NO. 133. AN ACT RELATING TO STRICT FORECLOSURE.
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 9 V.S.A. § 2292(e) is amended to read:
transfer is not voidable under subdivision
(a)(2) of section 2288 2288(a)(2)
or section 2289 of this title if the transfer results from:
termination of a lease upon default by the debtor when the termination is
pursuant to the lease and applicable law;
(2) enforcement of a security interest in compliance with Article 9 of Title 9A; or
(3) foreclosure of a mortgage in compliance with subchapter 6 of chapter 163 of Title 12.
Sec. 2. 12 V.S.A. § 4524 is amended to read:
§ 4524. SUPPLEMENTAL JUDGMENT JOINING PARTIES; RECORDING
At any time, without further notice
or service on the purchaser
, or mortgage or lien holder, lienholder
whose interest in the property being foreclosed first arose after the filing of
the complaint in the town clerk’s office, and upon filing certified copies
of the deed, mortgage, or attachment with the clerk of the court by
the plaintiff in the foreclosure action, any superior judge may sign a
supplemental judgment specifically naming that party. Reference to the deed,
mortgage, or lien and the supplemental judgment may be filed in the town
clerk’s office for record, and it shall have the same force and effect as
though that person had been made a party defendant in the original action.
Sec. 3. 12 V.S.A. § 4528 is amended to read:
§ 4528. DECREE FORECLOSING EQUITY OF REDEMPTION; WRIT OF
(a) If a decree is made foreclosing the right of redemption, the time of redemption shall be six months from the date of the decree unless a shorter time is ordered. The court shall fix the period of redemption taking into consideration whether there is value in the property in excess of the mortgage debt and debt owed to junior lienholders, any assessed but unpaid property taxes, the condition of the property, and any other equities.
(b) If the premises are not
redeemed agreeably to the decree, the clerk of the court
issue a writ of possession at the plaintiff’s request. Such writ shall
have the same force and effect and be executed in the same manner as similar
writs issued after judgment by a court of law in ejectment proceedings. Where
the premises are occupied by a residential tenant, the writ shall be served on
the tenant, and no sooner than 30 days after the writ is served, the
plaintiff shall be placed in possession of the property without further
proceedings. No decree of strict foreclosure shall be issued absent a
finding by the court based on competent evidence presented by the party seeking
such decree that there is no substantial value in the property in excess of the
mortgage debt found by the court to be due to the plaintiff, plus assessed but
unpaid property taxes due on the property.
(c) For the purposes of this section, “value” is defined as fair market value less all reasonable expenses that would be incurred in selling the property.
Sec. 4. 12 V.S.A. § 4530 is amended to read:
§ 4530. REDEMPTION IF COPY NOT RECORDED
The expiration of the right of redemption under the decree shall not transfer
the title to such lands as against foreclose the interest of
subsequent purchasers, mortgagees, or attaching creditors whose
interest in the property being foreclosed first arose after the filing of the
complaint for foreclosure in the land records as provided in section 4523 of
this chapter, unless such copy of record or such decree or copy thereof
is thus left for record the plaintiff complies with section 4529 of this
title or records in the land records a certified copy of the judgment, or
is afterwards and prior to the acquiring of any interest in or lien on the
lands by a purchaser, mortgagee, or attaching creditor , left for
record in like manner. If not thus left for record, such lands shall be
subject to redemption by subsequent purchasers, mortgagees or attaching
creditors, as though the time of redemption had not expired.
(b) If the certified copy of the judgment is not recorded within the time period specified in section 4529 of this chapter or prior to the acquisition of an interest in the lands being foreclosed, upon motion by a plaintiff or a party intervening in the action to assert a right of redemption as a result of the late recording of the certified copy of the judgment, the court before which the foreclosure is proceeding may establish a right of redemption for the party asserting a right under this subsection. No party whose right to redeem has expired under the terms of the judgment shall be granted an additional right to redeem, nor shall any previously expired right of redemption be reinstated in a proceeding under this section.
Sec. 5. 12 V.S.A. § 4531 is amended to read:
§ 4531. STRICT FORECLOSURE EXCEPTION
(a) All liens and mortgages affecting real property may, on the written motion of any party to any suit for foreclosure of such liens or mortgages, or at the discretion of the court before which the foreclosure proceedings are pending, be foreclosed by a judicial foreclosure sale, even if the mortgage does not contain a sale provision instead of a strict foreclosure.
(b) In an action for foreclosure, if a lien or interest in such realty is held by any person or federal agency which may not be foreclosed by strict foreclosure pursuant to federal law, a decree may be entered providing for such period of redemption as the court may determine, and providing for a sale of the mortgaged premises at the conclusion of such period if said premises are not redeemed, and for the time, manner, and notice of sale, if required, and the application of the proceeds therefrom.
Sec. 6. EFFECTIVE DATE
This act shall take effect on passage.
Approved: May 5, 2006
The Vermont General Assembly
115 State Street