What Happens If I Don't Pay Property Taxes in Vermont?

People who own real property must pay property taxes. The government uses these taxes to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.

When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.

If you don't pay your real property taxes in Vermont, the tax collector can sell the property to a new owner at a tax sale. Fortunately, you'll have some time to get current on the delinquent amounts before and after a sale.

How Do Vermont Property Taxes Work?

Tax bills are generally mailed to property owners 30 days before the due date. If the due date falls on a weekend or a holiday, the taxes are usually due on the following business day. (Vt. Stat. Ann. tit. 32 § 4772.)

How Does Vermont Handle Property Tax Non-Payment?

Within 15 days after the expiration of the due date for your property taxes, the town treasurer will issue a warrant in the amount of the unpaid taxes. This warrant remains in effect until the taxes on it are paid or otherwise discharged. (Vt. Stat. Ann. tit. 32 § 4793.)

The treasurer then delivers the warrant to the tax collector. (Vt. Stat. Ann. tit. 32 § 4793.) If you don't get caught up on the delinquent amounts, the tax collector will probably sell your home at a tax sale, though it has a few different routes it might use to collect the overdue amount. (Vt. Stat. Ann. tit. 32 § 5252.)

Notice Before a Property Tax Sale in Vermont Takes Place

Before a tax sale, the collector must mail you a notice about the upcoming sale and publish and post notice of the sale.

Notice by mail. The tax collector will mail you a notice by certified mail, return receipt requested:

• ten days before the sale if you're a resident of the town or
• twenty days before the sale if you live outside the town. (Vt. Stat. Ann. tit. 32 § 5252.)

If the notice by certified mail is returned unclaimed, the collector resends the notice by first-class mail or personally serves it to the taxpayer. (Vt. Stat. Ann. tit. 32 § 5252.)

Notice by publication. In Vermont, the tax collector must publish notice in a newspaper for three weeks before the sale. (Vt. Stat. Ann. tit. 32 §§ 5252, 5253.)

Notice by posting. The tax collector must also post notice of the tax sale in at least one public place in the town. (Vt. Stat. Ann. tit. 32 § 5252.)

Can Someone Take Your Property By Paying the Taxes in Vermont?

The tax sale consists of a public auction where the collector sells the home to the highest bidder. The highest bid must equal or exceed the amount of the outstanding taxes, costs, and fees. (Vt. Stat. Ann. tit. 32 §§ 5254, 5255.)

Not less than 24 hours before the tax sale, the property owner may request that a portion of the property, rather than the entire property, be sold to pay off the debt. The request must:

• clearly identify the portion of the property to be sold and
• must be accompanied by a certification from the District Environmental Commission and the town zoning administrative officer that the identified portion may be subdivided and meets minimum lot size requirements.

If the portion the taxpayer identifies can't be sold for the tax and costs, then the entire property may be sold. (Vt. Stat. Ann. tit. 32 § 5254.)

If no one bids an amount equal to the taxes, costs, and fees, then the city or town can purchase the home (Vt. Stat. Ann. tit. 32 § 5259.)

Can I Get My Home Back After a Vermont Tax Sale?

If you lose your home to a Vermont tax sale, you can redeem it (get it back) within one year after the sale. (Vt. Stat. Ann. tit. 32 § 5260.) To redeem your home, you must pay the purchase price plus interest at the rate of 1% per month from the sale date until the date you redeem. (Vt. Stat. Ann. tit. 32 § 5260.)

How Much You'll Have to Pay to Redeem Your Vermont Home

You can get your home back after the tax sale by paying:

• the purchase price, and
• interest at the rate of 1% per month from the sale date until the date you redeem (Vt. Stat. Ann. tit. 32 § 5260).

How to Redeem Your Vermont Home

You'll have to pay the redemption amount to the tax collector who held the sale (Vt. Stat. Ann. tit. 32 § 5260). The tax collector will then pass the funds along to the purchaser.

The purchaser gets a deed (title) to your home if you don't redeem before the redemption period expires. (Vt. Stat. Ann. tit. 32 § 5261.)

What Happens to My Mortgage in a Tax Sale?

Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax sale process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.

Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure.

What Options Do I Have If I Can't Afford to Pay My Property Taxes in Vermont?

Even though Vermont permits you to get your home back after a tax sale by redeeming it, generally, it is a good idea to take action before you fall behind in your property taxes to make them more affordable. For example, you could:

• look into whether you qualify for a property tax abatement or
• try to reduce the amount of taxes you must pay by challenging the taxable value of your home if you think it is incorrect.

Getting Help

Talk to a foreclosure lawyer, tax lawyer, or real estate lawyer if you're facing a tax sale in Vermont and have questions about the process or need help redeeming your property.