Rule 80.1.Foreclosure of mortgages and judgment liens

Reporter’s Notes—2025 Amendment: Rule 80.1(b)(3) is amended to require service of a blank Verified Answer – Foreclosure Case form and a blank Notice of Appearance for Self-Represented Litigant form. Rule 4(b) already requires service of blank answer and notice of appearance forms. Rule 80.1(c) requires that the answer in a foreclosure case be verified to avoid default. The amendment specifies that the answer form served be a verified answer form conforming substantially to the form approved by the Court Administrator for use in a foreclosure case.

Reporter’s Notes—2021 Amendment: Rule 80.1(f) is amended to update a cross-reference to the provision of the Civil Rules setting forth the appropriate procedure to be followed in proceedings by default against a minor or incompetent defendant. By virtue of an amendment of V.R.C.P. 55 promulgated November 5, 2019, effective January 6, 2020, the relevant provisions of former V.R.C.P. 55(b) are now incorporated in V.R.C.P. 55(c). The existing cross-reference in former V.R.C.P. 80.1(f) to V.R.C.P. 55(b)(2) referred to the language of that rule that judgment by default was to be entered without notice or hearing if defendant “is not an infant or incompetent person.” For greater clarity, the present amendment refers to amended V.R.C.P. 55(c)(1), which carries forward former V.R.C.P. 55(b)(1) in revised form, setting forth specific requirements regarding representation for minor or incompetent parties, with the added requirement of an affidavit as to the movant’s knowledge of the age and competency of the party.

Reporter’s Notes—2020 Amendment: Rule 80.1(c) is amended for consistency with the simultaneous amendment of Rule 55(a). See Reporter’s Notes to that amendment.

Reporter’s Notes—2018 Amendment: Rule 80.1 is amended to extend its 6- and 10-day time periods to 7 and 14 days consistent with the simultaneous “day is a day” amendments to V.R.C.P. 6.

Reporter’s Notes—Third 2014 Amendment: Rule 80.1(b)(3) was originally adopted as an emergency amendment on December 17, 2008, effective January 1, 2009, extended by subsequent orders until December 31, 2013, and amended by order of December 2, 2013, effective February 3, 2014. The rule as further amended and extended until December 31, 2015, by order of December 17, 2013, effective January 1, 2014, is now made permanent to implement the statute, 12 V.S.A. §§ 4631-4637, and because of its continued benefit to homeowners faced with foreclosure.

Reporter’s Notes—Second 2014 Amendment: Rule 80.1(b)(3), originally adopted as an emergency amendment on December 17, 2008, effective January 1, 2009, extended by subsequent orders until December 31, 2013, and amended by order of December 2, 2013, effective February 3, 2014, is further amended and extended as amended until December 31, 2015. The amendment is intended to bring the rule and practice under it into compliance with 12 V.S.A. §§ 4631-4637 as amended by Act No. 8 of 2013, effective December 1, 2013. It deletes the form of the required notice informing defendants in residential foreclosure cases of free resources available to assist them in trying to arrange to keep their homes, or, where appropriate, make the most favorable arrangements for selling the homes and paying off the debt. That notice is still required but now, to comply with the amended statute, two copies of it are to be served and it is to be given on a form approved by the Court Administrator complying with the statute. The current approved form is found on the Judiciary website at https://www.vermontjudiciary.org/eforms/Foreclosure_NoticetoHomeowner.pdf. The rule is extended, as amended, because it has proved, and continues to be, beneficial in the current home mortgage foreclosure situation and its provisions now must track the amended statute.

Reporter’s Notes—First 2014 Amendment: Rule 80.1(b)(3) is amended to reflect changes in Homeownership Centers information and the elimination and consolidation of the functions of the Department of Banking, Insurance, Securities and Health Care Administration in the Department of Financial Regulation by § 1 of Act No. 78 of 2011 (Adj. Sess.), amending 3 V.S.A. § 212.

Reporter’s Notes—2012 Amendment: The emergency amendment to Rule 80.1(b)(3) was promulgated on December 17, 2008, effective January 1, 2009, with a direction that the Advisory Committee report on any comments received by September 30, 2009, and was extended for two years until December 31, 2011, by order of December 10, 2009, effective January 1, 2010. The amendment requires a notice informing defendants in residential foreclosure cases of free resources available to assist them in trying to arrange to keep their homes, or, where appropriate, make the most favorable arrangements for selling the homes and paying off the debt. The rule continues to be beneficial in the current home mortgage foreclosure situation and is thus extended for two more years. Rule 80.1(g)(2), promulgated as an emergency amendment on December 21, 2010, effective on that date, to provide additional protections for foreclosure defendants, is now made permanent. See Reporter’s Notes to 2010 emergency amendment. The Civil Rules Committee was asked to report to the Court by September 30, 2011, on any comments received on this amendment. No public comments were received, but the continued issues concerning inaccuracies in the work of mortgage lenders and servicers in foreclosure cases that have been reported make it appropriate to adopt a permanent rule.

Reporter’s Notes—2010 Emergency Amendment: Rule 80.1(g) is amended to address a pressing problem that has emerged in recent months. There have been public disclosures, both in the media and in individual cases filed in Vermont courts, that affidavits filed by lenders and servicers in foreclosure cases have contained significant inaccuracies. These have included statements that the affiants had reviewed files they had not reviewed, statements that affiants had reviewed attached military service records that were actually dated after the date of the affidavit, and notarizations by notaries who had not witnessed the signatures they were notarizing. These inaccuracies in numerous affidavits raise serious questions for judges about the reliability of all of the other information in the affidavits, and about the reliability of affidavits filed in other cases. The problem is especially acute, because many lenders are national concerns with which Vermont counsel have little or no personal contact, and the affidavits are often the basis for the granting of summary judgment or default motions, or for the amounts the borrowers are ordered to pay to save the property from foreclosure in situations in which the property is the borrower’s residence. The amended rule is necessary to establish statewide uniformity in dealing with these matters. Accordingly, former Rule 80.1(g) is designated Rule 80.1(g)(1), and Rule 80.1(g)(2) is added to make special provision, consistent with 12 V.S.A. § 4531a(a), for all foreclosure actions involving owner-occupied residences of four units or less. In these actions, subparagraph (2)(A) provides that judgment and decree will not issue or a sale will not be confirmed until plaintiff’s counsel certifies, in a form set out in the amended rule, that counsel’s communication with a plaintiff’s representative, inspection of papers that have been filed, and other diligent inquiry have established the completeness and accuracy of all documents supporting the claim to the best of counsel’s knowledge, information, and belief. This certification is a specific application of the requirements of Rule 11 to the foreclosure situation. The terms of the certification make clear that it must be updated in light of factual changes and will be relied upon by the court. Further, new subparagraph (2)(B) provides that a judgment and decree will not issue on the basis of an affidavit submitted for the plaintiff to support default, summary judgment, or amounts due unless the affidavit sets forth the status and authority of the affiant and the affiant’s personal review of specific records and personal knowledge of the facts sworn to. Under subparagraph (C), the court may request supplemental documents or information concerning these matters and other issues, such as standing, that the affidavits do not resolve. Subparagraph (D) provides that, until all required affidavits have been filed, sales of the property are stayed, and the court may not issue or authorize issuance of foreclosure decrees, certificates of nonredemption, confirmations of sale, or writs of possession.

Reporter’s Notes—2010 Amendment: The emergency amendment adding V.R.C.P. 80.1(b)(3) to require a notice informing defendants in residential foreclosure cases of free resources available to assist them in trying to arrange to keep their homes, or, where appropriate, make the most favorable arrangements for selling the homes and paying off the debt, was promulgated on December 17, 2008, effective January 1, 2009, with a direction that the Civil Rules Advisory Committee report on any comments received by September 30, 2009. No comments were received. The rule has been found beneficial and is continued for two additional years while other amendments to Rule 80.1, designed to allow it to operate more fairly in the present financial climate, are being considered.

Reporter’s Notes—2009 Emergency Amendment: Rule 80.1(b)(3) is added as an emergency amendment to provide relief to homeowners faced with foreclosure in the present financial situation. The number of foreclosures has been increasing in Vermont as it has across the country. Resources are available through state and nonprofit agencies to assist homeowners in such cases. Most foreclosure defendants are unrepresented and may not be aware of these resources, or learn of them in time to take effective advantage of them. The amended rule will require plaintiffs filing residential foreclosure actions to include as the top page to be served with all foreclosure complaints the following notice (in the same format and font size), a copy of which must also be filed with the court. Failure to include the form will result in refusal of the summons and complaint for service and filing.

Reporter’s Notes—2001 Amendment: Rule 80.1(g) is amended to assure adequate notice to the defendant of the statutory requirement of permission to appeal a judgment of foreclosure. See 12 V.S.A. § 4601. The final phrase in parentheses is intended to incorporate the effect of Rule 6(a), which excludes the first day of a time period from the computation and excludes Saturdays, Sundays, and holidays from the computation if the period is shorter than 11 days. Rule 80.1(m), adopted in 1985, imposed a 10-day time limit for the filing of motions for permission to appeal. See Reporter’s Notes to that amendment. That provision has proved to be a problem for pro se litigants, who often are not aware of its existence. The required statement, like the requirement of Rule 80.1(b) that the right of redemption be explained in the complaint, will assure that all litigants have notice of this final opportunity to avoid foreclosure.

Reporter’s Notes—1999 Amendment: Rule 80.1(b)(1) is amended to clarify a point upon which superior court judges have disagreed. The new provision makes clear that joinder of a claim for strict foreclosure and a claim for a deficiency is not permitted except when the action becomes one for foreclosure by sale pursuant to Rules 80.1(h)-(k) because the defendant has requested foreclosure to a power of sale in the mortgage under 12 V.S.A. § 4531a. When defendant makes such a request, plaintiff may amend the complaint to add the deficiency claim. The effect of the amendment is to make the general joinder provisions of Rule 18(a), (b), inapplicable to strict foreclosure proceedings. Thus in such a proceeding a claim for a deficiency must be sought in a separate action, with the deficiency to be the difference between the value of the property after foreclosure and the debt. A contrary rule would raise difficult issues of appropriate notice to the defendant in a case where the deficiency hearing might come up long after the judgment of foreclosure. In addition, if joinder were permitted, failure of the plaintiff to plead and pursue a deficiency claim at the outset might mean that a later action on the deficiency would be barred by res judicata. Of course, if the plaintiff initially commences the action as one for foreclosure by sale, Rule 80.1(j)(2) permits the court to assess a deficiency judgment if the plaintiff so requests in the complaint. Failure of the plaintiff to make such a request, or to add a deficiency claim by amendment when defendant requests foreclosure by sale, could also lead to the bar of res judicata in the later deficiency action.

Reporter’s Notes—1988 Amendment: Rule 80.1(b) is amended to protect mortgagors’ rights of redemption. 12 V.S.A. §§ 4523- 4530. Unless defaulting mortgagors are informed of the existence of their right of redemption, they may not be aware of the need to file an entry of appearance. Without entering their appearance they will not be served with the proposed judgment order requesting a specific equity of redemption and the redemption period. V.R.C.P. 80.1(g). Nor will they be served with the judgment order which establishes the amount and time of redemption. V.R.C.P. 77(d); cf. V.R.C.P. 62(b) (requires service of judgment in personal actions; even if foreclosure is a personal action, the rule does not require service prior to expiration of redemption period). Instead, they will discover the existence of their right of redemption when it is too late—when the redemption period has expired and a writ of possession is served. The amendment to Rule 80.1(b) avoids this problem. The rule requires that within each foreclosure complaint the plaintiff explain that the defendant or defendants must enter their appearance in order to receive notice of the foreclosure judgment, and that this judgment will set forth the amount of money they must deposit to redeem the premises and the period of time allowed them to redeem the premises.

Reporter’s Notes—1985 Amendment: This rule has been amended in two respects. Subdivision (g) is amended to make clear that the plaintiff does not have to serve the form of judgment on those defendants who have not appeared. The clarification does not change the law since Rule 5(a) generally dispenses with further service on those in default for failure to appear. Subdivision (m) is added to provide procedure for seeking permission to appeal from a judgment of foreclosure pursuant to 12 V.S.A. § 4601. The statute contains no time limit for requesting permission to appeal. In order to promote the finality of judgments, a short time limit of 10 days to seek permission to appeal has been imposed. This is the standard time limit for post-judgment motions. Compare Rules 50(b), 50(c)(2), 52(b), 59(b), 59(d), and 59(e). Rule 6(b) has been amended contemporaneously to allow the time for the motion to be extended up to 20 additional days for the grounds provided in that rule. See Reporter’s Notes—1985 Amendment to Rule 6. Since the request for permission to appeal should follow any other post-trial motions, subdivision (m) adopts the tolling provisions of V.R.A.P. 4 by reference. Under that rule, most post-trial motions toll the running of the time to file a notice of appeal until the motion is decided. The motions will similarly toll the running of the time to request permission to appeal under this rule. The subdivision includes a provision similar to Rule 62(a) and (e) creating a stay of the judgment and tolling the running of the time of redemption until the appeal is denied or decided. The court may condition the appeal or the stay on terms proper for the security of the rights of the mortgagee. Compare Rule 62(d) (stay on security). If permission is granted, the appeal will proceed under Appellate Rule 6(a), as added contemporaneously with this subdivision.

Reporter’s Notes—1982 Amendment: Rule 80.1 is amended and expanded to accomplish three main objectives: (a) to provide a procedure for foreclosure by sale, (b) to provide for parties in interest, other than the mortgagor and mortgagee, in the foreclosure proceeding, and (c) to clarify preexisting language or improve existing procedure in areas where there are deficiencies in the rule. These amendments do not apply in district court because mortgage foreclosure actions must be brought in the superior court. See 12 V.S.A. § 4523(a). Subdivision (b)(1) is amended to expand the allegations that must be made in the complaint. The added language requires the plaintiff to specify the mortgage condition alleged to have been breached and to specify, and provide information about, parties in interest. The former requirement comes from the case law. See, e.g., Thompson- Starrett Co. v. E. B. Ellis Granite Co., 86 Vt. 282, 84 A. 1017 (1912). It is a specific application of the Rule 8(a) requirement that a pleader make a short and plain statement of the claim “showing the pleader is entitled to relief.” The amendment to subdivision (b)(1) also specifies that parties in interest be joined although the failure to join a party in interest does not invalidate the proceeding as to those joined. The requirement that parties in interest be disclosed facilitates joinder and clear specification of the interests involved. The term “parties in interest” is intended to be broad. Story defines those who should be joined as follows: “all persons, whose interests are to be affected or concluded by the decree, ought to be made parties.” J. Story, Equity Pleadings § 193 (10th ed. 1892). This is a specific application of the general equity rule. See O’Brien v. Holden, 104 Vt. 338, 160 A. 192 (1932). The term “parties in interest” includes mortgagors, and holders of the fee interest, although persons in the chain of title who are not personally liable to the plaintiff or owners of the property when foreclosure is brought need not be joined. See Miner v. Smith, 53 Vt. 551 (1881). The term includes mortgagees but holders of mortgages superior to the plaintiff need not be joined since they have no equity of redemption to be foreclosed. See Haskell’s Adm’r v. Holt, 75 Vt. 413, 56 A. 99 (1903). It includes lienors and attaching and judgment creditors. See Dickinson v. Lamoille County Nat’l Bank, 12 F. 747 (2d Cir. 1882). But see Downer v. Fox, 20 Vt. 388 (1848). It includes holders of leasehold interests in possession. See J. Story, supra, § 193 n.(a). It does not include interests that arise during the pendency of the proceedings. See 12 V.S.A. § 4523(b); Freedley v. Manchester Marble Co., 99 Vt. 25, 130 A. 691 (1925). The language on joining parties in interest and the effect of the failure to do so is derived from a Maine statute. See 14 Me. Rev. Stat. Ann. § 6321. Although the subdivision requires that parties in interest be joined, the consequences of nonjoinder are not the same as for parties the court finds are indispensable. See Rule 19(b). The proceeding is valid as to those joined but does not bind those not joined. See Hunn v. Koerber, 129 Vt. 490, 282 A.2d 831 (1971). Of course, the court can order that a party in interest be made a party to the proceedings. See Rule 19(a). The amendment to subdivision (c) clarifies when the plaintiff is entitled to a default judgment against parties other than the mortgagor. Unless the verified answer or affidavits raise defenses to plaintiff’s claim, the party will be defaulted. Such parties can, of course, raise defenses to plaintiff’s claim. A new subdivision (d) is added to specify that certain claims of parties defendant must be adjudicated prior to the entry of a judgment order. Those that relate to the validity and priority of other interests must be adjudicated to establish the order and terms of redemption, an essential part of the foreclosure decree. They might be raised by answer, counterclaim or cross-claim. Although the rule is silent on other claims, the intent is that the mortgagee’s relief not be delayed while other claims are heard. The court must use the applicable Rules of Civil Procedure being careful to weigh the plaintiff’s interest in speedy relief without delay because of disputes between junior parties in interest, and the protection of the rights of parties in interest. Pursuant to Rules 42(b) and 13(i), the court can separate out counterclaims or cross-claims and try them separately. In this way, the court can render a judgment on plaintiff’s claim before going on to unrelated counterclaims or cross-claims. See Rule 54(b); cf. Hill v. Longe, 95 Vt. 441, 115 A. 237 (1921) (mortgagor cannot offset unrelated credits; matters in cross-bill must be germane to those in original bill). The ability to raise cross-claims is also limited by the rule that such claims must arise out of the transaction or occurrence that is the subject matter of the foreclosure action or a counterclaim or relate to the property that is the subject of the foreclosure action. See Rule 13(g). Subdivision (e) (formerly (d)) is amended to authorize motions to shorten the period of redemption after the commencement of the action. The amendment does not specify the grounds necessary for favorable action on such a motion. Presumably the court, in order to avoid an unnecessary forfeiture on interests already determined, will require the mortgagee to show that events after the filing of the complaint necessitate a shortened redemption period. See Kelly v. Clement National Bank, 111 Vt. 65, 10 A.2d 201 (1940). The rule does not specify the redemption period—that is left to statute and decisional law. The new procedure for foreclosure by sale raises the possibility that different redemption periods apply, depending upon the method of foreclosure. Some of the statutes on foreclosure by sale suggest the court has more discretion in defining a redemption period when the foreclosure is by sale. See 12 V.S.A. §§ 2903(c) (judgment lien), 4531 (sale because of federal law). On the other hand the statute on implementing the power of sale doesn’t mention redemption but does prohibit sales of certain property within seven (7) months of service of the foreclosure complaint. See 12 V.S.A. § 4531a. The rule takes no position on whether the general redemption statute, 12 V.S.A. § 4528, applies to some or all foreclosures by sale. Subdivision (f) (formerly (e)) is amended to clarify that the second part of the subdivision applies where the case has been heard and decided on the merits so that the entry is not by default. Subdivisions (h) through (k) are added to provide procedure for foreclosure by sale. Foreclosure by sale is currently authorized by statute in three instances: (a) where a lien or interest in the realty is held by a person or federal agency which may not be foreclosed by strict foreclosure under federal law, 12 V.S.A. § 4531; (b) when a power of sale is contained in the mortgage and the mortgagee or mortgagor requests a sale in his initial pleading; and (c) to foreclose a judgment lien if the outstanding debt exceeds the value of the property, 12 V.S.A. § 2903(c). Even before the statutory authorizations, the court indicated foreclosure by sale could be used in some instances. See Roberts v. W. H. Hughes Co., 86 Vt. 460, 85 A. 982 (1913). The statute goes on to provide some of the sale procedure, at least for the instance where the mortgage contains a power of sale. See 12 V.S.A. §§ 4532-4533. The rule must be read together with the statute. The intent of the rule is to provide procedure on issues not covered in the statute or to define to some extent the power of the court. A foreclosure action, even when by sale, remains an equity action, and the court has the power to refuse to confirm a sale where the result would be inequitable. See 12 V.S.A. § 4533; G. Osborne, G. Nelson & D. Whitman, Real Estate Finance Law §§ 7.16, 7.17 (1979). Subdivision (h) provides what should be in the plaintiff’s form of judgment where there is to be a sale. Subdivision (h)(1) and (5) are provided for in the statute. 12 V.S.A. § 4532(a), (b), and (c) provide how the mortgagor will be notified, how notice of the sale will be published and a form of sale notice, applicable where there is a power of sale. The remaining parts of the subdivision deal with other issues that must be in the court’s order. Because the “whole proceeding, from the beginning to the final confirmation of the reported sale” is “under the supervision and control of the court,” Blossom v. Milwaukee & C.R. Co., 70 U.S. 196, 18 L.Ed. 43 (1866), it is important that the order of the court set the sales terms. Where the mortgage covers more than one parcel or a parcel is severable, the court must determine how the property is to be sold, both to bring the highest price and to protect the mortgagor. See Semmes Nurseries, Inc. v. McDade, 288 Ala. 523, 263 So. 2d 127 (1972). Subdivision (i) authorizes an appraisal at the request of any party. The use of the appraisal is discussed under subdivision (j) below. Subdivision (j) establishes the procedure for distribution of the proceeds depending upon whether there is a surplus or a deficiency. Although the statute talks of distributing surplus proceeds to the mortgagor, 12 V.S.A. § 4532(d), such a distribution would be subject to the claims of other defendants with valid interests in the property. It is more efficient to adjudicate rights to surplus proceeds in the foreclosure action rather than requiring a new action. The rule is not intended to specify who is entitled to surplus proceeds, a question of law, but instead to establish the procedure for distributing proceeds. Even the procedure cannot be covered in too much detail because of the tension between affording the mortgagee relief within a reasonable time and protecting the interests of junior interests and the mortgagor. In some cases, the entitlement to surplus proceeds will have been established as a consequence of defenses to the plaintiff’s claim and establishment of a redemption schedule. In others, the court will have to hold the proceeds and adjudicate claims to them. To avoid holding up payment of undisputed, superior claims while other claims are adjudicated, the rule authorizes a partial confirmation that will result in payment of the claims superior to the one in dispute. The statute specifically provides for the availability of a deficiency judgment “as determined by a subsequent action,” at least where there is a power of sale. See 12 V.S.A. § 4532(d). Requiring a separate action creates an inefficient use of judicial manpower and is inconsistent with the general rule that two claims can be joined in a separate action even though one is “cognizable only after” the other. See Rule 18(b). Thus, the rule allows joinder of the primary foreclosure action with the subsequent deficiency action as long as the latter is plead as a separate count in the complaint. In strict foreclosure actions, the deficiency is the difference between the fair market value of the premises and the debt. See Hewey v. Richards, 116 Vt. 547, 80 A.2d 541 (1951); Bailey v. Groton Mfg. Co., 113 Vt. 288, 34 A.2d 182 (1943). One can assume that the sale price is the fair market value in most cases. However, where the mortgagee is the purchaser the “position is one of great delicacy,” West Roxbury Co-op Bank v. Bowser, 324 Mass. 489, 87 N.E.2d 113 (1949), and the court must act in the discharge of its equitable powers and responsibilities to protect the interest of the mortgagor. In this instance, the court must affirmatively establish fair market value, and limit the recovery to the difference between the outstanding debt, plus reasonable expenses in conducting the sale, and the fair market value at the time of sale, as determined by the appraisal and other relevant evidence. This procedure, or variations on it, is used in other states. See 14 Me. Rev. Stat. Ann. § 6324; Suring State Bank v. Giese, 210 Wis. 489, 246 N.W. 556 (1933). It is imposed by rule in the exercise of the Supreme Court’s supervisory and appellate authority over the trial courts. Subdivision (k) specifies the content of the confirmation order. The confirmation should occur after hearing and an opportunity for all parties to contest the sale if desired. See 12 V.S.A. § 4553. Recording of the order is notice to all of the doings of the foreclosure and sale. Accordingly, the confirmation order must contain all relevant information. Subdivision (l) is the former subdivision (g) on foreclosure of judgment liens. Consistent with the amendment to subdivision (b), this subdivision is amended to require the complaint to specify that the judgment lien has not been satisfied. See 12 V.S.A. § 2903(c).

Reporter’s Notes—1981 Amendment: The coverage of this rule is now expanded to provide for enforcement of a judgment lien by foreclosure. This expansion is made to conform the rule to the provisions of 12 V.S.A. § 2903(c), enacted by Act No. 67 of 1979, effective July 1, 1979, with respect to judgments rendered subsequent to May 8, 1979. 12 V.S.A. § 2901 now provides that a final judgment issued in a civil action is a lien on any real property of the judgment debtor if recorded as provided in 12 V.S.A. § 2904. If the judgment lien is not satisfied within 30 days of recording, it may be foreclosed and redeemed as provided in this rule. 12 V.S.A. § 2903(c). The amendment adds subdivision (g) to provide procedure for foreclosure of the judgment lien. Except to detail the specific items that must appear in the complaint, the amendment applies the procedure for foreclosure of a mortgage to foreclosure of a judgment lien. Practitioners should note that except for where the outstanding debt exceeds the value of the property, foreclosure by sale is required. See 12 V.S.A. § 2903(c). As noted in the Reporter’s Notes to the 1975 Amendment, this rule applies primarily to proceedings for strict foreclosure. Thus, foreclosure of a judgment lien by sale should “be commenced and conducted under the rule so far [as is] consistent with the purpose of [the judgment lien statutes] and with the procedures mandated by them.” Reporter’s Notes to Rule 80.1—1975 Amendment. Where no procedure is provided, the court can proceed in any lawful manner consistent with the state constitution, the statutes and the rules. Rule 81(d).

Reporter’s Notes—1975 Amendment: Rule 80.1 is substantially amended to eliminate problems that have arisen in the administration of the summary judgment and default provisions of the rule. The amendments also make provision for service upon attaching creditors and inclusion of attorney’s fees in the accounting and judgment. The amended rule restores many features of the procedure under former Chancery Rule 39. It thus applies primarily to proceedings for strict foreclosure. Proceedings for foreclosure by sale under 12 V.S.A. § 4531 when federal law forbids strict foreclosure, or under newly enacted 12 V.S.A. §§ 4531a—4533 when a power of sale is contained in the mortgage, should be commenced and conducted under the rule so far consistent with the purposes of these statutes and with the procedures mandated by them. Where neither the rule nor the statutes provide an appropriate procedure, the court in a foreclosure by sale has inherent power under Rule 81(d) to “proceed in any lawful manner not inconsistent with the Constitution of the State of Vermont, these rules, or any applicable statutes.” Rule 80.1(b) is amended by making the former rule paragraph (1) and adding a new paragraph (2). The amendment adds a claim of attorney’s fees to the items which the complaint must contain, set out in paragraph (1). This change is intended to facilitate the award of such fees without hearing under amended subdivision (e). Rule 80.1(b)(2) provides for service upon attaching creditors. If such a creditor cannot be served by normal means (other than publication) under Rule 4, service may be had upon the creditor’s attorney of record in the suit in which the attachment was made. If the attorney cannot be located, then resort may be had to service by publication. The rule preserves the hierarchy of methods of giving notice which expresses the requirements of due process. See Reporter’s Notes to Rule 4 as originally promulgated. The amendment to Rule 80.1(c) makes clear that a motion for summary judgment is not a necessary foundation for a default. Under the amended rule, plaintiff need do nothing after filing the complaint until defendant answers or the time for answer expires. Defendant’s answer must be verified, or supported by affidavits, and must disclose “facts alleged to constitute a defense.” Within 10 days after service of the answer, plaintiff may move for summary judgment. The motion is treated as though made under Rule 56, except that plaintiff need not file supporting affidavits. Under that rule, if the motion is granted on all issues, including the sum due, judgment is prepared and entered as provided in amended Rule 80.1(f). If, as will more frequently be the case, the motion is granted only on the issue of breach, an accounting will be ordered by the court as provided in amended Rule 80.1(e). If the motion is denied, or if plaintiff makes no motion, the case goes forward for hearing on the merits (including an accounting) like any nonjury matter. (In such a case, of course, either party could make an ordinary Rule 56 motion with affidavits later if appropriate.) The rule does not specify the form of a court-ordered accounting. The judge may refer the matter to the clerk as on a default, or make a reference under Rule 53, or may take the account himself. If defendant fails to answer, the procedure is similar to that on default in any action under Rule 55, but for clarity the amended rule spells out the steps. Under amended Rule 80.1(c) in such a case, the clerk routinely enters the default. Thereupon, if the sum due is in controversy, the clerk at plaintiff’s request should take an accounting. The plaintiff must accompany his request with an affidavit of the sum claimed to be due and must give six days’ notice, in the manner provided in Rule 5, to all parties who have appeared. The clerk’s accounting is to proceed without any judicial order or direction, unless the defendant is an infant or incompetent. In that case, the provisions of Rule 55(b)(2) for a court-ordered accounting and representation by guardian ad litem or other representative apply. At the accounting, the clerk is to find the total of principal, interest then due, costs, and attorney’s fees. As a matter of substantive law “principal” presumably includes necessary advances by the mortgagee for repairs, insurance, taxes, and the like. See Barclay v. Drew, 105 Vt. 280, 166 A. 5 (1933). Interest is that on the principal sum at the mortgage rate, as well as any interest on accrued interest then due under 9 V.S.A. § 49. The rule expressly provides that attorney’s fees shall be included in the sum found due, whether the accounting is conducted by the clerk upon default or is conducted under order of the court. If the fees are claimed under a provision of the mortgage and do not exceed two percent of the total otherwise found due, or a greater amount expressly agreed upon in the mortgage, they are to be allowed without hearing unless defendant objects. Upon objection or a claim in a higher amount, the court is to set the fees after notice and hearing. The rule does not curtail the inherent power of the court to reduce agreed-upon fees as unconscionable or unethical. Such grounds of objection are substantive. If the defendant raises these or any other substantive points by timely objection, the court will decide the objections on substantive principles independent of the rule. Amended Rule 80.1(f) provides for preparation of the judgment by the plaintiff. The proposed judgment and the accounting, if any, are to be served on all defendants in accordance with Rule 5. The court is then to proceed under Rule 58, which allows the parties to file objections to the judgment within 5 days after service. The judgment is to recite the total amount due, whether agreed upon by the parties or found at the accounting. At the time of redemption, the plaintiff may have interest running from the date of the accounting to the date of redemption at the higher of the legal or the mortgage rate. Such interest is to be calculated on all sums included in the total amount due with the exception of interest. That is, the plaintiff is not entitled to receive interest computed on interest. The provisions of 9 V.S.A. § 49 for interest upon accrued interest thus do not apply after the determination of the sum due by agreement or at the accounting. That determination is the “final settlement” of the underlying obligation contemplated by the statute. The judgment itself is not an “obligation” upon which the statutory interest runs.

Reporter’s Notes: This rule has no equivalent in the Federal Rules. Rule 80.1(a) abolishes the former procedure for foreclosure by an action of ejectment at law under 12 V.S.A. §§ 4767-4772 (now superseded). Foreclosure now may be sought only in an ordinary civil action, which, under the special provisions of this rule, is similar to chancery proceedings by petition or bill under 12 V.S.A. §§ 4521-4522 (now superseded) and former Chancery Rule 39. Rule 80.1(b) requires the inclusion in the complaint of the principal elements in the form of petition formerly provided under 12 V.S.A. § 4521(a). Rule 80.1(c) adapts other provisions of the rules to carry forward the summary procedure by petition and affidavit previously provided by 12 V.S.A. § 4521(b) and former Chancery Rule 39. If plaintiff desires to take advantage of the summary procedure he may file a motion for summary judgment with his complaint. This motion will be governed by Rule 56, except that (1) the filing time is advanced, (2) plaintiff need not file affidavits, and (3) the date for hearing is fixed at 20 days after service. Under Rule 56(c), defendant has until such date to file an opposing affidavit, asserting any defense that he may have. If defendant files his affidavit, its validity will be tested on hearing under Rule 56 unless plaintiff withdraws his motion. If plaintiff withdraws, or if the court finds that defendant has raised a genuine issue, defendant may answer and the case will proceed to a full trial of the merits. The court may, under Rule 56(c), uphold the defense on the affidavit alone and give judgment for defendant. If defendant fails to file an affidavit, Rule 80.1(c) provides that the action will proceed as though on default under Rule 55. This procedure is equivalent to that of the decree pro confesso under the former chancery rule. Rule 80.1(d) incorporates the time for redemption set by statute, which is presently six months for mortgages executed subsequent to April 1, 1968, and one year for those executed before that date. See 12 V.S.A. § 4528; Act No. 367 of 1967, § 4. The rule supersedes the statute in one important aspect by providing that the time for redemption runs from the date of entry of judgment, which, under Rule 58, occurs only after the form of judgment (required by Rule 80.1(f)) is submitted by counsel and approved by the court. Under the former rule and statute, the period ran from the date of the decree, which could be as much as two months prior to the filing of the decree. This change occurs because the formal entry of the decree by the chancellor prior to its actual filing provided by former Chancery Rule 39.4 has been eliminated. Now, under Rule 58 the court grants judgment and approves the form of judgment prior to entry. The provision of the subdivision for motions to shorten the time for redemption is adapted from former Chancery Rule 39.6. Rule 80.1(e), based on former Chancery Rules 39.5, 39.8, recognizes that the court by itself or through a master may, either on the trial or on default proceedings under Rule 55(b)(2), establish the amount of the debt owed plaintiff, or the parties may agree on the amount. In the absence of such proceedings, however, the clerk is to take an accounting, which the plaintiff must submit with the form of judgment. Rule 80.1(f) carries forward the provisions of former Chancery Rules 39.4, 39.7, giving plaintiff two months to file the decree after the court has ordered its entry. Since the time of redemption now runs from the date of entry of judgment, which follows submission of the form thereof, the provision for enlargement of the time if plaintiff fails to submit the form operates only as a sanction upon plaintiff, rather than to relieve defendant. Annotations Construction. Attorney’s fees. Deficiency. Foreclosure based on condominium assessment liens. Joinder of parties. Lack of findings. Permission to appeal. Summary judgment. Construction. Substantial justice required a reversal of a trial court’s foreclosure judgment and a remand for further proceedings, as the property seller had not sought foreclosure or raised the issue, and the purchasers were accordingly prejudiced by the court’s sua sponte introduction of foreclosure into the case; they were not afforded due process rights with respect to the time period provided for their right of redemption or with respect to the opportunity to require a sale and avoid strict foreclosure. Prue v. Royer, 2013 VT 12, 193 Vt. 267, 67 A.3d 895, 2013 Vt. LEXIS 9 (2013). To enforce a promissory note or mortgage, a person must be in possession of the instrument at the time that the enforcement action is filed and the instrument must be made payable to the person or to the order of the person; these requirements are the same where the original endorsement is made in blank. Moreover, the rule which governs complaints in the analogous mortgage foreclosure context corresponds with this reading. Wells Fargo Bank Minnesota, N.A. v. Rouleau, 2012 VT 19, 191 Vt. 302, 46 A.3d 905, 2012 Vt. LEXIS 21 (2012). Attorney’s fees. Trial court has inherent power to reduce attorney’s fees in mortgage foreclosure actions if excessive, unconscionable, or unethical. Proctor Trust Co. v. Upper Valley Press, Inc., 137 Vt. 346, 405 A.2d 1221, 1979 Vt. LEXIS 1001 (1979). Provisions of this rule contemplate the allowance of a reasonable attorney fee not exceeding two percent of the principal, interest and costs found due upon accounting, to be allowed without hearing, in the absence of objection and unless a higher amount is claimed. Federal Land Bank of Springfield v. Pollender, 137 Vt. 42, 399 A.2d 512, 1979 Vt. LEXIS 935 (1979). Deficiency. In a foreclosure action, at no point did the trial court make a finding of the property's fair market value. Without this crucial fact, it could not make a proper deficiency calculation. New Eng. Phoenix Co. v. Grand Isle Veterinary Hosp., 2022 VT 10, 216 Vt. 227, 275 A.3d 134, 2022 Vt. LEXIS 9 (2022). Foreclosure actions and deficiency actions are separate and distinct proceedings. LaFarr v. Scribner, 150 Vt. 159, 549 A.2d 651, 1988 Vt. LEXIS 131 (1988). A judgment and decree of foreclosure on a mortgage operates only as to the property secured by the mortgage; if foreclosure of the mortgaged premises is insufficient to satisfy a debt secured by such mortgage, then the creditor’s recourse is through an action on the underlying note. LaFarr v. Scribner, 150 Vt. 159, 549 A.2d 651, 1988 Vt. LEXIS 131 (1988). Foreclosure based on condominium assessment liens. Foreclosures based on condominium assessment liens are subject to the same ten-day permission-to-appeal requirement as mortgage foreclosures. Woodbine Condominium Association v. Lowe, 174 Vt. 457, 806 A.2d 1001, 2002 Vt. LEXIS 143 (2002) (mem.). Joinder of parties. Subdivision (b)(1) of this rule does not require joinder of parties whose interests arise during the pendency of the foreclosure proceedings. Green Mountain Bank v. Bruehl, 148 Vt. 567, 536 A.2d 554, 1987 Vt. LEXIS 547 (1987). Lack of findings. Where trial court did not indicate reasons for denying defendants’ request to appeal grant of foreclosure petition, Supreme Court was unable to evaluate the court’s reasons for denying permission; as such, Supreme Court decided to consider matter, notwithstanding denial. Capital Impact Corp. v. Munro, 162 Vt. 6, 642 A.2d 1175, 1992 Vt. LEXIS 218 (1992). Permission to appeal. Appeal of a decree of foreclosure and related issues relating to the parties’ agreements for purchase of real property was properly before the court on appeal, although the purchasers did not seek permission to appeal, as the provision requiring permission to appeal only applied to mortgages which were such on their face or recognized as such by the parties; in the instant matter, the character of the instrument was in issue. Prue v. Royer, 2013 VT 12, 193 Vt. 267, 67 A.3d 895, 2013 Vt. LEXIS 9 (2013). Legislative policy of promoting the finality of foreclosure judgments would be thwarted if 12 V.S.A. § 4601 could be circumvented simply by filing a motion to reopen weeks or months after the entry of the foreclosure judgment; this is particularly true in situations where the redemption period has expired. Citibank, N.A. v. Groshens, 171 Vt. 639, 768 A.2d 1272, 2000 Vt. LEXIS 392 (2000) (mem.). Summary judgment. Where a note that was endorsed by an allonge in blank was subsequently ratified by the original mortgagee, the signature became effective as if authorized at the time made under 9A V.S.A. § 3-403(a); however, under Vermont case law and under V.R.C.P. 80.1(b)(1), in order to enforce the mortgage note, the bank would have to show that it was the holder of the note as defined by 9A V.S.A. §§ 3-301 and 1-201(21)(A) at the time the complaint was filed. Here, the document the bank filed to enforce its rights was a proof of claim rather than a complaint, and the seminal date for analysis and allowance of a proof of claim, including the issue of standing, was the date the bankruptcy case was commenced; thus, because the date that the note was endorsed was a material fact and because the record of undisputed material facts did not include any information about the date of the endorsement, the bank was not entitled to summary judgment on the debtor’s objection to its proof of claim. Parker v. U.S. Bank N.A. (In re Parker), 445 B.R. 301, 2011 Bankr. LEXIS 924 (Bankr. D. Vt. 2011). Where motion for summary judgment on complaint of foreclosure of mortgage was untimely, as it was filed seventy days after the verified answer, the motion should not have been granted. Stamato v. Quazzo, 139 Vt. 153, 423 A.2d 1200, 1980 Vt. LEXIS 1499 (1980). Summary judgment was inappropriate in proceedings on foreclosure of a mortgage where defendant’s verified answers, permitted under this rule, raised genuine issues of material fact; issues were raised as to the amount of money involved, as to when the payments were due, and as to conditions precedent to bringing the foreclosure action. Stamato v. Quazzo, 139 Vt. 153, 423 A.2d 1200, 1980 Vt. LEXIS 1499 (1980).