- July 28, 2003
- All Issuing Offices in Virginia
- Insuring HOA/Condo foreclosures
The Supreme Court of Virginia recently published its opinion in the case of Wachovia Bank v. Colchester Town Condominium. In a split decision, the Court held that, contrary to the language of the controlling statutes, the proceeds from a Condominium Association or Homeowner's Association lien foreclosure must first be used to pay off the existing first trust. This means, then, that the sale is not made subject to any such trust; any agent insuring a Condo/HOA foreclosure must require (in addition to the usual foreclosure sale requirements) that the trust be paid with the proceeds of the sale.
Although the Court's decision focused on purchase money
deeds of trust, the language was broad enough to encompass other senior deed of
trust liens as well. It will therefore be necessary to make the
requirement of payoff of senior deeds of trust regardless of whether the senior
trust was purchase money or not. The decision was handed down
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