Foreclosure Process in Virginia

Virginia

Virginia allows both in court or judicial foreclosure and out of court or non judicial foreclosure.  As in all states, the decision as to which type of foreclosure to pursue is up to the lender.  The most preferred method of foreclosure by the lender is out of court.  It moves along quicker and generally costs them less.  The only reason a lender would go with a judicial or in court process is because the language of the mortgage or deed of trust, does not include a power of sale clause, allowing an out of court foreclosure.  Most mortgages these days include the power of sale clause, because it benefits the lender to do it that way.

For non judicial foreclosure, the time and place and terms of sale may be written in to the mortgage or deed of trust, but they may not as well.

The deed of trust may state some publishing requirements with regards to the notice of sale, but neither its states requirements or not, the ad announcing the sale must still be published by the trustee (lender’s lawyer) no less than once a day for three days.  These days can be consecutive days, but it is not required that they be.

If the deed of trust does not contain instructions regarding the advertising of the sale and an ad must be run once a week for 4 weeks leading up to the sale date.  One other exception to this rule is that if the property is near a city and an ad run on five different days consecutively or not this will be allowed. 

A copy of this advertisement or a notice containing the same information in the ad must be mailed to the home owner a minimum of fourteen days prior to the sale.

The ad about the sale must include anything required in the deed of trust.  Additionally to anything in the deed of trust, the ad must state the time, place, and terms of the sale.  It must also include the lawyers names and the name and address of a person who will be able to answer questions regarding the sale.

In this state, the foreclosure process can be stopped at anytime leading up to the sale date.  For the home owner to accomplish this, they will have to come up with the total amount of money required to pay off the debt, plus other costs associated with the foreclosure.  This of course, includes attorney’s fees.

In Virginia, the date of the sale is tied to the dates of the advertising of the sale.  The sale can occur no sooner than eight days following the date the 1st ad was published.  The longest amount of time that can lapse between the date the last ad has been run, and date of the auction is 30 days.

Anyone other than the lenders lawyer can bid at auction.  One price bids are allowed and can be submitted.  These are allowed and can be submitted.  These on price bids will be announced at the auction by the trustee (lender’s lawyer). The bids must have been submitted to the trustee prior to the sale.  Submission of such a bid does not prevent a bidder from participating further at the sale.  They can still up the ante, so to speak.  Any bidder at the auction is permitted to inspect the written one price bid, if they want to.

The lenders lawyer has the right to require a cash deposit.  This cash deposit can be as high as 10% of the sale price.  The deed of trust can require more or less than this amount.  At the trustees discretion a postponement of sale can be executed.  The same advertising schedule as originally placed must be followed leading up to the new sale date.

As in all states, 1st lien holders, federal income taxes and property taxes will carry on attached to the property through the sale.

If any Lien holder connected to the property wants to pursue the borrower for additional money beyond what the sale generated, they are free to attempt such an action.  Virginia has no limit on deficiency judgments.

In Virginia, the home owner has eight months to redeem the property.  This means they have 240 days after the sale has occurred to regain ownership of the property, by paying as much money as the winning bid plus interest.

It doesn’t happen very often, but it does give the winning bidder some uncertainty about spending money on the place or moving in, because it can be taken away from them in the first eight months, following the sale.