1.2 The Trustee

• Library: Enforcement of Liens and Judgments in Virginia (Virginia CLE) (2019 Ed.)

1.2 THE TRUSTEE

1.201 Eligibility. Section 55-58.1(2) [55.1-317(A)] of the Virginia Code provides that a trustee must be a resident of Virginia to act in the execution of a deed of trust. A corporation, limited liability company or partnership serving as trustee must either be chartered under the laws of the United States or incorporated under the laws of Virginia. The deed of trust must specify the full residence or business address of the trustee or trustees named therein including street address and zip code. ⁵

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1.202 Duties.

A. Fiduciary Obligation. A trustee is a fiduciary and owes a duty both the debtor and the creditor. ⁶ A trustee must not place himself or herself in a position where the trustee's personal interests conflict with the interests of the parties to whom he or she owes a fiduciary duty. ⁷ A trustee who is counsel to or an employee of the noteholder must be very sensitive to the obligation of impartiality. The trustee should never take part in determining what amount, if any, the noteholder should bid. Because a trustee must act independently, when a noteholder solicits legal advice and also requests the enforcement of a deed of trust, the trustee should advise the noteholder to seek the advice of an independent counsel or to appoint a substitute trustee to enforce the deed of trust.

A trustee does not owe a fiduciary duty to the guarantors of the secured debt. ⁸ However, where the guarantors are known to the trustee, the better practice is to send the same notices to the guarantors that are sent to the owner of the property.

A foreclosure of real estate is not governed by the Uniform Commercial Code. While there is a fiduciary duty owed in a trustee's foreclosure, the UCC obligation of good faith set forth in section...