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Vermont Foreclosure Laws

Depending on the presence of a Power of Sale clause in the mortgage agreement in question, Vermont foreclosures can be either judicial or non-judicial. A Power of Sale clause allows the lender to pursue foreclosure without the need of judicial supervision. Any other scenario requires judicial procedure. However, even for non-judicial foreclosure the lender may still need to obtain the court's permission to foreclose.

If the property involved in the foreclosure is of two dwellings or less and is the homeowner's primary residence, the lender must petition the court for permission to foreclose. If it is granted, the sale must take place at least seven months after the court's ruling. For all other types of property, there is no need to consult the courts. The lender can simply issue a Notice of Default to the homeowner granting them a final 30 days to pay their debt. If it is still not paid at the end of 30 days, the lender can schedule a foreclosure and issue a Notice of Sale.

Judicial foreclosure follows the procedure of strict foreclosure. A court hearing is held to decide whether a default has in fact occurred. If the court rules against the homeowner, the lender may immediately repossess the property and sell it at auction.

Before a sale, a Notice of Sale must be filed with the town registrar and published in a local weekly newspaper for three weeks directly prior to the sale date.

On the date in question, the lender's trustee or a court official auctions off the property at the site. After a winning bidder has been established and paid their bid, a court ordered non-judicial or judicial sale is subject to judicial confirmation. The original homeowner has ten days to redeem ownership by paying the full sale price of the home before the court rules on confirmation. If the confirmation goes through, the winning bidder assumes all ownership and the homeowner loses all rights to redemption. In a lender initiated non-judicial foreclosure, redemption rights are determined by the original mortgage agreement.

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