§ 3610. Taxation of perpetual leased lands

(a) The term "perpetual lease" as used in this section includes every leasehold interest in land located in Vermont, and every estate in Vermont land other than fee simple absolute, arising out of or created by an instrument of lease which conveys to a person designated as lessee, his or her heirs, executors, administrators, and assigns, the right to possess, enjoy, and use the land in perpetuity or substantially in perpetuity, whether or not the instrument of lease contains restrictions on the use of the subject land by the person designated as lessee and whether or not the subject land may be repossessed by the owner because of nonpayment of rent or of other default under the instrument of lease. The term "lessee" as used in this section means the person entitled to possess, enjoy, and use land subject to a perpetual lease.

(b) The listers of each town and the appraisers of each unorganized town and gore shall list every perpetual lease in a separate record in which shall be shown as to each lease a brief description of the leased land, the fair market value of the land as appraised by them, the name of the lessor, the annual rental payable thereunder, and as of April 1 of each year the name and address of the lessee. If for any reason the lease is exempt under subsection (d) of this section, the reason for the exemption shall be noted.

(c) For purposes of section 3481 of this title, the appraised value of each perpetual lease not exempt under subsection (d) of this section shall be its market value as determined by the listers or appraisers, taking into consideration all limitations upon the use of the land by the lessee which substantially diminish the value of his or her right to occupy, use, or enjoy the land; but in no event is the appraised value of a perpetual lease to be in excess of the fair market value of the subject land as determined by the listers or appraisers.

(d) A perpetual lease is exempt from taxation against the lessee if so provided by an express term of the original grant of the subject land by the State of Vermont, or by a statute in effect at the time of the grant providing for exemption in perpetuity of the leases, or if the subject land would be exempt under chapter 125 of this title if the lessee were the owner of the land.

(e) Except as provided in subsection (d) of this section, every perpetual lease, whether or not the subject land is exempt from taxation, shall be set in the grand list as real estate against the lessee.

(f) The annual rental payable under a perpetual lease shall be credited in each year against the tax payable in respect of that lease to the town in which the subject land is located.

(g) Any tax levied by authority of this section shall be collected in the same manner as real estate taxes. The selectboard, treasurer, and collector of taxes have the same authority and are subject to the same duties, requirements and penalties with respect to the collection of the tax as is provided in the case of real estate taxes. A town may vote to collect interest on overdue taxes and for the payment of the taxes by installments as in the case of real estate taxes.

(h) Commencing with the date of the filing by the listers of the grand list in the office of the town clerk, taxes lawfully assessed upon a perpetual lease shall be a first lien thereon, underlying all mortgages, assignments, attachments, liens, or other encumbrances thereon, and all subleases for the term of a natural life or lives, for a term of years or for any other duration. The tax lien shall remain in full force and effect for a period of 15 years, and it may be enforced separately against the perpetual lease in each parcel of the subject real estate. Notice to all parties having an interest in the perpetual lease shall be given as provided by law or as directed by courts. Courts of law may issue execution, as the facts warrant, to impress the tax lien upon the perpetual lease.

(i) A perpetual lease is subject to sale in the same manner and subject to the same procedures, notices, defenses, and statutes of limitations as in the case of tax sales of real estate. Any person acquiring a perpetual lease, under the authority of this section, is subject to his or her portion of the annual rental due the grantee. (Added 1967, No. 366 (Adj. Sess.), § 1.)