Foreclosure: Obtaining Possession after Foreclosure

Upon purchasing property at a foreclosure sale, it is not uncommon to have a “holdover tenant”. If this occurs, you can obtain possession of the property by filing a Summons for Unlawful Detainer in the appropriate General District Court. The applicable statute requires that the plaintiff prove “a right to the possession of the premises at the time of the commencement of the suit.” The only evidence that is usually required is (a) a copy of the recorded trustee’s deed, since the facts recited therein are prima facie evidence of their truth, and (b) a copy of the notice to vacate sent to the occupant(s).

On the date of the initial return, if the defendant fails to appear, possession will be granted. If the matter is contested, most courts set a new date for trial. In contested cases, issues are usually related to notice and service, so the trustee should be prepared to present evidence that the foreclosure sale was properly advertised, noticed and conducted.

The judgment for possession is not final until 10 days after it is entered, and most courts will not issue a writ of possession during that 10-day pendency. If an appeal is noted within the 10-day period, the defendant must perfect the appeal by posting an appeal bond and paying within 30 days of the date of the judgment the applicable writ and service fees for the circuit court. Most judges are sympathetic to require significant appeal bonds equating with the former mortgage payments. 

Eviction is accomplished using a “Request for Writ of Possession.” A writ of possession may be issued on an unlawful detainer for up to one year from the date of judgment. When requesting the writ of possession, provide contact information for both the Sheriff and the person who will supervise the eviction of the new owner; the Sheriff will coordinate a date and time to serve the writ of possession and maintain the peace while the owner physically evicts the personal property of the occupant(s) and secures the property.

Real Estate: Statute of Limitations Enforced on Challenge to Bylaws Amendment

The Virginia Condominium Act, specifically Virginia Code Section 55-79.71(C), provides for a statute of limitations in regard to challenging amendments to governing documents. The section provides, in part:

“An action to challenge the validity of an amendment adopted by the unit owners’ association pursuant to this section may not be brought more than one year after the amendment is recorded.”

In the case of Godwin v. Bay Point Association Board of Directors, a Norfolk Circuit Court was faced with a homeowner challenge to bylaw amendments. The homeowner, Godwin, had sued the association alleging that it breached its governing documents by taking actions four years earlier and three years earlier that increased her assessment for insurance premiums. The association filed a motion to dismiss Godwin’s complaint on the ground that it was time-barred pursuant to Virginia Code Section 55-79.71(C).

Four years earlier the association’s board of directors signed a resolution regarding physical damage and flood insurance. Three years earlier it drafted and signed a bylaw amendment relating to insurance premiums. The association argued that challenging either of these actions was time-barred under the statute of limitations. 

The court ruled that the resolution was not an amendment to the condominium governing documents within the meaning of the act. The court found that, at most, the resolution represented a statement of the board’s opinion that the bylaws should be amended to revise the way insurance premiums were assessed against the unit owners. In the resolution, the board acknowledged the need to amend the bylaws and stated that the amendment process was lengthy and inconsistent with the budget preparation schedule for the upcoming fiscal year. Because the resolution was not an amendment adopted by the unit owners pursuant to the act, the court found that the act’s statute of limitations did not apply. However, the court ruled that the bylaws amendment was an amendment to the governing documents within the definition contemplated by the act. Accordingly, the one-year statute of limitations applied.

Godwin argued that because the association violated mandatory procedures for amending the bylaws, the amendment was null and void, and thus, the statute of limitations did not apply. The court, however, in examining the statute, noted that nothing in the statute suggested that only valid bylaw amendments are subject to the one-year statute of limitations. The court noted that any amendment, not just valid ones, may be challenged within one year. Accordingly, Godwin’s claim was barred by the statute of limitations.

Godwin then tried to argue that there was a breach of fiduciary duty (the legal duty of the board to act in the best interests of the residents). Godwin and the association agreed that an action for such breach must be filed within two years from the date of breach. Godwin argued that, although the association initially breached its fiduciary duty four and three years earlier “when in bad faith it knowingly and willfully” adopted the resolution and the bylaws amendment, there were renewed breaches when the annual budgets were adopted in the last two years, which reflected the change made to assessments for insurance premiums. The court disagreed, finding that any breach of fiduciary duty relating to the change in the insurance premium assessment took place when the association acted four and three years ago to adopt the resolution and bylaw amendment. The latest of these actions occurred over two years prior to Godwin’s filing suit. Therefore, the claim was time-barred.

Bankruptcy: Notice of Final Cure Payment in Chapter 13 Cases – New Rule Effective December 1, 2024

Effective December 1, 2024, there is a new rule in Chapter 13 cases involving a secured interest in the debtor’s primary residence. If the plan provides for installment payments and the payments are completed during the Chapter 13 case, the debtor must file a certification that they have completed their payments. Failure to do so, or failure to make all payments, will result in a motion to dismiss without a discharge filed by the trustee, or a Notice of Final Cure Payment. 

RULE 3002.1-1 CLAIMS IN CHAPTER 13 CASES SECURED BY THE SECURITY INTEREST IN A DEBTOR’S PRINCIPAL RESIDENCE (NEW) 

(A) Debtor’s Certification: In any chapter 13 case (1) that involves any claim that is secured by a security interest in the debtor’s principal residence for which the plan provides that either the trustee or debtor will make contractual installment payments and (2) where there is no order terminating or annulling the automatic stay related to such claim, the debtor(s) shall file, within 30 days of completion of the plan payments due under the terms of any confirmed plan, a certification (in addition to the certification required under LBR 4008-2(A)) as to whether all contractual installment payments due during the life of the case have been made. If the debtor fails to timely file a certification, or if the debtor’s certification states that not all contractual installment payments were made during the Chapter 13 case, the standing trustee shall file a motion to dismiss without a discharge.  

(B) Hearing on Response to Notice of Final Cure Payment: The standing trustee shall file, pursuant to FRBP 3002.1(f), a Notice of Final Cure Payment, a sample of which is an exhibit to these Local Rules, as Exhibit 17. If, within 21 days of the service of the Notice of Final Cure Payment, the creditor files and serves a statement pursuant to FRBP 3002.1(g) indicating either (1) the debtor has not paid in full the amount required to cure the default on the claim or (2) the debtor is not otherwise current on all payments consistent with 11 U.S.C. § 1322(b)(5), then the debtor, if represented by counsel, shall set the matter for hearing in the ordinary course. If the debtor is not represented by counsel, the standing trustee shall set the matter for hearing in the ordinary course. 

(1) If a debtor, who is represented by counsel, fails to file a notice of hearing as contemplated by this Local Rule within 30 days after a creditor’s response is filed, the Court may consider whether a reduction of the approved amount of attorney’s fee is appropriate upon motion by the standing trustee.

If you have questions, please contact Eddie or Jennifer.

Collections: Sale of Collateral after Repossession - Updates to the Virginia Code and Forms

Effective July 1, 2025, there will be minor changes to the forms in Virginia Code Sections 8.9A-614 and 8.9A-616. These are important changes to prepare for before July 1, 2025 as they change your Notice of Disposition of Collateral and Notice of Calculation of Surplus or Deficiency. 

The changes are primarily to update and modernize language regarding communication. While the changes are likely not substantive enough to invalidate your current forms, it provides an excellent opportunity to review your current forms and procedures. 

The form and instructions in Virginia Code Sections 8.9A-614 and 8.9A-616 are a “safe harbor” for creditors. If you follow the statutory language, your letters will be deemed in compliance with the Code Sections. If you have questions about the language in the Code Sections or would like for us to review your forms, please contact Eddie or Jennifer.