Vermont HOA Foreclosure

Section 1: Overview

Vermont enforces HOA assessment liens through the courts. When a unit carries little or no equity above senior debt, the court can vest title directly in the association — no public auction required. That remedy, called strict foreclosure, is a distinctly New England approach. Vermont also channels civil appeals straight to the state Supreme Court, bypassing any intermediate appellate court, placing it among only eight states set up that way.¹ The Vermont Common Interest Ownership Act (VCIOA), codified at 27A V.S.A. § 1-101 et seq. and effective January 1, 1999, governs condominiums and planned communities created on or after that date; the older Condominium Ownership Act at 27 V.S.A. § 1301 et seq. governs many condominiums formed before 1999, subject to selected VCIOA provisions that apply retroactively.² Under 27A V.S.A. § 3-116, the association's lien takes priority over a first mortgage to the extent of common-expense assessments that would have come due during the six months immediately preceding the enforcement action.³ Foreclosure runs judicially under 12 V.S.A. Chapter 172 — through strict foreclosure where the unit has little or no equity above senior debt, or by judicial sale where equity exists.⁴ Three federal regimes layer on top: the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, and the bankruptcy automatic stay.⁵ The sections below cover the statutory structure, the procedural sequence, recent legislative and judicial activity, and Vermont's place among comparable states.

Section 2: The statutory framework

2A. The Vermont Common Interest Ownership Act and the super-priority

The VCIOA — 27A V.S.A. § 1-101 et seq. — is Vermont's adoption of the Uniform Common Interest Ownership Act, a comprehensive statute governing the creation, management, and termination of common interest communities. The state legislature passed it in 1997 and it took effect January 1, 1999.⁶ The Act defines a common interest community to include condominiums and planned communities; cooperatives, organized under 11 V.S.A. Chapter 14, fall outside the statutory definition.⁶ Under 27A V.S.A. § 1-201, the Act applies to all condominiums available for residential use created after the effective date, and to other common interest communities of 12 or more residential units created after that date.⁷ Selected provisions reach back retroactively to pre-existing communities under 27A V.S.A. § 1-204 — some from 1999, others only for events and circumstances occurring after December 31, 2011.⁸

Condominiums created before January 1, 1999, may continue operating under the Condominium Ownership Act, 27 V.S.A. § 1301 et seq., added in 1967 and effective January 23, 1968.⁹ The Title 27 versus Title 27A distinction matters. The older Act applies only to property whose owners elected coverage by recording a declaration, and it carries its own lien provisions. Under 27 V.S.A. § 1323, unpaid common-expense assessments constitute a lien prior to all other liens except tax liens, sums unpaid on a first mortgage of record, and mechanic's liens; the lien forecloses in the same manner as a mortgage on real property.¹⁰ The older Act carries no six-month super-priority.

The defining feature of the modern framework is the statutory lien under 27A V.S.A. § 3-116. The lien secures any assessment attributable to a unit and, unless the declaration provides otherwise, reasonable attorney's fees and costs, late charges, fines, interest, and other sums due to the association.¹¹ Recording the declaration constitutes record notice and perfection — no separate lien filing is required. The lien ranks ahead of most other encumbrances, except liens recorded before the declaration, a first mortgage or deed of trust recorded before the assessment became delinquent, and real estate tax liens. The super-priority appears in § 3-116(c): the association's lien also takes priority over a first security interest to the extent of the common-expense assessments, based on the periodic budget adopted under § 3-115(a), that would have become due in the absence of acceleration during the six months immediately preceding institution of an action to enforce the lien.¹¹ The super-priority covers budgeted common-expense assessments only — not fines, late fees, attorney's fees, or interest, which remain enforceable as part of the general lien but outside the six-month priority over the first mortgage. A lien extinguishes unless enforcement proceedings begin within three years after the full assessment amount becomes due.¹¹

2B. Judicial foreclosure and strict foreclosure

Vermont foreclosures run judicially under 12 V.S.A. Chapter 172, and the association lien forecloses under that chapter as directed by 27A V.S.A. § 3-116(j).¹¹ The chapter offers two principal residential tracks. Strict foreclosure, under 12 V.S.A. § 4941, allows the court to enter a judgment and decree of foreclosure without a sale. The court issues such a decree only upon a finding that the property holds no substantial value in excess of the mortgage debt found due plus assessed but unpaid property taxes; the order must summarize the supporting evidence. If the owner does not redeem within the period set by the decree, title vests in the foreclosing party and the clerk issues a writ of possession.¹² Foreclosure by judicial sale, under 12 V.S.A. § 4945 et seq., applies where the property carries equity; the court orders a public sale after the redemption period, followed by a confirmation hearing.¹³

Vermont also authorizes nonjudicial foreclosure by power of sale under 12 V.S.A. § 4961, but only for property other than farmland or a dwelling house owned by a natural person — which confines that route largely to commercial and nonresidential contexts.¹⁴ Residential foreclosure in Vermont is therefore overwhelmingly judicial. For an association assessment lien, either the strict-foreclosure or the judicial-sale track applies depending on equity, and the same provisions govern whether the community falls under VCIOA or the pre-VCIOA condominium statute, because § 3-116 directs enforcement to Chapter 172 and the older Act directs foreclosure in the manner of a mortgage.¹⁰

2C. Redemption, court structure, and federal overlays

The court's decree sets the redemption period. In strict foreclosure, 12 V.S.A. § 4941(d) sets redemption at six months from the date of the decree unless the court orders a shorter period or the parties agree to one.¹² In foreclosure by judicial sale, the redemption period for an owner-occupied principal residence runs six months from the decree unless shortened, under 12 V.S.A. § 4946(b).¹⁵ Vermont law also gives many homeowners a right to foreclosure mediation under 12 V.S.A. § 4631 et seq., though that subchapter does not apply to commercial loans.¹⁶

Vermont's court structure is distinctive. Trial-level foreclosure actions go to the Vermont Superior Court, Civil Division; civil appeals go directly to the Vermont Supreme Court.¹⁷ Vermont has no intermediate appellate court, placing it among only eight states without a general intermediate appellate court.¹⁸ Foreclosure judgments carry an added appellate wrinkle: review requires the trial court's permission, and the Vermont Supreme Court has applied that requirement to condominium assessment-lien foreclosures.¹⁹

Three federal regimes overlay the state process. The Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., governs third-party collection conduct; under Obduskey v. McCarthy & Holthus LLP, a business engaged in no more than nonjudicial foreclosure is generally not a debt collector except for the limited purposes of § 1692f(6), but the Court expressly left open the treatment of judicial foreclosure, so broader exposure may attach in Vermont's predominantly judicial context.²⁰ The Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq., provides stays and protections for active-duty servicemembers.²¹ The bankruptcy automatic stay, 11 U.S.C. § 362, halts foreclosure activity the moment an owner files for bankruptcy.²²

Section 3: The Vermont HOA foreclosure procedural sequence

A. Lien establishment and recording

For VCIOA communities, the association lien arises automatically under 27A V.S.A. § 3-116(a), and recording the declaration constitutes record notice and perfection under § 3-116(e) — no separate lien instrument needs to be recorded to establish priority.¹¹ The lien attaches for assessments and, unless the declaration provides otherwise, for related fees, charges, fines, and interest. Priority follows § 3-116(b) and (c): the lien ranks junior to a first mortgage recorded before delinquency, except for the six-month super-priority slice of budgeted common-expense assessments that sits ahead of that mortgage. For pre-VCIOA condominiums under the older Act, the lien arises under 27 V.S.A. § 1323 and ranks behind tax liens, first mortgages of record, and mechanic's liens, with no super-priority component.¹⁰ Recorded declarations commonly supplement these statutory minima with assessment, late-fee, and interest terms, but the super-priority slice is fixed by statute and limited to budgeted common expenses.

B. Pre-foreclosure notice and demand

The VCIOA sets statutory preconditions before an association can commence foreclosure. Under 27A V.S.A. § 3-116(m), an association may not begin a foreclosure action unless the unit owner, at the time the action commences, owes at least three months of common-expense assessments based on the last adopted periodic budget and has failed to accept or comply with a payment plan offered by the association, and unless the executive board votes to commence a foreclosure action against that specific unit.¹¹ Where the sums due do not include an unpaid assessment, § 3-116(o) bars a foreclosure action unless the association first obtains a judgment for the sums due and perfects a judgment lien against the unit. On request, the association must furnish a recordable statement of unpaid assessments under § 3-116(i). These obligations apply to VCIOA communities; pre-VCIOA condominiums proceeding under the older Act are not subject to the § 3-116(m) three-month threshold, though their declarations and the mediation statute may impose notice obligations.

C. Judicial foreclosure: strict foreclosure or judicial sale

The association files a foreclosure complaint in the Vermont Superior Court, Civil Division, and serves the owner with a summons. Enforcement runs under 12 V.S.A. Chapter 172 as directed by 27A V.S.A. § 3-116(j), and every aspect of the foreclosure must be commercially reasonable under § 3-116(p).¹¹ The court enters a judgment and decree of foreclosure that sets the redemption period. If the court finds no substantial value in the unit above senior debt and unpaid taxes, it may decree strict foreclosure under 12 V.S.A. § 4941, in which title vests in the association at the expiration of the redemption period without any sale.¹² Where the unit carries equity, the matter proceeds as a foreclosure by judicial sale under 12 V.S.A. § 4945 et seq., with a public sale after the redemption period.¹³ A party may move to convert a strict foreclosure into a judicial sale, and the court may order a sale in its discretion. These tracks apply to both VCIOA communities and pre-VCIOA condominiums.

D. Post-decree rights and remedies

During the decree-set redemption period, the owner may redeem by paying the amount due plus costs. In strict foreclosure, if no redemption occurs, title vests and the clerk issues a writ of possession on request under 12 V.S.A. § 4941(e), executed in the manner of an ejectment writ.¹² In a judicial sale, the property sells after the redemption period and the court holds a confirmation hearing before title passes to the high bidder.¹³ Where a third-party bid exceeds the debt, surplus proceeds distribute to junior lienholders and then to the former owner according to priority. Junior interests that arose after the complaint was recorded are foreclosed once the certificate of non-redemption records.¹² A deficiency may be available where the debt exceeds the sale price or, in strict foreclosure, the fair market value, subject to the procedural requirements of Chapter 172.⁴ Recorded declarations and governing documents may supplement these remedies for VCIOA communities and pre-VCIOA condominiums alike.

Section 4: Recent legislative and judicial activity

A. Recent bills

No bill enacted in the 2023–2024 or 2025–2026 biennia amended 27A V.S.A. § 3-116, the broader VCIOA at Title 27A, or the Condominium Ownership Act at Title 27, Chapter 15. The codified amendment history of § 3-116 shows that its most recent change came in 2013, through 2013, No. 102 (Adj. Sess.), § 3, with no later amendment.¹¹ One enacted measure touched the foreclosure chapter that associations use.

B. Recent rulings

No Vermont Supreme Court decision in the past 36 months squarely interprets the VCIOA, the § 3-116 super-priority, HOA assessment-lien foreclosure, or strict foreclosure. The most recent foreclosure decision located — a 2025 residential mortgage case — does not concern association liens. The leading authority on association foreclosure remains a 2004 decision.

Two further decisions remain instructive. In Woodbine Condominium Association v. Lowe, the Vermont Supreme Court held that a condominium assessment-lien foreclosure is subject to the same permission-to-appeal requirement as a mortgage foreclosure, so an untimely appeal was dismissed for lack of jurisdiction.²⁵ In The Lodge at Bolton Valley Condominium Association v. Hamilton, 2006 VT 41, the Court addressed the three-year limitations period that governs foreclosure of condominium liens under § 3-116(e).²⁶

C. Active legislative debates

No active VCIOA-specific foreclosure debate appears in the current biennium. Legislative attention to housing and judiciary procedure continues, but no pending bill targeting the association super-priority or strict foreclosure was identified.

Section 5: National positioning and related coverage

Vermont sits among the comprehensive UCIOA-adopting states that grant associations a six-month super-priority over a first mortgage — a group that includes Colorado, Connecticut, Minnesota, Washington, and West Virginia. Nevada applies a nine-month variant that its Supreme Court read in SFR Investments Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014), as conferring true lien priority capable of extinguishing a first deed of trust.²⁷ What sets Vermont apart is the combination of a judicial foreclosure system, the retained strict-foreclosure remedy in which title vests without a sale where there is little or no equity, and the absence of any intermediate appellate court — disputes move from the Superior Court Civil Division directly to the Vermont Supreme Court. Connecticut shares the strict-foreclosure tradition, but most states resolve association liens through judicial or nonjudicial sale rather than title-vesting decrees. For multi-state operators, Vermont collection playbooks built for trustee-sale states need to account for judicial filings, court-set redemption periods, the § 3-116(m) preconditions, and the possibility of title vesting without a sale.

Caveats

The research note suggesting 12 V.S.A. § 4983 as the redemption provision could not be verified; redemption in Vermont is governed by 12 V.S.A. § 4941(d) for strict foreclosure and § 4946(b) for judicial sale, and this page cites those provisions instead. The official "Acts Affecting VSA Sections" tables on the legislature site load dynamically and could not be read directly; the finding that no 2023–2026 bill amended § 3-116 or Title 27A rests on the codified amendment-history parentheticals in the statutes themselves, which are authoritative. Editors should confirm the full enrolled text of Act 64 (S.109) against Chapter 172. Vermont's HOA-specific appellate record is thin — the leading case is two decades old; later trial-court decisions on the super-priority exist but are not binding statewide. Comparative super-priority and strict-foreclosure characterizations for other states are summary and should be verified against each state's current statute before reliance.

Sources

1. Vermont Judiciary, Supreme Court (appellate jurisdiction; no intermediate court); Vt. Stat. Ann. tit. 27A, § 3-116, Lien for sums due association; enforcement ↩
2. Vt. Stat. Ann. tit. 27A, § 1-201, New common interest communities (applicability); Vt. Stat. Ann. tit. 27, § 1301, Condominium Ownership Act, short title ↩
3. Vt. Stat. Ann. tit. 27A, § 3-116(c), six-month super-priority ↩
4. Vt. Stat. Ann. tit. 12, ch. 172, Foreclosure of Mortgages (subch. 2 strict foreclosure; subch. 3 judicial sale) ↩
5. Obduskey v. McCarthy & Holthus LLP, 586 U.S. 79 (2019) ↩
6. Vt. Stat. Ann. tit. 27A, §§ 1-101 et seq., Vermont Common Interest Ownership Act (effective Jan. 1, 1999; cooperatives excluded) ↩
7. Vt. Stat. Ann. tit. 27A, § 1-201, applicability to condominiums and communities of 12 or more units ↩
8. Vt. Stat. Ann. tit. 27A, § 1-204, retroactivity (some provisions from 1999, others after Dec. 31, 2011), as recited in Vermont Supreme Court opinion record ↩
9. Vt. Stat. Ann. tit. 27, § 1301, Condominium Ownership Act (added 1967, eff. Jan. 23, 1968) ↩
10. Vt. Stat. Ann. tit. 27, § 1323, Priority of lien (Condominium Ownership Act; foreclosed as a mortgage) ↩
11. Vt. Stat. Ann. tit. 27A, § 3-116, Lien for sums due association; enforcement (subsections (a)–(c) priority and super-priority; (e) perfection; (f) three-year limit; (i) statement; (j) foreclosure under ch. 172; (m) three-month precondition and board vote; (o) judgment-lien requirement; (p) commercial reasonableness; amendment history through 2013, No. 102) ↩
12. Vt. Stat. Ann. tit. 12, § 4941, Decree foreclosing equity of redemption; writ of possession (no-substantial-value finding; six-month redemption; writ of possession; certificate of non-redemption) ↩
13. Vt. Stat. Ann. tit. 12, ch. 172, subch. 3, Foreclosure by Judicial Sale (§§ 4945–4954) ↩
14. Vt. Stat. Ann. tit. 12, § 4961, Power of nonjudicial sale (excludes farmland and a dwelling house owned by a natural person) ↩
15. Vt. Stat. Ann. tit. 12, § 4946(b), redemption in foreclosure by judicial sale for owner-occupied principal residence (six months from decree unless shortened) ↩
16. Vt. Stat. Ann. tit. 12, § 4631 et seq., foreclosure mediation (not applicable to commercial loans) ↩
17. Vermont Judiciary, Court Divisions (Superior Court Civil Division hears foreclosure; Supreme Court hears appeals) ↩
18. Vermont Bar Association, A Short Guide to Vermont Appellate Practice (Vermont is one of only eight states without a general intermediate appellate court) ↩
19. Woodbine Condo. Ass'n v. Lowe (Vt. S. Ct.) (condominium assessment-lien foreclosure subject to permission-to-appeal requirement) ↩
20. Obduskey v. McCarthy & Holthus LLP, 586 U.S. 79 (2019) (nonjudicial-foreclosure holding; judicial foreclosure left open) ↩
21. Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq. ↩
22. Bankruptcy automatic stay, 11 U.S.C. § 362 ↩
23. S.109, 2025–2026 Vt. Reg. Sess., enacted as Act 64 (eff. June 12, 2025) (bill status) ↩
24. Will v. Mill Condo. Owners' Ass'n, 2004 VT 22, 176 Vt. 380, 848 A.2d 336 (full opinion) ↩
25. Woodbine Condo. Ass'n v. Lowe (Vt. S. Ct.) (full opinion) ↩
26. Lodge at Bolton Valley Condo. Ass'n v. Hamilton, 2006 VT 41 (three-year limitations period under Vt. Stat. Ann. tit. 27A, § 3-116(e)) ↩
27. Community Associations Institute, Priority Lien — Vermont (state super-priority comparison) ↩