Vermont Foreclosure Laws

Questions

Answers

How are mortgage liens treated in Vermont?

Vermont is generally known as a lien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called a mortgage.

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How are Vermont mortgages foreclosed?

In Vermont, the lenders go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in Superior Court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon. A variation of judicial foreclosure is known as strict foreclosure, which provides a more streamlined action and extinguishes any redemption rights.

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What are the legal instruments that establish a Vermont mortgage?

The documents are known as the mortgage, note, and in a commercial transaction, a security agreement. In Vermont, a lender can also use a power of sale foreclosure and this language would be contained in the mortgage. Sometimes the mortgage document is combined with the security agreement. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

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How long does it take to foreclose a property in Vermont?

Depending on the Superior Court schedule, it usually takes approximately 210-230 days to effectuate an uncontested judicial foreclosure. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy. The borrower has the right to cure certain defaults thirty (30) days after receiving a default notice.

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Is there a right of redemption in Vermont?

Vermont has a statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a time limit to undertake such redemption, which is usually six (6) months. Older (pre-1968) mortgages have a one (1) year right of redemption.

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Are deficiency judgments permitted in Vermont?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan.

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What statutes govern Vermont foreclosures?

The laws that generally govern Vermont foreclosures are found in Vermont Statutes, Title 12 (Court Procedure), Part 9 (Particular Proceedings), Chapter 163 (Chancery Proceedings), Subchapter 6 (Foreclosure of Mortgages).


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