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Residential Foreclosure Checklist (VA)

August 12, 2019

Resource ID: w-017-7475

Residential Foreclosure Checklist (VA)

BENJAMIN P. SMITH, SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A.,

WITH PRACTICAL LAW REAL ESTATE

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A Checklist outlining the primary considerations, requirements, and processes for conducting nonjudicial and judicial foreclosures of residential real property secured by deeds of trust and mortgages in Virginia. This Checklist outlines pre-foreclosure notice requirements for lenders and includes the appointment of receivers, deficiency judgments, and the borrower’s right to reinstate the loan and the right of redemption.

BEFORE COMMENCING A RESIDENTIAL FORECLOSURE

  • Determine the proper method of foreclosure (see Practice Note, Residential Foreclosures (VA): Available Methods of Foreclosure in Virginia (W-013-7164)).
  • Review the terms of the deed of trust or mortgage for any contractually required notice requirements (see Practice Note, Residential Foreclosures (VA): Pre-Foreclosure Notices (W-013-7164)).
  • Order a title search to identify liens and other encumbrances that affect title to the real property.
  • Consider paying priority liens on the property before beginning foreclosure, including:
  • taxes;
  • mechanic’s liens; and
  • home owner association liens.
  • Conduct a search of bankruptcy court records to determine if the borrower has filed for bankruptcy protection.
  • Establish possession of the original promissory note. If the lender cannot locate the original note, file a notice of lost note with the commissioner of accounts.
  • Review the terms of the note and deed of trust or mortgage to determine if the borrower has a contractual right to cure a default before beginning foreclosure.
  • Determine if the 120-day delinquency period required by the Consumer Financial Protection Bureau has run before beginning the foreclosure process.
  • Review the maturity date of the deed of trust or mortgage to ensure compliance with the statute of limitations.
  • Consider filing a motion for the appointment of a receiver if the property is in danger of waste or deterioration.

For more information on the pre-foreclosure requirements, see Practice Note, Residential Foreclosures (VA): Pre-Foreclosure Requirements and Considerations (W-013-7164).

COMMENCE A NONJUDICIAL FORECLOSURE

VERIFY THE TRUSTEE

Review the deed of trust or mortgage to determine:

  • The identity and residence of the original trustee (see Practice Note, Residential Foreclosures (VA): The Trustee (W-013-7164)).
  • If the appointment of a substitute trustee is necessary or has already occurred (see Practice Note, Residential Foreclosures (VA): Substitute Trustee (W-013-7164));

GIVE NOTICE OF THE SALE AND ADVERTISE THE SALE

  • Give written notice of sale to all interested parties (see Practice Note, Residential Foreclosures (VA): Deliver the Notice of Sale (W-013-7164)).
  • Give notice to the IRS if there is a federal tax lien on the property (see Practice Note, Residential Foreclosures (VA): Give Notice to the IRS (W-013-7164)).
  • Prepare the advertisement of sale.
  • Publish the advertisement of sale in a newspaper with a general circulation in the city or county where at least a portion of the property is located.
  • Schedule the sale date.
  • (See Practice Note, Residential Foreclosures (VA): Advertising the Sale (W-013-7164)).

CONDUCT THE TRUSTEE’S SALE

  • Conduct the sale at the:
  • property;
  • courthouse for the circuit court for the county where the property is located;
  • city or county where the property or the greater part of the property lies; or
  • corporate limits of any surrounding or contiguous city.
  • Submit a bid at the foreclosure sale:
  • orally in person;
  • by a written one-price bid; or
  • by a credit bid by the lender-beneficiary.
  • (See Practice Note, Residential Foreclosures (VA): Conducting the Sale (W-013-7164).)
  • After the trustee completes the sale:
  • have the successful buyer sign a memorandum of sale (see Practice Note, Residential Foreclosures (VA): Memorandum of Sale (W-013-7164));
  • convey the property to the buyer by a trustee’s deed;
  • distribute the sale proceeds in order of priority (see Practice Note, Residential Foreclosures (VA): Disbursement of Proceeds After a Nonjudicial Foreclosure) (W-013-7164); and
  • make an accounting to the commissioner of accounts of the circuit court where the deed of trust was first recorded (see Practice Note, Residential Foreclosures (VA): Accounting of Sale by the Trustee (W-013-7164)).
  • Take possession of the property (see Practice Note, Residential Foreclosures (VA): Taking Possession of the Property (W-013-7164)).

For more information on post-sale procedures, see Practice Note, Residential Foreclosures (VA): Post-Sale Requirements (W-013-7164).

COMMENCE A JUDICIAL FORECLOSURE

PREPARE, FILE, AND SERVE THE FORECLOSURE COMPLAINT

  • Identify the necessary parties.
  • Prepare a foreclosure complaint, including exhibits.
  • File and serve the foreclosure complaint and attachments on the named parties.
  • Record a notice of lis pendens with the clerk’s office in the county where the property is located.
  • (See Practice Note, Residential Foreclosures (VA): File a Foreclosure Complaint (W-013-7164).)

OBTAIN JUDGMENT

Obtain a judgment in foreclosure by a decree of sale by:

  • Including the naming of a special commissioner to conduct the sale.
  • Moving for summary judgment if no material facts are contested (see Practice Note, Residential Foreclosures (VA): Judgment (W-013-7164)).
  • Filing a motion for judgment by default if the borrower does not respond or appear (see Practice Note, Residential Foreclosures (VA): Judgment by Default (W-013-7164)).

EXECUTE THE COURT’S DECREE

  • Execute on the court’s decree of foreclosure sale by:
  • giving notice of sale;
  • publishing notice of sale;
  • advertising the sale; and
  • conducting the sale.
  • (See Practice Note, Residential Foreclosures (VA): Executing on the Decree of Foreclosure Sale (W-013-7164).)
  • Disburse the sale proceeds in order of priority (see Practice Note, Residential Foreclosures (VA): Disbursement of Sale Proceeds After a Judicial Foreclosure (W-013-7164)).
  • File an action to recover any deficiency ((see Practice Note, Residential Foreclosures (VA): Deficiency Judgment After Nonjudicial Foreclosure Sale, and Deficiency Judgment After Judicial Sale (W-013-7164)).

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