Title: HomeSide Lending v. Unit Owners Assoc.
Citation: N/A
Docket Number: 000590
State: Virginia
Issuer: Virginia Supreme Court
Date: January 12, 2001

Present:  Carrico, C.J., Hassell, Keenan, Koontz, Kinser, 
and Lemons, JJ., and Compton, S.J. 
 
HOMESIDE LENDING, INC. 
 
v. Record No. 000590   OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
   January 12, 2001 
UNIT OWNERS ASSOCIATION OF 
ANTIETAM SQUARE CONDOMINIUM, ET AL. 
 
FROM THE CIRCUIT COURT FOR PRINCE WILLIAM COUNTY 
LeRoy F. Millette, Jr., Judge 
 
In this appeal, we address the question whether, under 
Code § 55-79.84(A) and (E), court costs, attorneys’ fees, 
and repair expenses incurred by a condominium unit owners’ 
association in instituting and maintaining a suit to 
enforce liens for unpaid assessments, as well as the fees 
of a special commissioner, have priority over payment of 
sums remaining due on a note secured by a first deed of 
trust.  Because we conclude that Code § 55-79.84(A) 
establishes the priority of liens, we will reverse that 
part of the judgment of the circuit court directing payment 
of the costs and other reimbursements allowed under Code 
§ 55-79.84(E) before payment of the note secured by the 
first deed of trust. 
The appellee, Unit Owners Association of Antietam 
Square Condominium (Association), filed a bill of complaint 
pursuant to Code § 55-79.84 to enforce memoranda of liens 
and a judgment lien for unpaid condominium assessments.  
The Association named as defendants the owners of record of 
the residence at 2734 Bordeaux Place in Woodbridge, also 
known as Unit 25-B-3 in Phase VI, Block 25 of Antietam 
Square Condominium (the subject property); BancPlus 
Mortgage Corporation (BancPlus), appellant’s predecessor-
in-interest and the holder of a note secured by a purchase 
money deed of trust on the subject property; the trustees 
under that deed of trust; and a parks and recreation 
association that had two judgment liens against the subject 
property. 
 
In response, BancPlus and the trustees filed an 
answer, asserting that the deed of trust securing payment 
of the note was a first lien against the subject property 
and therefore had priority over all claims asserted by the 
Association.  BancPlus asked that no order be entered 
adverse to its interests; that the circuit court sustain 
the priority of its lien as to the subject property; and 
that any sale of the subject property be made subject to 
the lien of BancPlus, or in the alternative, that BancPlus 
be paid in full.1
                     
1 The owners of the subject property, and the parks and 
recreation association also filed answers.  However, after 
the subject property was sold, the circuit court entered a 
decree dismissing those parties. 
 
2
 
On motion of the Association, the court entered a 
decree appointing a commissioner in chancery for the 
purpose of determining, inter alia, the amounts of the 
liens on the subject property and the priority of those 
liens.  After conducting a hearing, the commissioner filed 
a report, stating that the lien of the deed of trust held 
by BancPlus was second only to the lien of any outstanding 
real estate taxes owed on the subject property.  The 
commissioner in chancery further reported that the 
perfected liens and judgment liens for assessments filed by 
the Association were next in priority after the deed of 
trust.  The circuit court subsequently confirmed the report 
of the commissioner in chancery and appointed a special 
commissioner to sell the subject property. 
A few months later, the appellant, HomeSide Lending, 
Inc. (HomeSide), was substituted as a party in the place of 
BancPlus since HomeSide was the current beneficiary under 
the deed of trust.2  HomeSide had already commenced 
foreclosure proceedings on the subject property because 
payment on the note secured by the deed of trust was in 
default.  Upon receipt of notice of HomeSide’s impending 
foreclosure sale, the Association filed a motion seeking a 
                     
2 A substitute trustee under the deed of trust was also 
named as a party to the proceedings. 
 
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temporary restraining order to prevent HomeSide from 
proceeding with the sale.  HomeSide decided to postpone 
(and later canceled) its scheduled foreclosure sale.  
However, when HomeSide again advertised the subject 
property for foreclosure, the Association renewed its 
motion for a temporary restraining order, and the circuit 
court granted the motion.  The court enjoined HomeSide from 
proceeding with a foreclosure sale on the subject property 
and directed that the injunction remain in effect until the 
court entered a final decree in the cause and allocated the 
proceeds from the prospective sale of the subject property. 
 
Approximately a month later, the special commissioner 
of sale moved the court to accept or reject a purchase 
offer for the subject property.  The circuit court approved 
an amended purchase offer in the amount of $43,900 and 
directed that the liens and encumbrances of record on the 
subject property be transferred to the sale proceeds.3
                     
3 The circuit court also fixed the amount of certain 
seller’s charges in connection with the sale, leaving the 
sum of $38,183.13 as the net proceeds from the sale of the 
subject property.  These seller’s charges included a real 
estate commission in the amount of 6% of the sale price, 
the grantor’s tax, the purchaser’s costs in the amount of 
6% of the sale price, pro-rata and delinquent real estate 
taxes, and a settlement attorney’s fee in the amount of 
$250. 
 
4
 
Nine months later, the special commissioner of sale 
filed the following proposed scheme for distributing the 
net sale proceeds in the amount of $38,183.13: 
1. $8,880 to the special commissioner of sale; 
2. $19,463.50 to the Association for attorney’s fees 
incurred in instituting and maintaining this suit; 
 
3. $4,010.84 to the Association for its costs incurred 
in the suit; 
 
4. $4,111.34 to the Association for repairs undertaken 
in order to market the subject property; and 
 
5. The balance of approximately $1,717.45, plus all 
accrued interest, to HomeSide. 
 
 
HomeSide objected to the proposed distribution.  It 
alleged that, as of December 31, 1999, the amount owed to 
HomeSide on the note secured by the deed of trust on the 
subject property was $72,038.14, exclusive of attorney’s 
fees and costs.  HomeSide asked the court to reject the 
proposed scheme of distribution and to award HomeSide the 
entire sum of $38,183.13 (plus accrued interest) in partial 
satisfaction of its deed of trust. 
 
After conducting a hearing on HomeSide’s objection, 
the circuit court entered a decree disbursing the sale 
proceeds in accordance with the proposed scheme of 
distribution filed by the special commissioner of sale.  
The court reasoned that the language used in Code § 55-
79.84 “means that, without limitation, the people who . . . 
 
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brought the suit, incurred the attorney’s fees, [and] 
incurred the cost of the special commissioner are entitled 
to . . . reimbursement for costs and attorney’s fees.”  We 
awarded HomeSide this appeal. 
 
The question on appeal is whether the circuit court 
erred in approving a distribution of the sale proceeds that 
gave priority to the attorney’s fees, costs, and repair 
expenses incurred by the Association in instituting and 
maintaining this suit and in selling the property, and also 
to the fees of the special commissioner of sale, over the 
sums unpaid on HomeSide’s deed of trust.  We believe that 
the plain meaning of the terms used in Code § 55-79.84(A) 
and (E) answer this question.4  Thus, in interpreting those 
subsections, we look no further than the words utilized by 
the General Assembly.  Supinger v. Stakes, 255 Va. 198, 
205-06, 495 S.E.2d 813, 817 (1998) (citing City of 
Winchester v. American Woodmark Corp., 250 Va. 451, 457, 
464 S.E.2d 148, 152 (1995)).  “We must . . . assume that 
the legislature chose, with care, the words it used when it 
enacted the relevant statute, and we are bound by those 
words as we interpret the statute.”  Barr v. Town & Country 
                     
4 The General Assembly amended Code § 55-79.84 in 2000. 
Those amendments are not applicable to this suit.  
Therefore, we will cite to the version of Code § 55-79.84 
in existence before the 2000 amendments. 
 
6
Properties, Inc., 240 Va. 292, 295, 396 S.E.2d 672, 674 
(1990).  “The manifest intention of the legislature, 
clearly disclosed by its language, must be applied.”  
Anderson v. Commonwealth, 182 Va. 560, 566, 29 S.E.2d 838, 
841 (1944). 
 
Subsection (A) of Code § 55-79.84 provides that a 
condominium unit owners’ association “shall have a lien on 
every condominium unit for unpaid assessments levied 
against that condominium unit . . . .”  That subsection 
further states that any such lien, 
once perfected, shall be prior to all other liens and 
encumbrances except (i) real estate tax liens on that 
condominium unit, (ii) liens and encumbrances recorded 
prior to the recordation of the declaration, and (iii) 
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. 
 
As applicable at the time of these events, subsection (E) 
provided that “[t]he judgment or decree in an action 
brought pursuant to this section shall include, without 
limitation, reimbursement for costs and attorneys’ fees, 
together with interest at the maximum lawful rate for the 
sums secured by the lien . . . .” 
Contrary to the circuit court’s holding and the 
argument of the Association, subsection (E) of Code § 55-
79.84 did not establish an order of priority for the 
disbursement of proceeds from the sale of the subject 
 
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property.  That provision merely directed that any judgment 
or decree entered in an action brought pursuant to Code 
§ 55-79.84 to enforce a lien for unpaid condominium 
assessments must include provisions addressing 
reimbursement for costs and attorneys’ fees, and also 
interest on the sums secured by such lien.  The additional 
requirement that the enumerated reimbursements be “without 
limitation” did not give priority to the payment of those 
reimbursements over the payment of other liens or 
encumbrances.  In other words, subsection (E) allowed a 
unit owners’ condominium association to recover more than 
just the unpaid assessments when it brought a suit to 
enforce its lien, but nothing in that subsection addressed 
the priority of those allowed reimbursements in relation to 
other liens. 
Instead, the priority of liens is governed by 
subsection (A) of § 55-79.84.  That provision gives the 
perfected lien of a condominium unit owners’ association 
for unpaid assessments priority over other liens except 
three specific types of liens, the third of which is 
relevant to this suit, i.e., “sums unpaid on any first 
mortgages or first deeds of trust recorded prior to the 
perfection of said lien for assessments.”  Code § 55-
79.84(A).  Thus, pursuant to that section, HomeSide’s deed 
 
8
of trust on the subject property has priority over not only 
the lien of the Association for unpaid assessments but also 
the Association’s attorneys’ fees, costs, and interest on 
the sums secured by its lien.  This was the conclusion 
reached by the commissioner in chancery who reported that 
HomeSide’s lien was second in priority only to any 
outstanding real estate taxes. 
Therefore, we conclude that the circuit court erred in 
directing that the proceeds from the sale of the subject 
property be disbursed to the Association for its attorneys’ 
fees, costs, and repair expenses before payment to HomeSide 
on the note secured by its first deed of trust.  Hence, we 
will reverse that portion of the judgment of the circuit 
court and remand the case to the court for entry of an 
order of distribution in accordance with this opinion. 
However, we will affirm the judgment of the circuit 
court with respect to the fees of the special commissioner 
of sale.  The court appointed the special commissioner 
pursuant to the provisions of Code § 8.01-96.  In pertinent 
part, that section states, “In decreeing a sale under any 
provisions of law, the court may . . . appoint one or more 
special commissioners to make such a sale.”  The amount of 
a special commissioner’s fees under a decree for sale of 
property is fixed by statute.  Under Code § 8.01-109, a 
 
9
court may allow “a commission of five percent on amounts up 
to and including $100,000, and two percent on all amounts 
above $100,000.”  That section further specifies that, for 
the purposes of determining the commission, “each piece of 
property so sold shall constitute a separate sale, even 
though more than one piece of property is sold under the 
same decree.”  The sale of the subject property in this 
suit was a judicial sale.  See Staples v. Somers, 196 Va. 
581, 587-88, 84 S.E.2d 523, 526-27 (1954) (discussing 
incidents of judicial sale).  By fixing the amount of the 
commission in a judicial sale, we believe that the General 
Assembly intended that such commission be paid from the 
proceeds of that sale.  Cf. Code § 8.01-618.1 (paying fee 
out of fund in court to special commissioner for making 
report under Code § 8.01-617); Citizens Nat’l Bank of 
Charlottesville v. Manoni, 76  Va. 802, 808 (1882) (when 
property sold under decree of sale, taxed costs properly 
paid from proceeds).  Thus, the circuit court properly 
directed payment of the fees of the special commissioner 
from the sale proceeds before any distribution of the funds 
to HomeSide. 
For these reasons, we will affirm in part, and reverse 
in part, the judgment of the circuit court and remand for 
further proceedings consistent with this opinion. 
 
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Affirmed in part, 
reversed in part, 
   and remanded. 
 
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