Vermont Foreclosure Laws
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Vermont is referred to as a lien theory state wherein the title of the property stays as security for the loan in question. A mortgage is the document through which the lien is placed on properties.
The final ruling on a foreclosure is issued through a court, because lenders in Vermont have to go through a judicial foreclosure process through a court. The property sells through a sale that has been publicly notified. A complaint, alongside a lis pendens (a recorded document used to provide notice to the public about the foreclosure on the property) needs to be filed in the Superior Court. A strict foreclosure is in variation from a judicial foreclosure, where an action that is more streamlined is provided and rights of redemption are done away with.
The documents are called the mortgage or the note, and a security agreement in cases of commercial transactions. A lender in Vermont can also follow a foreclosure through the power of sale language which would need to be included within the mortgage. Occasionally the security agreement is merged with the mortgage document. In order to confirm the debt in question and its repayment terms, which are included in the note, a mortgage needs to be filed.
It can take about 210 to 230 days for a judicial foreclosure that is not contested to take effect; this does depend on the schedule of the Superior Court. The process can be stalled if the action is contested in the court by the borrower, if a delay or an adjournment of the hearing is sought or if bankruptcy is filed for by the borrower.
In Vermont, a statutory right of redemption is in place, allowing a borrower to regain the property after the foreclosure proceedings are completed, by paying off completely, the amount left on the loan in question and the costs. This redemption can be made within a six month period after the sale. In cases of mortgages that originated before 1968, a one year redemption right is in place.
If a property ends up selling for less than the amount on the loan that is secured by the mortgage at the public sale, the lender can obtain a deficiency judgment. This implies that the borrower owes to the lender the difference of the original loan amount and what the property sells for at the auction.
Foreclosures in Vermont are governed by laws that are part of Vermont Statutes, Title 12 (Court Procedure), Part 9 (Particular Proceedings), Chapter 163 (Chancery Proceedings), and Subchapter 6 (Foreclosure of Mortgages).
