Vermont Legislature SmartTranscripts:

[Senator Brian Collamore (Chair)]: Good afternoon. Welcome into the Senate Committee on Government Operations meeting for Friday, February or which are were February and away? 01/16/2026. So we're at the end of our second full week in the 2026 session. Two items to take up today. We did have, for those of you that really pay attention to the agenda, we had a security training event that was postponed, and we'll take that up, I believe, next month. Up first today is s one ninety six, an act relating to property tax sales. Cameron Wood, who's our legislative counsel on this particular piece of legislation, is with us. Senator Clarkson, who's the sponsor of the bill, is meeting in another, I think in the Senate Pro Tem's office, actually, and she'll be joining us momentarily. But I do wanna welcome in former state senator, of course, once a senator, always a senator, senator Cheryl Hooker from Rutland, who was a member of both the senate and house at one point in her political career and has gone back to Rutland and is on the board of Alderman right now. And so she's involved in local municipal activity. We served together for many years. Cheryl, it's always good to see you. Welcome, and thank you for taking time with us today.

[Cheryl Hooker (Former Senator; Rutland City)]: Thanks for having me, Brian. It's good to see all of you.

[Senator Brian Collamore (Chair)]: And you know, I think everybody at the table, if not, we could certainly go through and introduce ourselves. Well, maybe when John gets to. Yeah. Okay. Excellent point, Sandra. So, we'll reintroduce ourselves at that point. So, I know from actually doing cemetery work with you earlier, this summer is when you first brought this to my attention. And I did promise that we at least take out, you know, testimony in in the committee to address this. So you and senator Clarkson, I guess, have put this bill together. And if you could just sort of run us through why you wanted to bring us to our attention, that would be great.

[Cheryl Hooker (Former Senator; Rutland City)]: Okay. Thanks, Brian. I'm Cheryl Hooker, Rutland City. This bill would make a couple of small changes to 32 VSA, the tax sale bill or the tax sale law. It would simply allow people who bought a property in a tax sale to go on to the property and secure it to keep it from deteriorating any further, especially if the property is uninhabited. Secondly, it would shorten the kind of redemption time that the previous owner had to make good on his payment or her payment of taxes. The reason I got involved in this is very personal and that my son in August 2023 was the successful bidder at a tax sale. He knew he had to wait one whole year before he could go on to the property. The property was uninhabited at the time, and it had open windows that you could see and you couldn't go in to check anything out. But the town that he purchased the property in was allowed to go in to kind of secure it, and they sort of did put up some blocks in a window that was open, and that was about it, I guess. He waited the whole year, and in August 2024, he got a tax collector's deed, which allowed him to go onto the property and to start doing whatever he wanted to do with it because technically, I guess, it was his property. So for about a month, he and friends were and there to clear out the many, many vehicles that were on the property, to go into the house to see what kind of damage was done and to start renovating what he could. About a month after the one year wait, he was notified that the previous owner had filed for bankruptcy. And apparently, the law says that the previous owner has the right to file for bankruptcy up to, I believe it's five years after the sale.

[Cameron Wood (Legislative Counsel)]: So

[Cheryl Hooker (Former Senator; Rutland City)]: so for more than a year, he was in litigation with the bankruptcy. He had to hire a lawyer and pay his share of the costs. He was charged with the pound. So, they each had to have lawyers and the person who had not paid taxes for the third time. This was the third time that this property had gone up for a tax sale was able to get legal representation from Vermont Legal Aid. So, for two years, My son's been paying legal fees and finally, in October '25, he was told that the judge had dismissed all of the charges, seven charges that were brought with regard to the bankruptcy, and that he indeed owned the house. The previous owner appealed. So now my son is still waiting to be able to do something with this property that he felt was an avenue for him to finally own a house of his own. And he is he moved into the the house because when he wasn't there and the house was seen as uninhabited, the insurance on it was $600 a month. So he had paid that for the first two years that he had the property and finally decided that he would do what he had to do to plumb and to heat the residents so that he could move in and reduce at least the rate of payment for insurance. He hasn't been able to get a loan now, a mortgage on the property, it's in litigation, and so he really can only do what he can afford to do from what he has in his own resources reserves. So I guess I'm here because I think that, yes, people need to have the opportunity to redeem themselves if they fail to pay their taxes. The person that my son got this property from had failed on three separate occasions: from 2012 was the beginning to 2025. Within that time, three times he had failed to pay his taxes three times. The first time he said that he made arrangements for a payment plan, which he didn't adhere to. Second time, he said he didn't receive the notice about the tax sale, and it was because he wasn't living in the property. He was living someplace else. The third time, they finally got him got the notice to him by sending it to a sheriff or someone to the place that he was living. So I understand that people need to have time to remedy their situations, and I think that that's something laudable. You know, people run into difficulties and they need help. There's also the other side of the scenario where the person who's buying the property also has should have some rights to go in and secure the property so that it doesn't deteriorate any more than it it already had, that that person then should have some understanding that what he or she is going to do to that property to enhance it is is going to be for the good and for, you know, for something that they can count on at least after a time. The the redemption period is a year now. In this bill, it would reduce that to six months. Within that time, there should be plenty of opportunity for people who have defaulted on their taxes to make some kind of a plan so that at least you know that they're in good faith doing something to

[Senator Brian Collamore (Chair)]: move

[Cheryl Hooker (Former Senator; Rutland City)]: this along. And then going back to just securing the property, it just seems like a logical thing to do, especially in this time that we have such a housing crisis and we're in need of more suitable places for people to live, to allow property to just deteriorate simply because you're waiting for somebody to to get their act together seems like it's counterproductive. So, you know, again, I'm here because of for a personal reason, but this doesn't just affect my son. This affects individuals who who feel that this is an avenue that they can use to have a home of their own. It affects people who are willing to go in and fix up different places so that people who need housing can get into suitable apartments. So I'm hoping that you'll look at this and make those changes. Ideally, I would like to see a situation where if you're gonna file bankruptcy, you have to do it at least within that time that you have to make arrangements for, you know, getting yourself settled in this situation. So that's it. I mean, the law as written or the bill as written would say the person who was the winner, if you can call it a winner, at the tax sale, would be able to go in and secure the property. And secondly, that the person who defaulted on taxes would have six months to either come up with a plan or to pay off the tax bill. Once again, I know bankruptcy is probably not in the purview here but it would be ideal for that bankruptcy to go to occur within that time. So I guess that's

[Senator Brian Collamore (Chair)]: all. Thank you very much. And I should really share your son's frustration. I'm assuming he's still frustrated with the whole situation. And I'm going to have Cameron Wood run through the bill. But now we're all here to support Cheryl's purposes. Let's introduce ourselves, and we'll start with Senator Morley.

[Senator John Morley III (Clerk)]: Senator John Morley from Orleans District.

[Cheryl Hooker (Former Senator; Rutland City)]: Nice to meet you.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Carrie, look at her here, and she can actually see her. Hi, Cheryl, Alison, and thank you. I apologize. I was in the principal's office about seeing the bill.

[Cheryl Hooker (Former Senator; Rutland City)]: You would, Cheryl.

[Senator Tanya Vyhovsky (Vice Chair)]: I know.

[Senator Alison Clarkson (Member; Bill Sponsor)]: That is only the the only reason that we're chatting from introducing this bill because I really wanted to be here and I apologize. To my chair and to you.

[Senator Brian Collamore (Chair)]: Senator Collamore from the Rhode Island District Chair and I are very well acquainted. We'll get to Lynn in just a second.

[Senator Tanya Vyhovsky (Vice Chair)]: Senator Tanya Vyhovsky, Chittenden Central, nice to see you.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Nice to see you.

[Senator Rebecca "Becca" White (Member)]: Hi Senator Emeritus Hooker, this is Senator Becca White, Windsor County.

[Senator Brian Collamore (Chair)]: And our committee assistant is Lynn Jacobuskas.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Hi Lynn. Don't know if you can see me.

[Cheryl Hooker (Former Senator; Rutland City)]: The assistants are very, very important.

[Senator Brian Collamore (Chair)]: They're important. Okay, Cameron, can we walk through the bill? May I just ask a question?

[Senator Alison Clarkson (Member; Bill Sponsor)]: Certainly, Senator. As, Cheryl, you did a great job on the bid. I would just say we passed the provision of being able to secure the property last year or the year before, I can't remember, Rich, and then I would also appreciate as you go through this bill, what happened because we thought we had done that, we had active discussion, very good discussion in here on that, and I am just curious what happened.

[Cameron Wood (Legislative Counsel)]: You. For the record, Cameron Wood, Office of Legislative Counsel. I believe most of you know me, but nice to meet you, sir. To meet you. My portfolio areas cover housing, consumer protection, retirements and pensions, but I also cover bankruptcy matters, and as this kind of, as was mentioned, somewhat involved bankruptcy proceedings that came to me and so now I think I get the pleasure of covering tax sales.

[Senator Brian Collamore (Chair)]: Happy to be here. We are

[Senator Alison Clarkson (Member; Bill Sponsor)]: thrilled to have you. Twice them with that.

[Senator Brian Collamore (Chair)]: For you, yes.

[Cameron Wood (Legislative Counsel)]: I'm gonna try to share my screen. I just requested permission, and I will pull the bill up, and then we can begin to walk through.

[Senator Brian Collamore (Chair)]: Okay, here we go.

[Cameron Wood (Legislative Counsel)]: Okay, so we have S-one 196 as introduced. This is a nine page bill, but the changes are relatively straightforward, so I'm not gonna walk through this line by line, I'll get to the changes here in just a minute. Before I jump in, would just make a few quick comments. This is the section entitled 32, this is under indebtedness for taxes, and this is regarding levy of notice of sale for tax sales. This section has been amended multiple times in the past two sessions, 2024 and in 2025. In 2024, you all added, you all, the General Assembly, added provisions that must be in effect before a municipality can go through the process of a tax sale. Specifically, you added that the debt had to be owed for greater than a year. You added that the individual debtor had to be given an opportunity for a repayment plan. You added additions to notification requirements to ensure that the debtor was made aware of the sale. Oh my god, that was a long discussion. Yep, and then you added that specific notice provisions, and I can just get there so you can see it. This information here at the bottom of page three and the top of page four, you require this following statement to be provided, and then you require that information regarding translation services must be included within that. And then last year in 2025, you added in Act 73, you put in that the outstanding debt, there tends to be a minimum of $1,500 and that's up here on the first page, line eight. So just commenting that those are some amendments that you all put in place over the past few years and so those provisions have to be met before you can even proceed with the tax sale. As was mentioned here, there's nothing that is being amended regarding those provisions or regarding the tax sale process. The amendments that this bill would do are about securing the property after a tax sale has occurred, which is gonna begin on the middle of H4. So we're still in the same section, everything in subsection A is what I mentioned, reasonable opportunity, one year, 1,500 notice, here's everything that has to be done to do the tax sale. Then we get the subsection B. Current law is, if the warrant for the tax sales has been recorded, the municipality in which the real estate lies may secure the property against illegal activity and potential fire hazards after giving the mortgagee lienholder of record written notice of at least ten days. This bill proposes to add damage from exposure to the elements and deterioration into those provisions. Now this is for a municipality, not for the tax purchaser, I'll get to that in just a second. But that's the first amendment that we're making to that section. And then the remainder of this is, as I mentioned again, the information that has to be provided and the reasonable opportunity to pay for the debtor.

[Senator Brian Collamore (Chair)]: Can I just interrupt for a second? Yes, sir. So on line 14 of page four, one of the provisions includes a requirement that there be a written, a record written notice at least ten days prior to subjunction. When Senator Hooker testified, one of the things that happened was that the municipality could have well sent that, but since the person in question wasn't living there at the time, never received it. So was there any other reference to, I understand what record written notice means, but what if it's never accepted or cut to that person? We

[Senator Alison Clarkson (Member; Bill Sponsor)]: spent a

[Cameron Wood (Legislative Counsel)]: lot time on that. One thing I'm gonna do, I'm gonna move up a little bit. I'm move back up to subsection A, and I'm gonna talk about some of the things that you all changed. Yeah, we changed that part. In subsection A regarding notice. So in 2024, as I mentioned, when you added the one year period, added the repayment requirement that the individual be given an opportunity to repay, you also added,

[Senator Brian Collamore (Chair)]: I think I found it,

[Cameron Wood (Legislative Counsel)]: three Three and four. Three and C here. So then now this is noticed for the tax sale itself, so on page three you added in subdivisions B and C. So the taxpayer has to be given a written notice by certified mail of the tax sale at the last known address thirty days prior, and then if notice by certified mail is returned unclaimed, it usually means you had to provide notice by first class mail as required by the rules of Vermont Civil Procedure, you all added in that now you must provide notice by email. If you have the email address, and you have to affix notice to the front door, and then

[Senator Alison Clarkson (Member; Bill Sponsor)]: And I

[Senator Tanya Vyhovsky (Vice Chair)]: actually think we're refreshing my memory, I don't wanna dive deep into this conversation again, but what if there is no front door because property is a vacant lot? Oh, yeah. Oh, we We addressed that. I don't, but I don't see it here and I don't remember how we addressed it.

[Cameron Wood (Legislative Counsel)]: I was not here, so I do not recall the conversation or have not listened to the conversation, I'd be happy to go back and check and see if

[Senator Alison Clarkson (Member; Bill Sponsor)]: I've I it's for by personal service. Previous counsel? I think it's line two. Or what the process would be.

[Senator Rebecca "Becca" White (Member)]: Okay, thank you.

[Cameron Wood (Legislative Counsel)]: Mr. Chair, to answer your question, if the individual is not living there, as long as the municipality is complying with what's on this page, then there should not be an issue. My understanding, and I want to be somewhat careful here, because as was mentioned, this appears to be an ongoing live case. My understanding is this property in particular that was referenced, the municipality tried to do a tax sale and that tax sale was made void because the municipality did not comply with the notice requirements in the law. So I don't know that it's, I don't think the individual's gonna have a defense simply to say, I don't live there, therefore I didn't get it, if the municipality can demonstrate that they've done what is required of them by law. Okay. But I do know, and I don't know the specific facts of what happened, I do know there was an instance where the municipality tried to move forward with the tax sale that was made null because they didn't comply with the notice requirements. They had to go

[Senator Brian Collamore (Chair)]: back and do it. Okay, thank you.

[Cameron Wood (Legislative Counsel)]: Okay, so, moving to section two, so I'm gonna bring us all the way back down to page six, and this is where you'll see section two. This is a form that has to be advertised for the tax sale, and as you can see here on page nine, excuse me, line 19, it's just reducing the notice of the redemption period from one year to six months. As was mentioned, you go through a tax sale, the tax sale is made, someone purchases the property at the tax sale, the individual debtor then has a year to redeem that property from tax sale. So the person purchasing it doesn't own the property at that point

[Senator Brian Collamore (Chair)]: in time.

[Cameron Wood (Legislative Counsel)]: The debtor still owns the property, it is still theirs, they have that one year to redeem. This is reducing it to six months, and so in this instance, it's just adding that into the notice that goes to the individual. Section three, this is where this would be adding in a section into this chapter where, as I said earlier, the municipality can go in and secure the property. Under this language, this would allow the purchaser to go in. So I'll just read this, it's a short section. After providing the mortgagee and lienholder a record written notice at least ten days, similar language to what the municipality is required to do, the purchaser of the real estate subject to the subchapter may enter the property to secure the property against illegal activity, damage from exposure, deterioration, potential fire hazard, same list of conditions. Senator Clarkson, you had asked about this. What I was able to find, and I have not done an exhaustive list of bills that came out of your committee here, but I was able to find that this similar language was introduced last by any of them, but it did not come out of this committee. Now whether it was included into something else, just, like I said, I haven't exhausted all

[Senator Alison Clarkson (Member; Bill Sponsor)]: of those included in the work that did come out of this committee and made it through Mhmm. Provisions you talked at the beginning.

[Cameron Wood (Legislative Counsel)]: I'll go back and show you. I'm I'm stand here.

[Senator Alison Clarkson (Member; Bill Sponsor)]: This is where Cheryl and I began two years or three years ago. We began on being able to secure it from animal damage, weather to damage. You're not allowed to secure the property that you have bought and paid for.

[Cameron Wood (Legislative Counsel)]: What I can do real quick once I walk through this, I'll stop sharing and I'll see if it was in 06/29, which ultimately became 01/2006. Yeah. Okay.

[Senator Tanya Vyhovsky (Vice Chair)]: Yes, Senator Wyatt. Thank you, Mr. Chair.

[Senator Rebecca "Becca" White (Member)]: So in this section, you don't, if I was someone who purchased a home in a tax sale, the person had set up a financial payment plan, but know, with intent, you know, I could go in even if they had set up a financial plan at that point, like going into someone's home.

[Cameron Wood (Legislative Counsel)]: So the repayment plan would have to occur before the tax sale. Okay. But, after the tax sale has occurred, let's say you're trying to come up with the money to cover what's required under the redemption, you have to pay the amount that was paid for the property at the tax sale plus interest. And so if you're working to come up with that under this language, you wouldn't be able to prohibit someone from coming onto the property. I will comment a few other quick things. There is a limitation, I mean it is, you can only go on to secure it against illegal activity, damage, deterioration, fire hazard, etcetera. There's nothing there about whether an individual is still living there.

[Senator Alison Clarkson (Member; Bill Sponsor)]: And we can't clarify that.

[Cameron Wood (Legislative Counsel)]: Yeah, that's kind

[Senator Rebecca "Becca" White (Member)]: of my, Yeah. I think that that is you you've hit on my exact point, because I just don't wanna set up a situation where there's people who are on the property being told that maybe someone's putting up tarps or, you know, some some kind of change to the property. So I'm wondering if would is something that could be added to this, like, if they went with the sheriff or, like, law enforcement and go, okay, well, it's a different, you know, or, like, they if they felt I think that might be a good addition. Is there any requirements of having like, when entering a secure property, this person could just go solo. There's no requirements in this bill now. Yep. But could we add something, like, with potential

[Cameron Wood (Legislative Counsel)]: other Yes.

[Senator Tanya Vyhovsky (Vice Chair)]: Thinking of it. Sarovsky. I think if the property were vacant, I could sort of see that. But if someone's living there, I feel like there is no securing it against the elements. Like, someone's living there. I I feel like at that point, no, you shouldn't be able to go into their home.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Yeah. That's a good thing. Yeah. So maybe maybe some thoughts on there. But there must be law about this. I mean, this must already be when a property goes to tax sale, is it still inhabited? I don't believe it is. I believe so we should get we should clarify when it is sold. I believe it is that that it is not people don't continue to live in a house that's already been sold. So that we should clarify. And I would also love to clarify the second piece of that because it's a yeah obviously you don't want the people moving in when it's when there's somebody there. But my understanding is that once it's gone to tax sale, people, there are no one is living in it after the tax sale. However, and and maybe it should not be called a tax sale. Maybe it should just be called a tax investment. Tax. So the question I have is how much time does an owner have to pay taxes before it does go to tax sale? It's a year right now. No, they have a year after tax sale. How much time do they have before it goes to tax exempt to cure the tax? No, they don't.

[Cameron Wood (Legislative Counsel)]: So, I will double check on the, if somebody's living there. Yeah. And see the first question.

[Senator Alison Clarkson (Member; Bill Sponsor)]: And sadly, Chris just left. So, delayed.

[Cameron Wood (Legislative Counsel)]: The outstanding taxes must be due for at least a year before the municipality can bring a tax sale. Right. The tax sale also has to be a minimum of $1,500 so the taxes could have been owed many, many years, however long it took you to get to that $1,500 threshold. At that point, and again, that was just added last year, it's but a minimum of a year, but it could be much longer than that, but at a year, if it's at least $1,500 if the individual's been given the opportunity to enter into a reasonable repayment plan, at that point the municipality can move forward with the tax. Is there

[Senator Tanya Vyhovsky (Vice Chair)]: any legal or statutory definition of what a reasonable repayment plan is? Who gets to decide what's reasonable?

[Cameron Wood (Legislative Counsel)]: I do not recall in this statute section, I do not believe that that is defined. There is

[Senator Alison Clarkson (Member; Bill Sponsor)]: So

[Cameron Wood (Legislative Counsel)]: it says or any scroll here, we're gonna go all the way back up to page five, yes. So it says here when establishing the plan, the municipality may request these pieces.

[Senator Brian Collamore (Chair)]: Oh, okay.

[Cameron Wood (Legislative Counsel)]: And they have to consider the following, the income, the schedule, the taxpayer, the taxpayer's tax payment history, the amount, etc. But other than that, there is nothing currently it's not a decline, it's not a decline term. Municipalities could proceed differently.

[Senator Brian Collamore (Chair)]: Yeah. I think and perhaps I'll yield to Senator Morley, but they have delinquent tax collectors in most municipalities. I think they have the option or the flexibility to determine for that municipality what their

[Senator Alison Clarkson (Member; Bill Sponsor)]: policy is. Yeah. And town managers do this all the time.

[Senator John Morley III (Clerk)]: So what lots of times happen is once we turn over those delinquent taxes, it goes into like a it leaves the village of Orleans and goes into the delinquent tax collector's purview. So it's out of the hands of the village at that point, as far as the of it and all that stuff, and then she, Senator, will set up a payment plan. And just so you know, lots of times those payment plans get thrown too. So that causes a bunch of

[Senator Alison Clarkson (Member; Bill Sponsor)]: other concerns. Our municipal manager used to do those plans and would work out of plans with the individuals. Yes. These are these are all individuals right now because they're published in our town reports. And and and it is, you know, all of us homeownership is a responsibility. You know, it's not, and it's hard to see those of us who do pay our taxes. And even if we have to pay them in staggered amounts see people year after year after year not paying their taxes and getting to continue. This is really a challenge. They tax budgets too. Yeah, and then it's, and the towns suffer as a result as well. Go ahead, Rebecca.

[Cameron Wood (Legislative Counsel)]: Other, I believe remaining provisions, so just bring us back to, I think we're on page seven here, section four, so this is the redemption section itself. So this is just reducing, as was mentioned, the redemption period from one year to six months. And then you have Sorry, what page you've

[Senator Brian Collamore (Chair)]: gone now?

[Cameron Wood (Legislative Counsel)]: That was on page seven, that whole section, the only amendment is there on page seven, then you get to page nine where there is, the amendments here do not apply to property that is subject to notice of sale prior to 07/01/2026. You wanna have kind of a date and time at which previous provisions apply, new provisions. Page seven. That section is there. A few other just quick notes I will comment on for awareness. You've talked a little bit about bankruptcy as well. The kind of fact pattern leading to this was involving some bankruptcy proceedings. Bankruptcy is primarily governed at the federal level, there's not really much that the state is going to do to amend how federal bankruptcy proceedings work. An individual who has their home subject to a tax sale during that redemption period can file for bankruptcy and potentially keep the home, even if it has been sold at a tax sale, if they're going through a personal reorganization. And then I also know some issues that were brought up subject to the case that was brought up by Senator Hooker. There are also certain look back periods that apply or can apply. So when you go through a bankruptcy proceeding, bankruptcy courts will look at certain transfers of property that happened prior to the bankruptcy filing to make sure there isn't any fraudulent activity, fraudulent transfers, things like that going on. My understanding was those were some of the arguments being made in the case that kind of led to this, so I'm just flagging that for you all. It's not always a clean, you have a tax sale, you get a year period and it's done. Somebody walks away free and clear, especially if somebody involves bankruptcy court, either immediately preceding the redemption period expiring or shortly thereafter. And you get into a lot of challenging federal conversations when that happens. This would reduce it from one year to six months, as you've heard. The only other comment that I will mention for your awareness, I said in 2024, Act 106, you all made some of those initial amendments regarding the one year taxes must be owed, providing the reasonable opportunity to enter the repayment plan, etcetera. You also had a task force look at additional changes to the tax sales process. There is a report with, which looked at multiple different issues that I won't necessarily go into here unless you would like me to. I was not, I did not staff a report or anything like that, but it's here in case we all want to report. Yeah, we would at least see it.

[Senator Brian Collamore (Chair)]: Or if you

[Cameron Wood (Legislative Counsel)]: want me to come back and walk through it. Sure. Yeah.

[Senator Brian Collamore (Chair)]: I will take more testimony. I will send it to

[Cameron Wood (Legislative Counsel)]: you all so you have it at a minimum in your comments. Senator Clarkson?

[Senator Alison Clarkson (Member; Bill Sponsor)]: So I also and I'm sorry Chris had to leave. Chris Dilly was here from the bank because I'd like to understand the interplay on the bankruptcy piece here too. Not all people who are delinquent in taxes declare bankruptcy. Right? Mean, so if they do so I would appreciate understanding the interplay of declaring bankruptcy and how it protects you in in the years proceeding actually getting the tax sale. Because what I think we all need to remember and appreciate that with many of those tax sales, these are properties that have been in tax limbo for quite a long time or it's tax, you know, some challenges on taxes. If you declare bankruptcy in the course of that proceeding up to the tax sale, because we're talking about a point of tax sale for six months after that, what can people do to protect themselves leading up to that moment? Does bankruptcy protect you and delay the tax sale? I mean, those, I just have questions about that interplay of bankruptcy and tax sale.

[Cameron Wood (Legislative Counsel)]: At a minimum, what happens when you file for bankruptcy is all collection activities have to stop immediately, including municipal tax sale collections. So if, let's say you receive a notice that the municipality is going to proceed with a tax sale, you're receiving that first notice. Keep in mind, the municipality has to publish the notice in the newspaper, and they have to do all this other stuff. So let's say you hit that piece of paper and it says, we're proceeding with the tax sale, you immediately go and file for bankruptcy, that tax sale has to stop immediately preceding the outcome of the bankruptcy case. Separate situation.

[Senator Alison Clarkson (Member; Bill Sponsor)]: How long is the, sorry, at that moment, how long do they have

[Cameron Wood (Legislative Counsel)]: to resolve that, that bank, the Oh, I don't know. I don't know the average case, the average time of bankruptcy case. I think it's going to depend on whether you're doing chapter seven or you're liquidating everything, or you're doing a chapter 13 where you're doing a personal reorganization? It's really gonna depend on the case.

[Senator Alison Clarkson (Member; Bill Sponsor)]: But that all happens pre taxing. Good.

[Cameron Wood (Legislative Counsel)]: So let's say after tax sale, the same thing is gonna apply. If you, town has sent you a notice, we're proceeding with the tax sale, they move forward, they sell it, it is purchased by someone else at that point and you're within the redemption period, you still own the property, it is still yours. And so you file for bankruptcy during that period, the same rules are gonna apply. Everything regarding that redemption period will stop until the bankruptcy case is resolved. And as I mentioned, what someone can do in that instance then is they could file for a Chapter 13, which is a personal reorganization, and they could make agreements with the bankruptcy court to pay back their delinquent taxes, pay back delinquent mortgage on the property, etcetera, and keep the property. And then they would be given up to three to five years, depending on the case, depending on the agreement they've made with the bankruptcy court, to pay those debts back off. So it's almost another bite at the apple for the debtor in that instance.

[Senator Alison Clarkson (Member; Bill Sponsor)]: I know, I think this is what's making me nuts about this, is that in many of these cases, there's been a lengthy period of time where the where the owner has had the obligation to pay taxes, they have failed to do so for whatever reason. I mean, independent of the reason. I understand being able to declare bankruptcy then, but I do not think it is fair to sell property to somebody else I'm

[Senator Brian Collamore (Chair)]: not selling

[Senator Alison Clarkson (Member; Bill Sponsor)]: and then be able to declare bankruptcy. It That just seems to me then we have to rethink this altogether because then it really isn't the sale of somebody else.

[Senator Brian Collamore (Chair)]: Well, that's not a question for a candidate.

[Senator Alison Clarkson (Member; Bill Sponsor)]: No, no. I'm just saying.

[Cameron Wood (Legislative Counsel)]: Well, bankruptcy's in my portfolio.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Oh, yeah. It's in his portfolio.

[Senator Brian Collamore (Chair)]: Okay.

[Senator Alison Clarkson (Member; Bill Sponsor)]: I'm asking.

[Cameron Wood (Legislative Counsel)]: But what I would respond and I would say is there's not, you're not going to, because bankruptcy is governed exclusively, nearly exclusively by federal law, you can't change that piece of it.

[Senator Brian Collamore (Chair)]: Yes. Senator White, you have a question.

[Cameron Wood (Legislative Counsel)]: Oh. I was gonna say that's the purpose of the reduction of the redemption period. That's kind of why, in working with you Senator, that's why we drafted this way, if you reduce the redemption period, you're somewhat reducing that time period in which that occurs, or waste the individual has the right before the property transfers to somebody else. Senator Wright.

[Senator Rebecca "Becca" White (Member)]: Thank you, Chair Collamore. Yeah, for this bill, and I think this is where probably Sandra Clarkson and I have some of our most challenging differences, because I think as I mentioned to this committee in previous years, my family had their homes sold in tax sale. When my parents were going through their divorce, it was a bad year. You know, it wasn't a long period of time. It was like eighteen months of a struggle. Luckily, my mother was the purchaser of my family home because no one else did during that tax sale. And I thank my community for that because it let my family not be unhoused. So I'm really grateful for that. No.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Just on that, did you live in the house up to that tax sale point? And at the tax sale, you were still living in the house.

[Senator Rebecca "Becca" White (Member)]: No. We had vacated. It it was but we had lived there for a period of time. My situation is more complex because my mother purchased the home. So she purchased the home my father had lost in tax sale. So the where I lived was a little bit, you know, kind of in the mix. But I so but I so I have a

[Senator Alison Clarkson (Member; Bill Sponsor)]: lot of difficulty with this bill.

[Senator Rebecca "Becca" White (Member)]: I have a lot of difficulty with this bill. I'm open to us considering it again. I wanna understand the report because I thought we weren't gonna make new changes until we had fully reviewed that. So I'd like to make sure we go into that. The biggest point of sticking for me where I will be unable to support this, but I'm open to the general concept is I'm uncomfortable with moving to a year from six months. You're moving one year to six months. Yeah. To make the time shorter is a hard stop for me. So I wouldn't be able to move forward with that. But I do really appreciate the sections around folks being able to secure from damage and exposure. I think that's

[Senator Tanya Vyhovsky (Vice Chair)]: a big one. We should do that. Oh, look at

[Senator Brian Collamore (Chair)]: So I have a question too. What happens to the money that the purchaser puts in a tax bill in this ongoing process? Is it putting a bank in limbo? Does it have to be reimbursed if the whole thing goes sour by the municipality? Where does the purchaser's money go? That may

[Cameron Wood (Legislative Counsel)]: be a better question for a municipality. I don't recall in reviewing the statutory sections there's any statutory requirement that a municipality has to put it in escrow or anything like that, the individual would get their money back assuming the individual redeems. Okay. Because if the individual redeems, they have to pay interest on that money too, and I think it might be 1%

[Senator John Morley III (Clerk)]: or It is per month.

[Senator Brian Collamore (Chair)]: Yeah, I believe

[Cameron Wood (Legislative Counsel)]: it's 1% per month.

[Senator Brian Collamore (Chair)]: Okay,

[Cameron Wood (Legislative Counsel)]: Well, so you, you have purchased it at the tax sale, and again, you have that one year redemption period. The debtor within that one year has to pay you what you paid for the property plus that interest. Okay. Then it's That's 10%.

[Senator John Morley III (Clerk)]: I think it's a year. If it's one year.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Yep. It adds up. It's not 1% a month.

[Cameron Wood (Legislative Counsel)]: The statute is 1%. Plus 1%. And then, you know, if you move into bankruptcy proceeding, then again, my assumption is the municipality has that money and they're gonna give it back to you, assuming you don't gain the property after a bankruptcy is discharged. Okay. So the, in theory, the person purchasing the property at the tax sale isn't lost anything other than the fact that they may not

[Senator Brian Collamore (Chair)]: Right, and that's what I wanted to add. Okay. Well, sounds like we probably need to take some more testimony. I'd like to see that report. I think Crystalia will probably wanna come in and offer the Vermont Bankers Association perspective.

[Senator Rebecca "Becca" White (Member)]: Can we include Vermont Legal Aid? I think they Yeah.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Legal Aid would be good. And I also think that we it would be great to have a town manager, you know, a town manager who's worked through this and worked on some deals. Know we have you here. I see No. No. Secret edition here. Let

[Senator Brian Collamore (Chair)]: me just copy that down. So town manager. Just for

[Senator Alison Clarkson (Member; Bill Sponsor)]: Yeah.

[Senator Rebecca "Becca" White (Member)]: A delinquent tax collector, whoever I don't or whoever.

[Senator Alison Clarkson (Member; Bill Sponsor)]: It's not always a delinquent tax collector. Legal aid. I think somebody who's you know, in addition to Cheryl's son, another person who's bought properties at tax sales, I think we have to maybe call it something else because it's not a sale. Doesn't I mean, it really it's like a right to purchase. It's like a a forceful refusal. It's not at the moment. It's not a tax sale. It's not a sale. It's a opportunity.

[Senator Tanya Vyhovsky (Vice Chair)]: I think if we're gonna start hearing from lots of people who've experienced purchasing that tax sale, it might also be helpful to hear from people who've lost their homes.

[Senator Alison Clarkson (Member; Bill Sponsor)]: Okay. Access. That's why the a legal aid and In addition to legal Yes. Yeah.

[Senator Brian Collamore (Chair)]: So I don't

[Senator Rebecca "Becca" White (Member)]: know if she's perfected the trees.

[Senator Brian Collamore (Chair)]: And I think to to Senator Hooker, I'll just mention, you are well aware, Cheryl, that nothing in this well, relatively rare would it be that something that's introduced gets all the way to the finish line without even changing a comma or a period. So we're and this committee is very good at, I think, being very objective in terms of what we do, what we take out of a bill, what we add to it, the testimony that we take. So we're gonna take this up again and see if we can't come to a point where all of the stakeholders say, Yeah, okay, that makes sense to me too. Let's go further. But I appreciate his frustration. Can't imagine, I would have gone out of my mind after two and a half years.

[Senator Alison Clarkson (Member; Bill Sponsor)]: That's a situation.

[Cheryl Hooker (Former Senator; Rutland City)]: I think a sense of balance here. I certainly appreciate that. And if you can come to consensus, bravo.

[Senator Alison Clarkson (Member; Bill Sponsor)]: That's our job. Cheryl, it's now been three years. Is that right?

[Cheryl Hooker (Former Senator; Rutland City)]: Yeah. It started in 2023. It's going on

[Senator Brian Collamore (Chair)]: '2 Yeah.

[Cheryl Hooker (Former Senator; Rutland City)]: And, you know, I mean, this case, the bankruptcy in this case took place after the redemption period. Sorry, after what? Now it's an appeal.

[Senator Alison Clarkson (Member; Bill Sponsor)]: The bankruptcy year? After

[Cheryl Hooker (Former Senator; Rutland City)]: It's in

[Senator Brian Collamore (Chair)]: a two my lap.

[Cheryl Hooker (Former Senator; Rutland City)]: And, you know, it could be two more appeals, I guess. Because right now, it's in it could go to district court. It could go to

[Senator Brian Collamore (Chair)]: Is she ready to sell it?

[Senator Tanya Vyhovsky (Vice Chair)]: She is. Really.

[Senator Brian Collamore (Chair)]: Okay. Well, thank you,

[Senator Rebecca "Becca" White (Member)]: Cheryl. You for

[Senator Brian Collamore (Chair)]: taking Have a great Friday and a great weekend. Good to see you as always.

[Cheryl Hooker (Former Senator; Rutland City)]: Good to

[Senator Alison Clarkson (Member; Bill Sponsor)]: see all of you. Bye, lovely lady.

[Cheryl Hooker (Former Senator; Rutland City)]: Bye, dear.

[Senator Brian Collamore (Chair)]: Yeah. Alright. So we'll put this on the calendar for, maybe next week or maybe the week after.

[Cameron Wood (Legislative Counsel)]: We'll take it up again for sure.

[Senator Brian Collamore (Chair)]: And why don't we take a five minute break before we launch into what hopefully will be our final event of the day.