Court Opinion

ID: 1059525
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:37:45.538892+00
Date Added: 2024-06-11T10:18:55.305523
License: Public Domain

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.

                               3
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 . . .

                              5
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

                              7
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.

                                10
     Affirmed in part,
     reversed in part,
     and remanded.

11