Vermont foreclosure law

Lenders in Vermont can foreclose on defaulting mortgages and deeds of trust using a judicial, non-judicial, or strict foreclosure process. The method used depends on the contents of the contract. Vermont has one of the longest foreclosure timelines in the country, with an average wait time of 210 days or seven months.

Strict foreclosure
The most common method used in Vermont is the strict foreclosure process. The basic premise of strict foreclosure is that the lender legally owns the home until the mortgage is fully paid. This means that if the borrower defaults or breaks any of the provisions in the mortgage, he or she loses all rights to the property and the lender can either take possession or put it up for sale.

In Vermont, however, the lender must file a lawsuit in the same county as the property before taking any action. After the suit is filed, the borrower will be given an order to appear in court. He or she will also be informed of their foreclosure rights. During this time, the lender can choose to skip the trial and immediately seek a summary judgment. In any case, strict foreclosure gives borrowers a Right of Redemption, which means they can redeem their home for a given period after the foreclosure. Mortgages originated before 1968 have a 12-month redemption period, while those signed after 1968 only have a six-month redemption time.

Power of Sale foreclosure
The Power of Sale is a clause in some mortgage contracts that gives the lender the right to sell the home as payment in case the borrower defaults on the loan. Unlike most states, however, Vermont may require the lender to use the judicial process for some types of properties.

Judicial foreclosure
A judicial foreclosure is used when the property in default is the borrower’s principal residence and consists of two units or less. In this process, the lender records a complaint against the borrower in a court in the same county as the borrower’s home. If the court confirms the default, it issues a decree of sale and foreclosure officially starts. However, the home can only be sold at least seven months after the court declares the foreclosure.

Non-judicial foreclosure
If the mortgage does not qualify for a judicial foreclosure, the lender can foreclose without obtaining a decree of sale. In a non-judicial foreclosure, the lender first sends the borrower a Notice of Intent to Foreclose by certified or registered mail. This notice includes a description of the default or breach, a statement of the lender’s right to accelerate (demand full payment) on the mortgage, and the total amount needed to cure the default. The borrower should receive a Notice of Sale at least 60 days before the foreclosure sale date.

Any time before the sale, the borrower can stop foreclosure and cure the default by paying the full balance on the mortgage, plus attorney’s fees and other related costs.

The sale is usually conducted on the home itself, unless the court specifies otherwise. The auction is open to everyone present, including the lender. Any surplus from the sale may be given back to the borrower, but the lender retains the right to seek deficiency claims. This means that they can sue the borrower if the foreclosure sale is not sufficient to pay the delinquent amount.

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