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Introduced by   Representative Obuchowski of Rockingham

Referred to Committee on


Subject:  Chancery proceedings; mortgage foreclosures; strict foreclosure

Statement of purpose:  This bill proposes to modify the strict foreclosure law to incorporate the procedural protections of allowing the court to foreclose a lien or mortgage on land by sale, after the fair market value of the property has been assessed, thereby creating a presumption of reasonably equivalent value.


It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  12 V.S.A. § 4524 is amended to read:


At any time, without further notice or service on the purchaser, or mortgage or lien holder whose claim on the property being foreclosed is determined under subsection 4523(b) of this title, 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. 2.  12 V.S.A. § 4528 is amended to read:



(a)  If a decree is made foreclosing the right of redemption, the time of redemption shall be established by the court before which the foreclosure is proceeding and shall not be less than three business days nor more than six months from the date of the decree unless a shorter time is ordered.  Where the court has determined that substantial equity in the property being foreclosed may exist pursuant to section 4531 of this chapter, the court shall take into account the existence of the substantial equity when determining the length of the period within which the defendants in the foreclosure action may redeem the property as provided in this chapter.  Where there is no substantial equity in the property being foreclosed, the court may establish a brief period of redemption.

(b)  If the premises are not redeemed agreeably to the decree, the clerk of the court may shall issue a writ of possession.  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.

Sec. 3.  12 V.S.A. § 4530 is amended to read:


(a)  Such foreclosure shall not transfer the title to such lands as against foreclose the interest of subsequent purchasers, mortgagees, or attaching creditors whose interest first attached to the property being foreclosed 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 certified copy of the judgment is recorded as provided in section 4529 of this chapter, or is afterwards recorded after the specified time period 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, then 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. 4.  12 V.S.A. § 4531 is amended to read:


(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.

(c)  In all cases in which a sale is ordered, the court shall appoint one disinterested appraiser who shall, under oath, appraise the property to be sold and make return of the appraisal to the clerk of the court.  The court shall, in its decree, appoint a person to make the sale and fix a day therefor, direct whether the property shall be sold as a whole or in parcels, and specify how the sale shall be made and advertised.

(1)  Upon motion of any party to the foreclosure, the court shall appoint a second appraiser in its decree.

(2)  If no party objects to the value expressed in the appraisal filed by the party seeking foreclosure, the court may adopt the valuation or consider such in its determination of the value of the foreclosed property.

(3)  If the plaintiff is the purchaser at sale, or if the property is redeemed at any time prior to the approval of the sale, or for any reason the sale does not take place, the expense of the sale and appraisal or appraisals shall be paid by the plaintiff and be collected with the costs of the case.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont