) 951-6298
Vermont Foreclosure Help
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