Bulletin: VA000019

Date:
July 28, 2003
To:
All Issuing Offices in Virginia
RE:
Insuring HOA/Condo foreclosures

Dear Associates:

The Supreme Court of Virginia recently published its opinion in the case of Wachovia Bank v. Colchester Town Condominium.  In a split decision, the Court held that, contrary to the language of the controlling statutes, the proceeds from a Condominium Association or Homeowner's Association lien foreclosure must first be used to pay off the existing first trust.  This means, then, that the sale is not made subject to any such trust; any agent insuring a Condo/HOA foreclosure must require (in addition to the usual foreclosure sale requirements) that the trust be paid with the proceeds of the sale.

Although the Court's decision focused on purchase money deeds of trust, the language was broad enough to encompass other senior deed of trust liens as well.  It will therefore be necessary to make the requirement of payoff of senior deeds of trust regardless of whether the senior trust was purchase money or not.   The decision was handed down 6 June 2003, so any closings from the auction sale of Condominium or Homeowner's Association liens after that date must comply with this procedure.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None