NO. 133. AN ACT RELATING TO STRICT FORECLOSURE.
(H.766)
It is hereby enacted by the General Assembly of the State of
Sec. 1. 9 V.S.A. § 2292(e) is amended to read:
(e) A 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:
(1) termination of a lease upon default by the
debtor when the termination is pursuant to the lease and applicable law; or
(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
POSSESSION
(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 may shall 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
(a)
Such foreclosure 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