Foreclosures

Foreclosure of real estate is the enforcement of a recorded lien given by a property owner as collateral for a loan. If default occurs in the payment of the loan and the noteholder calls the note, the note balance must be paid off, or the loan reinstated with the consent of the noteholder. If not, the noteholder has the right to accelerate the full payment of the note and request the trustee named in the deed of trust (or a substitute trustee) to conduct a sale of the property by public auction, with the net proceeds of the sale being applied to the balance owed on the note.

The foreclosure of real estate does not satisfy the financial obligations of the borrower under the note, and if the net proceeds from the auction applied to the note do not pay the note in full, the noteholder may pursue collection of the remaining balance from the borrower by a civil suit in the Henrico General District Court or the Henrico Circuit Court.

Foreclosure of real estate is controlled by the terms of the deed of trust , the Code of Virginia and case law decisions of the Virginia Supreme Court.

Every trustee foreclosing on real estate must account to the Commissioner of Accounts for the proper application of the money received from the successful purchaser at the public auction. This account by the trustee is due in the Commissioner's office within six (6) months of the date of sale of the property (the auction date).

There is no "form" which must be used by a trustee in the account of sale, but custom has established an accounting method which is hereinafter provided. Any accounting form which shows the required information is acceptable.

The requirements of a trustee are established by the deed of trust and Virginia statutes, and are explained in the "Manual For Commissioners of Accounts".  A thorough analysis of the documents and statutes should be conducted, and the terms set forth therein should be complied with, before conducting the sale and filing the account with the Commissioner's office.

The Henrico Commissioner of Accounts office audits a foreclosure account on the basis of what is submitted by the trustee with the filed account. We do not call or write the trustee to request missing documents or to request changes to the account. We audit the account as submitted and approve or disapprove the account  with a report requiring the trustee to file a supplemental account or provide additional documentation in order to obtain approval. This supplemental account also requires additional filing fees to be paid by the trustee.

While the trustee acts at the request of the noteholder he is a fiduciary and owes a duty to both the noteholder and the property owner. The trustee is not legal counsel for the noteholder.