2.9 Application of Proceeds of Sale or Other Disposition

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

2.9 APPLICATION OF PROCEEDS OF SALE OR OTHER DISPOSITION

2.901 Priority. section 8.9A-615 of the Virginia Code provides that proceeds of disposition are to be applied in the following order of priority:

A. Expenses and Attorney Fees. Proceeds are first applied to "the reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party." ¹⁶⁷

The parties' agreement should provide for legal fees in the event of default. The U.C.C. does not specify that legal fees must be provided for in the "security agreement" itself. Arguably, attorney fees provided for in an underlying note may constitute part of "the agreement." This interpretation of the U.C.C. is supported by the definition...