1.5 Settlement and Accounting

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

1.5 SETTLEMENT AND ACCOUNTING

1.501 The Trustee's Deed. A purchaser can only require a deed with special warranty of title from the trustee. The trustee is not responsible for conveying good title, because a trustee can sell only the interest conveyed to him or her. ⁹⁷ Section 55-59.1 [55.1-321] of the Virginia Code provides that a purchaser for value of the property may rely on a recital in the trustee's deed as to the trustee's compliance with the service of the notice required by the statute and has no duty of inquiry. ⁹⁸ The deed also creates compliance with the advertising requirements of the Virginia Code and the deed of trust. Recitations of fact in a deed are prima facie evidence of the matters recited in section 8.01-389(C) of the Virginia Code. A trustee's deed must now provide

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the name of the person preparing the instrument ⁹⁹ and also list the addresses of the trustee ¹⁰⁰ and the grantee. If the deed conveys more than four residential dwelling units, the first page must either state the name of the title insurance underwriter or that the existence of title insurance is unknown to the preparer of the deed. ¹⁰¹

1.502 Recordation Tax. The Attorney General of Virginia has opined that the recordation tax under section 58.1-801 of the Virginia Code is the greater of the amount bid at the sale or the assessed value of the property. ¹⁰²

1.503 Failure of the Purchaser to Comply with the Bid. A trustee may either bring an action to enforce the contract with the purchaser or resell the property. If a purchaser fails to comply with his or her bid, the trustee has the authority to resell the property after due notice to the purchaser, at the purchaser's risk. The resale should be made upon the same notice to the property owner and upon the same terms and conditions as prescribed in the deed of trust for the original sale. If a resale is so made, it conclusively fixes the damages for the purchaser's breach of contract. ¹⁰³

In Busman v. Beeren & Barry Investments, LLC, ¹⁰⁴ however, the contract of sale between the trustee and the purchaser contained a clause providing that, in the event of default by the trustee, the buyer's sole remedy in law or at equity was a refund of the deposit. The court granted the purchaser's demurrer and dismissed the case with prejudice, holding that the contract's lack of mutuality rendered it unenforceable. The court further observed that if the remedy had included interest on the deposit, this could have provided the necessary consideration to support mutuality. ¹⁰⁵

1.504 Distribution of the Proceeds. Section 55-59.4(A)(3) [55.1-324(A)(3)] of the Virginia Code provides that the trustee must receive and receipt for the proceeds and that the purchaser is not required to see to the

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application of the proceeds. Any proceeds must be applied in the following order:

	1.	"[T]o discharge the expenses of executing the trust, including a commission to the trustee"; 106
2.	"[T]o discharge all taxes, levies, and assessment[s], with costs and interest . . . including the due pro rata thereof for the current year"; 107
3.	"[T]o discharge in the order of their priority, if any, the remaining debts and obligations secured by the deed, and any liens of record inferior to the deed of trust under which sale is made, with lawful interest"; 108 and
4.	"[T]he residue of the proceeds shall be paid to the grantor or his assigns; provided, however, that the trustee as to such residue shall not be bound by any inheritance, devise, conveyance, assignment or lien of or upon the grantor's equity, without actual notice thereof prior to distribution; provided further that such order of priorities shall not be changed or varied by the deed of trust." 109
5.	Code Section 55-64 [55.1-331] addresses the disposition of surplus from the trustee's sale after the death of the deed of trust grantor when the grantor of the deed of trust dies prior to the sale and the deed of trust contains no definitive provisions with respect to the disposition of the surplus in the event of the death of the grantor. This section was recently amended to provide that the surplus remaining after the payment of (a) the

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