One type of foreclosure process in Vermont is strict foreclosure, which is conducted through the courts. Upon default, a lender files the necessary court documents to start the foreclosure, after which the borrower receives a summons to appear in court. If the court rules against the borrower, the lender is allowed to take possession of the property or schedule a sale of the property.
The more common type of foreclosure is allowed when the mortgage permits a lender to sell the property in the event of borrower default. This type of foreclosure may be accomplished either in court of out of court, depending on the type of property being foreclosed. If the lender proceeds through the courts, the court can rule the property in foreclosure and allow for a sale of the property. If the foreclosure is conducted out of court, the lender mails 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 no less than 30 days. The notice must be sent at least 30 days before a notice of sale is published.
If the foreclosure is being conducted out of court, a borrower may stop the proceedings any time prior to the sale by paying the default amount plus costs. For court foreclosures, the borrower usually has six months from the court ruling to redeem the property. The borrower must pay the full amount stipulated by the court to redeem.
Notice of Sale / Auction
The notice of sale contains a description of the property, lender and borrower names, mortgage date and the time, day, location and terms of the sale. The borrower receives the notice of sale at least 60 days prior to the sale date. The notice is published once per week for three weeks in a local newspaper, with the first notice appearing no less than 21 days before the sale date. In an out-of-court foreclosure, the lender records the notice of sale with town records no less than 60 days before the sale. The filing of this notice occurs instead of filing a foreclosure complaint in court.
The public auction is typically at the property. At the sale, any person may bid. The property is sold to the highest bidder, and the borrower is entitled to receive any surplus from the sale proceeds.
Within 90 days after an out-of-court foreclosure sale, the property ownership is transferred free and clear to the winning bidder.
Within 10 days after a court foreclosure sale, the court either confirms the sale or orders a resale. If confirmed, the property ownership is transferred to the winning bidder.