Vermont Real Estate Practices
- Attorney Involvement
- Cancellation/Commitment Fee
- Certificate of Release (of Mortgage)
- Joinder of Spouses
- Mortgage Tax
- Payment Customs
- Policy Countersignatures
- Real Estate Taxes
- Search and Examination Fees
- Search Requirements
- Security Instruments (Deed of Trust vs. Mortgage)
- Standard Exceptions and Requirements
- State-specific Policy Variations
- Title Insurance Form and Filing Regulations
- Transfer Taxes
- Withholding Taxes
- Witness Requirements
Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.
In the usual course of business, Vermont attorneys, or a qualified paralegal supervised by a Vermont attorney, conducts the search and examination of title and conducts the closing. If a legal opinion of title is provided, it is executed by a Vermont Attorney.
Vermont does not have an unauthorized practice of law statute, however there is Vermont Case Law indicating that deed preparation constitutes the practice of law. In re Welch 123 VT 180 (1962). There is also a Vermont Bar Association Advisory Ethics Opinion (99-03) which indicates that a paralegal is qualified to conduct a loan closing on behalf of a lender client where that paralegal’s role is limited to preparation of the Settlement Statement and supervising the execution of documents, so long as the Attorney is available for questions.
With respect to issuance of title insurance policies, only a licensed producer may execute policies on behalf of an underwriter. In order to become a licensed producer, one must be an attorney, but may be an out of state attorney.
Disbursement and recording legal documents post-closing is generally an administrative task and does not require an attorney or paralegal.
Does your state permit or require a cancellation fee or commitment fee upon cancellation?
Vermont is a filed rate and filed form state. Therefore, no fees may be charged unless specifically authorized by Vermont’s insurance regulator, Banking, Insurance, Securities, & Health Care Administration (BISHCA). A filing for a cancellation fee has not been filed or approved by BISHCA. Therefore, a cancellation or commitment fee is not permitted.
Certificate of Release (of Mortgage)
If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.
(1) Under certain circumstances, a licensed attorney may discharge a recorded mortgage pursuant to 27 V.S.A., Section 464a;
(2) If a private Mortgagee is deceased, 27 V.S.A., Section 465 provides a mechanism for a Vermont Probate Court to assign a special administrator for the purpose of discharging the lien;
(3) If a corporate Mortgagee’s charter has expired, 27 V.S.A., Section 469 provides a mechanism for a Vermont Superior Court presiding judge to discharge the lien directly upon appropriate findings;
(4) Vermont Title Standard 28.5 addresses discharges for failed financial institutions; and
(5) Pursuant to 27 VSA Section 470, an improperly executed discharge (from a lending institution, not a private mortgage) on a 1-4 family residential property can be validated if no action is claimed within three years after the discharge is recorded and a suitable Affidavit by the homeowner is filed in the land records.
Please describe the kinds of deeds that are customary for commercial and residential transactions. Please describe the kinds of deeds that are generally not insurable.
The customary deeds are Warranty Deeds, Limited Warranty Deeds and Quit Claim Deeds. Generally, Tax Collector Deeds are not insurable, for at least the Statute of Limitations period following the tax redemption period.
Joinder of Spouses
If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe. Any analogous rights, such as those in a civil union or equivalent, should also be addressed.
Non-titled spouses must join in the conveyance of a mortgage deed in order to subordinate their homestead interest to the lender. 27 V.S.A., Section 141(a). Notwithstanding the foregoing, a spouse or civil union partner may convey his/her homestead interest to the other spouse or civil union partner prior to the time the homestead right vests, divesting that spouse of any homestead rights. 27 V.S.A., Section 141(d). Accordingly, if the non-titled spouse conveys their homestead interest to the titled spouse in advance of closing, by acknowledged instrument recorded in the land records, that would enable the titled spouse to mortgage the property alone.
Is there a mortgage tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
Who customarily pays for:
(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?
(a) Owner’s policy: Purchaser
(b) Transfer tax and recording fee: Purchaser
(c) Survey charges: None required. In the rare instance where a survey is requested, the fee would be handled under the Purchase and Sale Agreement.
(d) Closing/settlement charges: Purchaser pays the settlement charges and their attorney’s fees. Seller pays for their attorney’s fees.
Please describe any statutory or regulatory requirements for countersignatures in order to issue the policy (for example, residency requirements).
Policies issued by an agent must be signed by the Vermont Attorney with the producer’s license. An out of state attorney can be a licensed producer.
Real Estate Taxes
Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.
Real property is assessed by each municipality on varying dates. There is no uniform tax year (some municipalities operate on a calendar year, while most operate on a July 1- June 30 year), nor is there a uniform due date for the collection of taxes. This information must be confirmed by the specific municipality in which the real property is located.
Please consult with a local underwriter for information relating to real estate taxes on the subject property.
Search and Examination Fees
Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances? If your jurisdiction is all-inclusive, please state that.
Yes, it is customary to charge a separate search and examination fee.
Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)? Please respond to each category. If a minimum search period exists for any category, please state it.
A 40 year title search covering a period to an instrument recorded at least 40 years is sufficient for a title purview of the Marketable Record Title Act (27 V.S.A., Ch 5), provided that the basis thereof is a deed, a deed under some governmental authority, a probate proceeding in which the property is reasonably identified or described, a mortgage deed subsequently foreclosed, or any other instrument which shows of record reasonable probability of title and possession thereunder, provided further, that none of the title instruments within that period actually searched discloses any title defects or outstanding interests in third parties, in which case, the search should be extended beyond the 40-year period in order to determine the existence and validity of such defects or interests at the time of the search. Reference is made to Vermont Title Standard 2.1.
Security Instruments (Deed of Trust vs. Mortgage)
Please describe the customary and permissible form(s) of security instruments used in your state.
Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?
Mortgages are the security instruments used in Vermont, not Deeds of Trust.
Standard Exceptions and Requirements
Please identify the standard exceptions and requirements that are customarily used in your state.
The standard exceptions are as followed:
1. Rights of present tenants, lessees or parties in possession.
2. Any lien, or right to a lien, for services, labor or materials heretofore or hereafter furnished, imposed by law and not shown by the public records.
3. Discrepancies, conflicts in boundary lines, shortage in area, easements, encroachments, and facts which an accurate survey and inspection of the premises would disclose.
Special Exceptions: The Mortgage, if any, referred to in Item 4 of Schedule A.
4. Liens for real estate taxes and assessments, which become due and payable subsequent to the date of this policy, plus unpaid water and sewer charges, if any.
5. IF THE INSURED PREMISES IS A CONDOMINIUM UNIT:
Covenants, conditions, restrictions, reservations, easements, liens for assessments, options, powers of attorney and limitations on title, created by the laws of the State of the insured premises or set forth in the Master Deed or Declaration of Condominium, in the related By-laws, or in the Declaration of Trust, as duly recorded in the appropriate Land Records Office and as the same may have been lawfully amended, and in any instrument creating the estate or interest insured by this policy.
State-specific Policy Variations
If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.
Title Insurance Form and Filing Regulations
Please describe the form and/or rate filing requirements, if any, related to policies and endorsements. Please describe any applicable rating bureau.
Vermont is a filed rate and filed form state. Therefore, no fees may be charged or forms issued unless specifically authorized by Vermont’s insurance regulator, Banking, Insurance, Securities, & Health Care Administration (BISHCA).
Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
Yes. It is uniform across the state.
A tax at the rate of one-and-one-quarter percent (0.0125) is imposed on all property other than a purchaser’s principal residence, property enrolled in the current use program or a working farm.
Real property that will be the purchaser’s principal residence is taxed at one-half of one percent (0.005) of the first $100,000 of value and one and one quarter percent (0.0125) of the value over $100,000.
Is usury coverage available?
The allowable legal rates of interest are set forth in 9 V.S.A., Section 41a.
A Usury Endorsement has not been filed with the BISHCA and therefore usury coverage is not available.
What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?
If any seller is a nonresident at the time of transfer, the buyer must withhold two and a half percent of the full consideration paid for the transfer and transmit it to the Commissioner of Taxes with Transfer Tax form RW-171 within 30 days of the transfer. If the buyer fails to withhold, the buyer is personally liable for the amount of the withholding.
Are witnesses required on a deed or security instrument? If so, please describe.
There is no witness requirement; however, it is customary to include one witness line. All deeds must be properly acknowledged in accordance with 27 V.S.A., Section 341 (a).
State of _________________
County of _______________________
At _______________________, in said County and State, this _____ day of _______________, 20XX, personally appeared Jill Spinelli, and she acknowledged the within instrument, by her subscribed, to be her free act and deed.
Before me, ____________________________
My Commission Expires:__________________