The most common type of foreclosure in the state of Virginia is non-judicial, which means that such foreclosures are managed by a third party, also known as a trustee, and not handled in courts. The judicial process of foreclosure requires filling of a lawsuit to obtain a court order, and there is no power of sale available in the mortgage or deed of trust. The focus of the laws summarized in here will primarily focus on the non-judicial foreclosures since these are more prevalent in the state.
Foreclosure Procedure
- Prior to a foreclosure sale, a notice has to be drawn up and delivered by the lender or trustee to the homeowner either personally or via mail. This has been laid out by the Virginia Code § 55-59.1, which states that this notice of sale must be sent 14 days before the actual sale is to take place. In addition to notifying the homeowner, the Code § 55-59.2 requires the trustee to publish the sale notice in a newspaper as well.
- The ad that is to be published in the newspaper, as per requirement by the Law, has to include a legal description of the property, street address, tax map identification and relevant location information. The time, place, terms of sale, name and contact information of the trustee is essential information that must also be included.
- The sale of property must be held, no less than 8 days and no more than 30 days after the initial ad has been published. The sale has to be made at an auction to the highest bidder, as stated in the Law. Those making bids at the foreclosure sale are mandated to submit a written one-price bid. The trustee cannot make bids at the sale and is required to announce all the written one-price bids that he has received. In addition to this, the bidders may be asked to deposit 10 percent of the actual sale price in the form of cash at the foreclosure, this percentage (either higher or lower than 10) will be mentioned in the deed of trust.
- In case there has been a delay in the sale as per the trustee’s discretion, this postponement has to be published as well.
- On the execution of sale, the proceeds are distributed as follows:
- Expenses incurred to close the trust
- Taxes, levies, assessments and/ or interest
- Settlement of remaining debts and obligations secured by the deed, any liens of record inferior to the deed of trust under which the sale has been made
- All remaining proceeds are handed over to the borrower
It is mandatory to point out that Foreclosure Laws in Virginia do not permit redemption of the home post a foreclosure, neither do they allow the borrower the right to reinstate the loan, unless the mortgage contract states otherwise. Virginia also does not have anti-deficiency laws, as part of its Foreclosure Code.