1.4 The Sale

LibraryEnforcement of Liens and Judgments in Virginia (Virginia CLE) (2019 Ed.)

1.4 THE SALE

1.401 Place. Section 55-59(7) [55.1-320(7)] of the Virginia Code provides that the sale may take place:

at the premises . . . or at such other place in the city or county in which the property or the greater part thereof lies, or in the corporate limits of any city surrounded by or contiguous to such county, or in the case of annexed land, in the county of which the land was formerly a part, as the trustee may select.

The statute specifically provides that the "front of the circuit court building" is an authorized location for the place of sale. Each city or county may have a customary location where foreclosure sales are held. The trustee should check with local authorities to be sure that the sale is held in the proper location.

1.402 Terms.

A. Cash or Credit. In the absence of specific direction in the trust instrument, the trustee is authorized to sell "upon such terms and conditions as the trustee may deem best." 69 This language has been interpreted to include the power to sell either for cash or on credit. 70 However, if the trust instrument provides for a sale for cash, a sale made by the trustee on credit is invalid. 71 On the other hand, where the deed of trust does not provide for the terms of sale, it is not an abuse of the trustee's discretion to sell for cash. 72 Section 55-59(8) [55.1-320(8)] provides: "If the sale is upon credit terms, the deferred purchase money shall bear interest

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from the day of sale and shall be secured by a deed of trust upon the property contemporaneous with the trustee's deed to the purchaser."

B. Multiple Parcels. When the deed of trust encumbers more than one parcel, unless the deed of trust clearly states to the contrary, the trustee is to sell only so much of the trust property as may be necessary to satisfy the secured obligations with the fewest parcels being sold. 73

At the sale, the trustee should first conduct bidding on each parcel and reserve finalizing the sale until all parcels are offered for sale. The amounts bid for all individual parcels are totaled and the property is then reoffered as a single lot. The sale is concluded when the higher of the aggregate individual bids or the in-gross bid is announced. 74

1.403 Conduct of the Sale. The trustee must be present and either conduct or supervise the sale. In the absence of specific authority in the deed of trust, a trustee cannot, even with the consent of the beneficiary, delegate the power to sell and be absent from the sale. 75 However, the trustee may employ an auctioneer to cry the sale. In interpreting section 13.1-1108 of the Virginia Code, the Circuit Court of Roanoke, in Walker v. Virginia Housing Development Authority, 76 held that when a professional limited liability company serves as trustee, any member or agent of the company may attend the sale in satisfaction of the attendance requirement. Section 13.1-546.1 of the Virginia Code contains similar language for law firms organized as professional corporations.

When a trustee buys directly or indirectly at his or her own sale, constructive fraud exists and the transaction is voidable. 77 A sale is also voidable where a named but non-acting co-trustee, who has not resigned or been removed, bids at the foreclosure sale. 78 The trustee serves as the agent for both the grantor and the noteholder and is bound to act impartially between them. 79

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Section 55-59.4(A) [55.1-324(A)(1)] of the Virginia Code permits written one-price bids for entry by announcement of the trustee. These bids may be received from the beneficiary or any other person, and the submission of a written bid does not preclude the beneficiary or other person from bidding at the sale. Upon request, the trustee must permit any other bidder in attendance to inspect a written bid. However, if the written bid of the beneficiary is the highest bid, it must be filed with the account of sale required under section 26-15. The written bid may be prepared by the beneficiary or his or her agent or attorney. It is advisable for the trustee to obtain the names and addresses of persons attending the sale. Some commissioners of accounts now require this information, as well as the current assessed value of the property, the opening...

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