Virginia Amends Various Residential Real Estate Provisions
Virginia Amends Provisions Regarding Tenant Escrow Funds and Security Deposits
Virginia reenacted and amended §54.1-2108.1 and 55-225.12 of the Code of Virginia regarding tenant funds held and a tenant’s right of assertion for relief from certain dwelling conditions. These amendments will be effective on July 1, 2017.
§ 54.1-2108.1 specifically delineates the actions that a real estate broker or an agent of the licensee must take regarding tenant funds, whether it would be escrow or deposit funds, upon foreclosure. It also explains the impact of a foreclosure on certain agreements between and among landlords, real estate brokers, agents and tenants. §55-225.12 delineates tenant rights and the impact that a foreclosure may have on those rights. Notable changes under these sections have been summarized below for your convenience.
First, an amendment has added a provision regarding interpleader actions. A real estate broker or an agent of the licensee now has a right to file an interpleader action if: (1) the filing party is holding escrow funds for the owner of the real property; and (2) the property is foreclosed upon. Previously, the foreclosure needed to occur by a lender; however, with the change, that limitation has been omitted.
Second, an amendment has added provisions regarding tenant rights. A tenant living within a dwelling on the date of the foreclosure sale may remain in possession of the dwelling. Additionally, such funds being paid to a licensee acting as a managing agent by the tenant who continues in possession must be placed in an escrow account. A tenant may also assert rights based upon the material noncompliance of conditions of a dwelling, such as lack of heat and infestation of rodents; and the tenant may continue to have the right to assert these claims if: (1) a foreclosure has occurred; and (2) the tenant is residing within the dwelling at the time of foreclosure.
Third, an amendment has added provisions regarding the effects foreclosure will have on property management agreements. Under the amendment, a property management agreement between the landlord and licensee shall continue following a foreclosure with the successor landlord. However, several limitations have been placed on this agreement: (1) this agreement will convert to a month to month; (2) unless altered by the parties, the agreement shall continue under the original terms; (3) the agreement may be terminated by either party pursuant to a 30 day written notice from the intended termination date.
Lastly, an amendment has added provisions regarding notices required when transferring escrow funds by a licensee and delineates immunities granted to licensees acting within provisions of this section. Specifically, the amendment allows a licensee to transfer escrow funds being kept on behalf of a landlord client provided written notices are given to corresponding tenants. However, in the case of a foreclosure sale, a licensee may not transfer aforementioned funds to the foreclosed landlord. Should a licensee act within the parameters of §54.1-2108.1 and 55-225.12, the licensee will be immune from liability stemming from compliance.
Virginia Amends Notices to Tenants in the Event of Foreclosure
Virginia reenacted and amended § 55-225.10 of the Code of Virginia regarding notice given by a landlord to a tenant in the event of a foreclosure and the tenant’s rights in such an occurrence. These amendments will be effective on July 1, 2017.
The amendments act to provide the tenant with several protections. However, in order for a tenant to be provided these protections he or she must be residing within the dwelling at the time of a foreclosure. Should the tenant be residing within the dwelling at the time of foreclosure, the following actions and protections will apply: (1) the rental agreement between the landlord and tenant shall be terminated; (2) the tenant will acquire a month-to-month periodic tenancy; and (3) the tenant will acquire rights to be provided notice within a prescribed time from a successor landlord who seeks to terminate the rental agreement.
In regards to the month-to-month periodic tenancy, even though the previous rental agreement has been terminated, its terms will carry over. This means that the tenant has the duty to continue rental payments in accordance with the terminated agreement. The tenant may pay to the successor landlord, the managing agent of the terminated agreement or a court escrow account; should the successor landlord seek to be the payment recipient, the burden lies on the landlord to provide notice of the new location.
The last change brought by the amendments regards the security deposits. Previously, the owner of the property was responsible for the transfer of the security deposit to the successor landlord. However, “owner” was not defined and led to some ambiguity. The clarifying changes specify that “the current owner” of the property is responsible for the transfer.
Full text for §55-225.10 of the Code of Virginia
Virginia Modified Provisions Regarding Electronic Filing of Land Records
Virginia reenacted and amended §17.1-258.3:1 of the Code of Virginia regarding the electronic filing fees of land records. These amendments will be effective on July 1, 2017.
This section allows the clerk of a circuit court to provide an electronic filing of land records, set fees for each instrument recorded electronically and provides the account type for the fee to be deposited to along with the manner in which those funds may be used. The most recent change is for the purpose of clarification.
The fee previously applied to “each instrument recorded electronically.” However, now the fee may be charged “for every land record filed by paper.” Therefore, while the fee applied beforehand to all instruments recorded electronically regardless of the manner of filing, the fee will now apply only to instruments filed by paper.
Full text for §17.1-258.3:1 of the Code of Virginia
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