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Selling Inherited Property in Vermont
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Selling Inherited Property in Vermont

Selling inherited property in Vermont runs on a license to sell under 14 V.S.A. § 1651 or a recorded decree of distribution. The town clerk records the deed.

By Settled Editorial

Vermont sells inherited real estate two ways. The executor or administrator asks the Probate Division for a license to sell under 14 V.S.A. § 1651 and signs the deed, or the court decrees distribution under 14 V.S.A. § 1721 and the heirs sign it themselves. Either deed records with the town clerk of the town where the land sits, because Vermont has no county registry of deeds.

This guide walks the license route, the decree route, the two taxes that ride on a Vermont closing, and what a surviving spouse's homestead does to a sale. For the wider job of opening and closing an estate, start with the Vermont probate guide.

Who Signs the Deed

How the owner held title settles whether the Probate Division is involved at all.

How the deceased held titleCourt involved?Who signs the deed
Sole name, will or no willYesThe executor or administrator under a license, or the heirs after a recorded decree
Enhanced life estate deed, 27 V.S.A. chapter 6NoThe surviving grantee
Joint tenancy with survivorship wordsNoThe surviving co-owner
Revocable living trustNoThe successor trustee

One Vermont default decides the last two lines and catches families out. 27 V.S.A. § 2(a) construes conveyances and devises of land to two or more people as estates in common and not in joint tenancy, unless the instrument says the grantees take jointly, as joint tenants, in joint tenancy, or to them and the survivors of them. Deeds to spouses and deeds in trust sit outside that default. So co-heirs who inherit together hold as tenants in common, and every one of them has to sign the deed.

Property that came through a Vermont enhanced life estate deed never enters the estate, and the surviving grantee sells it without a license. The full menu of transfers that skip the court sits in how to avoid probate in Vermont.

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The License to Sell Is the Working Route

Vermont did not hand its fiduciaries a general power to sell land. Two sections in 14 V.S.A. chapter 75 open the door, and the standard is wider than the debt test other states use.

14 V.S.A. § 1611 lets the Probate Division order the sale of all or part of the personal or real estate "when it appears necessary or beneficial for the administration of the estate." 14 V.S.A. § 1651 repeats that phrase and lays out the procedure in eleven numbered steps. A Vermont estate can sell a house because selling it helps the administration, not only because the estate cannot pay its bills.

Here is the sequence the statute sets:

  • File the motion. Section 1651(1) asks for a motion setting forth the facts that show the sale is necessary or beneficial. The Judiciary publishes it as form 700-00035, Motion for License to Sell or Convey Real Estate.
  • Gather consents, or take a hearing. Where the consent of interested persons is required, § 1651(2) has you file their written consents. Where consent is required and cannot be obtained, § 1651(3) sends the matter to a hearing on notice under the Rules of Probate Procedure.
  • Expect a bond question. Section 1651(4) lets the court require a new bond, in an amount and with sureties it directs, conditioned that the fiduciary account for the sale proceeds.
  • Swear the oath before the sale. Section 1651(5) requires the executor or administrator to be sworn, with a certificate returned to the court, before any sale under the order.
  • Public or private, the court says. Section 1651(6) lets the court authorize either. Section 1651(7) has the court designate the manner of notice where the sale is at auction.
  • Record the license. Section 1651(8) requires the license to carry findings on the first four steps, and a certified copy of the license or order of sale gets recorded in the same office where a deed of that property is recorded.
  • Report back. Where the court orders it, § 1651(9) sets a report within 60 days from the date of the sale.

Two subdivisions decide how a will changes the picture. Section 1651(10) issues the license without notice or hearing where the power to sell is expressly conferred by the will, with one carve-out: a dwelling house in which the surviving spouse or an heir, devisee, or legatee is residing still gets the full process. Section 1651(11) blocks any beneficial license that is inconsistent with the provisions or intent of the will. What makes the deed work at closing is 14 V.S.A. § 1652: the deed of an executor or administrator who has obtained a certified copy of the order of sale or license conveys the real estate authorized to be sold.

Interested persons can stop the sale, and the statute tells them how. 14 V.S.A. § 1614 bars the license where an interested person gives a bond, in the sum and with the sureties the court directs, conditioned to pay the debts and expenses of administration. Pay the estate's bills another way and the house stays in the family.

A mortgage does not block the sale, it just reorders the money. 14 V.S.A. § 1662 applies the net proceeds of licensed real estate first to the secured debt. Any surplus goes to the devisee where the will devised that property, and otherwise back into the estate. 14 V.S.A. § 1665 adds that § 1662 does not affect the rights of a surviving spouse.

The filing fee is statewide. 32 V.S.A. § 1434(a)(26) charges $100.00 for a petition for license to sell or convey real estate, and subdivision (a)(27) charges the same for personal property. Find your court through the Vermont probate court directory.

Or Wait for the Decree of Distribution

The other route hands the house to the heirs and lets them sell it as owners.

14 V.S.A. § 1721(a) puts distribution behind a queue: payment of or provision for debts, funeral charges, and expenses of administration, allowances for the family and support of minor children, and the assignment to the surviving spouse of the elective or intestate share. Only then does subdivision (a)(3) let the court order the remaining estate distributed, and it takes two approvals, not one: a final accounting approved by the Probate Division and a notice of clearance from the Department of Taxes.

Section 1721(b) then names the persons and the proportions each takes, and it carries a clawback worth knowing before anyone spends the money: where the assets left after a partial distribution cannot cover the ultimate charges, the people who received distributions repay the fiduciary on a pro rata basis, and the court apportions any shortfall it cannot collect.

14 V.S.A. § 1742 is the step a buyer's title searcher looks for. Certified copies of final orders or decrees relating to real estate get recorded in the office where a deed of that real estate is recorded. A decree sitting only in the court file does nothing for a title chain.

The tax clearance in § 1721(a)(3) has a companion. 32 V.S.A. § 7454(a) keeps a fiduciary from being finally discharged until Vermont estate taxes are paid and the Commissioner's receipt is filed, and § 7454(b) blocks allowance of a final account unless the judge finds that income taxes already payable have been paid. Selling the house late in an administration puts that gain squarely inside those two checks. The Vermont executor duties guide covers the rest of the closing sequence.

The Town Clerk Records Everything

Vermont keeps its land records at the municipal level, and that surprises almost every out-of-state buyer, agent, and heir. 24 V.S.A. § 1154(a)(1) makes the town clerk record deeds in the land records, and there is no county registry of deeds anywhere in the state. Every town and city keeps its own books, and the Secretary of State publishes the directory of clerks. Anyone who tells you to call the county recorder is describing a different state.

Deed formalities are short. 27 V.S.A. § 341(a) requires the deed to be signed by the grantor, acknowledged before a notary public, and recorded at length in the clerk's office of the town in which the lands lie. No witnesses. Section 341(b)(2) adds a trap for a family carving off a lot before selling: where a conveyance subdivides a parcel or changes its boundaries after January 1, 2020, the deed has to be accompanied by a survey plat or cite the volume and page where the new boundaries were already recorded.

Recording money is statewide and set by statute. 32 V.S.A. § 1671(a)(6) charges $15.00 per page for any document becoming a matter of public record, $15.00 for the property transfer return, and $10.00 per page for a certified copy. Uncertified copies run $1.00 per page under (a)(7). Section 1671(f) is the line that surprises people: where a new instrument affects more than one previously recorded instrument, the per page fee is assessed for each one affected, so a single deed can cost more than its own page count.

One more clerk rule can stall a closing outright. 32 V.S.A. § 9608(a) forbids a town clerk from recording a deed unless a properly executed transfer tax return is attached, complete and regular on its face, together with a certificate that the conveyance complies with or is exempt from 10 V.S.A. chapter 151, the Act 250 land use law. Where the conveyance creates a partition or division of land, the current Act 250 Disclosure Statement under 10 V.S.A. § 6007 goes with it.

Two Taxes Ride on the Closing

Vermont taxes the transfer of title, and it does not exempt an inheritance from that tax the way some states do.

32 V.S.A. § 9601(5) defines a transfer to include a grant, assignment, conveyance, will, trust, or decree of court. 32 V.S.A. § 9603 then lists the exemptions, and none of them is a general line for property passing by will or intestate succession. What exists is subdivision (5), which exempts transfers between spouses, parent and child or child's spouse, and grandparent and grandchild or grandchild's spouse without actual consideration, and also transfers in trust or by decree of court to the extent of the benefit to those same related persons. A decree of distribution to a sibling, a niece, or a friend does not sit inside that subdivision.

On the sale itself, 32 V.S.A. § 9604 puts the tax on the transferee unless the parties agree otherwise. The buyer writes the check, so the rate shapes the offer rather than the seller's net.

What the buyer will do with itRate under § 9602Total including the § 9602a surcharge
Live in it, first $200,000.00 of value0.5%0.5%, surcharge exempt
Live in it, value above $200,000.001.25%1.47%
Year-round residence, not their home, no landlord certificate3.4%3.62%
Everything else1.25%1.47%

32 V.S.A. § 9602 carries those rates, and the 3.4 percent band arrived with 2023 Act 181, effective August 1, 2024. 32 V.S.A. § 9602a adds the 0.22 percent clean water surcharge, which skips the first $200,000.00 of a buyer's principal residence. An inherited camp or second home sold to a buyer who will not live there costs that buyer 3.62 percent, and that shows up in what they are willing to pay. Confirm the number for your closing with the Vermont Department of Taxes.

Income Tax on the Gain

Federal law resets what the property cost you. Under 26 U.S.C. § 1014, property acquired from a decedent takes a basis equal to its fair market value at the date of death, so the appreciation during the owner's life disappears. 26 U.S.C. § 1223(9) treats that property as held for more than one year even where you sell it within a year of the death, so the gain is long term no matter how fast you move. The mechanics and the valuation evidence sit in the Vermont step-up in basis guide.

Vermont picks the gain up from the federal return. 32 V.S.A. § 5811(21) defines an individual's taxable income as federal adjusted gross income with listed additions and subtractions, so whatever gain lands on the federal 1040 lands on the Vermont IN-111. The state's capital gains exclusion at § 5811(21)(B)(ii) offers either the first $5,000.00 of adjusted net capital gain income or 40 percent of adjusted net capital gain from assets held more than three years, and it expressly excepts gain from the sale of any real estate or portion of real estate used by the taxpayer as a residence, whether or not that residence was the main one. The whole reduction is capped at 40 percent of federal taxable income or $350,000.00, whichever is less. The Department of Taxes states the rule plainly on its own page: state income tax is due on the gain from a Vermont sale whether the seller is a resident, a part-year resident, or a nonresident.

That raises the withholding question, and Vermont's answer turns on a single word in the definitions.

32 V.S.A. § 5847(a) makes the buyer withhold 2.5 percent of the consideration on a sale of Vermont real property by a nonresident and send it to the Commissioner within 30 days, on Form RW-171. A buyer who skips it becomes personally liable for the amount. Section 5847(b) lifts the duty where the seller certifies Vermont residency under penalty of perjury, or where the Commissioner issues a certificate that no tax is due or that the liability is covered. Section 5847(c) lets the Commissioner set a reduced amount for a seller in good standing.

Then comes § 5847(e), which defines nonresident to include individuals, trusts, partnerships, and corporations, but not estates. A sale made by the estate under a § 1651 license falls outside the withholding. The same house sold by out-of-state heirs after a decree of distribution does not. Section 5847(f) treats whatever is withheld as a payment against the seller's Vermont income tax, and § 5847(h) lets an installment seller elect instead to report the whole gain in the year of sale and pay six percent of it. Where an estate is holding a Vermont house for beneficiaries who all live out of state, the order of operations is worth pricing before anyone signs a listing agreement.

Land Gains Tax Reaches Subdivided Land

Vermont keeps a second, older tax on land sold soon after it was bought, and most inherited-house sales fall outside it. Know the boundary before you carve off a lot.

32 V.S.A. § 10001 imposes a tax on gains from the sale or exchange of land in Vermont. 32 V.S.A. § 10002(a) then narrows what counts. Land means land that the transferor purchased and subdivided within the six years before the sale, and it excludes land not exceeding 10 acres necessary for the use of a dwelling the seller uses as a principal residence. Buildings and other structures are not land under this chapter at all. 32 V.S.A. § 10003 prices what does qualify on a sliding scale by holding period and by the gain as a percentage of basis, running as high as 80 percent for land held less than four months.

The inheritance rule is 32 V.S.A. § 10005(f). Land acquired from a decedent or an estate, or sold by an estate, has a holding period commencing at the date of death, and its basis is fair market value at that date or at the alternative valuation date used for the federal estate tax. So an heir starts the six-year clock at the death, with a fresh basis, which is why a straight sale of the family house rarely produces a land gains bill. A family that splits the back field into lots and sells them is in different territory, and that is the point to call the Department of Taxes.

The Surviving Spouse's Homestead

A homestead can hold up a closing in Vermont regardless of what the will says.

27 V.S.A. § 101 defines the homestead as a dwelling house, outbuildings, and the land used with them, not exceeding $125,000.00 in value, owned and used or kept as a homestead. 27 V.S.A. § 105 then passes and vests that homestead in the surviving spouse at the death, free from the decedent's debts unless legally charged on it during life, and the Probate Division where the estate is pending sets it out to the spouse.

27 V.S.A. § 141(a) reaches conveyances during life, and title examiners read it closely on any older deed in the chain. A married owner cannot convey a homestead or an interest in it, outside a purchase money mortgage given at the time of purchase, unless the spouse joins in the execution and acknowledgment. A conveyance made without that joinder is inoperative as to the homestead. What a spouse can claim from the estate more broadly sits in Vermont surviving spouse rights.

When Heirs Cannot Agree

Because 27 V.S.A. § 2(a) leaves co-heirs as tenants in common, one holdout stops a sale. Talk first, then use the statute.

14 V.S.A. § 1729 covers real or personal estate assigned to two or more heirs, devisees, or legatees in common and undivided. Partition happens under 12 V.S.A. chapter 179, or in the Probate Division where that court consents, and the result binds everyone interested. 12 V.S.A. § 5161 opens partition to anyone holding real estate with others as joint tenants, tenants in common, or coparceners. 12 V.S.A. § 5174 lets the court assign the property to one party who pays the others a sum the commissioners judge equitable, at the times and in the manner they set, where the land cannot be divided without great inconvenience. 12 V.S.A. § 5175 orders a sale at public or private auction where no party will take that assignment and pay. Inside an estate, 14 V.S.A. § 1737 opens the parallel path in the Probate Division where the land cannot be divided without prejudice or inconvenience to the owners.

An heir who wants no part of the property has a cleaner exit. 14 V.S.A. § 1952(a) sets a nine month window from the death to deliver a disclaimer of a present interest, with a copy filed in the Probate Division where the administration was commenced, and § 1952(e) has a copy of that disclaimer recorded in the land records of the town where the property sits. 14 V.S.A. § 1954(a) then treats the disclaimant as having predeceased the decedent, and the disclaimer relates back to the date of death for all purposes. That is the tool for an underwater mortgage, a contaminated lot, or a camp nobody wants to insure.

The Price of Doing Nothing

Skipping probate on a Vermont house does not make the problem go away, it postpones it onto whoever tries to sell.

14 V.S.A. § 1801 exists for exactly that family. Where record title stands in the name of someone dead more than seven years, the estate was never probated, and the heirs' interest was never conveyed or was defectively conveyed, the Probate Division where venue lies decides on a verified petition, after notice and a hearing, whether the deceased owner or the heirs hold an existing enforceable title. 32 V.S.A. § 1434(a)(22) charges $100.00 for a conveyance of title to real estate under § 1801, including a petition to clear title.

Creditors run on a different clock, and it is not the one most families expect. 14 V.S.A. § 1203(a)(1) bars claims not presented within four months after the date of first publication of the notice to creditors. Where no notice was ever published or otherwise given, § 1203(a)(2) gives creditors one year from the death. A family that never opens an estate never starts the shorter clock. The details sit in Vermont creditor claims and the wider schedule in Vermont probate deadlines.

What a Vermont Closing File Holds

Ask the title company early, because the list is short and every item takes time to get.

  • A certified death certificate.
  • Letters of administration and a certificate of appointment for the fiduciary. Vermont issues letters of administration even where a will names an executor, under 14 V.S.A. § 902, so do not go looking for letters testamentary here.
  • The certified copy of the license to sell or order of sale, recorded per § 1651(8), or the recorded decree of distribution under § 1742.
  • The inventory filed under 14 V.S.A. § 1051, which carries each item's fair market value as of the date of death and any lien or encumbrance. It is due within 60 days of appointment and it is where a Vermont heir's basis evidence already lives.
  • The property transfer return and the Act 250 certificate the town clerk needs under § 9608.
  • Form RW-171 from the buyer where a nonresident seller is on the deed.
  • A title search covering mortgages, liens, and any homestead question in the chain.

An estate that will owe Vermont estate tax has one more item. 32 V.S.A. § 7442a charges nothing under $5,000,000.00 and 16 percent of the excess above that, applied through the Vermont situs fraction, and the estate-side treatment is covered in the Vermont estate tax guide.

Frequently Asked Questions

Can a Vermont executor sell a house without a court order?

No. 14 V.S.A. § 1651 requires a motion to the Probate Division and a license before the sale, and 14 V.S.A. § 1652 makes the deed valid to convey only where the executor or administrator holds a certified copy of that license or order of sale. The one shortcut sits in § 1651(10): where the will expressly confers a power of sale, the license issues without notice or hearing, except as to a dwelling house in which the surviving spouse or an heir, devisee, or legatee is residing.

What does a license to sell real estate cost in Vermont?

One hundred dollars. 32 V.S.A. § 1434(a)(26) prices a petition for license to sell or convey real estate at $100.00, and subdivision (a)(27) charges the same for personal property. Recording costs extra. 32 V.S.A. § 1671(a)(6) sets the town clerk fee at $15.00 per page, plus $15.00 for the property transfer return, with certified copies at $10.00 per page.

Who pays the Vermont property transfer tax on an inherited house?

The buyer, unless the contract shifts it. 32 V.S.A. § 9604 makes the tax the liability of the transferee unless fixed otherwise by agreement of the parties. 32 V.S.A. § 9602 sets 1.25 percent generally, 0.5 percent on the first $200,000.00 where the buyer will live there, and 3.4 percent on a year-round residence the buyer will neither live in nor rent under a landlord certificate. 32 V.S.A. § 9602a adds a 0.22 percent clean water surcharge.

Does Vermont tax the gain when I sell an inherited house?

Yes, through the income tax. Vermont taxable income starts from federal adjusted gross income under 32 V.S.A. § 5811(21), so the federal gain lands on the Vermont return. The capital gains exclusion at § 5811(21)(B)(ii) does not reach gain from the sale of real estate the taxpayer used as a residence. Your basis resets to fair market value at the date of death under 26 U.S.C. § 1014.

Will Vermont withhold 2.5 percent when out-of-state heirs sell?

Yes, where the seller is a nonresident. 32 V.S.A. § 5847(a) makes the buyer withhold 2.5 percent of the consideration and send it to the Commissioner within 30 days of the transfer. Section 5847(e) defines nonresident to include individuals, trusts, partnerships, and corporations, but not estates, so a sale by the estate itself falls outside the withholding while a sale by nonresident heirs after distribution does not. A Commissioner's Certificate under § 5847(b)(2) can reduce or remove it.

Where do I record a deed for inherited Vermont property?

With the town clerk of the town where the land lies. 24 V.S.A. § 1154(a)(1) makes the town clerk the recorder of deeds, and Vermont has no county registry of deeds at all. 27 V.S.A. § 341(a) requires the deed to be signed by the grantor, acknowledged before a notary public, and recorded at length in that clerk's office. No witnesses are required.

What if the heirs cannot agree to sell?

Any co-owner can force the question. 14 V.S.A. § 1729 sends undivided shares to partition under 12 V.S.A. chapter 179, or to the Probate Division where that court consents. 12 V.S.A. § 5174 lets the court assign the whole property to one party who pays the others a sum the commissioners judge equitable, and 12 V.S.A. § 5175 orders a sale where no party will take that assignment.

What happens if nobody ever probated the estate?

The title stays stuck until a court unsticks it. 14 V.S.A. § 1801 lets the Probate Division decide whether the deceased owner or the heirs hold enforceable title where the record owner has been dead more than seven years, the estate was never probated, and the heirs' interest was never conveyed or was defectively conveyed. It takes a verified petition with notice and a hearing, and 32 V.S.A. § 1434(a)(22) prices it at $100.00.

Related Vermont Guides

Sources:

It is not legal advice.

Information current as of August 4, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in Vermont can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

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