A party acquires title through foreclosure if the foreclosure was completed in conformance with the foreclosure statutes in effect on the date the foreclosure complaint was filed.
Title transfers upon the recording of a certified copy of the court order confirming the sale. 12 VSA §4954.
Title vests in the foreclosing mortgagee upon the issuance of the foreclosure judgment, subject only to the equity of redemption. 1 Record title is perfected:
- For foreclosure actions filed prior to July 1, 2012, by the recording of a certified copy of the judgment order; and,
- For foreclosure actions filed on or after July 1, 2012, a certified copy of the judgment order and a certified copy of the certificate of non-redemption. The judgment order must contain the finding of no substantial value required by 12 VSA 4941(c).
Title vests in the grantee named in the deed issued by the foreclosing lender to the high bidder at auction.
1 From In re: John R. Canney, III, U.S. Court of Appeals for the Second Circuit March 7, 2002 http://www.vtb.uscourts.gov/sites/vtb/files/opinions/9811881_316.pdf
A foreclosure judgment vests full legal and equitable title to the property with the mortgagee, subject only to the mortgagor’s “equity of redemption,” which is a contingent equitable interest in the property …” See Stowe Ctr., Inc Burlington Sav. Bank, 451 A.2d 1114, 1115 (Vt. 1982) (“Under Vermont law if no one redeems foreclosed property within the prescribed period, the foreclosing mortgagee, pursuant to Vermont strict foreclosure procedure, 12 V.S.A. chapter 163, subchapter 6, obtains full and complete title and has the right to sell the property and retain the surplus, if any.”) additional citations omitted.
“Footnote 11: We disagree with the district court’s suggestion that title does not pass until a certificate of non-redemption is recorded. Merchants Bank, 253 B. R. at 517-18 (relying on 12 Vt. Stat. Ann. Section 4530). This procedural requirement allows the mortgagee to perfect title with respect to “subsequent purchasers, mortgagee’s or attaching creditors” but has no effect whatsoever on the mortgagor. Citations omitted.”
Comment 1 Effective July 1, 2012 Vermont’s foreclosure statutes were amended creating, among other things, new requirements for actions commenced on and after that date.
Comment 2 A mortgage on farmland and a dwelling house owned by a natural person cannot be foreclosed by the non-judicial sale process. 12 VSA §4961
Comment 3 Title to a foreclosed property acquired pursuant to a non-judicial sale or strict foreclosure may be subject to possible fraudulent conveyance issues as discussed in Comment No. 6, Standard 17.2. During the period May 5, 2006 to July 1, 2012, a judgment in a strict foreclosure action must include the findings that there is no substantial value in the property in excess of the mortgage as specified in 12 VSA 4528(b). After July 1, 2012, the requirement for findings regarding findings that there is no substantial value in the property in excess of the mortgage is specified in 12 VSA §4941.
Comment 4 For foreclosures filed prior to July 1, 2012, the recording of the certificate of non-redemption was not required but was customary.
Comment 5 The final judgment in a foreclosure action may be captioned Order or Judgment Order and Decree of Foreclosure or any other variant of the same.
Comment 6 See VRCP 80.1 (k) for contents of an Order of Confirmation and 12 VSA §4954 for the effect of the confirmation order.
Comment 7 The procedure and limitations on application of the non-judicial sale foreclosure are set out in 12 VSA §4961.
September 27, 2018
- This standard was added