Each state has its own homestead laws, which can protect a certain portion of the property owned by the head of a household from being confiscated and sold to satisfy debts. Homestead protection laws are intended to prevent homeowners from becoming homeless in the event of extreme financial hardship. Specifically, individuals in danger of losing their home to foreclosure may declare a limited portion of property as a "homestead" and thus off-limits to unsecured creditors.
What Qualifies As A Homestead?
A homestead is the house or mobile home that a person lives in and land on which it sits. The property must be a person’s primary residence for it to be eligible for a homestead declaration.
Vermont Homestead Laws
In Vermont, the maximum value of exempt property is $125,000. The legal value of the property is the amount appearing on the last completed county assessment roll at the county treasurer’s office.
What If the Value of my Vermont Property Exceeds $125,000?
If the debtor’s property has a value greater than the allowed amount of $125,000, and is part of the homestead, the debtor may decide which portion of the property receives the homestead protections of the allowable amount.
What Does A Homestead Not Include?
A homestead does not include any real property used solely for commercial purposes.
Foreclosure
Keep in mind, the homestead exemption doesn't protect you from secured creditors such as your mortgage holder. If you don't make your mortgage payments, your lender can foreclose and sell your house at auction to pay off the loan despite a "homestead exemption."
Federal Laws
The homestead exemption is a state law and is subject to the Supremacy Clause of the United States Constitution, meaning that federal law can override it. Federal income tax liens are superior to Vermont's state homestead protection law. However, the Internal Revenue Service is generally reluctant to foreclose on a taxpayer's home in order to enforce these liens, and will normally only get involved if the property is sold or mortgaged before the tax lien expires.
The basics of Vermont homestead protection laws are listed in the following chart. See Prevent and Manage Foreclosure FAQs for more information.
| Code Section | Tit. 27 §101 |
| Max. Property Value That May Be Designated 'Homestead' | $125,000 |
| Maximum Acreage (Urban) | N/A |
| Maximum Acreage (Rural) | N/A |
Note: State laws are constantly changing -- contact a Vermont bankruptcy attorney or conduct your own legal research to verify the state law(s) you are researching.
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Vermont Homestead Laws: Related Resources
