Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 

Lemons, JJ., and Carrico, S.J. 

BOARD OF DIRECTORS OF THE COLCHESTER 

TOWNE CONDOMINIUM COUNCIL OF CO-OWNERS 

 OPINION BY 

v. Record No. 021741 JUSTICE LAWRENCE L. KOONTZ, JR. 

 June 6, 2003 

WACHOVIA BANK, N.A., ET AL. 

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 

Henry E. Hudson, Judge 

 In this appeal, we consider whether the trial court 

correctly determined that Code § 55-79.84, part of the 

Condominium Act, Code §§ 55-79.39 through -79.103, requires 

that the proceeds from a non-judicial sale of a condominium 

unit by a unit owners’ association to satisfy a lien for 

unpaid condominium fees must first be applied to satisfy a 

prior first deed of trust on the unit sold. 

BACKGROUND 

 In March 2002, the Board of Directors of the Colchester 

Towne Condominium Council of Co-Owners (the Association) 

recorded a lien, pursuant to Code § 55-79.84, against a 

condominium unit owned by Juanita C. James for unpaid 

condominium assessments. The Association initiated the 

process for a public sale of the unit, as permitted by Code 

§ 55-79.84(I), and notified Wachovia Bank, N.A. (the Bank), 

the holder of the first deed of trust on the unit. The first 

deed of trust had been recorded in 1996. The Association’s 
advertisement of the intended sale of the unit at public 

auction to the highest bidder reflected that title to the unit 

would be conveyed to the purchaser by special warranty deed. 

The notice included a statement that the unit was “subject to 

a deed of trust” in favor of the Bank and that the sale would 

be “subject to all existing liens.” The Association intended 

to disburse the sale proceeds pursuant to the provisions of 

Code § 55-79.84(I)(5)(c). This subsection makes no express 

provision for disbursement of any of the proceeds of the sale 

to satisfy a first deed of trust. 

 The Bank filed a bill of complaint and a motion for 

temporary injunction against the impending public sale in the 

trial court, seeking a declaratory judgment that the proceeds 

of the sale must first be applied to satisfy the lien of the 

Bank’s first deed of trust. The Association responded that, 

under Code § 55-79.84(I), it was entitled to sell the unit 

“subject to” the Bank’s lien without satisfying that lien, and 

that the proceeds of the sale were to be applied to the 

Association’s lien and other specified encumbrances on the 

property. The trial court entered an injunction in favor of 

the Bank, concluding that under the provisions of Code § 55-

79.84 the Bank’s lien had priority over the Association’s 

assessment lien and that the Association was required to apply 

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any proceeds from the sale first to satisfy the bank’s lien. 

We granted the Association an appeal. 

DISCUSSION 

 It is a matter of common knowledge and experience that, 

as with other forms of land development, purchase money 

financing by institutional lenders is the primary fuel that 

drives the development engine of a condominium complex. In 

turn, the realities of the marketplace require that such 

lenders be encouraged to provide the desired financing for 

individual condominium units by granting priority to the lien 

of their first mortgages or first deeds of trust. It is the 

priority of the lender’s lien on a particular unit as well as 

the market value of the unit that establishes the lender’s 

security for the loan.∗ Similarly, there is no dispute that 

condominium assessments are the recognized and necessary means 

by which all owners of a particular condominium development 

benefit from the use of such assessments for general 

maintenance, security, and other matters. 

 With this in mind, the General Assembly by its enactment 

of Code § 55-79.84 has preserved the desired priority of the 

 ∗

 We recognize that the Bank’s deed of trust in this 

particular case arises from an “equity line agreement” rather 

than from purchase money financing. This deed of trust, 

however, clearly qualified for priority over the assessment 

lien as established in Code § 55-79.84(A). 

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lien of the instrument securing institutional lenders while 

providing for an inferior lien in favor of the unit owners’ 

association for unpaid assessments on a particular condominium 

unit. Code § 55-79.84 addresses the circumstances under which 

a condominium association may acquire a lien on a condominium 

for unpaid assessments. It also addresses the methods of 

enforcing such a lien. When perfected in accordance with the 

statute, an assessment lien is prior to all other liens and 

encumbrances except real estate tax liens on the unit, liens 

and encumbrances recorded prior to the condominium lien, and 

“sums unpaid on any first mortgages or first deeds of trust 

recorded prior to the perfection of said lien for assessments 

and securing institutional lenders.” Code § 55-79.84(A). 

 Once an assessment lien is perfected against a 

condominium unit, Code § 55-79.84(I) authorizes “the unit 

owners’ association [to] sell the unit at public sale, subject 

to prior liens.” (Emphasis added.) Code § 55-79.84 (I)(5)(c) 

recites the order in which the proceeds of the sale are to be 

applied: 

 The unit owners’ association shall receive and 

receipt for the proceeds of sale, . . . and apply 

the same in the following order: first, to the 

reasonable expenses of the sale; second, to the 

satisfaction of all taxes, levies, and assessments, 

with costs and interest; third, to the satisfaction 

of the lien for the unit owners’ assessments; 

fourth, to the satisfaction in the order of priority 

of any remaining inferior claims of record; and 

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fifth, to pay the residue of the proceeds to the 

unit owner or his assigns . . . . 

 The focus of the present dispute is on the proper 

construction of the phrase “subject to prior liens” in Code 

§ 55-79.84(I). The Bank contends that because the priority of 

its lien is established in Code § 55-79.84(A), the proceeds of 

the sale must be used to satisfy its lien before being applied 

to the lien of the unit owners’ association and the other 

encumbrances on the unit in the order prescribed by Code § 55-

79.84(I)(5)(c) because the sale is “subject to prior liens.” 

 The Association contends that the phrase “subject to 

prior liens” as used in Code § 55-79.84(I) should be read to 

permit a unit owners’ association to sell a unit at public 

sale with the understanding that the unit remains encumbered 

by any prior superior liens. Thus, the Association contends 

that from the proceeds of the sale it may satisfy its 

assessment lien, satisfy the other encumbrances on the unit 

specifically enumerated in Code § 55-79.84(I)(5)(c), and pay 

any residue of the sale proceeds to the former owner of the 

unit, without applying the proceeds to the prior liens. In 

sum, the Association contends that a forced sale of an 

individual unit pursuant to Code § 55-79.84(I) preserves the 

priority of the lien of the first deed of trust in favor of 

the institutional lender established in subsection (A), by 

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permitting the sale to be made “subject to prior liens” 

through the continued encumbrances of the property after the 

sale. 

 The Association’s interpretation of the phrase “subject 

to prior liens” in Code § 55-79.84(I) creates a conflict 

between that subsection and subsection (A) of the statute. In 

effect, the Association’s interpretation would render the 

priority of liens established in subsection (A) meaningless 

with respect to the remainder of the statute. This conflict 

is avoided, however, by the application of basic principles of 

statutory construction. 

 Under basic rules of statutory construction, we examine 

the language of a statute in its entirety and determine the 

intent of the General Assembly from the words contained in the 

statute. Cummings v. Fulghum, 261 Va. 73, 77, 540 S.E.2d 494, 

496 (2001); Earley v. Landsidle, 257 Va. 365, 369, 514 S.E.2d 

153, 155 (1999). In doing so, the various parts of the 

statute should be harmonized so that, if practicable, each is 

given a sensible and intelligent effect. VEPCO v. Prince 

William Co., 226 Va. 382, 387-88, 309 S.E.2d 308, 311 (1983). 

 Applying these principles of statutory construction, the 

priority of the liens in favor of institutional lenders in 

Code § 55-79.84(A) is properly viewed as creating a condition 

precedent to the disbursement order of the sale proceeds under 

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subsection (I). Thus, the “subject to prior liens” language 

of the latter subsection may be fairly interpreted as 

requiring the satisfaction of those liens from the proceeds of 

a forced sale of an individual condominium unit by the unit 

owners’ association. In short, we conclude that the General 

Assembly intended to balance the interests of the holder of a 

first deed of trust and those of a unit owners’ association by 

providing in these subsections that the satisfaction of the 

institutional lender’s first mortgage or first deed of trust 

be a term of the public sale of an individual condominium unit 

by the unit owners’ association when seeking to satisfy its 

inferior lien for unpaid assessments. 

 A contrary result permitting the sale proceeds to be used 

to satisfy the lien of the unit owners’ association, other 

lesser encumbrances, and potentially disbursing the residue of 

the sale proceeds to the defaulting former owner, without 

applying those proceeds to satisfy the first deed of trust, 

would put the institutional lender holding the first deed of 

trust at a serious disadvantage with respect to its ability to 

protect its security interest in the condominium unit. The 

purchaser and new owner of the condominium unit would have no 

obligation to pay the lender the sums unpaid on the lender’s 

first deed of trust. The lender would be placed at risk that 

the new owner might permit damage to the unit before the 

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lender could foreclose. The other detrimental possibilities 

are numerous and of great potential consequence, such as the 

prospect of inadequate fire insurance coverage in the event of 

unexpected fire damage to the unit. Additionally, the 

original owner would no longer own the unit and, thus, would 

have less incentive to satisfy the debt secured by the 

lender’s deed of trust. We have no doubt that the General 

Assembly intended to avoid such possibilities to the detriment 

of the institutional lender’s security interest. 

 Accordingly, we hold that the proceeds of a public sale 

of a condominium unit by a unit owners’ association under Code 

§ 55-79.84(I) must be applied first to satisfy the prior 

superior liens established under Code § 55-79.84(A) before the 

unit owners’ association may apply the proceeds of that sale 

in satisfaction of its own lien as well as other encumbrances 

on the property, and then it is to pay any residue to the 

former unit owner as prescribed by Code § 55-79.84(I)(5)(c). 

CONCLUSION 

 For these reasons, we will affirm the judgment of the 

trial court directing that the proceeds of the sale of the 

condominium unit by the Association pursuant to Code § 55- 

79.84(I) must be used first to satisfy the Bank’s first deed 

of trust. 

Affirmed. 

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JUSTICE LACY, with whom JUSTICE KINSER and JUSTICE LEMONS 

join, dissenting. 

 Subsection (I)(5)(c) of Code § 55-79.84 specifically 

addresses the manner in which the proceeds of the non-judicial 

or public sale of a condominium unit are to be disbursed: 

 The unit owners' association shall receive and 

receipt for the proceeds of sale, . . . and apply 

the same in the following order: first, to the 

reasonable expenses of sale; second, to the 

satisfaction of all taxes, levies, and assessments, 

with costs and interest; third, to the satisfaction 

of the lien for the unit owners' assessments; 

fourth, to the satisfaction in the order of 

priority of any remaining inferior claims of 

record; and fifth, to pay the residue of the 

proceeds to the unit owner or his assigns; . . . 

There is nothing ambiguous about this provision. It clearly 

directs payment of an association's assessment lien following 

satisfaction of the expenses of the sale and satisfaction of 

taxes, levies, and assessments. Nothing in this language 

suggests that the proceeds from the public sale must be used 

first to satisfy a first deed of trust. Normal rules of 

statutory construction require application of unambiguous 

provisions in accordance with the plain language of the 

statute. Mozley v. Prestwould Bd. of Dirs., 264 Va. 549, 554, 

570 S.E.2d 817, 820 (2002). 

 The majority concludes, however, that this section cannot 

be applied as written because it creates a conflict with the 

priority of liens set out in subsection (A) of the section and 

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because "common knowledge and experience" inform us that 

without such priority institutional lenders will no longer 

provide the "fuel" for condominium development. The majority 

states that "[i]t is the priority of the lender's lien on a 

particular unit as well as the market value of the unit that 

establishes the lender's security for the loan." In my 

opinion, applying these Code subsections as written creates 

neither a conflict between them, nor the parade of horribles 

predicted by the majority. 

 What is the conflict the majority sees? Subsection (A) 

provides that sums unpaid on first mortgages, or first deeds 

of trust, securing institutional lenders and recorded prior to 

the perfection of association assessment liens have priority 

over the association assessment liens. Subsection (I) 

provides that the condominium owners' association may sell the 

unit at public sale, "subject to prior liens," if the 

association complies with certain procedures. Payment of sums 

remaining on a first mortgage or first deed of trust is not 

mentioned in the scheme delineated in subsection (I) of the 

statute. This omission, the majority says, creates the 

conflict because it renders meaningless the priority of liens 

set out in subsection (A). I disagree. 

Normal usage of the phrase "subject to prior liens" as 

used in subsection (I) means that the property being sold 

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remains as security for such prior liens – that is, the 

property remains liable for such prior liens regardless of the 

transfer of title. This concept is not foreign to creditors' 

rights jurisprudence. It is grounded in common law redemption 

of equity procedures available to subordinate lenders. See

Yaffe v. Heritage Sav. & Loan Ass'n., 235 Va. 577, 582, 369 

S.E.2d 404, 407 (1988); Kaplan v. Ruffin, 213 Va. 551, 554-55, 

193 S.E.2d 689, 692 (1973); Schmidt & Wilson, Inc. v. Carneal, 

164 Va. 412, 416-17, 180 S.E. 325, 326-27 (1935). The 

majority's interpretation of "subject to prior liens" is 

inconsistent with that phrase's well-understood and longaccepted meaning. 

The majority's interpretation also requires adding words 

to the statute so that the provision would read as follows: 

"The unit owners' association may sell the unit at public 

sale, subject to satisfaction of prior liens." We generally 

do not engage in adding words to a statute, particularly when 

the statute has a clear and unambiguous meaning without the 

addition of such words. See Woods v. Mendez, 265 Va. 68, 74-

75, 574 S.E.2d 263, 266-67 (2003). 

More importantly, in enacting subsection (I), the General 

Assembly did not render subsection (A) meaningless. The 

General Assembly exercised its legislative prerogative to 

provide condominium associations with a process to enforce 

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their assessment liens in addition to traditional foreclosure 

procedures and the other remedies set out in subsections (C), 

(D), and (G) of Code § 55-79.84. The priorities set out in 

(A) apply in all situations involving the sale of the 

condominium unit except the specific type of sale authorized 

in subsection (I). 

The General Assembly's understanding of the enforcement 

mechanism it adopted is further shown by the legislation 

adding subsection (I) in 1997. In that legislation, the 

General Assembly also amended Code § 55-516 to provide the 

identical enforcement mechanism for property owners' 

association assessment liens. See 1997 Va. Acts ch. 760. The 

provisions of subsection (A) in Code § 55-79.84 and subsection 

(A) of Code § 55-516 regarding the priority of liens are also 

identical. In contrast, the General Assembly, in prescribing 

disbursement of proceeds of public sale to enforce the 

assessment lien of a cooperative association, specifically 

provided that "[s]atisfaction in the order of priority of any 

prior claims of record" occur prior to satisfaction of the 

cooperative association's assessment lien. Code §§ 55-472 

(J)(3), -472(J)(4). Subsection (B) of Code § 55-472, like 

subsection (A) of Code § 55-79.84, also provides that a first 

security interest previously perfected encumbering the 

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cooperative interest of a proprietary lessee has priority over 

the cooperative association's assessment lien. 

Because the General Assembly has clearly provided for 

different payment distributions in the enforcement of 

assessment liens, even though the prior perfected security 

interest in each case generally has priority over assessment 

liens, I can only conclude that the language adopted by the 

General Assembly was meant to be applied as written. When the 

General Assembly intended that prior perfected liens be 

satisfied before payment of an association's assessment lien, 

it made the appropriate provisions in the legislation. The 

language adopted in Code § 55-79.84(I) did not do so and such 

a payment scheme should not be imposed by judicial 

interpretation. 

 The touchstone of the majority's statutory conflict is 

its perception that allowing the sale of a condominium unit 

"subject to" an antecedent deed of trust and paying the 

condominium assessment lien will somehow seal the doom of 

condominium development. We do not have the record in this 

case to support such a conclusion, nor is this Court the 

proper venue to develop such a record. Rather, the General 

Assembly is the branch of government designed and equipped to 

take testimony and compile information on the impact of such 

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payment priorities, and accordingly, to decide the wisdom of 

adopting them. 

Of course, if we were to consider relevant data and our 

common knowledge and experience regarding condominium 

development, we might conclude that part of the value of a 

condominium unit comes from the ability of the condominium 

association to maintain the common areas of the development, 

including the structures' exteriors, landscaping, and 

amenities. The ability to maintain these elements is directly 

related to the association's ability to secure payment of 

assessments from the individual unit owners. The legislative 

provision for payment of such association liens from the 

public sale of a unit, subject to the first deed of trust (and 

other prior liens), is precisely the type of enforcement 

mechanism that enhances a lender's confidence in the value of 

it's security interest. 

Contrary to the majority's observations, the sale of a 

condominium unit pursuant to subsection (I) would not alter 

the value of the property. There is no change in the original 

owner's liability for the first deed of trust note. In fact, 

following a public sale, satisfaction of the lender's deed of 

trust is enhanced because a second party has an interest in 

seeing that the deed of trust note is not defaulted. 

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Furthermore, the lender in this case, as in most deeds of 

trust, anticipated the sale of the property without its 

consent or satisfaction of its lien. The lending instrument 

states that, in the event of sale or conveyance of the 

property, the debt secured by the property is subject to 

payment in full. Concerns about unit damage or destruction by 

the owner before foreclosure, in my opinion, are counter 

intuitive and not consistent with human experience. 

Allowing the sale of a condominium unit subject to the 

lender's lien simply does not compromise or jeopardize the 

lender's security interest. But, as I have said, these 

concerns are the stuff of legislative policy determinations 

and not the type of legal principle or rule of statutory 

construction that should guide our analysis and conclusions. 

Accordingly, I would reverse the judgment of the trial 

court and remand the case for further proceedings.*

 *

 The lender in this case also argued that, because its 

lien was recorded in 1996 and subsection (I) of Code § 55-

79.84 was not enacted until 1997, the subsection cannot be 

applied retroactively to affect its substantive rights. 

Regardless of whether the 1997 enactment affected substantive 

rights, the lender is precluded from raising this issue here 

because it was not raised in the trial court. Rule 5:25. In 

the trial court, the lender argued that allowing the proceeds 

from a public sale to be disbursed as provided in subsection 

(I) was per se unconstitutional because such a construction 

would violate the Contract Clause of the United States 

Constitution. U.S. Const. art. I, § 10. 

15