In Vermont, a lender may foreclose on a property either in court or out of court. The typical timeline for a Vermont foreclosure is approximately nine months.
A recent Vermont foreclosure law freezes foreclosures and evictions until the governor declares an end to the state of emergency and then the law forces this moratorium for 30 days after that. If a borrower has a federally backed mortgage, they may qualify for a forbearance which lasts up to 180 days and then can be extended for 180 more days, sometimes even longer.
One type of Vermont foreclosure is called strict foreclosure. This is conducted through the courts. Once default has occurred, the lender files the necessary court documents to start the foreclosure process, after which the borrower receives a summons to appear in court. When the court rules against the borrower, the lender is then allowed to either take immediate possession of the property or schedule the sale of the property.
The other type of Vermont foreclosure occurs when the mortgage permits a lender to sell the property in the event of default through a Power of Sale clause. This type of foreclosure is accomplished either in court of out of court, and depends on the type of property being foreclosed on. If the lender proceeds through the courts, the court rules the property in foreclosure and allows for sale of the property. If the foreclosure is conducted out of court, the lender is required to mail a notice of the impending foreclosure to the borrower. The notice states the circumstances, the amount in default that must be paid to stop the foreclosure and a deadline of 30 days from the date of service of the letter. The notice must be sent a minimum of 30 days before a Notice of Sale, (NOS), is published. This type of foreclosure process is much more prevalent.
In a Vermont foreclosure, the borrower generally has the right to:
- apply for a way to avoid foreclosure through a loss mitigation process
- participate in foreclosure mediation
- get notice of the foreclosure and the chance to respond in court
- receive special protections if you’re in the military
- get current on the overdue amounts to stop the foreclosure sale
- pay off the total loan debt to prevent a foreclosure sale, and
- get any excess money after a foreclosure sale.
Notice of Sale & Auction
The NOS is required to contain a description of the property, lender and borrower names, mortgage date, and the time, day, location and terms of the upcoming sale. The borrower must receive the NOS a minimum of 60 days prior to the sale date. The notice must also be published once per week for three weeks in a local newspaper, and the first notice must appear a minimum of 21 days before the sale date. In an out-of-court foreclosure, the lender is required to record the NOS with town records at least 60 days prior to the sale. The filing of this notice serves the same purpose as filing a foreclosure complaint in court.
A public auction is typically held at the property., not the county courthouse. Any party or entity may bid. The property is awarded to the highest bidder. The borrower is entitled to receive any surplus from the sale proceeds, after any junior liens.
For an out-of-court foreclosure sale the property ownership is transferred free and clear to the winning bidder within 90 days.
For an in-court foreclosure sale, the court either confirms the sale or orders a resale. If confirmed, the property ownership is transferred to the winning bidder within 10 days.
For a Vermont foreclosure being conducted out of court, the borrower may stop the proceedings any time prior to the sale by paying the default amount plus costs.
For an in-court Vermont foreclosure process, the borrower typically gets six months from the court ruling to redeem the property. In order to redeem, the borrower must pay the full amount stipulated by the court, which may include added costs above and beyond what was originally owed in the default.