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Vermont The Process Vermont allows foreclosure either by filing a
lawsuit to obtain strict foreclosure, in which the title given to the lender
by deed will be ruled to be final, or by filing a lawsuit to foreclosure
under a power of sale clause in a deed of trust. Both procedures are governed
by the Vermont Rules of Civil Procedure. There is a statute for deed of trust
foreclosure (VT. Stat. Ann tit 12 §4531a). Under Vermont’s strict foreclosure
procedures, the lender gets a deed to the property at the outset of the loan,
but the deed also provides that the borrower can get the title back by
repaying the loan. All the lender has to do is get a court declaration that
the borrower has failed to meet the condition, and the title becomes final in
the name of the lender after a statutory redemption period passes, during
which the borrower can recover the property by paying off the rest of the
loan. In strict foreclosure a complaint (lawsuit) must
be filed in county court. The complaint and a summons to the borrowers to
appear and answer the complaint must be served on the borrower. The complaint
must state the borrower's and lender's names, the date of the mortgage deed,
a description of the debt owed and a claim for attorney's fees, if any are
sought. It must state that the reason the lender is foreclosing, is a breach
in the deed's conditions. Although the lawsuit prays for the court to
foreclose the borrower's right to redeem the property, the borrower
nevertheless has a right to redeem under Vermont's statutes. Under Vermont
statutes the time for redemption is one year for pre-1968 mortgage and six
months for post-1968 mortgages, from the date of the judgment. However, the
lender can request a shorter time for good cause. Once the complaint is
served, the lender may move for summary judgment in order to avoid trial. Non-judicial Foreclosure Due to Vermont's long tradition of strict
foreclosure, a foreclosure sale under a power of sale clause has only
recently become common in residential loans, although they have been common
in commercial transactions. Vermont does not have a well-established
tradition of foreclosure auctions. In Vermont, a lender must still bring a
lawsuit to foreclose a deed of trust and obtain an order for a sale. However,
the foreclosure may not take place until seven months have passed from the
date the lawsuit was served on the borrower, unless the borrower and lender
agree otherwise, or the borrower is damaging the property. Deficiency In Vermont a lender may sue the borrower to
collect deficiency if the foreclosure sale under the deed of trust was not
sufficient to repay the loan plus the foreclosure expenses. However, if the
lender buys at the foreclosure sale, the borrower can force the lender to
credit the fair market value of the property against the total amount owed,
which includes the loan balance and the foreclosure expenses. If the
foreclosure sale generates a surplus, junior lien holders and creditors may
claim it up to the amount owed in the order of their priority. |
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