VT Underwriting Summary

UPL

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.

Vesting

Types of Deeds

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.

Mortgage/Transfer Tax

No Mortgage Tax. Transfer tax is 1.45% on all property - primary residence property is taxed at .005 on the first $100,000. Exemptions: transfer to entity at time of formation is exempt as are vertical conveyances between parent-child -grandchild, no exemption for sibling transfer, spousal transfers are exempt. Return is prepared online, voucher submitted with separate check.

Spousal Joinder Requirements/Homestead

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.

Instrument Requirements

Certificate of Release (of Mortgage)

(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.

Witness Requirements

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). N/A Mortgage is customary lien instrument in Vermont

Odd Stuff

Usury

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.

State 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.