Vermont Foreclosure Laws

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Judicial Foreclosure Available:	Yes
Non-Judicial Foreclosure Available:	Yes
Primary Security Instruments:	Deed of Trust, Mortgage
Timeline:	Typically 210 Days
Right of Redemption:	Yes
Deficiency Judgments Allowed:	Yes

In Vermont, lenders may foreclose on mortgages or deeds of trust in default using the strict or the power of sale foreclosure process.

Judicial Foreclosure

Judicial Foreclosure involves the sale of the mortgaged property under the supervision of a court. The property is subject to auction by the county sheriff or some other officer of the court. The proceeds first go to the lender to satisfy the mortgage; then other lien holders; and, finally, to the borrower if any proceeds are left. All parties must be notified of the foreclosure. A judicial decision is announced after pleadings at a hearing in a state or local court.

Non-Judicial Foreclosure (Power of Sale)

Also known as Foreclosure by power of sale, Non-Judicial Foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. This process involves the sale of the property by the mortgage holder without court supervision. It is generally more expedient than foreclosure by judicial sale. As in judicial sale, the mortgage holder and other lien holders are respectively first and second claimants to the proceeds from the sale.

Strict Foreclosure

The strict foreclosure process is based on the premise that the lender owns the property until the mortgage has been paid in full. If the borrower breaks any of the conditions established in the mortgage prior to the time the loan is paid in full, he or she will lose any right to the property and the lender will either take possession of the property or arrange for it's sale. In Vermont, a suit must be filed in the county where the property is located before either of these actions can occur. The borrower will be served a summons to appear before the court and informed of his rights, at which time the lender may move for a summary judgment and avoid the trial altogether.

Regardless, the borrower has either a six (6) month (post-1968 mortgages) or a twelve (12) month (pre-1968 mortgages) redemption period.

Power of Sale Foreclosure

A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee.

In Vermont, power of sale foreclosures are conducted either judicially or non-judicially, depending on the type of property securing the deed of trust or mortgage.

Power of Sale Foreclosure Guidelines

1. At least thirty (30) days prior to the publication of a notice of sale, a notice of intent to foreclose must be sent to the borrower by registered or certified mail at his or her last known address. The notice of intent must include information on the mortgage to be foreclosed, state the condition breached and the lenders right to accelerate the mortgage, and include the total amount necessary to cure the default. The borrower must also be informed that he or she is entitled to receive a notice of sale at least sixty (60) days prior to the date of sale.


2. The borrower may redeem the property at any time prior to the foreclosure sale by paying the full amount due on the mortgage, plus costs.


3. The sale must be held on the property itself, unless otherwise ordered by the court, and the property must be sold to the highest bidder. Anyone may bid at the sale, including the lender. The borrower is entitled to receive any surplus from the sale, but they may also be sued for deficiency if the sale price is not enough to cover the amount of the mortgage in default.


4. If the property is sold without court action, as in non-judicial foreclosure by power of sale, the notice of sale must include the following language: "The mortgagor is hereby notified that at any time before the foreclosure sale, the mortgagor has a right to petition the superior court for the county in which the mortgaged premises are situated, with service upon the mortgagee, and upon such bond as the court may require, to enjoin the scheduled foreclosure sale. Failure to institute such petition and complete service upon the foreclosing party, or their agent, conducting the sale prior to sale shall thereafter bar any action or right of action of the mortgagor based on the validity of the foreclosure, the right of the mortgage holder to conduct the foreclosure sale, or compliance by the mortgage holder with the notice requirements and other conditions of section 4532 of Title 12. An action to recover damages resulting from the sale of the premises on the date of the sale may be commenced at any time within one year following the date of the sale, but not thereafter."

United States Foreclosure Law