Foreclosures in Vermont go through either what’s called a “strict foreclosure" process or a process called a “foreclosure by judicial sale” (which is a basic judicial foreclosure). If there’s a possibility that you could lose your home to a foreclosure in Vermont, you should educate yourself about these two varieties of foreclosure processes, as well as whether the lender can get a deficiency judgment against you, when you have to leave your home after the foreclosure, and more.
You can find a summary of some of the key aspects of Vermont foreclosure law along with citations to the statutes below so you can read the law yourself.
The citations to Vermont’s foreclosure statutes are:
We’ve summarized important parts of Vermont’s foreclosure laws below. You can find more detailed articles on various aspects of Vermont foreclosure law in Nolo’s Vermont Foreclosure Law Center.
In Vermont, foreclosures are either by judicial sale or strict foreclosure. With both types of foreclosure, the lender files a lawsuit in state court.
In both a foreclosure by judicial sale and strict foreclosure, the lender or bank (mortgagee) begins the foreclosure by filing a complaint with the court and serving it to the borrower along with a summons and notice of foreclosure. The summons will tell you how long you have to file an answer with the court, generally 20 days. (Learn more about the difference between a foreclosure summons and complaint.)
In a foreclosure by judicial sale, the lender must also mail a notice of sale to the borrower no fewer than 30 days before the sale date and publish the notice in a newspaper. Vt. Stat. Ann. tit. 12, § 4952.
“Reinstating” is when you catch up on the defaulted mortgage's missed payments (plus fees and costs) in order to stop a foreclosure. (Learn more about reinstatement to avoid foreclosure.)
Under Vermont law, you can reinstate in a foreclosure by judicial sale after the expiration of the redemption period set forth in the judgment, but prior to sale, if both you and the lender agree to it. Vt. Stat. Ann. tit. 12, § 4948.
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure. In Vermont, the redemption period is before the sale in a foreclosure by judicial sale, and after the foreclosure decree in a strict foreclosure. (To get details on redemption rights in Vermont, see Nolo’s article If I lose my home to foreclosure in Vermont, can I get it back?)
When you can redeem in a foreclosure by judicial sale. In a foreclosure by judicial sale, you can redeem your home within six months from the date of the foreclosure decree, unless the court orders a shorter time. Vt. Stat. Ann. tit. 12, § 4946. The sale takes place once the redemption period expires. You can also redeem up to the sale. Vt. Stat. Ann. tit. 12, § 4949. You cannot redeem the home after the sale.
When you can redeem in a strict foreclosure. In a strict foreclosure, you may redeem the property within six months from the date of the foreclosure decree, unless the court orders a shorter time period of redemption, or you and the foreclosing lender mutually agree to a shorter period. Vt. Stat. Ann. tit. 12, § 4941.
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws. (For a summary of the deficiency law in Vermont, see Vermont Laws on Post-Foreclosure Deficiency Judgments.)
Deficiency judgments are allowed in foreclosures by judicial sale. The lender can get a deficiency judgment against you in a foreclosure by judicial sale. (The plaintiff may request a deficiency judgment in the foreclosure complaint, and the deficiency is waived if not requested prior to the confirmation order. Vt. Stat. Ann. tit. 12, § 4954(d)). If the lender buys the home at the foreclosure sale, the deficiency amount is limited to the difference between the fair market value of the home and the total amount of the debt, plus expenses. Vt. R. Civ. P. 80.1.
Deficiency judgments are allowed in strict foreclosures. The lender can get a deficiency judgment (which is limited by the fair market value of the property) by filing a separate lawsuit.
If you don't redeem the home, the court will issue a writ of possession. The writ of possession has the same force and effect and is executed in the same manner as a similar writ issued after an ejectment (eviction) proceeding. Vt. Stat. Ann. tit. 12, § § 4941, 4946.