Effective July 1, 2018, Virginia’s unlawful detainer laws were amended to include new language beneficial to mortgagees and other foreclosure sale purchasers who seek to recover possession of foreclosed property by filing suit in a general district court.
A new subsection of the statute, Virginia Code § 8.01-126(C)(4), codifies common law and confirms that a former owner who continues to occupy a property after foreclosure is a tenant at sufferance. The tenancy may be terminated by giving a written notice to vacate three days prior to the effective termination date. Even more significantly, the language added to the statute confirms that the former owner may be held liable for payment of fair market rent from the date of foreclosure until the date the property is vacated, in addition to damages, reasonable attorneys’ fees, and court costs.
Prior to this amendment, Virginia’s unlawful detainer statutes were drafted with traditional landlord-tenant cases in mind, resulting in inconsistent rulings when courts tried to apply these laws to post-foreclosure evictions. For example, because they were typical in landlord-tenant evictions, courts routinely required foreclosure sale purchasers to give a five-day notice to vacate before possession would be awarded, even though this area of law was unsettled and no law clearly required it. The amendment clarifies, codifies, and shortens the notice requirement.
The Virginia Code also previously did not clarify whether rent and damages could be recovered by foreclosure sale purchasers, and, if so, when the rent or damage period started. As a result, courts would inconsistently start the “rental” period when the foreclosure sale was held, when the foreclosure deed was recorded, or when the notice to vacate was given. The recent amendment addresses these concerns, and did so in a way that favors the foreclosure purchasers by providing for accrual of rent from the date of foreclosure until the property is vacated, and permitting recovery of both rent and damages. The attorneys’ fee provision is also new.
This amendment to Virginia Code § 8.01-126, specific to post-foreclosure eviction cases initiated in a general district court, should bring more clarity to these types of cases going forward and make it easier for purchasers to recoup their losses when it makes sense to do so.
It also raises the stakes for prior owners who contest unlawful detainer suits in order to remain in the foreclosed property – for free – as long as possible. Foreclosure sale buyers, including REO lenders, may wish to consider seeking damages in these suits for strategic reasons other than the prospect of collection, such as to make it more difficult for prior owners to delay eviction through appeals.