I.[Reserved.]

II.Decisions Under Prior Law.

Seal. —

Neither § 55-57 nor § 55-48 contain seal requirements that § 55-51 operates to suspend, and neither of these statutes imposes a seal requirement on deeds, which the common law and the Statute of Conveyances, have already accomplished; these provisions only offer recommended language, purely permissive, not mandatory, for deeds already required to be under seal, and the presence or absence of either statute has no effect on the seal requirement. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

By its plain terms, the saving statute only saves deeds that fail to take effect by virtue of this chapter, and this saving statute appears in Chapter 4 of Title 55, but nowhere in that chapter is there a statutory requirement that deeds be under seal; that requirement comes from the common law and is incorporated into the definition of “deed” in the Statute of Conveyances, neither of which can be found in Chapter 4 of Title 55. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

I.[Reserved.]

II.Decided Under Prior Law.

A.Conveyance of Estates.

For history of this section, see Yancey v. Radford, 86 Va. 638 , 10 S.E. 972 , 1890 Va. LEXIS 24 (1890).

In general. —

Under this section no estate of inheritance or freehold or for a term of more than five years in lands shall be conveyed unless by deed or will. Smith v. Plaster, 151 Va. 252 , 144 S.E. 417 , 1928 Va. LEXIS 229 (1928).

Seal. —

One of the essential requisites of a deed is that it have a seal affixed thereto. Smith v. Plaster, 151 Va. 252 , 144 S.E. 417 , 1928 Va. LEXIS 229 (1928).

Fifteen-year lease did not include a seal of any kind, and thus, it failed to satisfy the common-law seal requirement embedded in the definition of “deed” under the Statute of Conveyances, nor did the lease include any specific seal substitutes recognized in § 11-3 ; because rent was received on a monthly basis, the occupation of the premises and the monthly payment of rent implied a month-to-month tenancy, which was paid for through the last month of occupancy. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

Neither § 55-57 nor § 55-48 contain seal requirements that § 55-51 operates to suspend, and neither of these statutes imposes a seal requirement on deeds, which the common law and the Statute of Conveyances, have already accomplished; these provisions only offer recommended language, purely permissive, not mandatory, for deeds already required to be under seal, and the presence or absence of either statute has no effect on the seal requirement. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

Common-law seal requirement antedated the General Assembly’s existence, and the legislative antecedent to the Statute of Conveyances made its first appearance in the Code of Virginia in 1705; so, even if Chapter 4 of Title 55 never existed, the seal requirement would nevertheless govern deeds of lease with a term exceeding five years. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

By its plain terms, the saving statute only saves deeds that fail to take effect by virtue of this chapter, and this saving statute appears in Chapter 4 of Title 55, but nowhere in that chapter is there a statutory requirement that deeds be under seal; that requirement comes from the common law and is incorporated into the definition of “deed” in the Statute of Conveyances, neither of which can be found in Chapter 4 of Title 55. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

General Assembly has engaged the common-law seal requirement but has never abolished it altogether for deeds governed by the Statute of Conveyances. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

Virginia law requires deed to transfer legal title to real property. However, this rule does not change the fact that petitioners possessed neither a legal nor an equitable interest in the property once the auctioneer’s hammer fell and the memorandum of sale was signed. At this point, and before settlement, the trustee retains legal title to the property, while the purchaser possesses the right to enforce the sale in equity. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

Legal title to property can be conveyed only by deed or will, and in this case the deed of trust did not convey the title to the property. FDIC v. Hish, 76 F.3d 620, 1996 U.S. App. LEXIS 4073 (4th Cir. 1996).

Not applicable to easements. —

Although § 55-2 was inapplicable to the conveyance of easements because an easement was not an estate, the circuit court’s judgment was reversed; the deeds at issue, along with a plat incorporated therein for descriptive purposes, did not contain operative words manifesting an intention to grant an easement. Considering the particular circumstances of the two deeds and the plat at issue, and resolving any doubt against the establishment of an easement, there was no conveyance of an express easement across the property owner’s two parcels for the benefit of the limited liability company’s parcel. Burdette v. Brush Mt. Estates, LLC, 278 Va. 286 , 682 S.E.2d 549, 2009 Va. LEXIS 91 (2009).

Under this section leases for more than five years must be by deed, but there is no statutory provision in this State which in terms declares that other actual leases must be in writing. If the situation is covered at all, it must fall under either the sixth or seventh clause of the statute of frauds. Smith v. Payne, 153 Va. 746 , 151 S.E. 295 , 1930 Va. LEXIS 267 (1930).

But section does not apply to lease for five years with option to renew. —

A lease for a period of five years, with an option to the lessee to continue for another period of five years, is not a lease for a term of more than five years within the meaning of this section. James v. Kibler's Adm'r, 94 Va. 165 , 26 S.E. 417 , 1896 Va. LEXIS 155 (1896).

Since an easement is not an estate, the provisions of § 55-2 do not control the conveyance of an easement. Burdette v. Brush Mt. Estates, LLC, 278 Va. 286 , 682 S.E.2d 549, 2009 Va. LEXIS 91 (2009).

And it has no application to the creation by parol of trusts in personalty or in the proceeds of real estate. Riggan's Adm'r v. Riggan, 93 Va. 78 , 24 S.E. 920 , 1896 Va. LEXIS 54 (1896).

This section does not bar the establishment of an oral trust in land or in a leasehold for more than five years, nor does it bar the oral transfer of a beneficiary’s interest in a trust. Burns v. Equitable Assocs., 220 Va. 1020 , 265 S.E.2d 737, 1980 Va. LEXIS 197 (1980).

No erasure or alteration in a conveyance, nor even the cancellation thereof by mutual consent of the parties, can divest an estate already vested by operation of the deed; for that would be in conflict with this section, which declares that no estate of inheritance or freehold, or for a term of more than five years in lands, shall be conveyed unless by deed or will. Brooks v. Clintsman, 124 Va. 736 , 98 S.E. 742 , 1919 Va. LEXIS 163 (1919).

Nor is the grantee’s title divested by the return of the deed to be canceled. Graysons v. Richards, 37 Va. (10 Leigh) 57, 1839 Va. LEXIS 18 (1839); Jones v. Neale, 2 Patton & H. 339 (1856).

Husband’s expression of desire that wife own property together did not convey legal title subsequent to writing. —

Since writing, where husband expressed his desire that he and his wife own property together, was neither a deed nor a will, it did not convey legal title or joint ownership of any kind to the real estate. Westbrook v. Westbrook, 5 Va. App. 446, 364 S.E.2d 523, 4 Va. Law Rep. 1770, 1988 Va. App. LEXIS 4 (1988).

B.Parol Gift or Promise of Gift.

Effect of statute. —

Prior to May 1, 1888, the date upon which the Code of 1887 took effect, a parol gift or a promise of a gift of land, to be consummated by deed, if followed by possession and improvements of the land, was enforceable under the doctrine of such cases as Halsey v. Peters’ Ex’r, 79 Va. 60 (1884); and a contract for a gift to be perfected by will, under similar circumstances, was enforceable under the doctrine announced in Burdine v. Burdine’s Ex’r, 98 Va. 515 , 36 S.E. 992 , 81 Am. St. R. 741 (1900). But in view of the history and apparent purpose of this section, which first made its appearance in the Code of 1887, no such contract or gift is now enforceable. Wohlford v. Wohlford, 121 Va. 699 , 93 S.E. 629 , 1917 Va. LEXIS 69 (1917) (see Nicholas v. Nicholas, 100 Va. 660 , 42 S.E. 669 , rehearing denied, 100 Va. 665 , 42 S.E. 866 (1902); Brooks v. Clintsman, 124 Va. 736 , 98 S.E. 742 , rehearing denied, 124 Va. 749 , 100 S.E. 394 (1919); Frizzell v. Frizzell, 149 Va. 815 , 141 S.E. 868 (1928); Creed v. Goodson, 153 Va. 98 , 149 S.E. 509 (1929)).

At common law voluntary parol partition of lands between coparceners was valid without deed. Not until § 2413 of the Code of 1887 became effective on May 1, 1888, was a deed required to effect such partition. Rowe v. Big Sandy Coal Corp., 197 Va. 136 , 87 S.E.2d 763, 1955 Va. LEXIS 205 (1955).

It was contended on behalf of the appellant that this section had no application, because the alleged contract was based upon a valuable consideration, to wit: the complainant’s change of position by leaving his own farm and bestowing his labor and care upon that of another, and the sale of his own land and application of the proceeds to improvements upon the place with reference to which he had a parol contract. But in this respect, the case cannot be distinguished in principle from Halsey v. Peter’s Ex’r, 79 Va. 60 (1884), the doctrine of which and the other Virginia cases of that type this section was expressly designed to abolish. Wohlford v. Wohlford, 121 Va. 699 , 93 S.E. 629 , 1917 Va. LEXIS 69 (1917).

Prior to the adoption of this section, an oral promise to give or devise land, followed by possession and improvements, was sufficient to support a right to a conveyance of the same from the heirs or devisees of the donor, but since the adoption of this section such a promise must be in writing before it can be enforced. Mann v. Mann, 159 Va. 240 , 165 S.E. 522 , 1932 Va. LEXIS 187 (1932).

It was intended by this section to require some evidence other than parol evidence of a gift of land. In the instant case complainant, who was asserting a gift of land from his father to him, has his evidence in writing and although this writing was crudely drawn it was quite clear that the father intended to give a tract of land to the son in consideration of the maintenance of the father and his wife. Creed v. Goodson, 153 Va. 98 , 149 S.E. 509 , 1929 Va. LEXIS 245 (1929).

But the evidence required need not be under seal but only in writing. Creed v. Goodson, 153 Va. 98 , 149 S.E. 509 , 1929 Va. LEXIS 245 (1929).

Oral contract for consideration fully performed. —

This section had no application where plaintiff relied upon and proved an oral contract for the purchase of a business and what pertained to it in exchange for his services in conducting and operating said business for the lifetime of decedent, which consideration he fully performed. Clark v. Atkins, 188 Va. 668 , 51 S.E.2d 222, 1949 Va. LEXIS 238 (1949).

An oral contract to devise land for a consideration fully performed is not embraced by the provisions of this section. Wright v. Dudley, 189 Va. 448 , 53 S.E.2d 29, 1949 Va. LEXIS 187 (1949).

Oral promise supported by consideration may constitute contract of sale. —

If an oral promise to make a conveyance of land is supported by valuable consideration, it is a contract of sale and not a promise to give. Mann v. Mann, 159 Va. 240 , 165 S.E. 522 (1932). But see §§ 11-1 and 11-2 as to necessity that contract for sale of realty be in writing .

In considering what advancements are to be brought into hotchpot under the provisions of § 64.1-17 regard must also be had to this section. Nicholas v. Nicholas, 100 Va. 660 , 42 S.E. 669 , 1902 Va. LEXIS 72 (1902).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Virginia law requires deed to transfer legal title to real property. —

Lease agreement did not create a life estate in favor of the mother because § 55-2 required that any purported life estate be transferred through a writing in a deed or a will. Harris v. Finnerty, 74 Va. Cir. 551, 2006 Va. Cir. LEXIS 200 (Fairfax County Oct. 26, 2006).

Under this section leases for more than five years must be by deed. —

Where a lease for more than five years was not in writing, a former tenant’s claim for breach of the lease was defeated by both the statute of frauds codified in § 11-2 , and by the statute of conveyances, codified in § 55-2; therefore, the demurrers thereto were sustained. Flamingo Lounge & Rest., Inc. v. Pure Gold Gentlemen's Club & Sports Bar, L.L.C., 62 Va. Cir. 507, 2003 Va. Cir. LEXIS 306 (Norfolk Sept. 23, 2003).

Defendant’s demurrer to a motion for judgment seeking recovery on a commercial lease was overruled because, although § 55-2 required that a lease for a term of more than five years had to be conveyed by deed, all that was required of the deed was a manifest intent to grant. Kassco, L.L.C. v. Geodigital Mapping, Inc., 69 Va. Cir. 137, 2005 Va. Cir. LEXIS 327 (Loudoun County Oct. 12, 2005).

No oral contract found. —

Trial court granted a trust the possession of a residence because the court found that there was not an oral contract between the trust and the occupant of the residence that permitted the occupant to reside therein absent a written lease. The court accepted the testimony of the attorney who drafted the trust that the grantor made no mention of an oral agreement that would have allowed the occupier to remain in the property, and the trust document did not mention allowing the occupier to remain in the property during the occupier’s lifetime. Stanley v. Stanley, 102 Va. Cir. 366, 2019 Va. Cir. LEXIS 353 (Orange County Aug. 16, 2019).

Quiet title. —

Plaintiff was granted a judgment on its claim to quiet title to the subject properties as to any claims by heirs, except the non-party heirs, because a memorandum between two of the heirs to portion of the subject property did not constitute a valid deed or will and did not convey an interest in the property where it specifically referenced a “quit claim deed,” the first heir had no ownership interest in the property to convey to a second heir, a third heir was not a bona fide purchaser of the property where he had both actual and inquiry notice that the first heir had conveyed his interest to the second heir, and the deed of partition conveyed no greater title or interest to other heirs than they had before it was made. Wintergreen Homestead, L.L.C. v. Ray M. Pennington & Bettie's Wintergreen, L.L.C., 104 Va. Cir. 362, 2020 Va. Cir. LEXIS 43 (Nelson County Mar. 23, 2020).

I.[Reserved.]

II.Decided Under Prior Law.

History of statute. —

For history of the various acts on this subject, from 1757, referring only to slaves, to the present, see the cases of Thomas’ Adm’r v. Lewis, 89 Va. 1 , 15 S.E. 389 (1892); First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

This section and § 55-96 are so closely related as to subject matter of gifts that they may be said to be in pari materia, and should be construed together. Both relate to goods and chattels, this section wholly, and § 55-96 in part. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

This section has no application to the creation by parol of trusts in personalty or in the proceeds of real estate. Riggan's Adm'r v. Riggan, 93 Va. 78 , 24 S.E. 920 , 1896 Va. LEXIS 54 (1896).

Nor does it apply to gifts causa mortis. —

The words “no gift” do not refer to gifts causa mortis, nor does the section embrace them. Thomas' Adm'r v. Lewis, 89 Va. 1 , 15 S.E. 389 , 1892 Va. LEXIS 73 (1892).

The words “goods or chattels” do not apply to choses in action. —

The words “goods or chattels” used in this section, relating to gifts, do not apply to choses in action, but only to visible and tangible property. A chose in action is the money, damages or thing owing; the bond or note, etc., is but the evidence of it. Bank stock is a chose in action. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901) (see Gardner v. Moore’s Adm’r, 122 Va. 10 , 94 S.E. 162 (1917)).

This section, § 55-87, former §§ 55-88 through 55-90 and former § 55-94 relate to gifts, loans, sales, or partition of the same kind of property, described by the same terms namely, “goods or chattels” or “goods and chattels.” They are closely connected in subject matter and in the language employed, and it can hardly be doubted that whatever was meant by the words “goods or chattels” or “goods and chattels” in either one of these sections must have been intended of the same words in each of the other sections. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

Where an alleged gift by a mother to her daughter, with whom she resided, was not of money, but was a part of a judgment which the donor had recovered against her son, a mere chose in action, the provision of this section, relating to the residence together of the donor and donee at their place of residence, has no application thereto. Gardner v. Moore's Adm'r, 122 Va. 10 , 94 S.E. 162 , 1917 Va. LEXIS 78 (1917).

“Paraphernalia” defined. —

For purposes of this section, the Supreme Court would adopt the following definition of “paraphernalia” found in the Oxford English Dictionary (1971): “personal belongings, esp., articles of adornment or attire, trappings; also the articles that compose an apparatus, outfit or equipment; . . . appointments or appurtenances in general.” Teed v. Powell, 236 Va. 36 , 372 S.E.2d 131, 5 Va. Law Rep. 474, 1988 Va. LEXIS 113 (1988).

Requirements for gift are intention and actual or constructive delivery. —

In order for a gift inter vivos to be effective there must be an intention in praesenti on the part of the donor to make the gift and there must be such actual or constructive delivery as divests the donor of all dominion and control over the property and invests it in donee. Taylor v. Smith, 199 Va. 871 , 102 S.E.2d 160, 1958 Va. LEXIS 135 (1958).

In Virginia, in order for there to be a valid gift of personal property, it must be shown that there existed a present intention on the part of the donor to make a gift, coupled with a delivery, either actual or constructive, such as to divest the donor of all dominion and control over the property and place it in the donee. In addition to the common-law requirements of a valid gift, this section requires a deed or will, unless actual possession comes to and remains with the donee or some person claiming under him. Sadler v. Garrett, 45 Bankr. 190, 1984 Bankr. LEXIS 4429 (Bankr. E.D. Va. 1984).

What constitutes delivery. —

The delivery of possession may be actual, constructive or symbolical, depending upon the nature of the thing given. Yancey v. Field, 85 Va. 756 , 8 S.E. 721 , 1889 Va. LEXIS 88 (1889); Thomas' Adm'r v. Lewis, 89 Va. 1 , 15 S.E. 389 , 1892 Va. LEXIS 73 (1892).

To render a gift effectual, the thing given, or the means of obtaining it, must be delivered by the donor to the donee, or to his agent, and accepted by him. Yancey v. Field, 85 Va. 756 , 8 S.E. 721 , 1889 Va. LEXIS 88 (1889).

Delivery vesting equitable title is all that is necessary. —

A delivery which vests an equitable title only in the donee is all that is necessary to constitute a valid gift. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901); Thomas' Adm'r v. Lewis, 89 Va. 1 , 15 S.E. 389 , 1892 Va. LEXIS 73 (1892).

Not necessary that deed be recorded. —

Under this statute, a deed is valid between the parties even without being recorded. Henry v. Graves, 57 Va. (16 Gratt.) 244, 1861 Va. LEXIS 5 (1861).

Donor and donee residing together. —

If the donor and donee reside together, possession or delivery at their common place of residence will not be sufficient to constitute a valid gift. Thomas' Adm'r v. Lewis, 89 Va. 1 , 15 S.E. 389 , 1892 Va. LEXIS 73 (1892); First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

This section applies to a husband and wife residing together regardless of whether there were any creditors of the donor at the time the alleged gifts were made. Kendrick v. Watkins, 121 F.2d 287, 1941 U.S. App. LEXIS 3202 (4th Cir. 1941).

This section was held applicable where husband bought furniture and other household articles several years before he went bankrupt and gave them to his wife without executing a deed or other writing. Kendrick v. Watkins, 121 F.2d 287, 1941 U.S. App. LEXIS 3202 (4th Cir. 1941).

Sale to wife and resale to husband. —

A husband, a merchant, conveyed to his wife a stock of goods which she immediately resold to him. There was no valuable consideration for either transfer. After these transfers the husband became indebted to complainant for purchases of merchandise in the ordinary course of business. These purchases from complainant by the husband were made in his own name and solely on his own credit. The husband at the time of the sale to his wife and resale, and thereafter, continued in actual possession of the stock of goods. It was held that neither this section nor former § 55-83 in any way affected the title which the husband took under the contract of resale, and that the sale and resale between husband and wife did not make the wife a debtor as to purchases from complainant made by her husband. Canada v. C.H. Beasley & Bros., 132 Va. 166 , 111 S.E. 251 (1922), overruled in part by Lofton Ridge, LLC v. Norfolk S. Ry. Co., 268 Va. 377 , 601 S.E.2d 648 (2004), to the extent that it suggests judicial estoppel applies in cases where the parties are not the same and do not have a derivative liability relationship .

Jewelry as marital property. —

Where husband testified that he gave his wife jewelry valued at $5,000 during the course of the marriage, the commissioner omitted the jewelry completely from the property that was valued for purposes of making an equitable distribution award, and the wife argued that the jewelry should have been excluded because it was “personal paraphernalia” and, thus, was exempt as a gift under this section, the court rejected the wife’s argument and classified the jewelry as marital property. Rein v. Rein, 1994 Va. App. LEXIS 699 (Va. Ct. App. Nov. 29, 1994).

Burden of proof. —

The one claiming the validity of the gift has the burden of proving by clear and convincing evidence all the facts and circumstances which would show that the gift was, in fact, a valid one. Sadler v. Garrett, 45 Bankr. 190, 1984 Bankr. LEXIS 4429 (Bankr. E.D. Va. 1984).

When a donee claims title to personal property in a gift inter vivos, the burden of proof rests upon him to establish by clear and convincing evidence every fact and circumstance necessary to show that validity of the gift. The intention of the donor to part with title and delivery of possession are essential requirements. Nelson v. Liggan, 189 Va. 637 , 53 S.E.2d 798, 1949 Va. LEXIS 207 (1949).

The law does not presume a gift and where a donee claims title to personal property by virtue of a gift inter vivos, the burden of proof rests upon him to show every fact and circumstance necessary to constitute a valid gift by clear and convincing evidence. Taylor v. Smith, 199 Va. 871 , 102 S.E.2d 160, 1958 Va. LEXIS 135 (1958).

Evidence was insufficient to establish a gift of money found, after the alleged donor’s death, in a safety deposit box which had been rented by the alleged donor in the name of the alleged donee. Taylor v. Smith, 199 Va. 871 , 102 S.E.2d 160, 1958 Va. LEXIS 135 (1958).

Three shotguns and a rifle given by decedent to her son did not qualify as gifts inter vivos where the son lived all his life with the decedent and therefore no actual possession existed. Teed v. Powell, 236 Va. 36 , 372 S.E.2d 131, 5 Va. Law Rep. 474, 1988 Va. LEXIS 113 (1988).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

No relinquishment of dominion and control. —

When a testator and his widow had saved cash in a fruitcake tin, the cash belonged to the widow by virtue of the will, not as an inter vivos gift, as the gift had not been completed. The testator, who told his son to give the money to the widow after his death, had not relinquished dominion and control over it, and the widow admitted that she did not know where the tin was and that she relied upon the son to deliver it to her after the testator died. Davenport v. Walters, 69 Va. Cir. 334, 2005 Va. Cir. LEXIS 332 (Norfolk Nov. 30, 2005).

I.[Reserved.]

II.Decided Under Prior Law.

One cannot suffer an unlawful forfeiture of something he has gained contrary to law or the terms of his own undertaking. Sundin v. Klein, 221 Va. 232 , 269 S.E.2d 787, 1980 Va. LEXIS 240 (1980), cert. denied, 452 U.S. 911, 101 S. Ct. 3043, 69 L. Ed. 2d 414, 1981 U.S. LEXIS 2367 (1981).

Consent or participation in an immoral or unlawful act by plaintiff precludes recovery for injuries sustained as a result of that act. Wackwitz v. Roy, 244 Va. 60 , 418 S.E.2d 861, 8 Va. Law Rep. 3230, 1992 Va. LEXIS 58 (1992).

Although punishment for suicide rescinded, suicide remains common-law crime. —

That the legislature affirmatively rescinded the punishment for suicide without decriminalizing the act confirmed to the district court that, although the State cannot punish a suicide in the respects indicated, it in fact remains a common-law crime. Hill v. Nicodemus, 755 F. Supp. 692, 1991 U.S. Dist. LEXIS 1479 (W.D. Va. 1991), aff'd, 979 F.2d 987, 1992 U.S. App. LEXIS 30063 (4th Cir. 1992).

Although the General Assembly has rescinded the punishment for suicide, it has not decriminalized the act. Suicide, therefore, remains a common-law crime in Virginia as it does in a number of other common-law states. Wackwitz v. Roy, 244 Va. 60 , 418 S.E.2d 861, 8 Va. Law Rep. 3230, 1992 Va. LEXIS 58 (1992).

Suicide remains a common-law crime in Virginia. Hill v. Nicodemus, 979 F.2d 987, 1992 U.S. App. LEXIS 30063 (4th Cir. 1992).

To constitute suicide at common law the person must be of years, of discretion and of sound mind; this common-law rule comports with a contemporary definition of suicide. Wackwitz v. Roy, 244 Va. 60 , 418 S.E.2d 861, 8 Va. Law Rep. 3230, 1992 Va. LEXIS 58 (1992).

Where the plaintiff alleged that her decedent was of unsound mind when he killed himself, if this were so, then he was not guilty of the common-law crime of suicide, and his act would not be a bar per se to the administrator’s action. Wackwitz v. Roy, 244 Va. 60 , 418 S.E.2d 861, 8 Va. Law Rep. 3230, 1992 Va. LEXIS 58 (1992).

Convict may take, hold and dispose of his property. —

There is no statute in Virginia that deprives a convict of the power to make contracts or conveyances of his real estate, and corruption of blood and forfeiture of estate on conviction of felony as at common law has been expressly abolished by this section. So, in Virginia, the right of a person to take, hold, and dispose of his property, real and personal, is not affected by his attainder of felony. Therefore, a convict is capable of executing a valid power of attorney. Haynes v. Peterson, 125 Va. 730 , 100 S.E. 471 , 1919 Va. LEXIS 62 (1919).

Slayer statute did not implicate prohibition against corruption of blood. —

Version of the Virginia Slayer Statute, § 55-401 et seq., which was in effect on the date of the decedent’s murder in 2005 neither implicated nor violated Virginia’s prohibition against corruption of blood or forfeiture of estate. Bell v. Casper, 282 Va. 203 , 717 S.E.2d 783, 2011 Va. LEXIS 187 (2011), cert. denied, 566 U.S. 962, 132 S. Ct. 1971, 182 L. Ed. 2d 819, 2012 U.S. LEXIS 3127 (2012).

I.[Reserved.]

II.Decided Under Prior Law.

A deed operates as a conveyance without any acknowledgment, under this section. Acknowledgment is necessary for recordation, but not to pass title. Title passes by the execution and delivery of the deed. Gannaway v. Federal Land Bank, 148 Va. 176 , 138 S.E. 564 , 1927 Va. LEXIS 219 (1927); Peatross v. Gray, 181 Va. 847 , 27 S.E.2d 203, 1943 Va. LEXIS 233 (1943).

I.[Reserved.]

II.Decided Under Prior Law.

In general. —

Under this statute every conceivable interest in or claim to real estate, whether present or future, vested or contingent, and however acquired may be disposed of by deed or will. Young v. Young, 89 Va. 675 , 17 S.E. 470 , 1893 Va. LEXIS 86 (1893) (see Carrington v. Goddin, 54 Va. (13 Gratt.) 587 (1857); Wilson v. Langhorne, 102 Va. 631 , 47 S.E. 871 (1904); Heuser v. Belvin, 118 Va. 346 , 87 S.E. 594 (1916)).

Although § 55-2 was inapplicable to the conveyance of easements because an easement was not an estate, the circuit court’s judgment was reversed; the deeds at issue, along with a plat incorporated therein for descriptive purposes, did not contain operative words manifesting an intention to grant an easement. Considering the particular circumstances of the two deeds and the plat at issue, and resolving any doubt against the establishment of an easement, there was no conveyance of an express easement across the property owner’s two parcels for the benefit of the limited liability company’s parcel. Burdette v. Brush Mt. Estates, LLC, 278 Va. 286 , 682 S.E.2d 549, 2009 Va. LEXIS 91 (2009).

Construction with other law. —

Virginia Conservation Easement Act [§§ 10.1-1009 through 10.1-1016 ] did not create a new right to burden land by a negative easement in gross for the purpose of land conservation and historic preservation, but facilitated the continued creation of such easements by providing a clear statutory framework under which tax exemptions are made available to charitable organizations devoted to those purposes and tax benefits and incentives are provided to the grantors of such easements, contrary to the common law; moreover, the easement at issue was not of a novel character and is consistent with the statutory recognition of negative easements in gross for conservation and historic purposes. United States v. Blackman, 270 Va. 68 , 613 S.E.2d 442, 2005 Va. LEXIS 69 (2005).

Section changed common-law rule. —

Under this section, the common-law rule was changed and every conceivable interest in or claim to real estate, whether present or future, vested or contingent, and however acquired, may be disposed of by deed or will. Weddle v. Nunley, 43 Bankr. 415, 1984 Bankr. LEXIS 4775 (Bankr. W.D. Va. 1984).

The statute changed the common-law rule by declaring that “any interest in or claim to real estate may be disposed of by deed or will.” Carrington v. Goddin, 54 Va. (13 Gratt.) 587, 1857 Va. LEXIS 22 (1857); Mustard v. Wohlford's Heirs, 56 Va. (15 Gratt.) 329, 1859 Va. LEXIS 19 (1859).

Right of entry or action. —

A party having an interest in or claim to land held adversely by another may, under this section, sell and convey the same, and his grantee may maintain ejectment for it. Carrington v. Goddin, 54 Va. (13 Gratt.) 587, 1857 Va. LEXIS 22 (1857) (see Dobson v. Culpepper, 64 Va. (23 Gratt.) 352 (1873); Mustard v. Wohlford’s Heirs, 56 Va. (15 Gratt.) 329 (1859)).

Future estates. —

Under this section future estates may be created both by will and deed. Harlan v. Weatherly, 183 Va. 49 , 31 S.E.2d 263, 1944 Va. LEXIS 129 (1944).

Contingent remainders. —

Under this section a contingent remainder may be conveyed by deed. Young v. Young, 89 Va. 675 , 17 S.E. 470 , 1893 Va. LEXIS 86 (1893) (see Heuser v. Belvin, 118 Va. 346 , 87 S.E. 594 (1916)).

Under this section contingent remainders and executory devises may be disposed of by deed or will. Copenhaver v. Pendleton, 155 Va. 463 , 155 S.E. 802 , 1930 Va. LEXIS 178 (1930); In re Camden, 217 F. Supp. 634, 1963 U.S. Dist. LEXIS 10194 (W.D. Va. 1963).

Under this section the right of contingent remaindermen to convey their interests in property cannot be questioned. Larkin v. Wright, 185 Va. 447 , 39 S.E.2d 355, 1946 Va. LEXIS 216 (1946); In re Camden, 217 F. Supp. 634, 1963 U.S. Dist. LEXIS 10194 (W.D. Va. 1963).

At common law, a contingent remainder passed only by estoppel, but under this section any interest in, or claim to, real estate may be transferred by deed or will. Hence, the deed of the debtor, conveying all of his property of every description includes his interest in a contingent remainder. Wilson v. Langhorne, 102 Va. 631 , 47 S.E. 871 , 1904 Va. LEXIS 110 (1904).

Under the provisions of this section and §§ 55-49, 55-75, the effect of a joint devise to testator’s three sons, with a conditional limitation over that if one or more of them shall die, leaving no issue, his or their share, as the case may be, shall go to his surviving brothers or brother, is to invest the devisees under such a will with the authority to convey and relinquish all their right, title and interest in the land devised, and the grantee of them takes a fee simple estate. Smith v. Smith, 112 Va. 617 , 72 S.E. 119 , 1911 Va. LEXIS 127 (1911).

Vested remainder subject to divestment. —

Whether interest acquired was a vested remainder subject to divestment or a contingent remainder, it was nevertheless transferable under this section and so passed to trustee in bankruptcy. In re Camden, 217 F. Supp. 634, 1963 U.S. Dist. LEXIS 10194 (W.D. Va. 1963).

Executory interests. —

An executory devise stands upon precisely the same footing as contingent remainders insofar as transmissibility of the subject thereof is concerned, and an interest in such subject may be conveyed (certainly by virtue of such a statute as this section) prior to the happening of the contingency upon which the interest is appointed by the will to vest in right of possession, provided the grantor has at the time of conveyance a possibility of taking coupled with an interest. This he has, according to the authorities, if he, at such time, is an ascertained person to take under the devise. And he is such an ascertained person if he is designated by name or by class, all of which class are to take, and one of which he is. Medley v. Medley, 81 Va. 265 , 1886 Va. LEXIS 95 (1886); Prince v. Barham, 127 Va. 462 , 103 S.E. 626 , 1920 Va. LEXIS 64 (1920).

Where a possible taker under an executory devise is designated by class, and he should die before the testator, if the will speaks as of that time in designating the person to take, the survivors of the class will take; but if he survives such time, his interest, under an executory devise, equally as if it were a contingent remainder, is descendible, and assignable in equity, and also at law, certainly by virtue of this statute in Virginia. Many of the authorities hold that the same is true at common law since the statute of uses and of wills dispenses with livery of seisin. Prince v. Barham, 127 Va. 462 , 103 S.E. 626 , 1920 Va. LEXIS 64 (1920).

Possibility of reverter. —

Though possibilities of reverter were inalienable at common law by deed or will, they are alienable by both deed and will under the provisions of this section and § 64.1-46. Copenhaver v. Pendleton, 155 Va. 463 , 155 S.E. 802 , 1930 Va. LEXIS 178 (1930) (see County School Bd. v. Dowell, 190 Va. 676 , 58 S.E.2d 38 (1950); Sanford v. Sims, 192 Va. 644 , 66 S.E.2d 495 (1951)).

Under these sections a possibility of reverter, whether it depends upon a base or qualified fee or upon a fee simple limited upon a condition subsequent, is alienable by either deed or will, at any time, either before or after the happening of the contingency or the breach of the condition subsequent upon which the possibility of reverter depends. Copenhaver v. Pendleton, 155 Va. 463 , 155 S.E. 802 , 1930 Va. LEXIS 178 (1930).

Right to construct sewer. —

A deed conveying part of a tract of land (consisting of 47.5 acres) provided that the grantee should have a right to construct a sewer through the property of the grantor. The deed contemplated the use of the easement not only for the drainage of the 47.5 acres conveyed, but also as essential to the drainage of an incorporated town, and other lands not included in that particular tract. It was held that the easement was not appurtenant to the 47.5 acres conveyed by the deed. It was either an easement in gross, or else extends the area of the land to which it is appurtenant, so as, at least, to include land naturally drained by the channel. If it is to be regarded as an easement in gross, it is still “an interest in land,” and, therefore, may be disposed of by deed or will under this section. City of Richmond v. Richmond Sand & Gravel Co., 123 Va. 1 , 96 S.E. 204 , 1918 Va. LEXIS 1 (1918).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Contingent remainders. —

Because there was no reason that would prevent a beneficiary from alienating a part of the beneficiary’s interest in a trust, pursuant to §§ 55-6 and 55-52, a commissioner’s determination that a beneficiary’s expectancy went directly to the beneficiary’s surviving children was affirmed. Bowman v. Mericle, 69 Va. Cir. 87, 2005 Va. Cir. LEXIS 259 (Norfolk Aug. 31, 2005).

I.[Reserved.]

II.Decided Under Prior Law.

The effect of this section is to validate remainders in such property as remains undisposed of by the life tenant where a fee simple estate arises when the first taker is given a life estate coupled with the power of absolute disposition. Rawlings v. Briscoe, 214 Va. 44 , 197 S.E.2d 211, 1973 Va. LEXIS 252 (1973).

The effect of this section is to validate the gift over where the first taker is given an express estate for life, coupled with the absolute power of disposition. Pigg v. Haley, 224 Va. 113 , 294 S.E.2d 851, 1982 Va. LEXIS 275 (1982).

This section modifies the rule of May v. Joynes. Clarkson v. Bliley, 185 Va. 82 , 38 S.E.2d 22, 1946 Va. LEXIS 182 (1946); Crisman v. Swanson, 193 Va. 247 , 68 S.E.2d 502, 1952 Va. LEXIS 130 (1952); Trustees of Duncan Mem. Methodist Church v. Ray, 195 Va. 803 , 80 S.E.2d 601, 1954 Va. LEXIS 159 (1954); Borum v. National Valley Bank, 195 Va. 899 , 80 S.E.2d 594, 1954 Va. LEXIS 168 (1954); Pigg v. Haley, 224 Va. 113 , 294 S.E.2d 851, 1982 Va. LEXIS 275 (1982).

The application of the doctrine of May v. Joynes , 61 Va. (20 Gratt.) 692 (1871), is limited by this section to the property that remains after a life estate with power in the life tenant to dispose of such property if he desires. Rule v. First Nat'l Bank, 182 Va. 227 , 28 S.E.2d 709, 1944 Va. LEXIS 172 (1944).

Under this section that which was void for repugnancy and uncertainty under the doctrine of May v. Joynes, 61 Va. (20 Gratt.) 692 (1871), is made valid. Now the gift over is validated where the first taker is given an express estate for life, coupled with the power of absolute disposition. Borum v. National Valley Bank, 195 Va. 899 , 80 S.E.2d 594, 1954 Va. LEXIS 168 (1954).

The rule of May v. Joynes, 61 Va. (20 Gratt.) 692 (1871) held that a life estate coupled with the absolute power of disposition created a fee simple estate invalidating the remainder; this rule obviously could defeat a testator’s intent, and, therefore, a statute was enacted to validate the remainder to the extent that the life tenant had not disposed of it. First Va. Bank v. United States, 490 F.2d 532, 1974 U.S. App. LEXIS 10638 (4th Cir. 1974).

But does not save property lawfully disposed of by life tenant during lifetime. —

This section does not save property from the operation of the rule in May v. Joynes, 61 Va. (20 Gratt.) 692 (1871), where the life tenant, with the full power of sale and disposition, lawfully disposed of it during her lifetime. Rawlings v. Briscoe, 214 Va. 44 , 197 S.E.2d 211, 1973 Va. LEXIS 252 (1973).

The following requirements must be met in order to apply this section: (1) The first taker must be given an express estate “for life.” (2) There must be “conferred expressly or by implication a power upon the life tenant in his lifetime or by will to dispose absolutely of said property.” (3) There must be “a limitation in remainder over.” (4) There must be a corpus on which the “limitation in remainder over” can operate. Borum v. National Valley Bank, 195 Va. 899 , 80 S.E.2d 594, 1954 Va. LEXIS 168 (1954); Pigg v. Haley, 224 Va. 113 , 294 S.E.2d 851, 1982 Va. LEXIS 275 (1982).

This section does not preclude creation of life estate by implication. —

This section does not require that a life estate be created by express words or preclude creation of such an estate by implication where there is no power of disposal in the first taker. Robinson v. Caldwell, 200 Va. 353 , 105 S.E.2d 852, 1958 Va. LEXIS 195 (1958); Edwards v. Bradley, 227 Va. 224 , 315 S.E.2d 196, 1984 Va. LEXIS 236 (1984).

But it applies only to an estate granted expressly for life. Hall v. Hoak, 184 Va. 821 , 36 S.E.2d 567, 1946 Va. LEXIS 145 (1946); Crisman v. Swanson, 193 Va. 247 , 68 S.E.2d 502, 1952 Va. LEXIS 130 (1952); Trustees of Duncan Mem. Methodist Church v. Ray, 195 Va. 803 , 80 S.E.2d 601, 1954 Va. LEXIS 159 (1954); Borum v. National Valley Bank, 195 Va. 899 , 80 S.E.2d 594, 1954 Va. LEXIS 168 (1954); Gardner v. Worrell, 201 Va. 355 , 111 S.E.2d 285, 1959 Va. LEXIS 234 (1959).

This section, by its express terms, applies only when there is a life estate in the first taker, and is not applicable when the estate of the first taker is a fee, whether created by express words or by implication. Clarkson v. Bliley, 185 Va. 82 , 38 S.E.2d 22, 1946 Va. LEXIS 182 (1946); Borum v. National Valley Bank, 195 Va. 899 , 80 S.E.2d 594, 1954 Va. LEXIS 168 (1954).

The amendment of 1908 applied to “any estate,” whether for life or in fee, and permitted a valid remainder, even after a fee, if power of disposition, where granted, was not exercised and there remained anything after the death of the devisee. Southworth v. Sullivan, 162 Va. 325 , 173 S.E. 524 , 1934 Va. LEXIS 248 (1934).

This was so unsatisfactory to the Code revisors of 1919 that they changed the amendment and limited the remainder over to cases where there was only an express estate for life. Therefore, subsequent to the revision of 1919, except where there is an express estate for life, the remainder is void just as it was prior to the amendment of 1908. Moore v. Holbrook, 175 Va. 471 , 9 S.E.2d 447, 1940 Va. LEXIS 192 (1940).

Coupled with the absolute power of disposition. Mowery v. Coffman, 185 Va. 491 , 39 S.E.2d 285, 1946 Va. LEXIS 221 (1946); Voigt v. Selander, 190 Va. 638 , 58 S.E.2d 25, 1950 Va. LEXIS 157 (1950); Trustees of Duncan Mem. Methodist Church v. Ray, 195 Va. 803 , 80 S.E.2d 601, 1954 Va. LEXIS 159 (1954).

This section is expressly limited to devises and bequests for life with absolute power of disposition. In such circumstances the doctrine of May v. Joynes, 61 Va. (20 Gratt.) 692 (1871), which holds that whenever in any devise or conveyance a life estate is given and there is afterwards given to the life tenant or first taker power to dispose of or consume the corpus of the estate, the first taker is vested with a fee simple estate, has been abolished, and the estate of the remaindermen preserved. The section is remedial and should be liberally construed. Christian v. Wilson's Ex'rs, 153 Va. 614 , 151 S.E. 300 , 1930 Va. LEXIS 257, cert. denied, 282 U.S. 840, 51 S. Ct. 21, 75 L. Ed. 746, 1930 U.S. LEXIS 133 (1930); Southworth v. Sullivan, 162 Va. 325 , 173 S.E. 524 , 1934 Va. LEXIS 248 (1934).

Thus, this section has no application where there is a limitation over after conveyance of a fee simple. —

Notwithstanding this section, where a testator has given his wife a fee simple estate, an attempted limitation over by him of any portion remaining at her death is void. This section has no application because the gift to the first taker was not of a life estate but of a fee simple. Skinner v. Skinner's Adm'r, 158 Va. 326 , 163 S.E. 90 , 1932 Va. LEXIS 257 (1932) (see Southworth v. Sullivan, 162 Va. 325 , 173 S.E. 524 (1934)).

In. Moore v. Holbrook , 175 Va. 471 , 9 S.E.2d 447 (1940), this section was held inapplicable because the estate was granted in general terms by language that unmistakably implied an estate in fee .

And it is inapplicable where no powers of disposal are conferred on first takers. —

Where no powers of disposal are conferred upon the first takers by a will, this section cannot be successfully relied upon. Robinson v. Caldwell, 200 Va. 353 , 105 S.E.2d 852, 1958 Va. LEXIS 195 (1958).

Words creating life estate. —

The words “shall immediately upon my decease become the property of my wife . . . to be used for her decent support during her natural life,” create an express life estate in the testator’s property. Pigg v. Haley, 224 Va. 113 , 294 S.E.2d 851, 1982 Va. LEXIS 275 (1982).

Words creating limitation in remainder over. —

The words “It is my will and desire that upon the death of my said wife whatever residue of my estate either real or personal which she has not consumed or disposed of shall become the property of . . .” satisfy the requirement that there be a limitation in remainder over. Pigg v. Haley, 224 Va. 113 , 294 S.E.2d 851, 1982 Va. LEXIS 275 (1982).

Residuary clause. —

Residuary clause in a testator’s will unambiguously granted the testator’s wife a life estate in the residual property. Along with directing the disposition of the residual property following the wife’s death, the residuary clause placed limitations on the wife’s use of the property during her life, and these limitations were irreconcilable with an absolute power of disposition. Feeney v. Feeney, 295 Va. 312 , 811 S.E.2d 830, 2018 Va. LEXIS 35 (2018).

Power of widow to terminate life estate by remarrying. —

Where a testator gave to his wife a life estate with power of disposition and remainder over to his children, and provided that in the event of his wife’s remarriage the life estate should terminate and one third of the remainder should belong to her absolutely, the power of the wife voluntarily to terminate her life estate by remarrying did not convert her estate into a fee simple interest, and, under the provisions of this section, the remainder over was valid and was not affected by the doctrine of May v. Joynes . Voigt v. Selander, 190 Va. 638 , 58 S.E.2d 25, 1950 Va. LEXIS 157 (1950).

This section does not restrict the life tenant’s power of disposition. First Va. Bank v. United States, 490 F.2d 532, 1974 U.S. App. LEXIS 10638 (4th Cir. 1974).

A life tenant’s right to dispose, sell, trade or use stock during her lifetime for her comfort and care as she may see fit is not limited by this section to an ascertainable standard relating to her health, support, or maintenance, for the purpose of federal estate tax exemption. First Va. Bank v. United States, 490 F.2d 532, 1974 U.S. App. LEXIS 10638 (4th Cir. 1974).

Absolute dominion over property given to life tenant. —

Language used in a testator’s will giving the life tenant the power to sell any and all residue of the property at her discretion shows that the testator intended to give her absolute dominion over the property with full power of disposition, and this section did not save it. Rawlings v. Briscoe, 214 Va. 44 , 197 S.E.2d 211, 1973 Va. LEXIS 252 (1973).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Rule inapplicable. —

Because a life estate granted to the testatrix was neither expressed nor implied, and the devise was not saved from the operation of May v. Joynes and § 55-7, a motion for summary judgment filed by the testatrix’s daughter seeking a declaration that the parcel conveyed did not pass under her will because she, in effect, had only a life estate in the property with a remainder over to her heirs, was denied. Allin v. Morris, 73 Va. Cir. 202, 2007 Va. Cir. LEXIS 53 (Rockingham County Apr. 3, 2007).

I.[Reserved.]

II.Decided Under Prior Law.

Husband and wife may join in deed to one of themselves. —

A husband and wife unquestionably can join in a deed conveying the entirety to a third party, and in Virginia this section permits a husband and wife to join in a deed conveying land to himself or herself. Vasilion v. Vasilion, 192 Va. 735 , 66 S.E.2d 599, 1951 Va. LEXIS 222 (1951).

I.[Reserved.]

II.Decided Under Prior Law.

Provision as to warranties applies only to descent of realty. —

This section, taken from the statute of Gloucester, and extended generally to common-law warranties, applies only to cases of real assets descending from the warranting ancestor, and not to personal assets, or assets, whether real or personal, accruing from him by devise or bequest. Norman's Ex'x v. Cunningham, 46 Va. (5 Gratt.) 63, 1848 Va. LEXIS 26 (1848).

And is not applicable where a husband conveys the property of his wife, with warranty against the claims of himself and his heirs. His children, deriving title from their mother, will not be affected by the warranty. Urquhart v. Clarke, 23 Va. (2 Rand.) 549, 1824 Va. LEXIS 35 (1824).

I.[Reserved.]

II.Decided Under Prior Law.

Words of inheritance or perpetuity unnecessary to create estate of inheritance. —

The act passed in 1785 (the original of this section) dispensed with the necessity of words of inheritance or perpetuity to create an estate of inheritance. Goodrich v. Harding, 24 Va. (3 Rand.) 280, 1825 Va. LEXIS 19 (1825); Bells v. Gillespie, 26 Va. (5 Rand.) 273, 1827 Va. LEXIS 57 (1827); Ball v. Payne, 27 Va. (6 Rand.) 73, 1827 Va. LEXIS 48 (1827); Jiggetts v. Davis, 28 Va. (1 Leigh) 368, 1829 Va. LEXIS 31 (1829); Seekright on Demise of Bramble v. Billups, 31 Va. (4 Leigh) 90, 1833 Va. LEXIS 1 (1833); Doe on Demise of See v. Craigen, 35 Va. (8 Leigh) 449, 1836 Va. LEXIS 74 (1836); Tinsley v. Jones, 54 Va. (13 Gratt.) 289, 1856 Va. LEXIS 17 (1856).

The word “heirs” is not necessary to create an estate of inheritance. Daniel v. Lipscomb, 110 Va. 563 , 66 S.E. 850 , 1910 Va. LEXIS 95 (1910).

Fee simple or whole estate or interest of grantor passes in absence of words of limitation in deed. —

The grantee, in a deed for land conveyed without any words of limitation, usually succeeds to every right of his grantor therein, or, as expressed in this section, such a deed passes the fee simple or whole estate or interest which the grantor had power to dispose of, unless a contrary intention shall appear by the conveyance. Gordon Metal Co. v. Kingan & Co., 132 Va. 229 , 111 S.E. 99 , 1922 Va. LEXIS 20 (1922).

Language construed to pass greatest estate it is capable of conveying. —

The language in a deed will be construed to pass to the grantee the greatest estate which the language employed is capable of conveying. Goodson v. Capehart, 232 Va. 232 , 349 S.E.2d 130, 3 Va. Law Rep. 961, 1986 Va. LEXIS 250 (1986).

Whole deed must be looked to in order to ascertain intention of grantor. —

Since under this statute the whole deed is to be looked to in order to ascertain the intention of the parties, the common-law rule that the habendum clause of a deed must yield to the granting clause in case of repugnance between the two no longer applies where the intention of the grantor can be ascertained with reasonable certainty. Temple's Adm'r v. Wright, 94 Va. 338 , 26 S.E. 844 , 1897 Va. LEXIS 80 (1897) (see Mauzy v. Mauzy, 79 Va. 537 (1884)).

Language disclosing intent to create mere life estates. —

Where testator and his wife owned certain lots jointly, and he devised all his real estate to his wife and provided that “at her death it is to go to” his nephew “and at his death to his two boys,” and she died some years later having devised her half interest in the property to the nephew “and at his death goes to his two sons,” the language of the respective devises clearly disclosed an intent to create mere life estates in the first takers with remainder over, nor was there any policy, statute or canon of property which would override this intent. Robinson v. Caldwell, 200 Va. 353 , 105 S.E.2d 852, 1958 Va. LEXIS 195 (1958).

A deed to a person “forever to hold for life” was held to create only a life estate in. Humphrey v. Foster, 54 Va. (13 Gratt.) 653, 1857 Va. LEXIS 26 (1857).

Grant to remaindermen held a fee. —

If a remainder, after the death of the life tenant, be given to such persons as shall at that time answer the description of his heirs at law, that is a valid gift of a remainder to such persons, who will be entitled, as purchasers, to an estate in fee simple. Taylor v. Cleary, 70 Va. (29 Gratt.) 330, 70 Va. (29 Gratt.) 448, 1877 Va. LEXIS 25 (1877).

Fee simple interest transferred by deed. —

Grant of summary judgment in favor of the town in its action against the property owner for quiet title and for ejectment was appropriate because a fee simple interest was previously transferred to the railroad by the 1909 deed and the town was currently the fee simple owner of that strip of land conveyed by that 1909 deed after the railroad abandoned their railroad line and donated the railroad corridor to the town. Bailey v. Town of Saltville, 279 Va. 627 , 691 S.E.2d 491, 2010 Va. LEXIS 53 (2010).

Residuary clause. —

Residuary clause in a testator’s will unambiguously granted the testator’s wife a life estate in the residual property. Along with directing the disposition of the residual property following the wife’s death, the residuary clause placed limitations on the wife’s use of the property during her life, and these limitations were irreconcilable with an absolute power of disposition. Feeney v. Feeney, 295 Va. 312 , 811 S.E.2d 830, 2018 Va. LEXIS 35 (2018).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Application of rule. —

Because a life estate granted to the testatrix was neither expressed nor implied, and the devise was not saved from the operation of May v. Joynes and § 55-7, a motion for summary judgment filed by the testatrix’s daughter seeking a declaration that the parcel conveyed did not pass under her will because she, in effect, had only a life estate in the property with a remainder over to her heirs, was denied. Allin v. Morris, 73 Va. Cir. 202, 2007 Va. Cir. LEXIS 53 (Rockingham County Apr. 3, 2007).

I.[Reserved.]

II.Decided Under Prior Law.

An estate tail is an estate limited to the issue of the donee. Jiggetts v. Davis, 28 Va. (1 Leigh) 368, 1829 Va. LEXIS 31 (1829).

Estates tail were unknown to the common law. They were created by the statute de donis conditionalibus. Bells v. Gillespie, 26 Va. (5 Rand.) 273, 1827 Va. LEXIS 57 (1827).

History of section abolishing estates tail. —

The acts of 1776 and 1785 abolished entails and converted estates tail into fee simple estates. See Carter v. Tyler, 5 Va. (1 Call) 165, 1797 Va. LEXIS 20 (1797); Tate v. Tally, 7 Va. (3 Call) 354, 1803 Va. LEXIS 6 (1803); Smith v. Chapman, 11 Va. (1 Hen. & M.) 240, 1807 Va. LEXIS 9 (1807); Bells v. Gillespie, 26 Va. (5 Rand.) 273, 1827 Va. LEXIS 57 (1827); Broaddus v. Turner, 26 Va. (5 Rand.) 308, 1827 Va. LEXIS 56 (1827); Ball v. Payne, 27 Va. (6 Rand.) 73, 1827 Va. LEXIS 48 (1827); Jiggetts v. Davis, 28 Va. (1 Leigh) 368, 1829 Va. LEXIS 31 (1829); Orndoff v. Turman, 29 Va. (2 Leigh) 200, 1830 Va. LEXIS 30 (1830); Seekright on Demise of Bramble v. Billups, 31 Va. (4 Leigh) 90, 1833 Va. LEXIS 1 (1833); Doe on Demise of Thomason v. Andersons, 31 Va. (4 Leigh) 118, 1833 Va. LEXIS 3 (1833); Doe on Demise of See v. Craigen, 35 Va. (8 Leigh) 449, 1836 Va. LEXIS 74 (1836); Nowlin v. Winfree, 49 Va. (8 Gratt.) 346, 1852 Va. LEXIS 71 (1852); East v. Garrett, 84 Va. 523 , 9 S.E. 1112 , 1888 Va. LEXIS 107 (1888); Hawthorne v. Beckwith, 89 Va. 786 , 17 S.E. 241 , 1893 Va. LEXIS 105 (1893); Walker v. Lewis, 90 Va. 578 , 19 S.E. 258 , 1894 Va. LEXIS 26 (1894).

The act of 1776 operated upon all estates tail in possession, and those in reversion or remainder, after the determination of an estate for life, or lives, or of any lesser estate; but a greater estate than for life or lives, was not within the operation of the act. An estate tail in remainder, after the determination of a preceding estate tail, e.g., was not affected by the act. Roy v. Garnett, 2 Va. (2 Wash.) 9 (1794). Hence, the statute of 1785, abolishing all entails, was reenacted from the statute of 1776, which had failed to accomplish its avowed purpose. Bells v. Gillespie, 26 Va. (5 Rand.) 273, 1827 Va. LEXIS 57 (1827).

It was held that by the act of 1776, for docking entails, all remainders, contingent as well as vested, were utterly barred, whether the entail was created before or after passage of the act. Hence, a devise of lands to A. and if the said A. should die not having any lawful heir of his body, then the land to go to B., created an estate tail in A., which by the statute was converted into a fee simple, and the limitation over was void. Carter v. Tyler, 5 Va. (1 Call) 165, 1797 Va. LEXIS 20 (1797) (see Hunter v. Haynes’ Lessee, 1 Va. (1 Wash.) 71 (1792); Hill v. Burrow, 7 Va. (3 Call) 342 (1802); Tate v. Tally, 7 Va. (3 Call) 354 (1802); Eldridge v. Fisher, 11 Va. (1 Hen. & M.) 559 (1807); Sydnor v. Sydnors, 16 Va. (2 Munf.) 263 (1811); M’Clintic v. Manns, 18 Va. (4 Munf.) 328 (1814); Tidball v. Lupton, 22 Va. (1 Rand.) 194 (1822); Kendall v. Eyre, 22 Va. (1 Rand.) 288 (1823); Bells v. Gillespie, 26 Va. (5 Rand.) 273 (1827); Broaddus v. Turner, 26 Va. (5 Rand.) 308 (1827); Jiggetts v. Davis, 28 Va. (1 Leigh) 368 (1829); Doe on Demise of See v. Craigen, 35 Va. (8 Leigh) 449 (1836); Callis v. Kemp, 52 Va. (11 Gratt.) 78 (1854); Tinsley v. Jones, 54 Va. (13 Gratt.) 289 (1856); Hood v. Haden, 82 Va. 588 (1886). But this doctrine of Carter v. Tyler, 5 Va. (1 Call) 165 (1797), was abrogated after January 1, 1820 by the provision of this section that “every limitation upon such estate shall be held valid if the same would be valid when limited upon an estate in fee simple created by technical language.”).

Statute liberally construed. —

The statute abolishing entails is a highly remedial statute and should be liberally construed. Orndoff v. Turman, 29 Va. (2 Leigh) 200, 1830 Va. LEXIS 30 (1830).

Presumption against intention to create entailed estate. —

Since the act of 1776 abolishing entails, it is not to be supposed that a man intended to convey an estate tail unless plain and unequivocal words were used, such as would of themselves create a fee tail without resorting to implication. Walker v. Lewis, 90 Va. 578 , 19 S.E. 258 , 1894 Va. LEXIS 26 (1894) (see Smith v. Chapman, 11 Va. (1 Hen. & M.) 240 (1807); Taylor v. Cleary, 70 Va. (29 Gratt.) 448 (1877)).

I.[Reserved.]

II.Decided Under Prior Law.

Statement of the rule in Shelley’s Case. —

Whenever the ancestor, by any will, gift, or conveyance, takes an estate of freehold in lands, or tenements, and in the same will, gift, or conveyance, an estate is afterwards limited by way of remainder, either mediately or immediately, to his heirs, or to the heirs of his body, the words “heirs,” or “heirs of the body,” are words of limitation of the estate, carrying the inheritance to the ancestor, and not words of purchase creating a contingent remainder in the heirs. Moore v. Brooks, 53 Va. (12 Gratt.) 135, 1855 Va. LEXIS 11 (1855); Taylor v. Cleary, 70 Va. (29 Gratt.) 330, 70 Va. (29 Gratt.) 448, 1877 Va. LEXIS 25 (1877); King v. Johnson, 117 Va. 49 , 83 S.E. 1070 , 1915 Va. LEXIS 9 (1915); Turner v. Monteiro, 127 Va. 537 , 103 S.E. 572 , 1920 Va. LEXIS 68 (1920).

History and effect of statute. —

Code 1849, c. 146, § 11, essaying to abolish the rule in Shelley’s Case, applied only where the grantor or testator was competent to, and did vest in the heir a remainder in fee simple after an estate for the ancestor’s life. Hood v. Haden, 82 Va. 588 (1886). This is not true under the present statute, which is coordinate with the rule itself .

The parties of the first part in a deed granted property to the party of the second part: “To have and to hold unto the party of the second part for her lifetime and then to her heirs forever.” It was held that under this section the language used gave to the grantee an estate for life and to her children a remainder in fee. Puckett v. Campbell, 151 Va. 213 , 144 S.E. 434 , 1928 Va. LEXIS 225 (1928).

Rule of property; not of construction. —

The rule in Shelley’s Case, where the requisites concur, controls the intention of the testator, or grantor, and overrides his purpose, often very clearly expressed, to limit the ancestor to an estate of freehold. The rule is not a means to discover the intent of the grantor, or testator, but, supposing the intent ascertained, the rule controls it. Taylor v. Cleary, 70 Va. (29 Gratt.) 330, 70 Va. (29 Gratt.) 448, 1877 Va. LEXIS 25 (1877); Turner v. Monteiro, 127 Va. 537 , 103 S.E. 572 , 1920 Va. LEXIS 68 (1920) (see Walker v. Lewis, 90 Va. 578 , 19 S.E. 258 (1894)).

Words must be used to import class of persons to take indefinitely in succession. —

It is a part of the rule in Shelley’s Case and essential to its operation, that the words used to indicate the persons to whom the estate is limited, by way of remainder, must import a class of persons to take indefinitely in succession. If they do import such a class, then the rule is of inflexible application; but if the words are used to designate particular individuals, the words so used are words of purchase and not of limitation, e.g. , grant to A. for life, remainder to the heirs of A. now living, or remainder to the sons of A. and their heirs, or remainder to the children of A. In all of these instances, particular individuals are indicated by the words used; hence, the rule does not apply. Turner v. Monteiro, 127 Va. 537 , 103 S.E. 572 , 1920 Va. LEXIS 68 (1920).

“Descendants” and “heirs of the body” are of equivalent meaning. —

The rule in Shelley’s Case applies when the limitation in remainder is to the “heirs of the body” of the tenant of the freehold. The words “descendants” and “heirs of the body” are of equivalent meaning. Turner v. Monteiro, 127 Va. 537 , 103 S.E. 572 , 1920 Va. LEXIS 68 (1920).

Who are “descendants.” —

While the word “descendants” is not a technical word to the extent that the law has not impressed it with a different meaning from that accorded in common acceptation and general understanding, it is a word much used in law and of very clear and definite meaning. A descendant is an individual proceeding from an ancestor in any degree. It is synonymous with issue. It is offspring, near or remote. The word “child” is not synonymous with the word “descendant,” though a child is a descendant and a descendant may be a child; but a descendant may also proceed from an ancestor in the remotest as well as the nearest degree. Obviously, this is not true as to a child. Turner v. Monteiro, 127 Va. 537 , 103 S.E. 572 , 1920 Va. LEXIS 68 (1920).

Application of rule. —

Under a will which took effect before the abolition of the rule in Shelley’s Case, a testator gave land to two of his sons during their lifetime to hold jointly and after the death of the last of the two to their descendants, if they have any; if not, to a third party or his descendants. Held, that by force of this rule in Shelley’s Case the two sons took an estate tail, which, by operation of the statute, then as now in force, was converted into a joint fee. Turner v. Monteiro, 127 Va. 537 , 103 S.E. 572 , 1920 Va. LEXIS 68 (1920).

The court held that where a testator gave his estate to his wife during her life, and at her death to be equally divided amongst all of his children and the shares of his two daughters to be held by them during their natural lives and no longer, and then equally to be divided between their heirs lawfully begotten, the words “heirs lawfully to be begotten” (or similar words) were words of limitation and the daughters took the whole interest in their shares of the estate. Moore v. Brooks, 53 Va. (12 Gratt.) 135, 1855 Va. LEXIS 11 (1855) (see Tinsley v. Jones, 54 Va. (13 Gratt.) 289 (1856); Hall’s Ex’r v. Smith, 66 Va. (25 Gratt.) 70 (1874); Walker v. Lewis, 90 Va. 578 , 19 S.E. 258 (1894)).

Rule not applicable. —

The court held that a grant by D. to his grandson R., his executors, administrators and assigns, from and after the grantor’s death, for and during his life only; and after his death the said piece of land to go to such person or persons as shall at that time answer the description of heir or heirs at law of the said R., and such person or persons shall take the said land under that description as purchasers under and by virtue of this deed, and not by inheritance as heirs of the said R., created in R. but a life estate in the land; and the persons who at the time of R.’s death answered the description of his heirs at law took as purchasers under the deed. Taylor v. Cleary, 70 Va. (29 Gratt.) 330, 70 Va. (29 Gratt.) 448, 1877 Va. LEXIS 25 (1877).

The statute does not apply to a trust deed for the benefit of the grantor’s wife “for life and the remainder to the heirs of her body begotten by” the grantor in the trust deed. Halsey v. Fulton, 119 Va. 571 , 89 S.E. 912 , 1916 Va. LEXIS 130 (1916).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Application of rule. —

Because a life estate granted to the testatrix was neither expressed nor implied, and the devise was not saved from the operation of May v. Joynes and § 55-7, a motion for summary judgment filed by the testatrix’s daughter seeking a declaration that the parcel conveyed did not pass under her will because she, in effect, had only a life estate in the property with a remainder over to her heirs, was denied. Allin v. Morris, 73 Va. Cir. 202, 2007 Va. Cir. LEXIS 53 (Rockingham County Apr. 3, 2007).

I.[Reserved.]

II.Decided Under Prior Law.

Where some of children were born after testator’s death, the interest or estate that had vested in those in being when testator died would open up and let in the after-born members of the class as each came into being. Newsome v. Scott, 200 Va. 833 , 108 S.E.2d 369, 1959 Va. LEXIS 175 (1959).

I.[Reserved.]

II.Decided Under Prior Law.

History of statute. —

The English statute of uses (St. 27 Hen. VIII, Ch. 10) was not in force in Virginia after 1792. This section, the only one ever enacted in Virginia, is materially different from the English statute. See Jones v. Tatum, 60 Va. (19 Gratt.) 720, 1870 Va. LEXIS 17 (1870).

This section does not apply to uses created by devise nor transfer such uses into the possession of the cestui que use. Bass v. Scott, 29 Va. (2 Leigh) 356, 1830 Va. LEXIS 43 (1830) (see Jones v. Tatum, 60 Va. (19 Gratt.) 720 (1870)).

I.[Reserved.]

II.Decided Under Prior Law.

Trustee in a land trust receives both legal and equitable title. —

Unlike a creditor trust where legal title resides in the trustee while the beneficiary retains equitable title, the trustee in a land trust receives both legal and equitable title to the property. Air Power, Inc. v. Thompson, 244 Va. 534 , 422 S.E.2d 768, 9 Va. Law Rep. 533, 1992 Va. LEXIS 114 (1992).

Beneficiary receives no interest in property in a land trust. —

In a land trust, the beneficiary retains no interest, legal or equitable, in the property itself, but instead holds only a personal property interest in the rents, proceeds, and profits from the property. Air Power, Inc. v. Thompson, 244 Va. 534 , 422 S.E.2d 768, 9 Va. Law Rep. 533, 1992 Va. LEXIS 114 (1992).

Third party has no responsibility to notify beneficiary of action against property. —

The provisions of this section effectively eliminate a third party’s responsibility, and ability, to notify land trust beneficiaries of any action against the property which that party may contemplate. Air Power, Inc. v. Thompson, 244 Va. 534 , 422 S.E.2d 768, 9 Va. Law Rep. 533, 1992 Va. LEXIS 114 (1992).

Beneficiary was proper but not necessary party in mechanics lien action. —

A beneficiary may be a proper party to an action to enforce a mechanic’s lien, which would provide notice and the opportunity to preserve its interests in the proceeds from a potential judicial sale; nevertheless, the beneficiary is not a necessary party to the enforcement suit. Air Power, Inc. v. Thompson, 244 Va. 534 , 422 S.E.2d 768, 9 Va. Law Rep. 533, 1992 Va. LEXIS 114 (1992).

Status of land trust. —

Where the facts in the record were insufficient to support a finding that an entity other than a land trust was actually created, and the trust agreement specifically provided that it would not be deemed to create or evidence the existence of a corporation, association, joint venture, or partnership, a land trust created under this section was not some type of business organization. Curtis v. Lee Land Trust, 235 Va. 491 , 369 S.E.2d 853, 4 Va. Law Rep. 2993, 1988 Va. LEXIS 75 (1988).

Limitation on use of trust. —

Owner-borrowers should not be permitted to use a Virginia statutory land trust as a device to defeat the rights of the defendant savings and loan associations from accelerating the payment of their secured notes as provided for by due on sale clauses. Williams v. First Fed. Sav. & Loan Ass'n, 500 F. Supp. 307, 1980 U.S. Dist. LEXIS 17253 (E.D. Va. 1980), aff'd, 651 F.2d 910, 1981 U.S. App. LEXIS 12924 (4th Cir. 1981).

In Virginia, it is clear that the land trust statute may not be used as an artifice to avoid creditors. Bluff Ventures Ltd. Partnership v. Chicago Title Ins. Co., 950 F.2d 139, 1991 U.S. App. LEXIS 26759 (4th Cir. 1991).

Lack of beneficiary’s signature held not to affect trustees’ power under due-on-sale clause. See Barnes v. VNB Mtg. Corp., 230 Va. 4 , 334 S.E.2d 531, 1985 Va. LEXIS 243 (1985).

“Deemed to be personal property” provision ineffectual to extent noteholder’s rights affected. —

To the extent that a “deemed to be personal property” provision in a land trust agreement would affect the noteholder’s right to invoke the due-on-sale clause in a deed of trust against the beneficiary thereunder, the provision is ineffectual. Barnes v. VNB Mtg. Corp., 230 Va. 4 , 334 S.E.2d 531, 1985 Va. LEXIS 243 (1985).

Liability imposed only upon promise to pay. —

Because of the nature of the land trust, before personal liability can be imposed upon the beneficiaries, they must expressly or by implication promise to pay. Curtis v. Lee Land Trust, 235 Va. 491 , 369 S.E.2d 853, 4 Va. Law Rep. 2993, 1988 Va. LEXIS 75 (1988).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Applicability. —

Section 55-17.1 did not apply as it focused on the interest of the beneficiary, not the authority of the grantor of the settlor to convey property once conveyed to the trust. Barksdale v. Haynes, 100 Va. Cir. 160, 2018 Va. Cir. LEXIS 339 (Lynchburg Oct. 5, 2018).

I.Decided under current law.

Property owner as third party beneficiary. —

Family sufficiently alleged that its contract with a home owner made the property owner a third-party beneficiary where the complaint alleged that the home builder was aware that the improvements to the real property were to solely benefit the record title owner of the property and the owner desired to build living quarters for the family to live on site while performing valuable services for the owner. Tingler v. Graystone Homes, Inc., 298 Va. 63 , 834 S.E.2d 244, 2019 Va. LEXIS 138 (2019).

II.Decided Under Prior Law.

A.In General.

Purpose of statute. —

The statute was enacted for a double purpose. One was to change the rule of the common law that one not a party to a deed inter partes could not sue for a breach of a covenant therein made for his benefit. The other purpose was to change the common-law rule that a suit for breach of a covenant made with two persons for the benefit of one of them must be jointly brought by both the covenantees. City of Newport News v. Potter, 122 F. 321, 1903 U.S. App. LEXIS 4760 (4th Cir. 1903).

As to purpose of 1919 revision of this section, see Horney v. Mason, 184 Va. 253 , 25 S.E.2d 78 (1945).

It was not the purpose of this section to limit or restrict the powers of parties to contract, or their right to select the parties with whom they would contract, or to prevent parties from limiting the right of action to the immediate parties with whom the contract was made, nor to create beneficiaries not made so by the contract, but to extend the remedy on the contracts mentioned in the section to beneficiaries under the contracts, where such extension was not forbidden by the terms of the contract itself. Montague Mfg. Co. v. Homes Corp., 142 Va. 301 , 128 S.E. 447 , 1925 Va. LEXIS 337 (1925); Indemnity Ins. Co. v. Davis' Adm'r, 150 Va. 778 , 143 S.E. 328 , 1928 Va. LEXIS 351 (1928); Norfolk-Portsmouth Newspapers, Inc. v. Stott, 208 Va. 228 , 156 S.E.2d 610, 1967 Va. LEXIS 208 (1967).

This section is highly remedial and should be liberally construed in order to accomplish the ends manifestly intended. Montague Mfg. Co. v. Homes Corp., 142 Va. 301 , 128 S.E. 447 , 1925 Va. LEXIS 337 (1925); Indemnity Ins. Co. v. Davis' Adm'r, 150 Va. 778 , 143 S.E. 328 , 1928 Va. LEXIS 351 (1928); Bristol Steel & Iron Works, Inc. v. Plank, 163 Va. 819 , 178 S.E. 58 , 1935 Va. LEXIS 242 (1935).

This section is remedial and is to be liberally interpreted and applied. Graybar Elec. Co. v. Doley, 273 F.2d 284, 1959 U.S. App. LEXIS 4644 (4th Cir. 1959).

Remedy provided is cumulative. —

The instant case was a suit against vendees who had assumed the payment of a mortgage. Defendants demurred on the ground that the complainant had a complete and adequate remedy at law under this section. Upon the question of whether under this section the complainant might sue the defendants at law on their assumption of the mortgage debt due complainant, the Supreme Court expressed no opinion. However, the statutory remedy by an action at law under this section is cumulative only in such cases, and does not oust courts of chancery from the jurisdiction they have long exercised to grant relief to a mortgage creditor against the grantee of mortgaged property who has assumed the mortgage debt, under the doctrine of subrogation. Blanton v. Keneipp, 155 Va. 668 , 156 S.E. 413 , 1931 Va. LEXIS 260 (1931).

And equity power is not diminished. —

The power given by this section to law courts in nowise diminishes that theretofore exercised in equity. It is but cumulative and concurrent. Buchanan v. Buchanan, 174 Va. 255 , 6 S.E.2d 612, 1940 Va. LEXIS 209 (1940).

This section does not forbid a suit in the name of the original obligee. Glens Falls Ins. Co. v. Sherritt, 95 F.2d 823, 1938 U.S. App. LEXIS 4794 (4th Cir. 1938).

Limited liability of purchaser of property subject to existing lien. —

When one purchases property subject to an existing lien the purchaser is not personally liable for any deficiency. In such a case the defaulter can only lose the underlying property. Unlike taking property subject to an existing lien, when a purchaser takes property and assumes the underlying lien the purchaser is personally liable for the indebtedness including any deficiency that may result from foreclosure. Bankers Mtg. Corp. v. Jacobs, 613 F. Supp. 1579, 1985 U.S. Dist. LEXIS 17099 (E.D. Va. 1985).

Mortgagee has no direct action at law against second mortgagor. —

The mortgagee’s right to hold a subsequent purchaser liable is not grounded in contract between the mortgagee and the subsequent purchaser, as generally no such contract exists, but on the theory that the covenant of the subsequent purchaser is a collateral security obtained by the mortgagor, which by equitable subrogation inures to the benefit of the mortgagee. Thus, as between the original mortgagor and the subsequent purchaser, the latter is the principal debtor and the mortgagor is his surety. The promise of a subsequent purchaser to assume the mortgage debt upon the property is a contract only between the two of them absent an independent undertaking by the purchaser and the mortgagee. Admittedly, the contract benefits the mortgagee but the primary beneficiary of this collateral undertaking is the mortgagor. Therefore, absent some statutory authority, no direct action at law (as distinguished from equity) by the mortgagee against the second mortgagor will lie. If upon foreclosure the property does not bring enough to satisfy the entire debt, the mortgage creditor may proceed in an equity court against the subsequent purchaser for any deficiency. Bankers Mtg. Corp. v. Jacobs, 613 F. Supp. 1579, 1985 U.S. Dist. LEXIS 17099 (E.D. Va. 1985).

Mortgagee need not first foreclose prior to obtaining a judgment against a subsequent purchaser who assumes in writing the obligation secured by the property, as there need be no privity of contract under the present third-party beneficiary statute of Virginia. Bankers Mtg. Corp. v. Jacobs, 613 F. Supp. 1579, 1985 U.S. Dist. LEXIS 17099 (E.D. Va. 1985).

Restrictive covenant enforceable by beneficiary. —

Where a covenant is for the benefit of third persons they have the right to enforce it in their own names, under this section. Cheatham v. Taylor, 148 Va. 26 , 138 S.E. 545 , 1927 Va. LEXIS 207 (1927).

A restrictive covenant for the benefit of a third party may be enforced in his own name under this section. Meagher v. Appalachian Elec. Power Co., 195 Va. 138 , 77 S.E.2d 461, 1953 Va. LEXIS 184 (1953).

Section not applicable. —

Where premises are subleased to an assignee of the lessees who does not assume the obligation of maintaining fire insurance on the premises, which obligation was a covenant in the lease between lessor and lessees, this section has no application, since it does not purport to create a contract where no contract exists. Burton v. Chesapeake Box & Lumber Corp., 190 Va. 755 , 57 S.E.2d 904, 1950 Va. LEXIS 166 (1950).

Section held inapplicable. Benoit v. Baxter, 196 Va. 360 , 83 S.E.2d 442, 1954 Va. LEXIS 228 (1954).

Contract found not to be made for the benefit of third party. Graybar Elec. Co. v. Doley, 273 F.2d 284, 1959 U.S. App. LEXIS 4644 (4th Cir. 1959).

Because the benefit to the third-party referred to in the first phrase of the statute derives from an instrument, this section must refer to a benefit from a written document. Thorsen v. Richmond SPCA, 292 Va. 257 , 786 S.E.2d 453, 2016 Va. LEXIS 68 (2016) (but see § 64.2-520.1 and notes thereunder).

This section did not apply to an oral contract between an attorney and a testator where although the statute clearly applied to a written instrument, it did not abrogate the common law, which allowed third-party beneficiaries to sue upon oral contracts. Thorsen v. Richmond SPCA, 292 Va. 257 , 786 S.E.2d 453, 2016 Va. LEXIS 68 (2016) (but see § 64.2-520.1 and notes thereunder).

Implied guarantee not within section. —

Where defendants, for whom a building was being erected, agreed with plaintiff to retain sufficient funds and pay plaintiff for materials furnished, an action on the agreement was to recover upon an implied guarantee made by defendants to plaintiff and was not a suit upon a contract made by defendants for plaintiff’s benefit, such as is dealt with in this section. Nicholas v. Harrisonburg Bldg. & Supply Co., 181 Va. 207 , 24 S.E.2d 452, 1943 Va. LEXIS 169 (1943).

B.Intended Beneficiary.

1.In General.

A person may have a beneficial interest in a contract to which he is not a named party. Horney v. Mason, 184 Va. 253 , 35 S.E.2d 78, 1945 Va. LEXIS 146 (1945).

A third-party beneficiary to a contract is entitled to enforce the terms of the contract and is subject to defenses arising out of it. Levine v. Selective Ins. Co. of Am., 250 Va. 282 , 462 S.E.2d 81, 12 Va. Law Rep. 244, 1995 Va. LEXIS 103 (1995).

Where evidence was clear that subordination agreement between plaintiff and corporation was intended to confer a benefit upon lender, a nonparty, lender took its interests under the subordination agreement subject to the plaintiff’s right to rescind the agreement because of fraud, even through lender had no knowledge of the fraud. Ashmore v. Herbie Morewitz, Inc., 252 Va. 141 , 475 S.E.2d 271, 1996 Va. LEXIS 88 (1996), cert. denied, 520 U.S. 1120, 117 S. Ct. 1254, 137 L. Ed. 2d 335, 1997 U.S. LEXIS 1712 (1997).

Like a party to an agreement, a third-party beneficiary is entitled to enforce the terms of the agreement and is subject to the defenses arising from that agreement. First Sec. Fed. Sav. Bank, Inc. v. McQuilken, 253 Va. 110 , 480 S.E.2d 485, 1997 Va. LEXIS 17 (1997).

But it must be shown that contract was made for his benefit. —

This section limits the right of a third person to sue upon a contract to which he is not a party to a case where it can be shown that the contract was made for his benefit. Graybar Elec. Co. v. Doley, 273 F.2d 284, 1959 U.S. App. LEXIS 4644 (4th Cir. 1959); Norfolk-Portsmouth Newspapers, Inc. v. Stott, 208 Va. 228 , 156 S.E.2d 610, 1967 Va. LEXIS 208 (1967).

The third-party beneficiary doctrine is subject to the limitation that the third party must show that the parties to the contract clearly and definitely intended it to confer a benefit upon him. Professional Realty Corp. v. Bender, 216 Va. 737 , 222 S.E.2d 810, 1976 Va. LEXIS 195 (1976); Valley Landscape Co. v. Rolland, 218 Va. 257 , 237 S.E.2d 120, 1977 Va. LEXIS 187 (1977); Richmond Shopping Center, Inc. v. Wiley N. Jackson Co., 220 Va. 135 , 255 S.E.2d 518, 1979 Va. LEXIS 245 (1979).

The third-party beneficiary statute has no application unless the party sought to be held liable has assumed an obligation for the benefit of a third party. The statute does not purport to create a contract when no contract exists. Professional Realty Corp. v. Bender, 216 Va. 737 , 222 S.E.2d 810, 1976 Va. LEXIS 195 (1976); Valley Landscape Co. v. Rolland, 218 Va. 257 , 237 S.E.2d 120, 1977 Va. LEXIS 187 (1977).

If a promise or covenant is made for the benefit of a third party, that party may maintain an action on the promissory instrument in his own name. However, the third party must show that the parties to the instrument clearly intended to confer a benefit on him. Sinicrope v. Black Diamond Sav. & Loan Ass'n, 21 Bankr. 476, 1982 Bankr. LEXIS 4248 (Bankr. W.D. Va. 1982).

Defendants’ motion to dismiss plaintiff’s breach of implied warranty claim in regard to a construction contract was denied. The contract evinced an intent to directly benefit plaintiff by conferring third-party beneficiary status upon him; thus, the privileges associated with privity were also conferred, pursuant to § 55-22, and plaintiff was entitled to sue based on an implied warranty of fitness for a particular purpose. Wal-Mart Stores, Inc. v. J.A. Fielden Co., 440 F. Supp. 2d 523, 2006 U.S. Dist. LEXIS 49901 (W.D. Va. 2006).

And showing benefit incidental to contract is insufficient. —

To come within the purview of this provision it is insufficient for a person to show that incidental to the contract he would benefit from its enforcement. The person “must show that the parties to the contract clearly and definitely intended to confer a benefit upon him.” In re County Green Ltd. Partnership, 438 F. Supp. 693, 1977 U.S. Dist. LEXIS 14662 (W.D. Va. 1977).

A clear intent to benefit the third person must appear to enable him to sue on the contract; incidental beneficiaries cannot maintain an action thereon. Valley Landscape Co. v. Rolland, 218 Va. 257 , 237 S.E.2d 120, 1977 Va. LEXIS 187 (1977).

Incidental beneficiaries may not sue on a contract as a third-party beneficiary. Richmond Shopping Center, Inc. v. Wiley N. Jackson Co., 220 Va. 135 , 255 S.E.2d 518, 1979 Va. LEXIS 245 (1979).

The fact that a building contractor would be incidentally benefited by a proper performance of duties on the part of the architect is not sufficient to make the contractor a third-party beneficiary of a contract between the architect and the owner. Valley Landscape Co. v. Rolland, 218 Va. 257 , 237 S.E.2d 120, 1977 Va. LEXIS 187 (1977).

A mere incidental beneficiary of a contract does not have standing to sue on the contract. Kelley v. Griffin, 252 Va. 26 , 471 S.E.2d 475, 1996 Va. LEXIS 65 (1996).

Incidental and intended beneficiaries distinguished. —

An incidental beneficiary is so far removed from the obligations assumed by the contracting parties that a court will not allow him to sue on that contract, whereas an intended beneficiary is such an integral part of the obligations assumed by the contracting parties that a court will permit him to sue on that contract. Radosevic v. Virginia Intermont College, 651 F. Supp. 1037, 1987 U.S. Dist. LEXIS 338 (W.D. Va. 1987).

Subcontractor was not an intended third-party beneficiary entitled to sue on a services contract between the City of Richmond and the contractor because the subcontractor was not a party to the contract; the primary purpose of the contract was to benefit the City with a working records management system; and, thus, the subcontractor was merely an incidental beneficiary and not an intended third-party beneficiary. BIS Computer Solutions, Inc. v. City of Richmond, 122 Fed. Appx. 608, 2005 U.S. App. LEXIS 651 (4th Cir. 2005).

Third-party beneficiary must demonstrate intent of contracting parties to benefit him. —

In order for a third-party beneficiary to qualify as an intended beneficiary, he must demonstrate that the contracting parties clearly and definitely intended to directly benefit him. Radosevic v. Virginia Intermont College, 651 F. Supp. 1037, 1987 U.S. Dist. LEXIS 338 (W.D. Va. 1987).

Trial court properly found that investors were not third-party beneficiaries arising from transactions in which a third party opened accounts at the bank; evidence of the bank’s intention in setting up the accounts was provided by a vice president’s testimony that his main concern was to protect the bank from any involvement with criminal activity. There was no direct evidence of the intentions of the third party, the other contracting party, but the circumstantial evidence of the conduct of its principals was sufficient to support the trial court in concluding that conferring a benefit upon the investors was the farthest thing from their minds. Collins v. First Union Nat'l Bank, 272 Va. 744 , 636 S.E.2d 442, 2006 Va. LEXIS 95 (2006).

Chapter 7 debtor suffered dismissal with prejudice of his adversary complaint against the malpractice insurer for his former bankruptcy lawyer who allegedly failed to persuade a bank that held mortgages on certain real estate to renegotiate the terms of those mortgages because debtor was neither an insured under the policy nor a third-party beneficiary with a right to enforce the policy per § 55-22. Debtor’s assertion of a direct claim against the insurer also was precluded by § 38.2-2200 , which permitted the pursuit of such a direct action only after the putative claimant has obtained an unsatisfied judgment against the insured under the policy. Reynolds Living Trust v. Wells Fargo Bank, N.A. (In re Reynolds), No. 09-71964, No. 11-07012, 2011 Bankr. LEXIS 3352 (Bankr. W.D. Va. Sept. 6, 2011).

Bondholders not intended beneficiaries of underlying contracts. —

Bondholders were not the intended beneficiaries of a contract between a county and a contractor hired to construct and operate a solid waste facility where there was no provision, express or implied, of the construction contract or the operations contract that clearly and definitely showed an intent to confer a benefit upon the bondholders as third-party beneficiaries of those contracts. Caudill v. County of Dinwiddie, 259 Va. 785 , 529 S.E.2d 313, 2000 Va. LEXIS 78 (2000).

Intent of parties evidenced by contract. —

The four concerns of a contract evidence whether contracting parties clearly and definitely intended to directly benefit a third party. Radosevic v. Virginia Intermont College, 651 F. Supp. 1037, 1987 U.S. Dist. LEXIS 338 (W.D. Va. 1987).

Condition precedent to insurer’s obligation to pay for loss applied to third-party additional insured. —

Under a personal liability umbrella policy, a provision requiring an insured to perform the affirmative act of maintaining underlying insurance at policy limits greater than the amount required by § 46.2-472 was enforceable against a third-party additional insured because the provision was a condition precedent to the insurer’s obligation to pay for loss that exceeded an insured’s underlying policy limits and a third-party additional insured’s rights could not be greater than the rights of the named insured. State Farm Fire & Cas. Co. v. Nationwide Mut. Ins. Co., 596 F. Supp. 2d 940, 2009 U.S. Dist. LEXIS 8263 (E.D. Va. 2009).

Person must be intended beneficiary of contract and not third-party beneficiary of estate. —

Remaindermen failed to assert third-party beneficiary claims against attorney who wrote will of remaindermen’s grandparents; although remaindermen were third-party beneficiaries of the estate, they were not the intended beneficiaries of the contract between the grandparents and the attorney. Copenhaver v. Rogers, 238 Va. 361 , 384 S.E.2d 593, 6 Va. Law Rep. 499, 1989 Va. LEXIS 146 (1989).

Nonparty, partial beneficiary may directly sue promisor. —

The legislative history of this section reveals that the statute was amended, in part, in order to enable one not a party to a contract but who is only a partial beneficiary rather than a sole beneficiary to directly sue the promisor. Bankers Mtg. Corp. v. Jacobs, 613 F. Supp. 1579, 1985 U.S. Dist. LEXIS 17099 (E.D. Va. 1985).

Buyer evinced no intent to benefit broker. —

Where plaintiff-broker sought to recover cash commission from buyers who breached the sales contract, the presence of the sellers’ express covenant to pay the commission and the absence thereof as to the buyers evinces an intent not to confer a benefit upon the broker. Professional Realty Corp. v. Bender, 216 Va. 737 , 222 S.E.2d 810, 1976 Va. LEXIS 195 (1976).

The buyers’ promise to purchase ran in favor of the sellers; that promise was made in consideration of the sellers’ promise to sell, not in consideration of brokerage services rendered, and cannot fairly be construed to evince an intent by the buyers to confer a gratuitous benefit upon the broker. Professional Realty Corp. v. Bender, 216 Va. 737 , 222 S.E.2d 810, 1976 Va. LEXIS 195 (1976).

Seller’s intent to benefit broker. —

Both the sellers’ covenant to sell to the buyers and the sellers’ covenant to pay a commission for services rendered by the broker ran in favor of the broker, and together they evince the sellers’ intent to confer a benefit upon the broker. Professional Realty Corp. v. Bender, 216 Va. 737 , 222 S.E.2d 810, 1976 Va. LEXIS 195 (1976).

Any person having an interest in property insured, though no party to the policy, may institute and maintain an action in his own name to extent of loss occasioned him by its destruction. Tilley v. Connecticut Fire Ins. Co., 86 Va. 811 , 11 S.E. 120 , 1890 Va. LEXIS 46 (1890).

A remote beneficiary in an insurance policy might, under this section, maintain an action thereon in his own name. Clemmitt v. New York Life Ins. Co., 76 Va. 355 , 1882 Va. LEXIS 39 (1882).

Creditor may sue surety on bond. —

Where the principal contracted to liquidate and pay in full all of the liabilities of a corporation then existing or thereafter arising, and the surety guaranteed the performance of his contract, the contract of the surety was not for the exclusive benefit of the parties therein named, but inured to the benefit of the creditors of the corporation, and under this section a creditor not named could prosecute his action against the surety in his own name. Montague Mfg. Co. v. Homes Corp., 142 Va. 301 , 128 S.E. 447 , 1925 Va. LEXIS 337 (1925).

Under this section, a creditor of a road contractor for labor and material may maintain an action on the contractor’s bond against his surety, such bond being made in part for his benefit. Aetna Cas. & Sur. Co. v. Earle-Lansdell Co., 142 Va. 435 , 129 S.E. 263 , 1925 Va. LEXIS 350 (1925).

Under this section, one furnishing labor and material for the construction of a highway may sue the surety on the contractor’s undertaking bond for labor and material furnished in or about the construction of the highway. Fidelity & Deposit Co. v. Mason, 145 Va. 138 , 133 S.E. 793 , 1926 Va. LEXIS 380 (1926).

A judgment creditor of an insured may bring an action under this section only for the breach of covenant or promise which was made for his benefit in whole or in part. Rowe v. United States Fid. & Guar. Co., 421 F.2d 937, 1970 U.S. App. LEXIS 11044 (4th Cir. 1970).

2.Illustrative Cases.

Prospective purchasers held not able to bring action. —

Where there was no allegation in the motion for judgment to support a conclusion that the listing agreement clearly and definitely intended to confer a benefit upon prospective purchasers, prospective purchasers could not bring an action. Allen v. Lindstrom, 237 Va. 489 , 379 S.E.2d 450, 5 Va. Law Rep. 2205, 1989 Va. LEXIS 77, cert. denied, 493 U.S. 849, 110 S. Ct. 145, 107 L. Ed. 2d 104, 1989 U.S. LEXIS 4350 (1989).

Railroad may sue member of coal exchange. —

Where a member of a coal exchange in joining such exchange contracted to abide by its rules, one of which obligated the payment of demurrage, and later the member shipped coal under the contract, under this section he was liable to a railroad company for demurrage incurred. Smokeless Fuel Co. v. C & O Ry., 142 Va. 355 , 128 S.E. 624 , 1925 Va. LEXIS 343 (1925).

The touchstone for application of this section to construction contractors is whether the architects’ contract was made for builders’ benefit “in whole or in part.” That determination depends in turn upon the intent of the primary contracting parties, which may be gleaned either upon the face of the contract or from extrinsic evidence in that regard. McCloskey & Co. v. Wright, 363 F. Supp. 223, 1973 U.S. Dist. LEXIS 13097 (E.D. Va. 1973).

Subcontractor as beneficiary under performance bond. —

Where performance bond was written in such a way that general contractor and surety were bound, jointly and severally, to owner for any liability arising under construction contract, the subcontractors were clearly third-party beneficiaries under the bond. Sinicrope v. Black Diamond Sav. & Loan Ass'n, 21 Bankr. 476, 1982 Bankr. LEXIS 4248 (Bankr. W.D. Va. 1982).

Subcontractor not intended beneficiary of a contract. —

Subcontractor failed to allege sufficient facts under Fed. R. Civ. P. 8(a) to maintain a breach of contract claim against a tiling company and a grout distributor based on stained and discolored grout at a certain construction site because it did not aver any facts showing that it was an intended third-party beneficiary of the contract between the tiling company and the grout distributor, as required for a claim as a third-party beneficiary of a contract under § 55-22. RCI Contrs. & Eng'rs, Inc. v. Joe Rainero Tile Co., 677 F. Supp. 2d 914, 2010 U.S. Dist. LEXIS 1674 (W.D. Va. 2010).

Materialman held not entitled to recover on contractor’s bond given to city where bond and contract between contractor and city did not evidence an intent to protect materialmen. Century Indem. Co. v. Esso Std. Oil Co., 195 Va. 502 , 79 S.E.2d 625, 1954 Va. LEXIS 128 (1954).

Engineer may enforce forfeiture provision in contract with city. —

Under this section where a contract with a city for the construction of a sewer required the city to deduct from the amount due the contractor a specified sum for each day’s delay in the completion of the work beyond a time specified, and to pay such sum to the engineer employed by the city to superintend the work, the engineer may maintain an action on such covenant in his own name. City of Newport News v. Potter, 122 F. 321, 1903 U.S. App. LEXIS 4760 (4th Cir. 1903).

Public service corporation may enforce covenant as beneficiary. —

There is no public policy that would prohibit a public service corporation from enforcing an otherwise valid covenant as third-party beneficiary thereto. Kempsville Util. Corp. v. Wills, 213 Va. 679 , 194 S.E.2d 740, 1973 Va. LEXIS 206 (1973).

The beneficiary should be given the opportunity to explain the business justification of a covenant which benefits it. Kempsville Util. Corp. v. Wills, 213 Va. 679 , 194 S.E.2d 740, 1973 Va. LEXIS 206 (1973).

Purchaser of cargo held beneficiary. —

A purchaser, for whose benefit and at whose risk cargo was being transported after it was loaded by the seller f.o.b. Roanoke, was a third-party beneficiary to the contract of carriage, entitled to sue on the contract, bound by the terms of the contract, and subject to defenses arising out of the contract. Sydnor & Hundley, Inc. v. Wilson Trucking Corp., 213 Va. 704 , 194 S.E.2d 733, 1973 Va. LEXIS 212 (1973).

Injured party as beneficiary under contract of insurance. —

If the injured party is a beneficiary under the contract of insurance and the policy is made for his benefit, then he should be entitled to maintain an action in his own name for a breach of that contract. Davis v. National Grange Ins. Co., 281 F. Supp. 998, 1968 U.S. Dist. LEXIS 8336 (E.D. Va. 1968), disapproved, Rowe v. United States Fidelity & Guaranty Co., 421 F.2d 937, 1970 U.S. App. LEXIS 11044 (4th Cir. 1970).

Tort claimants had standing to seek indemnification on insurance policies issued to tortfeasors. —

Tort claimants had standing to seek a declaration that the insurance policies issued to the first tortfeasor required its insurer to defend and indemnify it for any damages awarded in the underlying tort suit because the denial of coverage would injure the claimants if they obtained judgment against the first tortfeasor and the judgment went unsatisfied as subdivision 2 of § 38.2-2200 allowed the claimants to sue defendant directly for the outstanding amount of an unsatisfied judgment against the first tortfeasor, Virginia law conferred on tort claimants the right to sue on the policy as a third-party beneficiary, and the claimant’s were third-party beneficiaries from the moment of injury pursuant to § 55-22; the second tortfeasor and its insurer, however, could not establish that they suffered an injury-in-fact as a result of defendant’s denial of coverage to the first tortfeasor, and thus, they were dismissed from the action. Lott v. Scottsdale Ins. Co., 811 F. Supp. 2d 1224, 2011 U.S. Dist. LEXIS 104803 (E.D. Va. 2011).

No evidence established injured third parties as intended beneficiaries to insurance contract. —

Where defendants claimed there was a well-recognized duty owed by insurers to injured third parties, which provided a right to an independent action against an insurer, no evidence was before the court that established the defendants as intended beneficiaries to the insurance contract between insurance company and the original named insureds under this section. Without such evidence, the defendants lacked proper standing to bring an action alleging bad faith by insurance company. Fireman's Fund Ins. Co. v. St. Asaph Lawyer's Title Co. (In re Dameron), 213 Bankr. 482, 1997 Bankr. LEXIS 1757 (Bankr. E.D. Va. 1997).

Lot owner not intended beneficiary of covenant as to multifamily dwellings. —

Under a third-party beneficiary theory, the third party must show that the parties to the contract clearly and definitely intended it to confer a benefit upon him. Where the evidence showed that a resort imposed special covenants as to multifamily residences to protect its own interests, only incidentally benefiting the lot owners, the lot owners did not clearly show that the contracting parties definitely intended the contract to confer a benefit upon them. Forbes v. Schaefer, 226 Va. 391 , 310 S.E.2d 457, 1983 Va. LEXIS 296 (1983).

Where a covenant in a deed of trust is for the benefit of the holder of notes secured, the right to sue thereon comes squarely within the provisions of this statute. Holcomb v. Webley, 185 Va. 150 , 37 S.E.2d 762, 1946 Va. LEXIS 188 (1946).

The assumption of the payment of a lien on land as a part of the purchase price thereof, for which the grantee’s immediate grantor is not personally bound, is a promise for the sole benefit of the holder of the lien within the meaning of this section and may be enforced by such holder against the party so promising. Casselman v. Gordon, 118 Va. 553 , 88 S.E. 58 , 1916 Va. LEXIS 37 (1916) (see Swain v. Virginia Bank & Trust Co., 151 Va. 655 , 144 S.E. 645 (1928)).

Purchasers of a home were third-party beneficiaries under certain “Insurance/Warranty Documents” entered into by their builder, a home warranty corporation, and a home warranty insurer, where the documents showed that the contracting parties clearly and definitely intended to confer a benefit upon the purchasers. Cobert v. Home Owners Warranty Corp., 239 Va. 460 , 391 S.E.2d 263, 6 Va. Law Rep. 2005, 1990 Va. LEXIS 84 (1990).

Court did not commit plain error in failing to address third-party beneficiary status. —

In a boat owner’s negligence action against a subcontractor, the district court did not commit plain error in failing to address whether the owner was a third-party beneficiary of the contract between his general contractor and the subcontractor, and, thus, could maintain an action against the subcontractor pursuant to § 55-22, because the owner informed the district court that it need not address the issue, and he presented absolutely no argument on the matter. Dur v. W. Branch Diesel, 240 Fed. Appx. 568, 2007 U.S. App. LEXIS 16237 (4th Cir. 2007).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Applicability. —

When a comatose nursing home patient sued the general partner of the limited liability partnership that owned the nursing home, as well as current and former nursing home employees, a claim that the patient had to engage in arbitration since the patient was a third-party beneficiary of a contract signed by the patient’s sister upon admitting the patient to the nursing home was irrelevant because the patient’s claims were not based on the contract. Gibson v. Medical Facilities of Am., Inc., 79 Va. Cir. 329, 2009 Va. Cir. LEXIS 269 (Norfolk Sept. 25, 2009).

Beneficiaries distinguished. —

Homebuilder was, at most, an incidental beneficiary of a contract between its subcontractor and the manufacturer of a building product for the purchase and sale of the product, since there was no evidence the parties to that contract knowingly intended to benefit the builder. MacConkey v. F.J. Matter Design, Inc., 54 Va. Cir. 1, 2000 Va. Cir. LEXIS 390 (Virginia Beach Feb. 8, 2000).

Intent of parties. —

Condominium owners were not third-party beneficiaries of a contract between the builder of their condominiums and an insurer to provide insurance against defects in the construction of the condominiums, because the owners were each issued individual insurance policies; there was no intent in the contract between the builder and the insurer that the owners were beneficiaries of that contract. Bay Point Condo. Ass'n Bd. of Dirs. v. Mid-Atlantic Ins. Corp., 54 Va. Cir. 124, 2000 Va. Cir. LEXIS 555 (Norfolk Sept. 20, 2000).

Subcontractor was not an intended third-party beneficiary of a contractor’s separate subcontract with a tile remover, and, at most, the subcontractor was an incidental beneficiary of the tile removal contract and, therefore, had no right to enforce the warranties under that contract in seeking contribution and indemnification from the tile remover. Metro Panel Sys. v. Sordoni Skanska Constr. Co., 56 Va. Cir. 399, 2001 Va. Cir. LEXIS 478 (Norfolk Sept. 17, 2001).

Intent of parties evidenced by contract. —

Where a second amended motion for judgment alleged the existence of consulting agreements between an equine services provider and each veterinarian, and that the clients of the provider were the intended third-party beneficiaries of the agreements, demurrers filed by the veterinarians were overruled. Washington v. Equine Reprod. Concepts, L.L.C., 61 Va. Cir. 727, 2002 Va. Cir. LEXIS 431 (Rappahannock County Dec. 19, 2002).

Guarantor alleged not only that the bank and the car dealership considered him when entering into financing documents, but that they did so with the intention of allowing him to satisfy his creditors (including the bank) while protecting his personal estate. Although it was by no means clear whether it was to be proven that the parties intended to confer a direct benefit upon the guarantor, he alleged sufficient facts on the bank’s demurrer to allege that he was a third-party beneficiary. Wachovia Bank, N.A. v. Ranson Tyler Chevrolet, L.L.C., 73 Va. Cir. 143, 2007 Va. Cir. LEXIS 43 (Roanoke Mar. 27, 2007).

Although a company’s claim that it was a third-party beneficiary of a December 24, 2003 contract because the company was a party to a December 29, 2003 contract between itself and an excess insurer and an insurance group was rejected, the company stated a valid cause of action for breach of a third-party beneficiary contract under Va. Code § 55-22 by adequately alleging under Va. Sup. Ct. R. 1:4(d) that when the excess insurers entered into the December 24, 2003 contract with a hospital, those parties intended to directly benefit the company by settling the hospital’s claims for payment of company’s employee’s medical bills, which were covered by the company plan and the excess coverage. Old Dominion Freight Line, Inc. v. Std. Sec. Life Ins. Co., 73 Va. Cir. 441, 2007 Va. Cir. LEXIS 135 (Richmond July 18, 2007).

Plaintiff’s deceased patient was a third-party beneficiary, i.e., was an intended beneficiary, not an incidental beneficiary, of the 9/16/11 Radiology Services Agreement between defendant radiological associates, and the physician services corporation; thus, based on the totality of the agreement, the whole intent of the parties was to meet the care, services, and requirements of unnamed unknown future patients. Rauchfuss v. Peninsula Radiological Assocs., 94 Va. Cir. 8, 2016 Va. Cir. LEXIS 60 (Newport News Apr. 28, 2016).

Contract clearly bestowed a benefit. —

Because an agreement provided that third-party defendant would provide a transfer station location for various sources of waste and thereby the language bestowed a benefit upon third-party plaintiff, third-party plaintiff could maintain a breach of contract claim pursuant to the terms of this section. Rivanna Solid Waste Auth. v. Van Der Linde, 78 Va. Cir. 418, 2009 Va. Cir. LEXIS 190 (Charlottesville July 21, 2009).

Borrowers were not intended beneficiaries. —

Borrowers were not a party to or an intended beneficiary of the assignment, and therefore lacked standing to challenge its validity under § 55-22. Buzbee v. United States Bank, N.A., 84 Va. Cir. 485, 2012 Va. Cir. LEXIS 39 (Fairfax County May 2, 2012).

Standing to sue. —

Injured person’s parents had no standing as parties to a suit brought by the injured person against an insurer relating to the injured person’s claims under the medical pay provisions of a policy issued by the insurer to the parents; the injured person was a third-party beneficiary of the insurance contract between his parents and the insurer, and as such, had standing to initiate a breach of contract claim. Tolbert v. Dwyer, 2000 Va. Cir. LEXIS 651 (Nelson County Mar. 9, 2000).

Because there was no express agreement between a patient and a doctor, and the patient was not a third-party beneficiary of an agreement between the doctor and a health plan, the patient lacked standing to sue the doctor for breach of contract. Hughes v. Olin, 69 Va. Cir. 46, 2005 Va. Cir. LEXIS 191 (Prince William County May 26, 2005).

In a case alleging the mismanagement of irrevocable trusts, a beneficiary was permitted to proceed in a malpractice action where she alleged that she was an intended third-party beneficiary of an attorney client relationship between a lawyer and a trustee. Burton v. Dolph, 89 Va. Cir. 101, 2014 Va. Cir. LEXIS 129 (Norfolk June 27, 2014).

I.[Reserved.]

II.Decided Under Prior Law.

This section made a decided change in the law in regard to suits to quiet title. Kennedy Coal Corp. v. Buckhorn Coal Corp., 140 Va. 37 , 124 S.E. 482 , 1924 Va. LEXIS 155 (1924).

It extends equity jurisdiction in case of removal of a cloud from title to conditions where the plaintiff is both out of possession and has only an equitable title. United States v. McIntosh, 2 F. Supp. 244, 1932 U.S. Dist. LEXIS 1618 (D. Va. 1932).

Prior to Acts 1912, p. 76, from which this section was derived, only those who had a complete legal and equitable title to land, accompanied by possession, could invoke the jurisdiction of a court of equity to remove a cloud upon their title. Buchanan Co. v. Heirs of Smyth, 115 Va. 704 , 80 S.E. 794 , 1914 Va. LEXIS 123 (1914).

Possession is not necessary. —

Under the provisions of this section it is immaterial whether the complainant in a suit to quiet title is in or out of possession of the land. Kennedy Coal Corp. v. Buckhorn Coal Corp., 140 Va. 37 , 124 S.E. 482 , 1924 Va. LEXIS 155 (1924) (see Buchanan Co. v. Heirs of Smyth, 115 Va. 704 , 80 S.E. 794 (1914); Payne v. Buena Vista Extract Co., 124 Va. 296 , 98 S.E. 34 (1919); Buchanan Coal Co. v. Street, 175 Va. 531 , 9 S.E.2d 339 (1940)).

It is doubtful whether this statute can be legally effective to expand federal equity jurisdiction to remove a cloud from title to all cases where the plaintiff is both out of possession and has only an equitable title. It could hardly be properly extended to cases where the plaintiff out of possession but with legal title has adequate remedy in an ejectment suit. United States v. McIntosh, 2 F. Supp. 244, 1932 U.S. Dist. LEXIS 1618 (D. Va. 1932).

A void commissioner’s deed conveying property to a divorced wife constituted a cloud on the husband’s title which a court of equity, under this section, had jurisdiction and power to remove by cancelling and setting aside said deed. Watson v. Mose, 165 Va. 661 , 183 S.E. 428 , 1936 Va. LEXIS 251 (1936).

As to quieting title involving grants of public lands, see Chapman v. Kite, 130 Va. 70 , 107 S.E. 702 , 1921 Va. LEXIS 142 (1921).

Settlement of disputes as to title and boundaries. —

Except when the relief which is authorized by this section is sought, and in the absence of some peculiar equity, courts of equity are without jurisdiction to settle disputes regarding the title and boundaries of land. Duty v. Honaker Lumber Co., 131 Va. 31 , 108 S.E. 863 , 1921 Va. LEXIS 4 (1921); Bath Hardwood Lumber Co. v. Back Creek Mt. Corp., 140 Va. 280 , 125 S.E. 213 , 1924 Va. LEXIS 171 (1924).

Judgment lien did not constitute good title to property. —

Judgment creditor’s action for quiet title failed because the creditor’s claim of superior title failed because the creditor’s judgment lien did not constitute good title to the property, and the creditor cited absolutely no support for the proposition that its claimed interest in the form of a judgment lien that had attached to the property was itself a title to the estate. PEI P'ship Architects, LLC v. Celebrate Va. South, LLC, No. 3:13-CV-48, 2013 U.S. Dist. LEXIS 38030 (E.D. Va. Mar. 19, 2013).

When there is another remedy. —

The fact that complainants owned the fee simple title to a tract of land and the mineral rights in an adjacent tract did not deprive them of the right to have the established boundary lines of the adjacent tract fixed and determined by a court of equity, even though, as owners of the fee in the first-mentioned tract, they might have proceeded under §§ 8.01-179 through 8.01-183 , as coterminous owners of the surface with the owners of the surface of the adjacent tract, to have the boundary line between the tracts determined. Buchanan Coal Co. v. Street, 175 Va. 531 , 9 S.E.2d 339, 1940 Va. LEXIS 198 (1940).

Determination of title as between hostile claims. —

A court of equity is without jurisdiction in a suit to remove a cloud upon title to determine the question of title as between several independent, distinct and hostile claims. Such an independent and hostile claim, involving the whole property and denying in toto and ab initio the title of the complainants, cannot be set up and adjudicated in a suit in equity. To permit this would authorize an adverse claimant to implead other claimants of the title in such a way as to substitute an equity suit for an action of ejectment. Duty v. Honaker Lumber Co., 131 Va. 31 , 108 S.E. 863 , 1921 Va. LEXIS 4 (1921).

Recovery of possession. —

As to jurisdiction under this section of a suit to try title and recover possession from an adverse claimant, see Roller v. Armentrout, 118 Va. 173 , 86 S.E. 906 , 1915 Va. LEXIS 137 (1915), writ of error dismissed, 245 U.S. 642, 38 S. Ct. 221, 62 L. Ed. 527, 1918 U.S. LEXIS 1654 (1918).

Forfeiture for breach of condition not within section. —

A suit in equity to annul and rescind a deed for breach of a condition subsequent cannot be treated as a suit to remove a cloud from title where the complainant has neither legal nor equitable title, and therefore does not fall within the class of persons who may bring a suit to quiet title under this section. Until the consummation of the forfeiture, the grantor in a case like this has nothing but a right of action. Pence v. Tidewater Townsite Corp., 127 Va. 447 , 103 S.E. 694 , 1920 Va. LEXIS 63 (1920).

Relief against fraud and enforcement of trusts. —

It was never intended, either by this section, or by the cases which have construed it, to deny to a court of equity jurisdiction either to relieve against fraud or to declare and enforce trusts resulting therefrom. Bath Hardwood Lumber Co. v. Back Creek Mt. Corp., 140 Va. 280 , 125 S.E. 213 , 1924 Va. LEXIS 171 (1924).

In a suit to remove clouds upon title and to establish a resulting trust, equity had jurisdiction and it was not harmful to deny a jury trial. Bath Hardwood Lumber Co. v. Back Creek Mt. Corp., 140 Va. 280 , 125 S.E. 213 , 1924 Va. LEXIS 171 (1924).

Amendment of bill. —

In a suit involving title to a tract of land, the original bill sought to have a grant from the Commonwealth to appellants cancelled but after the court decided that appellee had failed to prove that the grant had been procured through fraud, the bill was amended so as to pray to have the deed to appellants removed as a cloud upon appellee’s title. It was held that the procedure adopted by the trial court conformed to the provisions of this section. French v. Clinchfield Coal Corp., 171 Va. 211 , 198 S.E. 503 , 1938 Va. LEXIS 274 (1938).

A. General Purpose

B. Section 1(a)(1): Nonvested Property Interests that are Initially Valid

C. Section 1(a)(2): Wait-and-See — Nonvested Property Interests whose Validity is Initially in Abeyance

1. The 90-Year Permissible Vesting Period

2. Technical Violations of the Common-Law Rule

D. Sections 1(b)(1) and 1(c)(1): Powers of Appointment that are Initially Valid

E. Sections 1(b)(2) and 1(c)(2): Wait-and-See — Powers of Appointment whose Validity is Initially in Abeyance

F. The Validity of the Donee’s Exercise of a Valid Power

G. Section 1(e): Effect of Certain “Later-of” Type Language; Coordination of Generation-Skipping Transfer Tax Regulations With Uniform Act

H. Subsidiary Common-Law Doctrines: Whether Superseded by this Act

Official Comments for Uniform Statutory Rule Against Perpetuities, § 55-12.1 et seq.: Copyright 1990 by the National Conference of Commissioners on Uniform State Laws. Reprinted with permission.

Common-Law Rule Against Perpetuities Superseded. As provided in Section 9, this Act supersedes the common-law Rule Against Perpetuities (Common-law Rule) in jurisdictions previously adhering to it (or repeals any statutory version or variation thereof previously in effect in the jurisdiction). The Common-law Rule (or the statutory version or variation thereof) is replaced by the Statutory Rule Against Perpetuities (Statutory Rule) set forth in this section and by the other provisions in this Act.

Subsidiary Doctrines Continue in Force Except to the Extent the Provisions of Act Conflict with Them. The courts in interpreting the Common-law Rule developed several subsidiary doctrines. In accordance with the general principle of statutory construction that statutes in derogation of the common law are to be construed narrowly, a subsidiary doctrine is superseded by this Act only to the extent the provisions of the Act conflict with it. A listing and discussion of such subsidiary doctrines, such as the constructional preference for validity, the all-or-nothing rule for class gifts, and the doctrine of infectious invalidity, appears later, in Part G of this Comment.

Application. Unless excluded by Section 4, the Statutory Rule Against Perpetuities (Statutory Rule) applies to nonvested property interests and to powers of appointment over property or property interests that are nongeneral powers, general testamentary powers, or general powers not presently exercisable because of a condition precedent.

The Statutory Rule does not apply to vested property interests (e.g., X’s interest in Example (23) of this Comment) or to presently exercisable general powers of appointment (e.g., G’s power in Example (19) of this Comment; G’s power in Example (1) in the Comment to Section 2; A’s power in Example (2) in the Comment to Section 2; X’s power in Example (3) in the Comment to Section 2; A’s noncumulative power of withdrawal in Example (4) in the Comment to Section 2).

The Common-law Rule’s Validating and Invalidating Sides. The Common-law Rule Against Perpetuities is a rule of initial validity or invalidity. At common law, a nonvested property interest is either valid or invalid as of its creation. Like most rules of property law, the Common-law Rule has both a validating and an invalidating side. Both sides are derived from John Chipman Gray’s formulation of the Common-law Rule:

Validating Side of the Common-law Rule. A nonvested property interest is valid when it is created (initially valid) if it is then certain to vest or terminate (fail to vest) — one or the other — no later than 21 years after the death of an individual then alive.

Invalidating Side of the Common-law Rule. A nonvested property interest is invalid when it is created (initially invalid) if there is no such certainty.

Notice that the invalidating side focuses on a lack of certainty, which means that invalidity under the Common-law Rule is not dependent on actual post-creation events but only on possible post-creation events. Actual post-creation events are irrelevant, even those that are known at the time of the lawsuit. It is generally recognized that the invalidating side of the Common-law Rule is harsh because it can invalidate interests on the ground of possible post-creation events that are extremely unlikely to happen and that in actuality almost never do happen, if ever.

The Statutory Rule Against Perpetuities. The essential difference between the Common-law Rule and its statutory replacement is that the Statutory Rule preserves the Common-law Rule’s overall policy of preventing property from being tied up in unreasonably long or even perpetual family trusts or other property arrangements, while eliminating the harsh potential of the Common-law Rule. The Statutory Rule achieves this result by codifying (in slightly revised form) the validating side of the Common-law Rule and modifying the invalidating side by adopting a wait-and-see element. Under the Statutory Rule, interests that would have been initially valid at common law continue to be initially valid, but interests that would have been initially invalid at common law are invalid only if they do not actually vest or terminate within the permissible vesting period set forth in Section 1(a)(2). Thus, the Uniform Act recasts the validating and invalidating sides of the Rule Against Perpetuities as follows:

As indicated, this modification of the invalidating side of the Common-law Rule is generally known as the wait-and-see method of perpetuity reform. The wait-and-see method of perpetuity reform was approved by the American Law Institute as part of the Restatement (Second) of Property (Donative Transfers)

§§ 1.1-1.6 (1983). For a discussion of the various methods of perpetuity reform, including the wait-and-see method and the Restatement (Second)’s version of wait-and-see, see Waggoner, Perpetuity Reform, 81 Mich.L.Rev. 1718 (1983).

Section 1(a)(1) Codifies the Validating Side of the Common-law Rule. The validating side of the Common-law Rule is codified in Section 1(a)(1) (and, with respect to powers of appointment, in Sections 1(b)(1) and 1(c)(1)).

A nonvested property interest that satisfies the requirement of Section 1(a)(1) is initially valid. That is, it is valid as of the time of its creation. There is no need to subject such an interest to the waiting period set forth in Section 1(a)(2), nor would it be desirable to do so.

For a nonvested property interest to be valid as of the time of its creation under Section 1(a)(1), there must then be a certainty that the interest will either vest or terminate — an interest terminates when vesting becomes impossible — no later than 21 years after the death of an individual then alive. To satisfy this requirement, it must be established that there is no possible chain of events that might arise after the interest was created that would allow the interest to vest or terminate after the expiration of the 21-year period following the death of an individual in being at the creation of the interest. Consequently, initial validity under Section 1(a)(1) can be established only if there is an individual for whom there is a causal connection between the individual’s death and the interest’s vesting or terminating no later than 21 years thereafter. The individual described in subsection (a)(1) (and subsections (b)(1) and (c)(1) as well) is often referred to as the “validating life,” the term used throughout the Comments to this Act.

Determining Whether There is a Validating Life. The process for determining whether a validating life exists is to postulate the death of each individual connected in some way to the transaction, and ask the question: Is there with respect to this individual an invalidating chain of possible events? If one individual can be found for whom the answer is No, that individual can serve as the validating life. As to that individual there will be the requisite causal connection between his or her death and the questioned interest’s vesting or terminating no later than 21 years thereafter.

In searching for a validating life, only individuals who are connected in some way to the transaction need to be considered, for they are the only ones who have a chance of supplying the requisite causal connection. Such individuals vary from situation to situation, but typically include the beneficiaries of the disposition, including the taker or takers of the nonvested property interest, and individuals related to them by blood or adoption, especially in the ascending and descending lines. There is no point in even considering the life of an individual unconnected to the transaction — an individual from the world at large who happens to be in being at the creation of the interest. No such individual can be a validating life because there will be an invalidating chain of possible events as to every unconnected individual who might be proposed: Any such individual can immediately die after the creation of the nonvested property interest without causing any acceleration of the interest’s vesting or termination. (The life expectancy of any unconnected individual, or even the probability that one of a number of new-born babies will live a long life, is irrelevant.)

Example (1) — Parent of Devisees as the Validating Life. G devised property “to A for life, remainder to A’s children who attain 21.” G was survived by his son (A), by his daughter (B), by A’s wife (W), and by A’s two children (X and Y).

The nonvested property interest in favor of A’s children who reach 21 satisfies Section 1(a)(1)’s requirement, and the interest is initially valid. When the interest was created (at G’s death), the interest was then certain to vest or terminate no later than 21 years after A’s death.

The Rule of Subsection (d). The rule established in subsection (d) plays a significant role in the search for a validating life. Subsection (d) declares that the possibility that a child will be born to an individual after the individual’s death is to be disregarded. It is important to note that this rule applies only for the purposes of determining the validity of an interest (or power of appointment) under paragraph (1) of subsection (a), (b), or (c). The rule of subsection (d) does not apply, for example, to questions such as whether or not a child who is born to an individual after the individual’s death qualifies as a taker of a beneficial interest — as a member of a class or otherwise. Neither subsection (d), nor any other provision of this Act, supersedes the widely accepted common-law principle, sometimes codified, that a child in gestation (a child sometimes described as a child en ventre sa mere ) who is later born alive is regarded as alive at the commencement of gestation.

The limited purpose of subsection (d) is to solve a perpetuity problem caused by advances in medical science. The problem is illustrated by a case such as Example (1), above — “to A for life, remainder to A’s children who reach 21.” When the Common-law Rule was developing, the possibility was recognized, strictly speaking, that one or more of A’s children might reach 21 more than 21 years after A’s death. The possibility existed because A’s wife (who might not be a life in being) might be pregnant when A died. If she was, and if the child was born viable a few months after A’s death, the child could not reach his or her 21st birthday within 21 years after A’s death. The device then invented to validate the interest of A’s children was to “extend” the allowable perpetuity period by tacking on a period of gestation, if needed. As a result, the common-law perpetuity period was comprised of three components: (1) a life in being (2) plus 21 years (3) plus a period of gestation, when needed. Today, thanks to sperm banks, frozen embryos, and even the possibility of artificially maintaining the body functions of deceased pregnant women long enough to develop the fetus to viability (see Detroit Free Press, July 31, 1986, at 5A; Ann Arbor News, Oct. 30, 1978, at C5 (AP story); N.Y. Times, Dec. 6, 1977, at 30; N.Y. Times, Dec. 2, 1977, at B16) — advances in medical science unanticipated when the Common-law Rule was in its developmental stages — having a pregnant wife at death is no longer the only way of having children after death. These medical developments, and undoubtedly others to come, make the mere addition of a period of gestation inadequate as a device to confer initial validity under Section 1(a)(1) on the interest of A’s children in the above example. The rule of subsection (d), however, does insure the initial validity of the children’s interest. Disregarding the possibility that children of A will be born after his death allows A to be the validating life. None of his children, under this assumption, can reach 21 more than 21 years after his death.

Note that subsection (d) subsumes not only the case of children conceived after death, but also the more conventional case of children in gestation at death. With subsection (d) in place, the third component of the common-law perpetuity period is unnecessary and has been jettisoned. The perpetuity period recognized in paragraph (1) of subsections (a), (b), and (c) has only two components: (1) a life in being (2) plus 21 years.

As to the legal status of conceived-after-death children, that question has not yet been resolved. For example, if in Example (1) it in fact turns out that A does leave sperm on deposit at a sperm bank and if in fact A’s wife does become pregnant as a result of artificial insemination, the child or children produced thereby might not be included at all in the class gift. Cf. Restatement (Second) of Property (Donative Transfers) Introductory Note to Ch. 26 at pp. 2-3 (Tent. Draft No. 9, 1986). Without trying to predict how that matter will be settled in the future, the best way to handle the problem from the perpetuity perspective is subsection (d)’s rule requiring the possibility of post-death children to be disregarded.

Recipients as Their Own Validating Lives. It is well established at common law that, in appropriate cases, the recipient of an interest can be his or her own validating life. See, e.g., Rand v. Bank of California, 236 Or. 619, 388 P.2d 437 (1964). Given the right circumstances, this principle can validate interests that are contingent on the recipient’s reaching an age in excess of 21, or are contingent on the recipient’s surviving a particular point in time that is or might turn out to be in excess of 21 years after the interest was created or after the death of a person in being at the date of creation.

Example (2) — Devisees as Their Own Validating Lives. G devised real property “to A’s children who attain 25.” A predeceased G. At G’s death, A had three living children, all of whom were under 25.

The nonvested property interest in favor of A’s children who attain 25 is validated by Section 1(a)(1). Under subsection (d), the possibility that A will have a child born to him after his death (and since A predeceased G, after G’s death) must be disregarded. Consequently, even if A’s wife survived G, and even if she was pregnant at G’s death or even if A had deposited sperm in a sperm bank prior to his death, it must be assumed that all of A’s children are in being at G’s death. A’s children are, therefore, their own validating lives. (Note that subsection (d) requires that in determining whether an individual is a validating life, the possibility that a child will be born to “an” individual after the individual’s death must be disregarded. The validating life and the individual whose having a post-death child is disregarded need not be the same individual.) Each one of A’s children, all of whom under subsection (d) are regarded as alive at G’s death, will either reach the age of 25 or fail to do so within his or her own lifetime. To say this another way, it is certain to be known no later than at the time of the death of each child whether or not that child survived to the required age.

Validating Life Can Be Survivor of Group. In appropriate cases, the validating life need not be individualized at first. Rather the validating life can initially (i.e., when the interest was created) be the unidentified survivor of a group of individuals. It is common in such cases to say that the members of the group are the validating lives, but the true meaning of the statement is that the validating life is the member of the group who turns out to live the longest. As the court said in Skatterwood v. Edge, 1 Salk. 229, 91 Eng. Rep. 203 (K.B. 1697), “for let the lives be never so many, there must be a survivor, and so it is but the length of that life; for Twisden used to say, the candles were all lighted at once.”

Example (3) — Case of Validating Life Being the Survivor of a Group. G devised real property “to such of my grandchildren as attain 21.” Some of G’s children are living at G’s death.

The nonvested property interest in favor of G’s grandchildren who attain 21 is valid under Section 1(a)(1). The validating life is that one of G’s children who turns out to live the longest. Since under subsection (d), it must be assumed that none of G’s children will have post-death children, it is regarded as impossible for any of G’s grandchildren to be alive and under 21 beyond the 21-year period following the death of G’s last surviving child.

Different Validating Lives Can and in Some Cases Must Be Used. Dispositions of property sometimes create more than one nonvested property interest. In such cases, the validity of each interest is treated individually. A validating life that validates one interest might or might not validate the other interests. Since it is not necessary that the same validating life be used for all interests created by a disposition, the search for a validating life for each of the other interests must be undertaken separately.

Perpetuity Saving Clauses and Similar Provisions. Knowledgeable lawyers almost routinely insert perpetuity saving clauses into instruments they draft. Saving clauses contain two components, the first of which is the perpetuity-period component. This component typically requires the trust or other arrangement to terminate no later than 21 years after the death of the last survivor of a group of individuals designated therein by name or class. (The lives of corporations, animals, or sequoia trees cannot be used.) The second component of saving clauses is the gift-over component. This component expressly creates a gift over that is guaranteed to vest at the termination of the period set forth in the perpetuity-period component, but only if the trust or other arrangement has not terminated earlier in accordance with its other terms.

It is important to note that regardless of what group of individuals is designated in the perpetuity-period component of a saving clause, the surviving member of the group is not necessarily the individual who would be the validating life for the nonvested property interest or power of appointment in the absence of the saving clause. Without the saving clause, one or more interests or powers may in fact fail to satisfy the requirement of paragraph (1) of subsections (a), (b), or (c) for initial validity. By being designated in the saving clause, however, the survivor of the group becomes the validating life for all interests and powers in the trust or other arrangement: The saving clause confers on the last surviving member of the designated group the requisite causal connection between his or her death and the impossibility of any interest or power in the trust or other arrangement remaining in existence beyond the 21-year period following such individual’s death.

Example (6) — Valid Saving Clause Case. A testamentary trust directs income to be paid to the testator’s children for the life of the survivor, then to the testator’s grandchildren for the life of the survivor, corpus on the death of the testator’s last living grandchild to such of the testator’s descendants as the last living grandchild shall by will appoint; in default of appointment, to the testator’s then-living descendants, per stirpes. A saving clause in the will terminates the trust, if it has not previously terminated, 21 years after the death of the testator’s last surviving descendant who was living at the testator’s death. The testator was survived by children.

In the absence of the saving clause, the nongeneral power of appointment in the last living grandchild and the nonvested property interest in the gift-in-default clause in favor of the testator’s descendants fail the test of Sections 1(a)(1) and 1(c)(1) for initial validity. That is, were it not for the saving clause, there is no validating life. However, the surviving member of the designated group becomes the validating life, so that the saving clause does confer initial validity on the nongeneral power of appointment and on the nonvested property interest under Sections 1(a)(1) and 1(c)(1).

If the governing instrument designates a group of individuals that would cause it to be impracticable to determine the death of the survivor, the common-law courts have developed the doctrine that the validity of the nonvested property interest or power of appointment is determined as if the provision in the governing instrument did not exist. See cases cited in Restatement (Second) of Property (Donative Transfers) (1983), Reporter’s Note No. 3 at p. 45. See also Restatement (Second) of Property (Donative Transfers) § 1.3(1) Comment a (1983); Restatement of Property § 374 and Comment l (1944); 6 American Law of Property § 24.13 (A. Casner ed. 1952); 5A R. Powell, The Law of Real Property Para. 766[5] (1985); L. Simes & A. Smith, The Law of Future Interests § 1223 (2d ed. 1956). If, for example, the designated group in Example (6) were the residents of X City (or the members of Y Country Club) living at the time of the testator’s death, the saving clause would not validate the power of appointment or the nonvested property interest. Instead, the validity of the power of appointment and the nonvested property interest would be determined as if the provision in the governing instrument did not exist. Since without the saving clause the power of appointment and the nonvested property interest would fail to satisfy the requirements of Sections 1(a)(1) and 1(c)(1) for initial validity, their validity would be governed by Sections 1(a)(2) and 1(c)(2).

The application of the above common-law doctrine, which is not superseded by this Act and so remains in full force, is not limited to saving clauses. It also applies to trusts or other arrangements where the period thereof is directly linked to the life of the survivor of a designated group of individuals. An example is a trust to pay the income to the grantor’s descendants from time to time living, per stirpes, for the period of the life of the survivor of a designated group of individuals living when the nonvested property interest or power of appointment in question was created, plus the 21-year period following the survivor’s death; at the end of the 21-year period, the corpus is to be divided among the grantor’s then-living descendants, per stirpes, and if none, to the XYZ Charity. If the group of individuals so designated is such that it would be impracticable to determine the death of the survivor, the validity of the disposition is determined as if the provision in the governing instrument did not exist. The term of the trust is therefore governed by the 90- year permissible vesting period of paragraph (2) of subsections (a), (b), or (c) of the Statutory Rule.

Additional references. Restatement (Second) of Property (Donative Transfers) § 1.3(1) (1983), and the Comments thereto; Waggoner, Perpetuity Reform, 81 Mich.L.Rev. 1718, 1720-1726 (1983).

1. The 90-Year Permissible Vesting Period

Since a wait-and-see rule against perpetuities, unlike the Common-law Rule, makes validity or invalidity turn on actual post-creation events, it requires that an actual period of time be measured off during which the contingencies attached to an interest are allowed to work themselves out to a final resolution. The Statutory Rule Against Perpetuities establishes a permissible vesting period of 90 years. Nonvested property interests that have neither vested nor terminated at the expiration of the 90-year permissible vesting period become invalid.

As explained in the Prefatory Note, the permissible vesting period of 90 years is not an arbitrarily selected period of time. On the contrary, the 90-year period represents a reasonable approximation of — a proxy for — the period of time that would, on average, be produced through the use of an actual set of measuring lives identified by statute and then adding the traditional 21-year tack-on period after the death of the survivor.

2. Technical Violations of the Common-Law Rule

One of the harsh aspects of the invalidating side of the Common-Law Rule, against which the adoption of the wait-and-see element in Section 1(a)(2) is designed to relieve, is that nonvested property interests at common law are invalid even though the invalidating chain of possible events almost certainly will not happen. In such cases, the violation of the Common-law Rule could be said to be merely technical. Nevertheless, at common law, the nonvested property interest is invalid.

Cases of technical violation fall generally into discrete categories, identified and named by Professor Leach in Perpetuities in a Nutshell, 51 Harv.L.Rev. 638 (1938), as the fertile octogenarian, the administrative contingency, and the unborn widow. The following three examples illustrate how Section 1(a)(2) affects these categories.

Example (7) — Fertile Octogenarian Case. G devised property in trust, directing the trustee to pay the net income therefrom “to A for life, then to A’s children for the life of the survivor, and upon the death of A’s last surviving child to pay the corpus of the trust to A’s grandchildren.” G was survived by A (a female who had passed menopause) and by A’s two adult children (X and Y).

The remainder interest in favor of G’s grandchildren would be invalid at common law, and consequently is not validated by Section 1(a)(1). There is no validating life because, under the common law’s conclusive presumption of lifetime fertility, which is not superseded by this Act (see Part H, below), A might have a third child (Z), conceived and born after G’s death, who will have a child conceived and born more than 21 years after the death of the survivor of A, X, and Y.

Age Contingencies in Excess of 21. Another category of technical violation of the Common-Law Rule arises in cases of age contingencies in excess of 21 where the takers cannot be their own validating lives (unlike Example (2), above). The violation of the Common-law Rule falls into the technical category because the insertion of a saving clause would in almost all cases allow the disposition to be carried out as written. In effect, the Statutory Rule operates like the perpetuity-period component of a saving clause.

Example (10) — Age Contingency in Excess of 21 Case. G devised property in trust, directing the trustee to pay the income “to A for life, then to A’s children; the corpus of the trust is to be equally divided among A’s children who reach the age of 30.” G was survived by A, by A’s spouse (H), and by A’s two children (X and Y), both of whom were under the age of 30 when G died.

The remainder interest in favor of A’s children who reach 30 is a class gift. At common law, the interests of all potential class members must be valid or the class gift is totally invalid. Leake v. Robinson, 2 Mer. 363, 35 Eng. Rep. 979 (Ch. 1817). This Act does not supersede the all-or-nothing rule for class gifts (see Part G, below), and so the all-or-nothing rule continues to apply under this Act. Although X and Y will either reach 30 or die under 30 within their own lifetimes, there is at G’s death the possibility that A will have an afterborn child (Z) who will reach 30 or die under 30 more than 21 years after the death of the survivor of A, H, X, and Y. The class gift would be invalid at common law and consequently is not validated by Section 1(a)(1).

The various persons connected to a power of appointment are identified by a special terminology. The “donor” is the person who created the power of appointment. The “donee” is the person who holds the power of appointment, i.e., the powerholder. The “objects” are the persons to whom an appointment can be made. The “appointees” are the persons to whom an appointment has been made. The “takers in default” are the persons whose property interests are subject to being defeated by the exercise of the power of appointment and who take the property to the extent the power is not effectively exercised. Restatement (Second) of Property (Donative Transfers) § 11.2 (1986).

A power of appointment is “general” if it is exercisable in favor of the donee of the power, the donee’s creditors, the donee’s estate, or the creditors of the donee’s estate. A power of appointment that is not general is a “nongeneral” power of appointment. Restatement (Second) of Property (Donative Transfers) § 11.4 (1986).

A power of appointment is “presently exercisable” if, at the time in question, the donee can by an exercise of the power create an interest in or a power of appointment over the appointive property. Restatement (Second) of Property (Donative Transfers) § 11.5 (1986). A power of appointment is “testamentary” if the donee can exercise it only in the donee’s will. Restatement of Property § 321 (1940). A power of appointment is “not presently exercisable because of a condition precedent” if the only impediment to its present exercisability is a condition precedent, i.e., the occurrence of some uncertain event. Since a power of appointment terminates on the donee’s death, a deferral of a power’s present exercisability until a future time (even a time certain) imposes a condition precedent that the donee be alive at that future time.

A power of appointment is a “fiduciary” power if it is held by a fiduciary and is exercisable by the fiduciary in a fiduciary capacity. A power of appointment that is exercisable in an individual capacity is a “nonfiduciary” power. As used in this Act, the term “power of appointment” refers to “fiduciary” and to “nonfiduciary” powers, unless the context indicates otherwise.

Although Gray’s formulation of the Common-law Rule Against Perpetuities does not speak directly of powers of appointment, the Common-law Rule is applicable to powers of appointment (other than presently exercisable general powers of appointment). The principle of subsections (b)(1) and (c)(1) is that a power of appointment that satisfies the Common-law Rule Against Perpetuities is valid under the Statutory Rule Against Perpetuities, and consequently it can be validly exercised, without being subjected to a waiting period during which the power’s validity is in abeyance.

Two different tests for validity are employed at common law, depending on what type of power is at issue. In the case of a nongeneral power (whether or not presently exercisable) and in the case of a general testamentary power, the power is initially valid if, when the power was created, it is certain that the latest possible time that the power can be exercised is no later than 21 years after the death of an individual then in being. In the case of a general power not presently exercisable because of a condition precedent, the power is initially valid if it is then certain that the condition precedent to its exercise will either be satisfied or become impossible to satisfy no later than 21 years after the death of an individual then in being. Subsections (b)(1) and (c)(1) codify these rules. Under either test, initial validity depends on the existence of a validating life. The procedure for determining whether a validating life exists is essentially the same procedure explained in Part B, above, pertaining to nonvested property interests.

Example (11) — Initially Valid General Testamentary Power Case. G devised property “to A for life, remainder to such persons, including A’s estate or the creditors of A’s estate, as A shall by will appoint.” G was survived by his daughter (A).

A’s power, which is a general testamentary power, is valid as of its creation under Section 1(c)(1). The test is whether or not the power can be exercised beyond 21 years after the death of an individual in being when the power was created (G’s death). Since A’s power cannot be exercised after A’s death, the validating life is A, who was in being at G’s death.

Sections 1(b)(2) and 1(c)(2), by adopting the wait-and-see method of perpetuity reform, shift the ground of invalidity from possible to actual post-creation events. Under these subsections, a power of appointment that would have violated the Common-law Rule, and therefore fails the subsection (b)(1) or (c)(1) tests for initial validity, is nevertheless not invalid as of the time of its creation. Instead, its validity is in abeyance. A general power not presently exercisable because of a condition precedent is invalid only if in actuality the condition neither is satisfied nor becomes impossible to satisfy within the 90-year permissible vesting period. A nongeneral power or a general testamentary power is invalid only if in actuality it does not terminate (by irrevocable exercise or otherwise) within the 90-year permissible period.

Example (14) — General Testamentary Power Case. G devised property “to A for life, then to A’s first born child for life, then to such persons, including the estate or the creditors of the estate of A’s first born child, as A’s first born child shall by will appoint; in default of appointment, to G’s grandchildren in equal shares.” G was survived by his daughter (A), who was then childless, and by his son (B), who had two children (X and Y).

Since the general testamentary power conferred on A’s first born child fails the test of Section 1(c)(1) for initial validity, its validity is governed by Section 1(c)(2). If A has a child, such child’s death must occur within 90 years of G’s death for any provision in the child’s will purporting to exercise the power to be valid.

Fiduciary Powers. Purely administrative fiduciary powers are excluded from the Statutory Rule under Sections 4(2) and (3), but the only distributive fiduciary power that is excluded is the power described in Section 4(4). Otherwise, distributive fiduciary powers are subject to the Statutory Rule. Such powers are usually nongeneral powers.

Example (17) — Trustee’s Discretionary Powers Over Income and Corpus. G devised property in trust, the terms of which were that the trustee was authorized to accumulate the income or pay it or a portion of it out to A during A’s lifetime; after A’s death, the trustee was authorized to accumulate the income or to distribute it in equal or unequal shares among A’s children until the death of the survivor; and on the death of A’s last surviving child to pay the corpus and accumulated income (if any) to B. The trustee was also granted the discretionary power to invade the corpus on behalf of the permissible recipient or recipients of the income.

The trustee’s nongeneral powers to invade corpus and to accumulate or spray income among A’s children are not excluded by Section 4(4), nor are they initially valid under Section 1(c)(1). Their validity is, therefore, governed by Section 1(c)(2). Both powers become invalid thereunder, and hence no longer exercisable, 90 years after G’s death.

Example (18) — Exercise of a Nongeneral Power of Appointment. G was the life income beneficiary of a trust and the donee of a nongeneral power of appointment over the succeeding remainder interest, exercisable in favor of M’s descendants (except G). The trust was created by the will of G’s mother, M, who predeceased him. G exercised his power by his will, directing the income to be paid after his death to his brother B’s children for the life of the survivor, and upon the death of B’s last surviving child, to pay the corpus of the trust to B’s grandchildren. B predeceased M; B was survived by his two children, X and Y, who also survived M and G.

G’s power and his appointment are valid. The power and the appointed interests were created at M’s death when the power was created, not on G’s death when it was exercised. See Section 2. G’s power passes Section 1(c)(1)’s test for initial validity: G himself is the validating life. G’s appointment also passes Section 1(a)(1)’s test for initial validity: Since B was dead at M’s death, the validating life is the survivor of B’s children, X and Y.

Common-Law “Second-look” Doctrine. As indicated above, both at common law and under this Act (except for purposes of Section 5 only, as explained in the Comment to Section 5), appointed interests and powers established by the exercise of a general testamentary power or a nongeneral power are created when the power was created, not when the power was exercised. In applying this principle, the common law recognizes a so-called doctrine of second look, under which the facts existing on the date of the exercise are taken into account in determining the validity of appointed interests and appointed powers. E.g., Warren’s Estate, 320 Pa. 112, 182 A. 396 (1930); In re Estate of Bird, 225 Cal.App.2d 196, 37 Cal.Rptr. 288 (1964). The common-law’s second-look doctrine in effect constitutes a limited wait-and-see doctrine, and is therefore subsumed under but not totally superseded by this Act. The following example, which is a variation of Example (18) above, illustrates how the second-look doctrine operates at common law and how the situation would be analyzed under this Act.

Example (21) — Second-look Case. G was the life income beneficiary of a trust and the donee of a nongeneral power of appointment over the succeeding remainder interest, exercisable in favor of G’s descendants. The trust was created by the will of his mother, M, who predeceased him. G exercised his power by his will, directing the income to be paid after his death to his children for the life of the survivor, and upon the death of his last surviving child, to pay the corpus of the trust to his grandchildren. At M’s death, G had two children, X and Y. No further children were born to G, and at his death X and Y were still living.

The common-law solution of this example is as follows: G’s appointment is valid under the Common-law Rule. Although the period of the Rule begins to run at M’s death, the facts existing at G’s death can be taken into account. This second look at the facts discloses that G had no additional children. Thus the possibility of additional children, which existed at M’s death when the period of the Rule began to run, is disregarded. The survivor of X and Y, therefore, becomes the validating life for the remainder interest in favor of G’s grandchildren, and G’s appointment is valid. The common-law’s second-look doctrine would not, however, save G’s appointment if he actually had one or more children after M’s death and if at least one of these after-born children survived G.

Additional References. Restatement (Second) of Property (Donative Transfers) § 1.2, Comments d, f, g, and h; § 1.3, Comment g; § 1.4, Comment l (1983).

In general, perpetuity saving or termination clauses can be used in either of two ways. The predominant use of such clauses is as an override clause. That is, the clause is not an integral part of the dispositive terms of the trust, but operates independently of the dispositive terms; the clause provides that all interests must vest no later than at a specified time in the future, and sometimes also provides that the trust must then terminate, but only if any interest has not previously vested or if the trust has not previously terminated. The other use of such a clause is as an integral part of the dispositive terms of the trust; that is, the clause is the provision that directly regulates the duration of the trust. Traditional perpetuity saving or termination clauses do not use a “later-of” approach; they mark off the maximum time of vesting or termination only by reference to a 21-year period following the death of the survivor of specified lives in being at the creation of the trust.

Section 1(e) applies to a non-traditional clause called a “later-of” (or “longer-of”) clause. Such a clause might provide that the maximum time of vesting or termination of any interest or trust must occur no later than the later of (A) 21 years after the death of the survivor of specified lives in being at the creation of the trust or (B) 90 years after the creation of the trust.

Under the Uniform Act as originally promulgated, this type of “later-of” clause would not achieve a “later-of” result. If used as an override clause in conjunction with a trust whose terms were, by themselves, valid under the Common-law Rule, the “later-of” clause did no harm. The trust would be valid under the Common-law Rule as codified in Section 1(a)(1) because the clause itself would neither postpone the vesting of any interest nor extend the duration of the trust. But, if used either (1) as an override clause in conjunction with a trust whose terms were not valid under the Common-law Rule or (2) as the provision that directly regulated the duration of the trust, the “later-of” clause would not cure the perpetuity violation in case (1) and would create a perpetuity violation in case (2). In neither case would the clause qualify the trust for validity at common law under Section 1(a)(1) because the clause would not guarantee that all interests will be certain to vest or terminate no later than 21 years after the death of an individual then alive. ** In any given case, 90 years can turn out to be longer than the period produced by the specified-lives-in-being-plus-21-years language. **

Because the clause would fail to qualify the trust for validity under the Common-law Rule of Section 1(a)(1), the nonvested interests in the trust would be subject to the wait-and-see element of Section 1(a)(2) and vulnerable to a reformation suit under Section 3. Under Section 1(a)(2), an interest that is not valid at common law is invalid unless it actually vests or terminates within 90 years after its creation. Section 1(a)(2) does not grant such nonvested interests a permissible vesting period of either 90 years or a period of 21 years after the death of the survivor of specified lives in being. Section 1(a)(2) only grants such interests a period of 90 years in which to vest.

The operation of Section 1(a), as outlined above, is also supported by perpetuity policy. If Section 1(a) allowed a “later-of” clause to achieve a “later-of” result, it would authorize an improper use of the 90-year permissible vesting period of Section 1(a)(2). The 90-year period of Section 1(a)(2) is designed to approximate the period that, on average, would be produced by using actual lives in being plus 21 years. Because in any given case the period actually produced by lives in being plus 21 years can be shorter or longer than 90 years, an attempt to utilize a 90-year period in a “later-of” clause improperly seeks to turn the 90-year average into a minimum.

Set against this background, the addition of Section 1(e) is quite beneficial. Section 1(e) limits the effect of this type of “later-of” language to 21 years after the death of the survivor of the specified lives, in effect transforming the clause into a traditional perpetuity saving/termination clause. By doing so, Section 1(e) grants initial validity to the trust under the Common-law Rule as codified in Section 1(a)(1) and precludes a reformation suit under Section 3.

Note that Section 1(e) covers variations of the “later-of” clause described above, such as a clause that postpones vesting until the later of (A) 20 years after the death of the survivor of specified lives in being or (B) 89 years. Section 1(e) does not, however, apply to all dispositions that incorporate a “later-of” approach. To come under Section 1(e), the specified-lives prong must include a tack-on period of up to 21 years. Without a tack-on period, a “later-of” disposition, unless valid at common law, comes under Section 1(a)(2) and is given 90 years in which to vest. An example would be a disposition that creates an interest that is to vest upon “the later of the death of my widow or 30 years after my death.”

Coordination of the Federal Generation-Skipping Transfer Tax with the Uniform Statutory Rule. In 1990, the Treasury Department announced a decision to coordinate the tax regulations under the “grandfathering” provisions of the federal generation-skipping transfer tax with the Uniform Act. Letter from Michael J. Graetz, Deputy Assistant Secretary of the Treasury (Tax Policy), to Lawrence J. Bugge, President, National Conference of Commissioners on Uniform State Laws (Nov. 16, 1990) (hereinafter Treasury Letter ).

Section 1433(b)(2) of the Tax Reform Act of 1986 generally exempts (“grandfathers”) trusts from the federal generation-skipping transfer tax that were irrevocable on September 25, 1985. This section adds, however, that the exemption shall apply “only to the extent that such transfer is not made out of corpus added to the trust after September 25, 1985.” The provisions of Section 1433(b)(2) were first implemented by Temp. Treas. Reg. § 26.2601-1, promulgated by T.D. 8187 on March 14, 1988. Insofar as the Uniform Act is concerned, a key feature of that temporary regulation is the concept that the statutory reference to “corpus added to the trust after September 25, 1985” not only covers actual post-9/25/85 transfers of new property or corpus to a grandfathered trust but “constructive” additions as well. Under the temporary regulation as first promulgated, a “constructive” addition occurs if, after 9/25/85, the donee of a nongeneral power of appointment exercises that power “in a manner that may postpone or suspend the vesting, absolute ownership or power of alienation of an interest in property for a period, measured from the date of creation of the trust, extending beyond any life in being at the date of creation of the trust plus a period of 21 years. If a power is exercised by creating another power it will be deemed to be exercised to whatever extent the second power may be exercised.” Temp. Treas. Reg. § 26.2601- 1(b)(1)(v)(B)(2) (1988).

Because the Uniform Act was promulgated in 1986 and applies only prospectively, any “grandfathered” trust would have become irrevocable prior to the enactment of the Uniform Act in any state. Nevertheless, the second sentence of Section 5(a) extends the wait-and-see approach to post-effective-date exercises of nongeneral powers even if the power itself was created prior to the effective date of the Uniform Act in any state. Consequently, a post-effective-date exercise of a nongeneral power of appointment created in a “grandfathered” trust could come under the provisions of the Uniform Act.

The literal wording, then, of Temp. Treas. Reg. § 26.2601-1(b)(1)(v)(B)(2) (1988), as first promulgated, could have jeopardized the grandfathered status of an exempt trust if (1) the trust created a nongeneral power of appointment, (2) the donee exercised that nongeneral power, and (3) the Uniform Act is the perpetuity law applicable to the donee’s exercise. This possibility arose not only because the donee’s exercise itself might come under the 90-year permissible vesting period of Section 1(a)(2) if it otherwise violated the Common-law Rule and hence was not validated under Section 1(a)(1). The possibility also arose in a less obvious way if the donee’s exercise created another nongeneral power. The last sentence of the temporary regulation states that “if a power is exercised by creating another power it will be deemed to be exercised to whatever extent the second power may be exercised.”

In late March 1990, the National Conference of Commissioners on Uniform State Laws (NCCUSL) filed a formal request with the Treasury Department asking that measures be taken to coordinate the regulation with the Uniform Act. By the Treasury Letter referred to above, the Treasury Department responded by stating that it “will amend the temporary regulations to accommodate the 90-year period under USRAP as originally promulgated [in 1986] or as amended [in 1990 by the addition of subsection (e)].” This should effectively remove the possibility of loss of grandfathered status under the Uniform Act merely because the donee of a nongeneral power created in a grandfathered trust inadvertently exercises that power in violation of the Common-law Rule or merely because the donee exercises that power by creating a second nongeneral power that might, in the future, be inadvertently exercised in violation of the Common-law Rule.

The Treasury Letter states, however, that any effort by the donee of a nongeneral power in a grandfathered trust to obtain a “later-of” specified-lives-in-being-plus-21-years or 90-years approach will be treated as a constructive addition, unless that effort is nullified by state law. As explained above, the Uniform Act, as originally promulgated in 1986 or as amended in 1990 by the addition of Section 1(e), nullifies any direct effort to obtain a “later-of” approach by the use of a “later-of” clause.

The Treasury Letter states that an indirect effort to obtain a “later-of” approach would also be treated as a constructive addition that would bring grandfathered status to an end, unless the attempt to obtain the later-of approach is nullified by state law. The Treasury Letter indicates that an indirect effort to obtain a “later-of” approach could arise if the donee of a nongeneral power successfully attempts to prolong the duration of a grandfathered trust by switching from a specified-lives-in-being-plus-21-years perpetuity period to a 90-year perpetuity period, or vice versa. Donees of nongeneral powers in grandfathered trusts would therefore be well advised to resist any temptation to wait until it becomes clear or reasonably predictable which perpetuity period will be longer and then make a switch to the longer period if the governing instrument creating the power utilized the shorter period. No such attempted switch and no constructive addition will occur if in each instance a traditional specified-lives-in-being-plus-21-years perpetuity saving clause is used.

Any such attempted switch is likely in any event to be nullified by state law and, if so, the attempted switch will not be treated as a constructive addition. For example, suppose that the original grandfathered trust contained a standard perpetuity saving clause declaring that all interests in the trust must vest no later than 21 years after the death of the survivor of specified lives in being. In exercising a nongeneral power created in that trust, any indirect effort by the donee to obtain a “later-of” approach by adopting a 90-year perpetuity saving clause will likely be nullified by Section 1(e). If that exercise occurs at a time when it has become clear or reasonably predictable that the 90-year period will prove longer, the donee’s exercise would constitute language in a governing instrument that seeks to operate in effect to postpone the vesting of any interest until the later of the specified-lives-in-being-plus-21-years period or 90 years. Under Section 1(e), “that language is inoperative to the extent it produces a period of time that exceeds 21 years after the death of the survivor of the specified lives.”

Quite apart from Section 1(e), the relation-back doctrine generally recognized in the exercise of nongeneral powers stands as a doctrine that could potentially be invoked to nullify an attempted switch from one perpetuity period to the other perpetuity period. Under that doctrine, interests created by the exercise of a nongeneral power are considered created by the donor of that power. See, e.g., Restatement (Second) of Property, Donative Transfers § 11.1 comment b (1986). As such, the maximum vesting period applicable to interests created by the exercise of a nongeneral power would apparently be covered by the perpetuity saving clause in the document that created the power, notwithstanding any different period the donee purports to adopt.

Constructional Preference for Validity. Professor Gray in his treatise on the Common-law Rule Against Perpetuities declared that a will or deed is to be construed without regard to the Rule, and then the Rule is to be “remorselessly” applied to the provisions so construed. J. Gray, The Rule Against Perpetuities § 629 (4th ed. 1942). Some courts may still adhere to this proposition. Colorado Nat’l Bank v. McCabe, 143 Colo. 21, 353 P.2d 385 (1960). Most courts, it is believed, would today be inclined to adopt the proposition put by the Restatement of Property § 375 (1944), which is that where an instrument is ambiguous — that is, where it is fairly susceptible to two or more constructions, one of which causes a Rule violation and the other of which does not — the construction that does not result in a Rule violation should be adopted. Cases supporting this view include Southern Bank & Trust Co. v. Brown, 271 S.C. 260, 246 S.E.2d 598 (1978); Davis v. Rossi, 326 Mo. 911, 34 S.W.2d 8 (1930); Watson v. Goldthwaite, 184 N.E.2d 340, 343 (Mass. 1962); Walker v. Bogle, 244 Ga. 439, 260 S.E.2d 338 (1979); Drach v. Ely, 703 P.2d 746 (Kan. 1985).

The constructional preference for validity is not superseded by this Act, but its role is likely to be different. The situation is likely to be that one of the constructions to which the ambiguous instrument is fairly susceptible would result in validity under Section 1(a)(1), 1(b)(1), or 1(c)(1), but the other construction does not necessarily result in invalidity; rather it results in the interest’s validity being governed by Section 1(a)(2), 1(b)(2), or 1(c)(2). Nevertheless, even though the result of adopting the other construction is not as harsh as it is at common law, it is expected that the courts will incline toward the construction that validates the disposition under Section 1(a)(1), 1(b)(1), or 1(c)(1).

Conclusive Presumption of Lifetime Fertility. At common law, all individuals — regardless of age, sex, or physical condition — are conclusively presumed to be able to have children throughout their entire lifetimes. This principle is not superseded by this Act, and in view of new advances in medical science that allow women to become pregnant after menopause by way of test-tube fertilization (see Sauer, Paulson & Lobo, A Preliminary Report on Oocyte Donation Extending Reproductive Potential to Women Over 40, 323 N.Eng.J.Med. 1157 (1990)) and the widely accepted rule of construction that adopted children are presumptively included in class gifts, the conclusive presumption of lifetime fertility is not unrealistic. Since even elderly individuals probably cannot be excluded from adopting children based on their ages alone, the possibility of having children by adoption is seldom extinct. See, generally, Waggoner In re Lattouf’s Will and the Presumption of Lifetime Fertility in Perpetuity Law, 20 San Diego L.Rev. 763 (1983). Under this Act, the main force of this principle is felt in Example (7), above, where it prevents a nonvested property interest from passing the test for initial validity under Section 1(a)(1).

Act Supersedes Doctrine of Infectious Invalidity. At common law, the invalidity of an interest can, under the doctrine of infectious invalidity, be held to invalidate one or more otherwise valid interests created by the disposition or even invalidate the entire disposition. The question turns on whether the general dispositive scheme of the transferor will be better carried out by eliminating only the invalid interest or by eliminating other interests as well. This is a question that is answered on a case-by-case basis. Several items are relevant to the question, including who takes the stricken interests in place of those the transferor designated to take.

Act Supersedes Doctrine of Infectious Invalidity. At common law, the invalidity of an interest can, under the doctrine of infectious invalidity, be held to invalidate one or more otherwise valid interests created by the disposition or even invalidate the entire disposition. The question turns on whether the general dispositive scheme of the transferor will be better carried out by eliminating only the invalid interest or by eliminating other interests as well. This is a question that is answered on a case-by-case basis. Several items are relevant to the question, including who takes the stricken interests in place of those the transferor designated to take.

The doctrine of infectious invalidity is superseded by this Act by Section 3, under which courts, upon the petition of an interested person, are required to reform the disposition to approximate as closely as possible the transferor’s manifested plan of distribution when an invalidity under the Statutory Rule occurs.

Separability. The common law’s separability doctrine is that when an interest is expressly subject to alternative contingencies, the situation is treated as if two interests were created in the same person or class. Each interest is judged separately; the invalidity of one of the interests does not necessarily cause the other one to be invalid. This common-law principle was established in Longhead v. Phelps, 2 Wm.Bl. 704, 96 Eng. Rep. 414 (K.B. 1770), and is followed in this country. L. Simes & A. Smith, The Law of Future Interests § 1257 (2d ed. 1956); 6 American Law of Property § 24.54 (A. Casner ed. 1952); Restatement of Property § 376 (1944). Under this doctrine, if property is devised “to B if X-event or Y-event happens,” B in effect has two interests, one contingent on X-event happening and the other contingent on Y-event happening. If the interest contingent on X-event but not the one contingent on Y-event is invalid, the consequence of separating B’s interest into two is that only one of them, the one contingent on X-event, is invalid. B still has a valid interest — the one contingent on the occurrence of Y-event.

The separability principle is not superseded by this Act. As illustrated in the following example, its invocation will usually result in one of the interests being initially validated by Section 1(a)(1) and the validity of the other interests being governed by Section 1(a)(2).

Example (22) — Separability Case. G devised real property “to A for life, then to A’s children who survive A and reach 25, but if none of A’s children survives A or if none of A’s children who survives A reaches 25, then to B.” G was survived by his brother (B), by his daughter (A), by A’s husband (H), and by A’s two minor children (X and Y).

The remainder interest in favor of A’s children who reach 25 fails the test of Section 1(a)(1) for initial validity. Its validity is, therefore, governed by Section 1(a)(2) and depends on each of A’s children doing any one of the following things within 90 years after G’s death: predeceasing A, surviving A and failing to reach 25, or surviving A and reaching 25.

The “All-or-Nothing” Rule with Respect to Class Gifts; the Specific Sum and Sub-Class Doctrines. The common law applies an “all-or-nothing” rule with respect to class gifts, under which a class gift stands or falls as a whole. The all-or-nothing rule, usually attributed to Leake v. Robinson, 2 Mer. 363, 35 Eng. Rep. 979 (Ch. 1817), is commonly stated as follows: If the interest of any potential class member might vest too remotely, the entire class gift violates the Rule. Although this Act does not supersede the basic idea of the much-maligned “all-or-nothing” rule, the evils sometimes attributed to it are substantially if not entirely eliminated by the wait-and-see feature of the Statutory Rule and by the availability of reformation under Section 3, especially in the circumstances described in Sections 3(2) and (3). For illustrations of the application of the all-or-nothing rule under this Act, see Examples (3), (4), and (6) in the Comment to Section 3.

The common law also recognizes a doctrine called the specific-sum doctrine, which is derived from Storrs v. Benbow, 3 De G.M. & G. 390, 43 Eng. Rep. 153 (Ch. 1853), and states: If a specified sum of money is to be paid to each member of a class, the interest of each class member is entitled to separate treatment and is valid or invalid under the Rule on its own. The common law also recognizes a doctrine called the sub-class doctrine, which is derived from Cattlin v. Brown, 11 Hare 372, 68 Eng. Rep. 1318 (Ch. 1853), and states: If the ultimate takers are not described as a single class but rather as a group of subclasses, and if the share to which each separate subclass is entitled will finally be determined within the period of the Rule, the gifts to the different subclasses are separable for the purpose of the Rule. American Security & Trust Co. v. Cramer, 175 F. Supp. 367 (D.D.C. 1959); Restatement of Property § 389 (1944). The specific-sum and sub-class doctrines are not superseded by this Act. The operation of the specific-sum doctrine under this Act is illustrated in the following example.

Example (23) — Specific-Sum Case. G bequeathed “$10,000 to each child of A, born before or after my death, who attains 25.” G was survived by A and by A’s two children (X and Y). X but not Y had already reached 25 at G’s death. After G’s death a third child (Z) was born to A.

If the phrase “born before or after my death” had been omitted, the class would close as of G’s death under the common-law’s rule of construction known as the rule of convenience: The after-born child, Z, would not be entitled to a $10,000 bequest, and the interests of both X and Y would be valid upon their creation at G’s death. X’s interest would be valid because it was initially vested; neither the Common-law Rule nor the Statutory Rule applies to interests that are vested upon their creation. Although the interest of Y was not vested upon its creation, it would be initially valid under Section 1(a)(1) because Y would be his own validating life; Y will either reach 25 or die under 25 within his own lifetime.

Duration of Indestructible Trusts — Termination of Trusts by Beneficiaries. The widely accepted view in American law is that the beneficiaries of a trust other than a charitable trust can compel its premature termination if all beneficiaries consent and if such termination is not expressly restrained or impliedly restrained by the existence of a “material purpose” of the settlor in establishing the trust. Restatement (Second) of Trusts § 337 (1959); IV A. Scott, The Law of Trusts § 337 (3d ed. 1967). A trust that cannot be terminated by its beneficiaries is called an indestructible trust.

It is generally accepted that the duration of the indestructibility of a trust, other than a charitable trust, is limited to the applicable perpetuity period. See Restatement (Second) of Trusts § 62, Comment o (1959); Restatement (Second) of Property (Donative Transfers) § 2.1 and Legislative Note and Reporter’s Note (1983); I A. Scott, The Law of Trusts § 62.10(2) (3d ed. 1967); J. Gray, The Rule Against Perpetuities § 121 (4th ed. 1942); L. Simes & A. Smith, The Law of Future Interests §§ 1391-93 (2d ed. 1956).

Nothing in this Act supersedes this principle. One modification, however, is necessary: As to trusts that contain a nonvested property interest or power of appointment whose validity is governed by the wait-and-see element adopted in Section 1(a)(2), 1(b)(2), or 1(c)(2), the courts can be expected to determine that the applicable perpetuity period is 90 years.

** By substantial analogous authority, the specified-lives-in-being-plus-21-years prong of the “later-of” clause under discussion is not sustained by the separability doctrine (described in Part H of the Comment to Section 1). See, e.g., Restatement of Property § 376 Comments e and f and illustration 3 (1944); Easton v. Hall, 323 Ill. 397, 154 N.E. 216 (1926); Thorne v. Continental Nat’l Bank & Trust Co., 305 Ill. App. 222, 27 N.E.2d 302 (1940). The inapplicability of the separability doctrine is also supported by perpetuity policy, as described in the text above.

** By substantial analogous authority, the specified-lives-in-being-plus-21-years prong of the “later-of” clause under discussion is not sustained by the separability doctrine (described in Part H of the Comment to Section 1). See, e.g., Restatement of Property § 376 Comments e and f and illustration 3 (1944); Easton v. Hall, 323 Ill. 397, 154 N.E. 216 (1926); Thorne v. Continental Nat’l Bank & Trust Co., 305 Ill. App. 222, 27 N.E.2d 302 (1940). The inapplicability of the separability doctrine is also supported by perpetuity policy, as described in the text above.

I.[Reserved.]

II.Decided Under Prior Law.

Purpose of section. —

The purpose of this section is to effectuate the intention of the testator by rendering valid a limitation which would have been otherwise invalid as violative of the rule against perpetuities. Since January 1, 1820, words which had previously been construed to mean an indefinite failure of issue are now construed to mean a definite failure of issue, and the limitations founded thereon are no longer void for remoteness. Daniel v. Lipscomb, 110 Va. 563 , 66 S.E. 850 , 1910 Va. LEXIS 95 (1910) (see Elys v. Wynne, 63 Va. (22 Gratt.) 224 (1872); Wine v. Markwood, 72 Va. (31 Gratt.) 43 (1878); Corr v. Porter, 74 Va. (33 Gratt.) 278 (1880); Thomas v. Thomas, 224 Va. 4 , 294 S.E.2d 795 (1982)).

This section focuses upon contingent limitations to estates. Mullins v. Simmons, 235 Va. 194 , 365 S.E.2d 771, 4 Va. Law Rep. 2141, 1988 Va. LEXIS 33 (1988).

Rule incorporated in section. —

A devise to a person with limitation over to another, in the event of the first taker’s death without issue, is a limitation which takes effect when the first devisee dies without heir or issue, and vests in the first devisee a defeasible fee. This rule is incorporated in this section. Rinker v. Trout, 171 Va. 327 , 198 S.E. 913 , 1938 Va. LEXIS 283 (1938).

It is manifest from reading this section that it was the legislative intent that every limitation in a deed or will contingent upon the dying of any person without heirs, etc., should be construed to be a limitation to take effect when such person shall die not having such heirs, etc. People's Nat'l Bank v. Crickenberger, 159 Va. 264 , 165 S.E. 412 , 1932 Va. LEXIS 190 (1932).

Section based on proposition that invalid limitation not intended. —

The statutory rule is based upon the proposition that a testator does not intend to create an invalid limitation, but intends instead to make the limitation effective at a time not violative of the rule against perpetuities. Hence, where a will contains a bare provision that a limitation shall take effect upon the death of a person without issue, this section saves the limitation from a claim of remoteness by arbitrarily fixing the date of the person’s death as the time for determining whether he dies without issue. Thomas v. Thomas, 224 Va. 4 , 294 S.E.2d 795, 1982 Va. LEXIS 265 (1982).

But plainly intended limitation given effect even if invalidation results. —

Under this section, if a will declares plainly an intention that the limitation shall be effective at some later time, the intention will be given effect even though the declared time is impermissibly remote and results in the invalidation of the limitation. Thomas v. Thomas, 224 Va. 4 , 294 S.E.2d 795, 1982 Va. LEXIS 265 (1982).

Purpose served where will fixes time earlier than that fixed by section. —

If a will displays the testator’s intention that a die-without-issue limitation shall take effect earlier than the time fixed in this section, thus avoiding a possible claim of remoteness, the statutory purpose is served and the intent should be given effect. In these circumstances, an express declaration of intent on the face of the will is not necessary; it suffices if the intention to fix an earlier vesting date can be discerned from the application of conventional rules of construction. A contrary holding would permit use of this section to thwart, rather than effectuate, a testator’s intention. Thomas v. Thomas, 224 Va. 4 , 294 S.E.2d 795, 1982 Va. LEXIS 265 (1982).

Section does not preempt consideration of all other rules of will construction. Rather, it is designed to complement other rules in the ascertainment of the true intention of the testator. Thomas v. Thomas, 224 Va. 4 , 294 S.E.2d 795, 1982 Va. LEXIS 265 (1982).

Under the provisions of this section it is immaterial whether the testator meant heirs, or issue, or children; the language employed refers, in any event, to the death of the person not having such heir, issue, or child. The statute is devoid of ambiguity. People's Nat'l Bank v. Crickenberger, 159 Va. 264 , 165 S.E. 412 , 1932 Va. LEXIS 190 (1932).

This section does not contemplate a limitation wherein an express and unlimited power to the grantee to dispose of the estate during his lifetime is created. The fact that the grantee is limited in the means of making disposition to a conveyance by deed and not given the power to dispose of it by will does not change the rule. Hall v. Hoak, 184 Va. 821 , 36 S.E.2d 567, 1946 Va. LEXIS 145 (1946) (see § 55-7).

The statute does not effect a limitation expressly created upon an indefinite failure of descendants, as was true in Claiborne v. Wilson, 168 Va. 469 , 192 S.E. 585 (1937).

Illustrations. —

In 1833 W. made his will, and died. By clause 6 he gives to his daughter, D., a designated tract of land, to her and the heirs of her body; but should D. “die without heir, as above mentioned, my wish is that said land shall return to my other heirs, and be sold, and the moneys arising from the sale to be equally divided among all my heirs.” It was held that D. took a fee simple estate in the land defeasible upon her dying without a child living at her death. Elys v. Wynne, 63 Va. (22 Gratt.) 224, 1872 Va. LEXIS 15 (1872).

Testatrix devised real property in fee simple to one N.E.P., if living, or to her issue, and if the said N.E.P. shall die without issue then the property shall pass to W.H.P., if living at the death of the said N.E.P. Bearing in mind the language of this section, and the holdings of the Supreme Court the limitation to W.H.P. was contingent upon N.E.P. dying without issue, and the language of the will had reference to the death of N.E.P. and not to the death of the testatrix. Farrar v. Pemberton, 154 Va. 61 , 152 S.E. 339 , 1930 Va. LEXIS 197 (1930).

I.[Reserved.]

II.Decided Under Prior Law.

An option agreement which violates the rule against perpetuities is invalid and unenforceable. United Va. Bank v. Union Oil Co., 214 Va. 48 , 197 S.E.2d 174, 1973 Va. LEXIS 253 (1973).

A perpetuities problem may not be solved by resort to what occurs after commencement of the period fixed by the rule. United Va. Bank v. Union Oil Co., 214 Va. 48 , 197 S.E.2d 174, 1973 Va. LEXIS 253 (1973).

Where a trust contained a right of first refusal that was unlimited in duration, that section of the Declaration of Trust violated the rule against perpetuities, and therefore was stricken from the trust agreement. Joseph v. Pollak, 795 F. Supp. 163, 1992 U.S. Dist. LEXIS 8773 (E.D. Va. 1992).

Vesting in beneficiary upon execution. —

A trust created by Declaration and Supplemental Declaration of Trust did not violate the rule against perpetuities where the beneficial property interests vested in every beneficiary upon its execution, even though the trust contained no termination date. Joseph v. Pollak, 795 F. Supp. 163, 1992 U.S. Dist. LEXIS 8773 (E.D. Va. 1992).

I.[Reserved.]

II.Decided Under Prior Law.

Section significantly modified the harsh rule against perpetuities by providing that no transfer of an interest in property will fail unless it does not vest, if at all, within the period of the rule. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

Rule prior to enactment of section. —

Prior to amendment in 1982 by the enactment of this section, the rule against perpetuities required that interests in property must vest, if at all, within the period fixed by the rule. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

Period where parties are corporate entities. —

Normally, the period is a life or lives in being plus 21 years and 10 months. However, where the parties are corporate entities and do not contract with reference to a life or lives in being, the determinative period is 21 years from the date of creation of the interest. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

Rule not violated where reasonable time for performance less than 21 years. —

Where a reasonable time for performance of the contract, as contemplated by the parties, would be well within 21 years, the contract does not violate the rule. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

Reasonable time for development of subdivision lots is less than 21 years. —

Settled contract law implies a reasonable time limitation for performance of conditions in contracts for the sale of land where no time for performance is fixed by the contract itself. This reasoning is applicable in the context of a contract for sale of residential lots to be developed as a subdivision. Where the sellers agreed to develop any lots for which the purchaser exercised the option, the sellers were obligated to perform this duty within a reasonable time or be subject to remedies the purchaser might pursue for the sellers’ breach of the express terms of the contract. A reasonable time for completion of development would be far less than 21 years. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

Option contracts. —

The rule against perpetuities is applicable to option contracts. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

This section may not be applied retroactively to save the right of first refusal subject to the rule against perpetuities. Lake of the Woods Ass'n v. McHugh, 238 Va. 1 , 380 S.E.2d 872, 5 Va. Law Rep. 2689, 1989 Va. LEXIS 124 (1989).

This section may not be retroactively applied to save a right of first refusal of unlimited duration. Joseph v. Pollak, 795 F. Supp. 163, 1992 U.S. Dist. LEXIS 8773 (E.D. Va. 1992).

Upon exercise of an option to purchase subdivision lots, the purchaser would acquire an equitable interest in the lots it committed itself to purchase, with the right to compel conveyance of legal title and the agreement would become an executory contract for the sale of land with mutuality of obligation and remedy. Such a contract creates an interest in land enforceable in equity and is therefore subject to the rule against perpetuities. Ryland Group, Inc. v. Wills, 229 Va. 459 , 331 S.E.2d 399, 1985 Va. LEXIS 223 (1985).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Validity of right of first refusal. —

Pursuant to § 8.01-184 , the trial court declared that a right of first refusal in the articles of incorporation of a company was void ab initio, as this limitation on the transfer of stock was an unreasonable restraint, and also violated the rule against perpetuities. Frazer v. Millington, 63 Va. Cir. 458, 2003 Va. Cir. LEXIS 256 (Fairfax County Dec. 15, 2003).

Rule not violated. —

Where the contract for the sale of land provided that, if the property was not subdivided by the date of closing, that date was to be extended day-for-day until the sellers’ subdivision and/or adjustment of property lines was approved, the contract did not violate the rule against perpetuities as provided under subsection A of § 55-13.3; that section required a court to examine whether 21 years had passed and whether or not the interest had vested, and although the property was subdivided and the subdivision plat was recorded late, this was done in less than one and one-half years or within the 21-year period provided in subsection A of § 55-13.3.Bel-Aire, Inc. v. RB Trexlertown, LLC, 68 Va. Cir. 108, 2005 Va. Cir. LEXIS 138 (Virginia Beach May 24, 2005).

I.[Reserved.]

II.Decided Under Prior Law.

A.Notes From Former Section 55-20.

History and effect of statute. —

In Virginia, as between joint tenants, survivorship was abolished as early as July 1st, 1787, but this act was held to have no application to tenants by entireties. See Thornton v. Thornton, 24 Va. (3 Rand.) 179, 1825 Va. LEXIS 15 (1825); M'Clanachan v. Siter, Price & Co., 42 Va. 280 (1845); Norman's Ex'x v. Cunningham, 46 Va. (5 Gratt.) 63, 1848 Va. LEXIS 26 (1848); Dooley v. Baynes, 86 Va. 644 , 10 S.E. 974 , 1890 Va. LEXIS 25 (1890).

It was also held that the statute abolishing survivorship between joint tenants had no application where the estate in joint tenancy had not vested, and, hence, when one joint tenant predeceased the testator the whole estate passed to the survivor. Lockhart v. Vandyke, 97 Va. 356 , 33 S.E. 613 (1899). This doctrine was changed in 1919 by the enactment of the present statute. Gardner v. Gardner, 152 Va. 677 , 148 S.E. 781 , 1929 Va. LEXIS 200 (1929).

The effect of this section and § 55-21 is to abolish tenancies by the entirety and joint tenancies unless it is manifest from the wording of the conveyance that the grantor intends to establish a tenancy by the entirety. Wolfe v. Sprouse, 183 Bankr. 739, 1995 U.S. Dist. LEXIS 9357 (W.D. Va. 1995).

This section and § 55-21 fall in line with the development that the ancient common-law rule favoring joint tenancies has been reversed, and the presumptions are now almost wholly in favor of tenancies in common by requiring that the desire to create a survivorship interest be manifestly apparent from the tenor of the instrument in order to establish a joint tenancy or a tenancy by the entirety. Wolfe v. Sprouse, 183 Bankr. 739, 1995 U.S. Dist. LEXIS 9357 (W.D. Va. 1995).

This section abolishes survivorship as between joint tenants. Wilkinson v. Witherspoon, 206 Va. 297 , 142 S.E.2d 478, 1965 Va. LEXIS 198 (1965).

The doctrine of survivorship between joint tenants has been abolished by this section, and the legislature intended to place joint tenants, insofar as dower and curtesy are concerned, in the same situation as tenants in common. Turner v. Turner, 185 Va. 505 , 39 S.E.2d 299, 1946 Va. LEXIS 223 (1946); Roane v. Roane, 193 Va. 18 , 67 S.E.2d 906, 1951 Va. LEXIS 236 (1951).

Survivorship not created. —

A deed conveying land to grantees “as joint tenants, and not as tenants in common” does not create an estate with survivorship. Hoover v. Smith, 248 Va. 6 , 444 S.E.2d 546, 10 Va. Law Rep. 1430, 1994 Va. LEXIS 106 (1994).

Subject to certain statutory exceptions in the section following. Rady v. Staiars, 160 Va. 373 , 168 S.E. 452 , 1933 Va. LEXIS 218 (1933); Roane v. Roane, 193 Va. 18 , 67 S.E.2d 906, 1951 Va. LEXIS 236 (1951).

This section is not applicable where it is manifest from the tenor of the instrument that it is intended that the part of the one dying should belong to the survivors. Leonard v. Boswell, 197 Va. 713 , 90 S.E.2d 872, 1956 Va. LEXIS 143 (1956).

Survivorship can be conferred only by the instrument conveying property. —

Since the enactment of §§ 55-20 and 55-21, survivorship can be conferred only by the instrument conveying the property. Funches v. Funches, 243 Va. 26 , 413 S.E.2d 44, 8 Va. Law Rep. 1707, 1992 Va. LEXIS 148 (1992).

Estates by entireties are abolished except where the deed or will manifests an intent that they shall continue. Allen v. Parkey, 154 Va. 739 , 149 S.E. 615 , 1929 Va. LEXIS 234 (1929).

In Virginia, when real property is conveyed to a husband and wife, the deed must specify that a tenancy by the entirety is intended or a tenancy in common results. In re Manicure, 29 Bankr. 248, 1983 Bankr. LEXIS 7098 (Bankr. W.D. Va. 1983).

And converted into tenancies in common. —

The effect of this section when an estate is conveyed to a husband and wife, is to convert a tenancy by entirety into a tenancy in common and of course to destroy survivorship, but § 55-21 provides that this section shall not apply when it was manifest from the instrument creating the estate that it was intended that the part of the one dying should then belong to the other. Allen v. Parkey, 154 Va. 739 , 149 S.E. 615 , 1929 Va. LEXIS 234 (1929).

The deed in question did in fact create a tenancy by the entireties, notwithstanding the lack of language using those specific words, since the intent was conveyed by the language “with the full common law right of survivorship.” In re Zella, 196 Bankr. 752, 1996 Bankr. LEXIS 657 (Bankr. E.D. Va.), aff'd, 202 Bankr. 712, 1996 U.S. Dist. LEXIS 16968 (E.D. Va. 1996).

A conveyance to husband and wife creates only a tenancy in common, unless it manifestly appears from the tenor of the instrument that it was intended on the part of the one dying that the property in question should then belong to the other. In re Zella, 196 Bankr. 752, 1996 Bankr. LEXIS 657 (Bankr. E.D. Va.), aff'd, 202 Bankr. 712, 1996 U.S. Dist. LEXIS 16968 (E.D. Va. 1996).

In Virginia, estates by the entireties are abolished except where the deed or will manifests an intent of survivorship. In re Scialdone, 197 Bankr. 225, 1995 Bankr. LEXIS 1976 (Bankr. E.D. Va. 1995).

Manifest means “obvious to the understanding, evident to the mind, not obscure or hidden, and is synonymous with open, clear, visible, unmistakable, indubitable, indisputable, evident and self-evident.” In re Scialdone, 197 Bankr. 225, 1995 Bankr. LEXIS 1976 (Bankr. E.D. Va. 1995).

It will be observed that partition is not compellable by statute between tenants by entirety, but that end is reached through this section, which makes tenants by entirety tenants in common. Allen v. Parkey, 154 Va. 739 , 149 S.E. 615 , 1929 Va. LEXIS 234 (1929).

Survivor’s interest in personal property unclear. —

Although this section had effect of abolishing survivorship between husband and wife with respect to both real and personal property unless an intent to create a survivorship interest was clearly expressed, it does not address the question of whether the resulting survivorship interest is held as joint tenants or as tenants by the entirety. With respect to real property, it is clear that an estate by the entirety is created; but whether the same would be true with respect to personal property is far from clear. In re Massey, 225 Bankr. 887, 1998 Bankr. LEXIS 1338 (Bankr. E.D. Va. 1998).

The deed which purports to establish a tenancy by the entirety between persons who are not married to each other creates a joint tenancy; the words of survivorship expressly manifest the requisite intent that the joint tenancy is clothed with the common-law right of survivorship, and, this express manifestation of survivorship necessarily excludes the wife’s dower interest. Funches v. Funches, 243 Va. 26 , 413 S.E.2d 44, 8 Va. Law Rep. 1707, 1992 Va. LEXIS 148 (1992).

The interest of the surviving joint tenant is superior to the dower interest of the wife of the other joint tenant. Funches v. Funches, 243 Va. 26 , 413 S.E.2d 44, 8 Va. Law Rep. 1707, 1992 Va. LEXIS 148 (1992).

No application to derivatives of property held by entireties. —

Neither this section nor § 55-21 was intended to apply to derivatives of property held by the entireties. Moore v. Glotzbach, 188 F. Supp. 267, 1960 U.S. Dist. LEXIS 4641 (E.D. Va. 1960).

Right to hold personalty by entireties. —

This section and § 55-21, when read together, carry the inference that Virginia recognizes the right to hold personalty as tenants by the entireties. Moore v. Glotzbach, 188 F. Supp. 267, 1960 U.S. Dist. LEXIS 4641 (E.D. Va. 1960).

A lease to a tenant does not qualify as a conveyance or devise to a husband and wife as provided by this section, and hence the exception stated in § 55-21 would be inapplicable to the lease and rental flowing therefrom. Moore v. Glotzbach, 188 F. Supp. 267, 1960 U.S. Dist. LEXIS 4641 (E.D. Va. 1960).

Reservation by grantor of estate for himself and wife “during the period of their natural lives.” —

Since the enactment of this section, changing the common-law doctrine of tenants by entireties, if a husband by his sole deed conveys land excepting from the grant an estate “for and during the period of the natural lives” of himself and wife, each has only a life interest in one moiety of the land. If the exception be treated as a grant, then under the statute they take as tenants in common a moiety each. But in neither event is there any survivorship between them. American Nat'l Bank v. Taylor, 112 Va. 1 , 70 S.E. 534 , 1911 Va. LEXIS 44 (1911).

Partition. —

A joint tenancy with right of survivorship, as at common law, is subject to partition by a judgment lien creditor of one of the several joint tenants. Jones v. Conwell, 227 Va. 176 , 314 S.E.2d 61, 1984 Va. LEXIS 279 (1984).

The words “joint tenants” as used in § 8.01-81 were intended by the legislature to include joint tenants with right of survivorship and, pursuant to § 8.01-81 , such tenants shall be compellable to make partition at the instance of a judgment lien creditor. Jones v. Conwell, 227 Va. 176 , 314 S.E.2d 61, 1984 Va. LEXIS 279 (1984).

Parties formerly married to each other, but thereafter divorced, are as free to hold property jointly under the exception contained in § 55-21 as are any other parties and although they lack one of the essential unities prerequisite to the creation of a tenancy by the entirety, they may become joint tenants, and if the instrument creating the estate manifests the requisite intention, the joint tenancy will be clothed with the common-law right of survivorship, unaffected by this section. Gant v. Gant, 237 Va. 588 , 379 S.E.2d 331, 5 Va. Law Rep. 2322, 1989 Va. LEXIS 65 (1989).

Section construed with former § 64.1-64. —

Reading this section and former § 64.1-64, bearing in mind the common-law doctrine governing lapses, the conclusion is irresistible that a devise to a joint tenant who predeceases the testator would lapse, just as a devise to a tenant in common would do, unless the tenant left issue who survived the testator, or unless a different disposition thereof be made or required by the will. Gardner v. Gardner, 152 Va. 677 , 148 S.E. 781 , 1929 Va. LEXIS 200 (1929).

Tenancy by entirety property is not exempt from process by a joint creditor of the husband and wife. Community Bank v. Costley, 39 Bankr. 585, 1984 Bankr. LEXIS 5662 (Bankr. E.D. Va. 1984).

Creditors of one spouse may not attach real estate owned by tenants by the entireties; only creditors with joint debts of both spouses may reach the entireties’ realty. Ford v. Poston, 53 Bankr. 444, 1984 U.S. Dist. LEXIS 14804 (W.D. Va. 1984), disapproved, In re Smiley, 864 F.2d 562, 1989 U.S. App. LEXIS 257 (7th Cir. 1989).

Proceeds of entireties’ realty are immune from creditors whom individual spouse owes. Ford v. Poston, 53 Bankr. 444, 1984 U.S. Dist. LEXIS 14804 (W.D. Va. 1984), disapproved, In re Smiley, 864 F.2d 562, 1989 U.S. App. LEXIS 257 (7th Cir. 1989).

Application of law of another state. —

Florida law was applied to determine the creation of an estate by the entireties in certain bonds, and Virginia law was consulted as to the incidents of the estate. Johnson v. McCarty, 202 Va. 49 , 115 S.E.2d 915, 1960 Va. LEXIS 189 (1960).

B.Notes From Former Section 55-21.

This section limits the provisions of § 55-20 abolishing survivorship in certain cases. The pertinent exception in this section is that the right of survivorship shall not be abolished “when it manifestly appears from the tenor of the instrument that it was intended the part of the one dying should then belong to the others.” Roane v. Roane, 193 Va. 18 , 67 S.E.2d 906, 1951 Va. LEXIS 236 (1951).

The effect of § 55-20 and this section is to abolish tenancies by the entirety and joint tenancies unless it is manifest from the wording of the conveyance that the grantor intends to establish a tenancy by the entirety. Wolfe v. Sprouse, 183 Bankr. 739, 1995 U.S. Dist. LEXIS 9357 (W.D. Va. 1995).

There is no contrary public policy or prohibitive legislation affecting the creation of a joint tenancy with right of survivorship. Leonard v. Boswell, 197 Va. 713 , 90 S.E.2d 872, 1956 Va. LEXIS 143 (1956).

Right of survivorship depends on intention. —

Where it manifestly appears from the tenor of the will that the share of one dying should then belong to the others, survivorship in such a case is not abolished. Drake v. Blythe, 108 Va. 38 , 60 S.E. 632 , 1908 Va. LEXIS 7 (1908).

This section was inapplicable where the only “instrument” to which two joint depositors were a party, affecting their interest in treasury bill purchased by bank at the direction of deceased depositor, was a “Security Buy Memo,” which contained no words evidencing an intent to create a right of survivorship. Bennet v. First & Merchants Nat'l Bank, 233 Va. 355 , 355 S.E.2d 888, 3 Va. Law Rep. 2467, 1987 Va. LEXIS 200 (1987).

In Virginia, estates by the entireties are abolished except where the deed or will manifests an intent of survivorship. In re Scialdone, 197 Bankr. 225, 1995 Bankr. LEXIS 1976 (Bankr. E.D. Va. 1995).

The deed in question did in fact create a tenancy by the entireties, notwithstanding the lack of language using those specific words, since the intent was conveyed by the language “with the full common law right of survivorship.” In re Zella, 196 Bankr. 752, 1996 Bankr. LEXIS 657 (Bankr. E.D. Va.), aff'd, 202 Bankr. 712, 1996 U.S. Dist. LEXIS 16968 (E.D. Va. 1996).

This section requires only that the intention to create a survivorship estate be made manifest. To satisfy this requirement, parties need only use language that passes a simple test, one inherent in the meaning of the word “manifest.” Manifest means “obvious to the understanding, evident to the mind, not obscure or hidden, and is synonymous with open, clear, visible, unmistakable, indubitable, indisputable, evident, and self-evident.” Hoover v. Smith, 248 Va. 6 , 444 S.E.2d 546, 10 Va. Law Rep. 1430, 1994 Va. LEXIS 106 (1994).

A joint estate or one to donees, share and share alike, etc., is not enough to give a right of survivorship. The donor or testator must make plain his purpose, but when that purpose has been made plain and it is manifest that he intended survivorship should follow, the court will give effect to this intention, and no particular words are necessary. Wallace v. Wallace, 168 Va. 216 , 190 S.E. 293 , 1937 Va. LEXIS 218 (1937).

The doctrine of survivorship in the case of executors obtains in Virginia and this is true even though it should be conceded that this section and § 64.1-145 do not apply. Hofheimer v. Seaboard Citizens' Nat'l Bank, 154 Va. 896 , 156 S.E. 581 , 1931 Va. LEXIS 293, cert. denied, 283 U.S. 855, 51 S. Ct. 648, 75 L. Ed. 1462, 1931 U.S. LEXIS 403 (1931).

In the instant case appellant and a state bank were designated as coexecutors in a will. Before the death of testator the state bank was merged in appellee, a national bank. It was held that the right of survivorship is preserved and appellant was entitled to qualify as the sole surviving executor of the testator. Hofheimer v. Seaboard Citizens' Nat'l Bank, 154 Va. 392 , 153 S.E. 656 , 1930 Va. LEXIS 221 (1930), cert. denied, 283 U.S. 855, 51 S. Ct. 648, 75 L. Ed. 1462, 1931 U.S. LEXIS 403 (1931).

Conveyances within section. —

Where land is conveyed to “husband and wife, as tenants by the entireties, with right of survivorship as at common law,” such quoted words are not meaningless, but are placed in the deed for the express purpose of bringing the conveyance within the exception to § 55-20 contained in this section. Vasilion v. Vasilion, 192 Va. 735 , 66 S.E.2d 599, 1951 Va. LEXIS 222 (1951).

Manifest means “obvious to the understanding, evident to the mind, not obscure or hidden, and is synonymous with open, clear, visible, unmistakable, indubitable, indisputable, evident and self-evident.” In re Scialdone, 197 Bankr. 225, 1995 Bankr. LEXIS 1976 (Bankr. E.D. Va. 1995).

A lease to a tenant does not qualify as a conveyance or devise to a husband and wife as provided by § 55-20, and hence the exception stated in this section would be inapplicable to the lease and rental flowing therefrom. Moore v. Glotzbach, 188 F. Supp. 267, 1960 U.S. Dist. LEXIS 4641 (E.D. Va. 1960).

Termination of entirety estate. —

Implicit in the terms under which an entirety estate originates is the proposition that the estate can be terminated only by the voluntary action of both tenants or the death of one as a result of a cause reasonably contemplated at the time the tenancy is created. Sundin v. Klein, 221 Va. 232 , 269 S.E.2d 787, 1980 Va. LEXIS 240 (1980), cert. denied, 452 U.S. 911, 101 S. Ct. 3043, 69 L. Ed. 2d 414, 1981 U.S. LEXIS 2367 (1981).

Where one entirety tenant murders the other, the “one person” fiction must give way to the reality that, by his murderous act, the killer has destroyed the unitary nature of the entirety estate and, contrary to his implied agreement, for all practical purposes has terminated the tenancy by a cause of death not contemplated at the time of the original conveyance. While this sort of practical termination may not be sufficient to pass legal title to those claiming under the victim, it would justify limiting the killer’s interest for their benefit. Sundin v. Klein, 221 Va. 232 , 269 S.E.2d 787, 1980 Va. LEXIS 240 (1980), cert. denied, 452 U.S. 911, 101 S. Ct. 3043, 69 L. Ed. 2d 414, 1981 U.S. LEXIS 2367 (1981).

Parties formerly married to each other, but thereafter divorced, are as free to hold property jointly under the exception contained in this section as are any other parties and although they lack one of the essential unities prerequisite to the creation of a tenancy by the entirety, they may become joint tenants, and if the instrument creating the estate manifests the requisite intention, the joint tenancy will be clothed with the common-law right of survivorship, unaffected by § 55-20. Gant v. Gant, 237 Va. 588 , 379 S.E.2d 331, 5 Va. Law Rep. 2322, 1989 Va. LEXIS 65 (1989).

Joint bank accounts. —

The provisions of this section apply to bank accounts. Wilkinson v. Witherspoon, 206 Va. 297 , 142 S.E.2d 478, 1965 Va. LEXIS 198 (1965).

A joint estate in a bank account with right of survivorship was held to have been expressly created in accord with this section. Johnson v. McCarty, 202 Va. 49 , 115 S.E.2d 915, 1960 Va. LEXIS 189 (1960).

Where a bank deposit by a person is in the name of himself and another, not his wife, the presumption is that it was done for the purpose of convenience only, and this presumption is strengthened by the illness or infirmity of the depositor. King v. Merryman, 196 Va. 844 , 86 S.E.2d 141, 1955 Va. LEXIS 154 (1955); Quesenberry v. Funk, 203 Va. 619 , 125 S.E.2d 869, 1962 Va. LEXIS 195 (1962).

In the absence of any statutory presumption, the rule is that when a person deposits his money in the bank to the credit of himself and another, payable to the order of either, or to the survivor, the rights and interests of the depositors as between themselves are dependent upon whether the owner of the money intended to make a gift to the other, or whether the account was entered in joint form in accordance with a contract or for other purposes. Wrenn v. Daniels, 200 Va. 419 , 106 S.E.2d 126, 1958 Va. LEXIS 203 (1958); Quesenberry v. Funk, 203 Va. 619 , 125 S.E.2d 869, 1962 Va. LEXIS 195 (1962).

Parol evidence is admissible to show the intent of a person setting up a joint bank account. Quesenberry v. Funk, 203 Va. 619 , 125 S.E.2d 869, 1962 Va. LEXIS 195 (1962).

Where deceased had directed a bank to change his account to a joint account of himself and his daughter, but the tenor of his instructions to the bank and the form of deposit did not show that the intention to create a tenancy with survivorship “manifestly appeared,” the daughter did not take the fund by survivorship. King v. Merryman, 196 Va. 844 , 86 S.E.2d 141, 1955 Va. LEXIS 154 (1955).

This section applies to bank accounts. Colley v. Cox, 209 Va. 811 , 167 S.E.2d 317, 1969 Va. LEXIS 183 (1969).

Investment accounts. —

Where, in selecting the type of account to be opened, the depositor and his daughter checked the box for “Joint Tenants with Rights of Survivorship” and the agreement further stated that in the event of the death of either, the entire interest in the account would vest in the survivor, this language was unambiguous and manifestly signified the intent that the entire interest in the account would vest in the surviving tenant upon the death of the joint tenant. Buck v. Jordan, 256 Va. 535 , 508 S.E.2d 880, 1998 Va. LEXIS 130 (1998).

Partition. —

A joint tenancy with right of survivorship, as at common law, is subject to partition by a judgment lien creditor of one of the several joint tenants. Jones v. Conwell, 227 Va. 176 , 314 S.E.2d 61, 1984 Va. LEXIS 279 (1984).

The words “joint tenants” as used in § 8.01-81 were intended by the legislature to include joint tenants with right of survivorship and, pursuant to § 8.01-81 , such tenants shall be compellable to make partition at the instance of a judgment lien creditor. Jones v. Conwell, 227 Va. 176 , 314 S.E.2d 61, 1984 Va. LEXIS 279 (1984).

In the instant case there was a conveyance after marriage to a man and his wife jointly. The intention was manifest that the estate by entirety should not be converted into an estate in common and therefore, as provided by this section, § 55-20 did not apply. The seisin was per tout et non per mie, and there is survivorship upon the death either of husband or wife and neither can dispose of any part of the estate without the consent of the other. Since there is no separate interest in either tenant there can be no partition. Allen v. Parkey, 154 Va. 739 , 149 S.E. 615 , 1929 Va. LEXIS 234 (1929).

In a suit to compel a partition, complainant alleged that a certain lot was conveyed to defendant and his wife to be held by them as joint tenants with common-law right of survivorship; that defendant deserted his wife, and the latter conveyed all her interest in the property to complainant, her daughter; that as a result complainant and defendant were tenants in common and that complainant had a right to compel a partition. That the parties to the original deed intended the part of a dying grantee to belong to the survivor was conceded, and a demurrer to the bill was sustained. Burroughs v. Gorman, 166 Va. 58 , 184 S.E. 174 , 1936 Va. LEXIS 162 (1936).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Action to enforce agreement signed by partners. —

Trial court dismissed an action in which a surviving partner filed action against a deceased partner’s heirs, seeking specific performance of an agreement that gave the deceased partner’s interest in a warehouse to the surviving partner, because the surviving partner sued the heirs as individuals, instead of suing the administratrix of the deceased partner’s estate, but gave the surviving partner leave to amend her bill of complaint to name the administratrix as a party. Quenza v. Baum, 62 Va. Cir. 284, 2003 Va. Cir. LEXIS 295 (Norfolk July 14, 2003).

Joint bank accounts. —

Couple’s bank account was not subject to garnishment, as it was owned as tenants by the entirety; the signature card plainly “manifested” an intent of survivorship, as the words “with survivorship” were expressly contained on the card. Sulzman v. Barnick, 62 Va. Cir. 139, 2003 Va. Cir. LEXIS 93 (Spotsylvania County June 9, 2003).

I.Decided Under Current Law.

Garnishment. —

In a garnishment action, even if the insureds did have the requisite common-law unities, the insurance policy did not create a contractual right held by them with the common-law right of survivorship, an essential attribute of a tenancy by the entirety, as the policy did not use the expression “tenants by the entireties” or “tenants by the entirety”; and it did not state that the insureds held whatever interest they might have with the “right of survivorship” as at common law. Jones v. Phillips, 299 Va. 285 , 850 S.E.2d 646, 2020 Va. LEXIS 141 (2020).

II.Decided Under Prior Law.

In general. —

Based on the language of a deed, the directives of § 55-20.1, and the rulings of the Virginia Supreme Court and the Fourth Circuit, Chapter 7 debtor and her mother were joint tenants, and not tenants in common. Debtor’s interest as a joint tenant with the right of survivorship became property of her bankruptcy estate. Scott v. Hoole (In re Hoole), No. 17-50262, 2018 Bankr. LEXIS 810 (Bankr. W.D. Va. Mar. 21, 2018).

In arguing that her joint tenancy with her mother was owned unequally and that extrinsic evidence was necessary to determine the portion owned by each joint tenant, a Chapter 7 debtor’s reliance on § 58.1-3211.1 was misplaced, as that provision confined its applicability to tax relief and nothing in that provision suggested that it negated § 55-20.1.Scott v. Hoole (In re Hoole), No. 17-50262, 2018 Bankr. LEXIS 810 (Bankr. W.D. Va. Mar. 21, 2018).

I.Decided Under Current Law.

Garnishment. —

Circuit court erred in dismissing the garnishment because there was no disposition of the property as a disposition involved an act of transferring something to another’s care or possession or the relinquishing of property, and the property in the current case was not transferred to the insurer or to anyone else. Jones v. Phillips, 299 Va. 285 , 850 S.E.2d 646, 2020 Va. LEXIS 141 (2020).

In a garnishment action, even if the insureds did have the requisite common-law unities, the insurance policy did not create a contractual right held by them with the common-law right of survivorship, an essential attribute of a tenancy by the entirety, as the policy did not use the expression “tenants by the entireties” or “tenants by the entirety”; and it did not state that the insureds held whatever interest they might have with the “right of survivorship” as at common law. Jones v. Phillips, 299 Va. 285 , 850 S.E.2d 646, 2020 Va. LEXIS 141 (2020).

II.Decided Under Prior Law.

Gift from husband to wife of his interest in the proceeds from the sale of real property that they owned as tenants by the entirety was not fraud as to the rights of the husband’s creditor because the creditor was not prejudiced by a gift of property that was exempt from their claims. The gift was not void under § 55-81. Banc of Am. Leasing & Capital LLC v. Havel, No. 4:05cv90, 2006 U.S. Dist. LEXIS 70828 (E.D. Va. Sept. 29, 2006).

Ownership of motor vehicles. —

Section 46.2-622 , which is a specific statute prohibiting motor vehicles from being held as tenants by the entirety, limits subsection A of § 55-20.2, which allows personal property in general to be held as tenants by the entirety. In re Rodriguez, 406 Bankr. 707, 2008 Bankr. LEXIS 2659 (Bankr. E.D. Va. 2008).

Chapter 7 debtor could not exempt a minivan jointly owned with his non-debtor wife as tenancy by the entireties property because, although § 55-20.2 permitted a husband and wife to own real or personal property as tenants by the entireties, § 46.2-622 precluded holding title to a motor vehicle as tenants by the entirety. In re Cordova, 394 Bankr. 389, 2008 Bankr. LEXIS 2956 (Bankr. E.D. Va. 2008).

Motor vehicles are not exempt property. —

Debtors were not entitled to claim their motor vehicles as exempt tenants by the entirety property under 11 U.S.C.S. § 522(b)(3)(B) because § 46.2-622 did not allow them to be held as tenants by the entirety, and the tenants by the entirety estate in the proceeds from an equity line of credit terminated upon the purchase of the vehicles. In re Rodriguez, 406 Bankr. 707, 2008 Bankr. LEXIS 2659 (Bankr. E.D. Va. 2008).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Joint bank account by husband and wife held as tenants by entirety. —

Judgment creditor was unable to garnish a judgment debtor’s bank account, where it was a joint account held with the debtor’s wife, who was not a debtor to the creditor, as they held the property as tenants by the entirety under § 55-20.2; it was noted that prior to application of § 6.1-125.3 [now see § 6.2-606 ], the threshold issue of whether the funds were garnishable was to be resolved, which, in this case was done against the creditor. Sulzman v. Barnick, 62 Va. Cir. 139, 2003 Va. Cir. LEXIS 94 (Spotsylvania County July 8, 2003).

Attorney’s liens. —

In a case in which an attorney, who had represented the ex-husband in his divorce, sought to enforce his attorney’s lien against the property in question, which had been conveyed to the wife and had been held as tenants by the entirety, the attorney unsuccessfully argued that the property converted to a tenancy in common upon the entry of the final decree of divorce and that the lien attached at that time. That argument failed to take into account that notice of the lien was given when the property was still held in tenancy by the entirety so the lien could not attach by the time the recording of the lien took place, and the property was already solely owned by the ex-wife, never having converted to a tenancy in common, and therefore could not be subject to the satisfaction of the attorney’s lien. Borden v. Wilson, 79 Va. Cir. 111, 2009 Va. Cir. LEXIS 50 (Fairfax County June 24, 2009).

I.[Reserved.]

II.Decided Under Prior Law.

A.In General.

Editor’s note. —

The cases cited below were decided under former Title 55 or prior law. Many were also decided prior to the abolition of dower and curtesy. See § 64.2-301 .

History of section. —

See Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Right of legislature to remove disabilities. —

It was entirely competent, for the legislature to remove the disability of married women in whole or in part, and to define her powers with reference to property of all kinds, to ascertain the rights of the husband, if any, therein, and the liability of the property to claims against the wife. Hall v. Stewart, 135 Va. 384 , 116 S.E. 469 , 1923 Va. LEXIS 21 (1923).

The effect of this section is to give the wife as full control over her property during the coverture as her husband has over his. She may sue her husband as if he were a stranger. A husband in Virginia may be a trespasser upon his wife’s lands whenever she is not occupying them, if he goes there against her will or her commands; she may prosecute him for criminal trespass; she may dispossess him if he is in possession; or may hold him to account in connection with any transaction with reference to her lands as if he were a stranger. His right to curtesy and his marital rights give him no more power or authority over his wife’s property than if he were a total stranger. Edmonds v. Edmonds, 139 Va. 652 , 124 S.E. 415 , 1924 Va. LEXIS 140 (1924) (see Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69 (1955)).

This section has wiped aside every vestige of control the husband ever had under the common law, and all his rights as husband except as to curtesy. Edmonds v. Edmonds, 139 Va. 652 , 124 S.E. 415 , 1924 Va. LEXIS 140 (1924).

“The revisors of the Code of 1919, when they came to deal with § 5134, (from which this section was taken) in order that there might, thereafter, be no doubt of the total abolition of the husband’s common-law rights, added immediately after ‘but neither his right to curtesy,’ the following significant words, ‘nor his marital rights,’ to language which of itself seemed to have eliminated the husband’s previous rights. The language ‘nor his marital rights’ would seem but to emphasize and clarify, to make certain, the first few lines of the act: ‘A married woman shall have the right to acquire, hold, use, control, and dispose of property as if she were unmarried,’ etc.” Commonwealth v. Rutherfoord, 160 Va. 524 , 169 S.E. 909 , 1933 Va. LEXIS 233 (1933).

Section gives substantive right to sue husband for tortious damage to property. —

This section gives to the wife full ownership and control of her property, including her choses in action. Her husband is now a stranger to her property and property rights, and she to his. In the ownership and control of their respective properties, their identities are now wholly separate and distinct. Thus the substantive right to sue her husband for tortious damage to her property (as distinguished from a purely personal tort) is furnished by this section. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Section 55-41 does not prohibit married woman from selling her property. —

Section 55-41, relating to the effect to be given to certain conveyances made by married women and the covenants therein contained, does not in any way prohibit her from contracting to sell her statutory separate estate, or inhibit or interfere with a court of equity in the enforcement of such contracts. Dunn v. Stowers, 104 Va. 290 , 51 S.E. 366 , 1905 Va. LEXIS 98 (1905).

This section does not apply to warranty in deed to release dower. —

This section was not intended to apply to a warranty in a deed in which the wife united for the purpose only of relinquishing her inchoate right of dower in her husband’s property, nor does it repeal by implication § 55-41, declaring the effect of such a warranty. Augusta Nat'l Bank v. Beard, 100 Va. 687 , 42 S.E. 694 , 1902 Va. LEXIS 76 (1902).

Husband who steals from wife subject to criminal law. —

The broad provisions of the Married Woman’s Act, giving the wife absolute control over her tangible personal property, must necessarily bring her within the protective shelter of the criminal laws by making any thief, including her husband, who takes and deprives her of possession and use of her property subject to the usual criminal sanctions. Stewart v. Commonwealth, 219 Va. 887 , 252 S.E.2d 329, 1979 Va. LEXIS 185 (1979).

The purpose of the Married Woman’s Act would be frustrated if a husband could steal with impunity from his wife. Therefore, he may be prosecuted as any other thief for the larceny of her property. Stewart v. Commonwealth, 219 Va. 887 , 252 S.E.2d 329, 1979 Va. LEXIS 185 (1979).

Although a husband could be convicted of larceny of his wife’s separate property under § 55-35, defendant had a good faith belief that he had a claim of right to certain cassette tapes that he took; as a result, the evidence, as found by the trial court, was insufficient to support defendant’s conviction. Ward v. Commonwealth, 2003 Va. App. LEXIS 211 (Va. Ct. App. Apr. 8, 2003).

Extent of right of husband to use property. —

It is difficult to see how a husband under this section can have any right of occupancy of the wife’s real estate unless she resides upon it, and he gets the right of joint occupancy with her then, not because he has any interest in her land, or control over it, or the right to use it, but because as her husband he has the right to the enjoyment of her society. The husband’s rights so far as the wife’s property is concerned are determined by this section and his occupancy even as a home or use or control thereof are not only not provided for thereby but they are expressly provided against. Edmonds v. Edmonds, 139 Va. 652 , 124 S.E. 415 , 1924 Va. LEXIS 140 (1924).

The husband no longer has exclusive possession or control over any portion of property held as tenants by the entireties. Logic dictates that the same rule should apply to the rents, issues and profits derived from such entirety property. Moore v. Glotzbach, 188 F. Supp. 267, 1960 U.S. Dist. LEXIS 4641 (E.D. Va. 1960).

Notwithstanding this section, the presumption prevails that the husband is the owner of all property, real and personal, of which the wife may be in possession during coverture, especially if they are living together as husband and wife; and to overcome this presumption, in a contest between the husband’s creditors and the wife, she must show affirmatively that the property is her own, and that it was derived from a source other than her husband and in good faith, if he be insolvent. Otherwise, a wide door would be opened to fraud. First Nat'l Bank v. House, 145 Va. 149 , 133 S.E. 664 , 1926 Va. LEXIS 381 (1926) (see Childress v. Fidelity & Cas. Co., 194 Va. 191 , 72 S.E.2d 349 (1952)).

This section does not change the presumption that the husband is the owner of all property of which the wife may be in possession during coverture, but the sources from which a wife may accumulate a separate estate are enlarged by it. Thus, while at common law the husband was absolutely entitled to the wife’s earnings unless she was a sole trader, under this section the wife may accumulate a separate estate through her earnings. Harris v. Carver, 139 Va. 676 , 124 S.E. 206 , 1924 Va. LEXIS 142 (1924).

In a suit by creditors of an insolvent husband against the wife, the presumption is that every conveyance or transfer of real or personal estate made to the wife, during the coverture, either by her husband or a third person, is founded upon a consideration furnished by the husband, and the burden is upon the wife to show by clear and satisfactory evidence that the consideration was in good faith paid by her out of her own estate, and not by her husband. This presumption is based upon the relationship of the parties and exists notwithstanding the emancipation of married women as to their property rights. Johnson v. Ables, 119 Va. 593 , 89 S.E. 908 , 1916 Va. LEXIS 134 (1916) (see Childress v. Fidelity & Cas. Co., 194 Va. 191 , 72 S.E.2d 349 (1952)).

B.Curtesy.

This section destroyed the estate of tenancy by the curtesy initiate, but does not affect the husband’s estate by the curtesy at his wife’s death. The section only protects the wife’s estate during her life, but does not after her death, affect the law of succession as to her real or personal estate. Breeding v. Davis, 77 Va. 639 , 1883 Va. LEXIS 101 (1883) (see Campbell v. McBee, 92 Va. 68 , 22 S.E. 807 (1895)).

The right of the husband as tenant by marital right and tenant by curtesy initiate have been taken away by the section, and no right by curtesy consummate could accrue after divorce, the latter right being dependent on the death of the wife. Jones v. Kirby, 146 Va. 109 , 135 S.E. 676 , 1926 Va. LEXIS 315 (1926).

Rights of husband’s creditors. —

Estate by the curtesy consummate exists in the husband in the wife’s lands unaliened by her during her lifetime, though devised by her will. Such estate is subject to the liens of the husband’s creditors acquired during the coverture, in preference to the general liens of creditors upon her real estate. Browne v. Bockover, 84 Va. 424 , 4 S.E. 745 , 1888 Va. LEXIS 92 (1888) (see Campbell v. McBee, 92 Va. 68 , 22 S.E. 807 (1895)).

I.[Reserved.]

II.Decided Under Prior Law.

A.Contracts of Married Woman.

1.In General.

History. —

For the history of certain acts relating to the power of married women to contract, see Wynn v. Louthan, 86 Va. 946 , 11 S.E. 878 (1890). For history of section, see Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Purpose. —

The ultimate purpose running through the Married Woman’s Act is to place the wife on an equality with her husband. Carey v. Foster, 221 F. Supp. 185, 1963 U.S. Dist. LEXIS 6685 (E.D. Va. 1963), aff'd, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

Common law. —

At common law, no right of consortium was ever vested in the wife. Carey v. Foster, 221 F. Supp. 185, 1963 U.S. Dist. LEXIS 6685 (E.D. Va. 1963), aff'd, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

A married woman may contract and be contracted with, as if she were unmarried. Moreland v. Moreland, 108 Va. 93 , 60 S.E. 730 , 1908 Va. LEXIS 14 (1908) (see Young v. Hart, 101 Va. 480 , 44 S.E. 703 (1903)).

A married woman can legally execute with her husband a joint promissory negotiable note. Poole v. Perkins, 126 Va. 331 , 101 S.E. 240 , 1919 Va. LEXIS 99 (1919).

2.Transactions With Husband.

Agreements for separation. —

Where husband and wife who have already separated enter a contract adjusting property rights and providing a maintenance for the wife, it is not essential to the validity of the contract that the provision for the wife be made through the intervention of a trustee. Moreland v. Moreland, 108 Va. 93 , 60 S.E. 730 , 1908 Va. LEXIS 14 (1908).

A paper writing under seal executed by husband and wife, which granted to the survivor the right to all real estate and personal property, was a contract under seal, which, under this section the husband and wife might make as if she were unmarried. Harlan v. Weatherly, 183 Va. 49 , 31 S.E.2d 263, 1944 Va. LEXIS 129 (1944).

B.Suits By and Against Married Women.

1.In General.

This section is in derogation of the common law and is to be strictly construed and read as if the common law remained unchanged unless the purpose to change it appears expressly or by necessary implication. Furey v. Furey, 193 Va. 727 , 71 S.E.2d 191, 1952 Va. LEXIS 184 (1952).

Husband may not recover for loss of services or consortium. This section has abolished causes of action brought by a husband in personal injury cases for his wife’s medical expenses or the loss of his wife’s services or consortium. Bolen v. Bolen, 409 F. Supp. 1374, 1976 U.S. Dist. LEXIS 17131 (W.D. Va. 1976).

Maryland law allowing for loss of consortium claims does not contravene Virginia public policy because both Maryland and Virginia were similarly interested in preserving equality between spouses when creating their respective laws regarding claims for loss of consortium, and because of these similar ideals, Maryland law is not in contravention of Virginia public policy. Kelley v. United States, 580 F. Supp. 2d 490, 2008 U.S. Dist. LEXIS 84298 (E.D. Va. 2008).

A married woman may sue and be sued as if she were unmarried. Moreland v. Moreland, 108 Va. 93 , 60 S.E. 730 , 1908 Va. LEXIS 14 (1908) (see Young v. Hart, 101 Va. 480 , 44 S.E. 703 (1903)).

It is no longer necessary for an adult married woman to sue by next friend. Lynchburg Cotton Mill v. Rives, 112 Va. 137 , 70 S.E. 542 , 1911 Va. LEXIS 63 (1911).

Construction of word “unmarried.” —

The word “unmarried” originally and ordinarily means, it is true, never having been married, but the term is a word of flexible meaning and slight circumstances will be sufficient to give the word its other meaning of not having a husband or wife at the time in question, and as the term is used in this section it has the meaning of “not having a husband” at the time of the suit or action. Keister's Adm'r v. Keister's Ex'rs, 123 Va. 157 , 96 S.E. 315 , 1918 Va. LEXIS 13 (1918).

Right to maintain action for personal injuries is vested exclusively in wife. —

Under this section the right to maintain an action for personal injuries inflicted upon a married woman is vested exclusively in the wife and that right includes the right to recover the entire damages sustained, both to herself and those sustained by the husband and formerly recoverable only by him. Alsop v. Eastern Air Lines, 171 F. Supp. 180, 1959 U.S. Dist. LEXIS 3564 (D. Va. 1959).

She may recover entire damages sustained by personal injury to her. —

The addition to this section in 1919 of the provision giving married women the right to recover the entire damage sustained, in the event of a personal injury, did not affect the rule laid down in Edmonds v. Edmonds, 139 Va. 652 , 124 S.E. 415 (1924), but was intended to change the law as announced in Richmond Ry. & Elec. Co. v. Bowles, 92 Va. 738 , 24 S.E. 388 (1896).

Including medical bills. —

Under this section, a married woman may now recover for a personal injury inflicted on her “the entire damage sustained.” This would, of course, embrace medical bills incurred by her, necessary to effect a cure and for which she is liable. United Dentists, Inc. v. Bryan, 158 Va. 880 , 164 S.E. 554 , 1932 Va. LEXIS 303 (1932).

The right of the husband to recover for loss of domestic services of his wife from one who had tortiously injured her was taken from him and given to the wife by § 5134 of the Code of 1919, but this did not deprive him of the right to recover for medical expenses made necessary by the injury and paid by him. Nor was its language broad enough to take from him and vest in the wife his right to recover for loss of her consortium as distinguished from the loss of her domestic services. However, the amendment of 1932 (Acts 1932, c. 25, p. 21) broadened and enlarged the scope of this section so that it expressly gave to the wife the right to recover every item of damage incident to her injury, and provided that no action for any element of damage incident to such injury could be maintained by the husband. This prevented the husband from recovering for such medical expenses. Floyd v. Miller, 190 Va. 303 , 57 S.E.2d 114, 1950 Va. LEXIS 128 (1950).

But recovery is chargeable with husband’s claim for reimbursement of expenses. —

Under this section, the wife’s recovery is chargeable with the husband’s claim for reimbursement of expenses, the evident intention of the 1950 amendment being to constitute the wife the trustee for the benefit of the husband to that extent. Carey v. Foster, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

Husband may not recover for loss of services or consortium. —

In a joint action brought by husband and wife against a third party for the recovery of damages alleged to have been tortiously inflicted upon the wife, the husband may not recover for the loss of services or consortium of the wife. Alsop v. Eastern Air Lines, 171 F. Supp. 180, 1959 U.S. Dist. LEXIS 3564 (D. Va. 1959).

This section did not intend to change the common law, other than to deprive the husband of his right of action for loss of consortium. Carey v. Foster, 221 F. Supp. 185, 1963 U.S. Dist. LEXIS 6685 (E.D. Va. 1963), aff'd, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

Under this section the husband is prohibited from bringing an action for loss of consortium. Carey v. Foster, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

And wife may not recover for loss of husband’s consortium. —

The Married Woman’s Act, which removed the common-law disability of a wife to sue and be sued in her own name, has not conferred upon the wife a right to maintain an action in her name for the loss of consortium occasioned by injuries to her husband. Carey v. Foster, 221 F. Supp. 185, 1963 U.S. Dist. LEXIS 6685 (E.D. Va. 1963), aff'd, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

For negligent actions arising in Virginia, there is no existing right of action for loss of consortium which can be maintained by the wife for injuries inflicted upon the husband, or by the husband for injuries inflicted upon the wife. Carey v. Foster, 221 F. Supp. 185, 1963 U.S. Dist. LEXIS 6685 (E.D. Va. 1963), aff'd, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

When the husband is injured negligently, consideration of equality requires that the wife be allowed no recovery for loss of her husband’s consortium. She cannot claim in the name of equality rights the counterparts of which the husband does not enjoy. Carey v. Foster, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

Nor may she recover for husband’s loss of wife’s consortium. —

The statute does not mean that the wife may recover for the husband’s loss of the wife’s consortium, but merely means that there may be no recovery as to that element of damage and the wife is entitled to recover as though she were unmarried. Carey v. Foster, 221 F. Supp. 185, 1963 U.S. Dist. LEXIS 6685 (E.D. Va. 1963), aff'd, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

This section cannot be construed to authorize the wife to recover for the husband’s loss of her affection and companionship consequent upon injury negligently inflicted upon her. Carey v. Foster, 345 F.2d 772, 1965 U.S. App. LEXIS 5571 (4th Cir. 1965).

Constitutional guarantee of due process does not apply. —

The constitutional guarantee of due process could have no more application to a right of action to recover for loss of service and consortium than would be the situation involving related common-law relationships which have been drastically changed by statute, such as the former curtesy rights of the husband. Alsop v. Eastern Air Lines, 171 F. Supp. 180, 1959 U.S. Dist. LEXIS 3564 (D. Va. 1959).

Wife may sue for criminal conversation with her husband and alienation of his affections. —

The common-law rule that a wife had no right of action for criminal conversation with her husband and alienation of his affections has been abrogated by this section. Newsom v. Fleming, 165 Va. 89 , 181 S.E. 393 , 1935 Va. LEXIS 276 (1935).

Christian name of wife proper. —

In a proceeding by motion for judgment to recover damages for the negligent killing of plaintiff’s intestate against a husband and wife, the wife should be impleaded by her own baptismal, or Christian name and not by the initial letters of her husband’s name. The former is her legal designation. Ratcliffe v. McDonald's Adm'r, 123 Va. 781 , 97 S.E. 307 , 1918 Va. LEXIS 66 (1918).

Allegation that contract made with reference to separate estate unnecessary. —

It is unnecessary since this provision was enacted to allege that the contract sued on was made with reference to the married woman’s separate estate. Young v. Hart, 101 Va. 480 , 44 S.E. 703 , 1903 Va. LEXIS 55 (1903).

2.By and Against Husband.

The reason for interspousal immunity is to foster a harmonious and conjugal relationship. Obviously the reason for the rule is lost upon the death of one of the parties for there is no longer a marriage to be saved or a union to be preserved. Korman v. Carpenter, 216 Va. 86 , 216 S.E.2d 195, 1975 Va. LEXIS 253 (1975).

The modern trend is to abrogate, or at least substantially modify, interspousal immunity doctrine. Korman v. Carpenter, 216 Va. 86 , 216 S.E.2d 195, 1975 Va. LEXIS 253 (1975).

There is no distinct line of demarcation between what tort actions may or may not be maintained by one spouse against the other. The more logical line of cleavage would seem to place on one side actions for purely personal torts, such as for personal injury, defamation of character, malicious prosecutions, false imprisonment or the like, for which actions should not lie. On the other side, actions by a husband or wife for those torts that may be inflicted upon or committed against the property (or property rights) of the other should lie. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Section does not confer right to sue husband for assault. —

This statute has not conferred upon a married woman a right of action against her husband for damages for an assault upon her committed by the husband during the coverture. Keister's Adm'r v. Keister's Ex'rs, 123 Va. 157 , 96 S.E. 315 , 1918 Va. LEXIS 13 (1918); Furey v. Furey, 193 Va. 727 , 71 S.E.2d 191, 1952 Va. LEXIS 184 (1952) (commented on in 10 Wash. & Lee L. Rev. 128 (1953)).

This section did not change the common-law rule prohibiting one spouse from suing the other in a tort action. Alexander v. Kuykendall, 192 Va. 8 , 63 S.E.2d 746, 1951 Va. LEXIS 147 (1951).

This section merely enlarged the remedies of married women with respect to other substantive rights of theirs existing at common law and conferred by the first portion of the statute. Furey v. Furey, 193 Va. 727 , 71 S.E.2d 191, 1952 Va. LEXIS 184 (1952) (commented on in 10 Wash. & Lee L. Rev. 128 (1953)).

The common law, as it existed in 1918, conferred no right in the wife to sue her husband for an assault. Surratt v. Thompson, 212 Va. 191 , 183 S.E.2d 200, 1971 Va. LEXIS 327 (1971).

Although committed before marriage. —

A wife cannot under this section maintain a suit against her husband for a tort committed by him against her before their marriage. Furey v. Furey, 193 Va. 727 , 71 S.E.2d 191, 1952 Va. LEXIS 184 (1952) (commented on in 10 Wash. & Lee L. Rev. 128 (1953)).

Nor can such an action be maintained by husband against wife. —

It has been held that actions for torts against the person brought by the wife, or her personal representatives, will not lie against the husband or his personal representative. Yet upon consideration of the change in the common-law status of husbands and wives wrought by legislation and the historical development of marital rights and liabilities, upon principles of simple justice and public policy, it is plain that no similar action could be maintained by the husband against the wife. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Personal representative of wife may not sue for death caused by husband. —

The personal representative of a wife who was killed by her husband when the husband and wife were living together in that relationship has no right of action against the husband or his personal representative for the death of the wife. Keister's Adm'r v. Keister's Ex'rs, 123 Va. 157 , 96 S.E. 315 , 1918 Va. LEXIS 13 (1918).

An action for wrongful death may be maintained, predicated upon injuries to one spouse during marriage arising out of a wrongful act by the other spouse, when such an act results in the termination of the marriage by death, and when the deceased spouse is survived by no living child or grandchild. Korman v. Carpenter, 216 Va. 86 , 216 S.E.2d 195, 1975 Va. LEXIS 253 (1975).

When wife immune from liability for certain personal injuries to husband. —

Wife is immune from liability in tort for personal injuries intentionally inflicted upon the husband at her direction during the marriage, i.e., and abortive murder-for-hire scheme, when the parties are divorced from the bond of matrimony at the time the action is instituted. Counts v. Counts, 221 Va. 151 , 266 S.E.2d 895, 1980 Va. LEXIS 226 (1980).

Wife can maintain an action against her husband for personal injuries that result from a motor vehicle accident. Surratt v. Thompson, 212 Va. 191 , 183 S.E.2d 200, 1971 Va. LEXIS 327 (1971).

The common law, as it exists today, does not cling to the concept that the “one flesh” of husband and wife may not so divide itself as to permit an action by wife against husband for personal injuries sustained in an automobile accident. Surratt v. Thompson, 212 Va. 191 , 183 S.E.2d 200, 1971 Va. LEXIS 327 (1971).

Each spouse is liable to the other for tortious damage to property. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

From the language of §§ 55-35, 55-36, and 55-37, it appears that as to their property rights the legislature intended wholly to sever the common-law unity of husband and wife and remove all disabilities and impediments preventing one spouse from suing the other for wrongs to their respective properties. When read together, these sections empower each spouse to maintain actions at law for wrongful invasions of their respective property rights as if they had never been married. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Wife may maintain ejectment against husband. —

As a husband is not entitled to the possession or use of the rents and profits of his wife’s real estate during the coverture, a wife may maintain an action of ejectment against her husband for a house which he had conveyed to her upon consideration of natural love and affection. Humphreys v. Strong, 141 Va. 146 , 126 S.E. 194 , 1925 Va. LEXIS 396 (1925).

A fire insurance company, as subrogee of insured, was entitled to maintain an action against insured’s wife for her alleged destruction of his property. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

I.[Reserved.]

II.Decided Under Prior Law.

Necessaries doctrine unconstitutional. —

Predecessors of this section, which is part of the Married Woman’s Act (Acts 1876-77, c. 329), did not affect the common-law necessaries doctrine, creating an obligation directly between a husband and a third party who provided services to his wife, but the necessaries doctrine is unconstitutional as a gender-based classification not substantially related to governmental interests. Schilling v. Bedford County Mem. Hosp., 225 Va. 539 , 303 S.E.2d 905, 1983 Va. LEXIS 253 (1983).

By this section the husband’s liability for the wife’s torts has been completely abolished, and no action by him against her need be also against himself. Vigilant Ins. Co. v. Bennett, 197 Va. 216 , 89 S.E.2d 69, 1955 Va. LEXIS 214 (1955).

Attachment of lien on principal residence held as tenants by the entirety. —

Where a creditor filed two claims for medical care provided to Chapter 13 debtor wife, who had cancer surgery performed on her, and objected to confirmation of debtors’ plan because it failed to pay creditor as much as it would have received in a Chapter 7 liquidation, the objection was overruled on the basis that the trustee could not have § 55-37 administered for creditor’s benefit on debtors’ marital residence, held by them as tenants by the entireties, had debtors filed for relief under Chapter 7 because § 55-37 expressly exempted the marital residence from process to enforce the debt. In re Balthrop, No. 05-11000-SSM, 2005 Bankr. LEXIS 2713 (Bankr. E.D. Va. Nov. 28, 2005).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Statute inapplicable. —

Statute did not bar children’s lawsuit against their deceased father’s second wife because it was not one seeking to impose personal liability against the second wife for her late husband’s contractual obligations; the children sought recovery to the extent that the second wife was unjustly enriched as a result of any amounts distributed to her through an insurance policy, and thus, the cause of action stood separate from the initial breach of contract. Griffin v. Cowser-Griffin, 92 Va. Cir. 282, 2016 Va. Cir. LEXIS 207 (Surry County Jan. 29, 2016).

Responsibility for funeral expenses of deceased spouse. —

Decedent’s sister was entitled to recover funeral costs from the decedent’s surviving spouse, pursuant to § 55-37 and the common-law doctrine of necessaries, because the decedent’s sister paid for the decedent’s burial instead of her surviving spouse, and § 64.1-136.1 did not extend liability solely to the decedent’s estate. Shepard v. Moore, 83 Va. Cir. 377, 2011 Va. Cir. LEXIS 216 (Norfolk Sept. 22, 2011).

I.[Reserved.]

II.Decided Under Prior Law.

Purpose. —

The statute language, “no covenant or warranty [in a deed] shall operate to bind . . . her any further than to convey her . . . interest in such land . . .” makes clear that the writers of the statute understood the phraseology as contained in the instant deed has been, was, and would continue to be found in deeds. The very purpose of the statute was to remove from this much-used language the operative effect of binding the dower- or curtesy-conveying spouse to the burden of defending the purchaser’s good title or guaranteeing him quiet possession and the like. American Dev. Group, Inc. v. Brookes, 587 F. Supp. 992, 1984 U.S. Dist. LEXIS 15192 (E.D. Va. 1984).

Relationship to other statutes. —

The contention that § 55-41 specifically provides that when a husband and wife join in a deed of conveyance, the provisions of clause (i) of subsection B of § 64.1-16.1 are satisfied is rejected. Chappell v. Perkins, 266 Va. 413 , 587 S.E.2d 584, 2003 Va. LEXIS 102 (2003).

Nonland-owning spouse not obligated to warrant title when exception does not apply. —

Where the exception to the general rule in this section has not been met, the nonland-owning spouse has no obligation to any grantee with respect to a general warranty of title or with respect to the English covenants. American Dev. Group, Inc. v. Brookes, 587 F. Supp. 992, 1984 U.S. Dist. LEXIS 15192 (E.D. Va. 1984).

I.[Reserved.]

II.Decided Under Prior Law.

Section construed distributively. —

Chapter 1 of Title 64.1 deals with two very distinct subjects, the descent of real estate and the distribution of personal property. The reference then in this section must be construed distributively, that is to say, when the wife’s property consists of real estate it shall pass as real estate passes under that chapter, and when of personal property it passes as personal property passes in that chapter. Hall v. Stewart, 135 Va. 384 , 116 S.E. 469 , 1923 Va. LEXIS 21 (1923).

What property passes. —

Under this section, what passes is not a surplus but the whole of the estate of which the wife dies intestate. Hall v. Stewart, 135 Va. 384 , 116 S.E. 469 , 1923 Va. LEXIS 21 (1923).

Section prevails over statutes relating to funeral expenses. —

This section was passed many years after the statutes relating to funeral expenses and, of course, would prevail if there is any conflict between them. Hall v. Stewart, 135 Va. 384 , 116 S.E. 469 , 1923 Va. LEXIS 21 (1923).

I.[Reserved.]

II.Decided Under Prior Law.

Husband who steals from wife subject to criminal law. —

The broad provisions of the Married Woman’s Act, giving the wife absolute control over her tangible personal property, must necessarily bring her within the protective shelter of the criminal laws by making any thief, including her husband, who takes and deprives her of possession and use of her property subject to the usual criminal sanctions. Stewart v. Commonwealth, 219 Va. 887 , 252 S.E.2d 329, 1979 Va. LEXIS 185 (1979).

I.[Reserved.]

II.Decided Under Prior Law.

In Virginia there is no statute fixing an invariable form for deeds of conveyance of land. The form given in this section uses the word “grant,” but that is not an indispensable requisite. To constitute a grant it is not indispensable that technical words be used. Albert v. Holt, 137 Va. 5 , 119 S.E. 120 , 1923 Va. LEXIS 134 (1923).

Use of technical words or strict compliance with the form in this section is not necessary to effect a transfer, if the language used plainly shows on the face of the document a clear intent to convey title. Lim v. Soo Myung Choi, 256 Va. 167 , 501 S.E.2d 141, 1998 Va. LEXIS 81 (1998).

Valid deed not found. —

Where a memorandum was void of any language indicating an intent to transfer property, but rather was replete with contemporaneous statements regarding joint tenant’s belief in property’s current status, the memorandum did not constitute a valid deed. Lim v. Soo Myung Choi, 256 Va. 167 , 501 S.E.2d 141, 1998 Va. LEXIS 81 (1998).

Although § 55-2 was inapplicable to the conveyance of easements because an easement was not an estate, the circuit court’s judgment was reversed; the deeds at issue, along with a plat incorporated therein for descriptive purposes, did not contain operative words manifesting an intention to grant an easement. Considering the particular circumstances of the two deeds and the plat at issue, and resolving any doubt against the establishment of an easement, there was no conveyance of an express easement across the property owner’s two parcels for the benefit of the limited liability company’s parcel. Burdette v. Brush Mt. Estates, LLC, 278 Va. 286 , 682 S.E.2d 549, 2009 Va. LEXIS 91 (2009).

Seal. —

Neither § 55-57 nor § 55-48 contain seal requirements that § 55-51 operates to suspend, and neither of these statutes imposes a seal requirement on deeds, which the common law and the Statute of Conveyances, have already accomplished; these provisions only offer recommended language, purely permissive, not mandatory, for deeds already required to be under seal, and the presence or absence of either statute has no effect on the seal requirement. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

CIRCUIT COURT OPINIONS

Statutory formalities. —

Defendant’s demurrer to a motion for judgment seeking recovery on a commercial lease was overruled, because while there were statutory formalities for a deed, failure to comply with them was not necessarily fatal to an enforcement action between parties to deed under § 55-51. Only the intent to grant needed to be manifest. Kassco, L.L.C. v. Geodigital Mapping, Inc., 69 Va. Cir. 137, 2005 Va. Cir. LEXIS 327 (Loudoun County Oct. 12, 2005).

I.[Reserved.]

II.Decided Under Prior Law.

Language admitting of two constructions. —

In the construction of language contained in a deed the grantor must generally be considered as having intended to convey all that the language he employed is capable of passing to the grantee, and where the description admits of two constructions, it will be construed most favorably to the grantee. Waskey v. Lewis, 224 Va. 206 , 294 S.E.2d 879, 1982 Va. LEXIS 283 (1982).

Joint devisees with right of survivorship may convey fee simple. —

Under the provisions of this section and §§ 55-6 and 55-75, the effect of a joint devise to testator’s three sons, with a conditional limitation over that if one or more of them shall die leaving no issue his or their share shall go to his surviving brothers or brother, is to invest the devisees with the authority to convey and relinquish all their rights, title and interest in the land devised, and the grantee of the three of them takes a fee simple estate. Smith v. Smith, 112 Va. 617 , 72 S.E. 119 , 1911 Va. LEXIS 127 (1911).

Deed of heir conveying land of decedent. —

A deed made by an heir and conveying land of a decedent, although void as to creditors of the decedent until the expiration of a year from the decedent’s death, was valid between the parties and, under this section, conveyed to the grantee all the estate, right, title and interest of the grantor in the lands. Heeke v. Allan, 127 Va. 65 , 102 S.E. 655 , 1920 Va. LEXIS 32 (1920).

I.[Reserved.]

II.Decided Under Prior Law.

This section is merely an affirmation of the common law. Whitmore v. Margaret Paxton Mem. for Convalescent Children, 151 Va. 1018 , 145 S.E. 827 , 1928 Va. LEXIS 287 (1928).

The recording statutes are designed primarily to protect prospective purchasers against encumbrances and only incidentally to memorialize passage of appurtenances. Corbett v. Ruben, 223 Va. 468 , 290 S.E.2d 847, 1982 Va. LEXIS 226 (1982).

Deed to land embraces underlying minerals. —

Where land is sold without reservation of any kind it embraces the underlying minerals. Steinman v. Vicars, 99 Va. 595 , 39 S.E. 227 , 1901 Va. LEXIS 84 (1901).

And may include easement of waterway. —

Pursuant to this section a grant of all the grantor’s “right, title and claim of whatever kind, in and to” certain property carries with it, as an appurtenance, the easement of a waterway over the lands of the grantor to and for the use of the premises granted, although such easement be not expressly mentioned. Norfolk & W. Ry. v. Obenchain, 107 Va. 596 , 59 S.E. 604 , 1907 Va. LEXIS 77 (1907).

License vs. Easement. —

Where the original deed to sellers contained no reference to nearby swimming pool privileges but reference thereto was made in the original contract of sale, sellers enjoyed a license and therefore did not convey an easement or privilege to use the pool to purchasers. Bunn v. Offutt, 216 Va. 681 , 222 S.E.2d 522, 1976 Va. LEXIS 185 (1976).

No right to apportion easement to third parties. —

Language allowing a park authority to grant third-party easements “of any nature” subject to approval by a power company demonstrated the exclusivity of the power company’s easement; the deed language unambiguously provided the power company a non-exclusive easement in gross, and thus, the power company did not have the right to apportion the easement to third parties. Va. Elec. & Power Co. v. N. Va. Reg'l Park Auth., 270 Va. 309 , 618 S.E.2d 323, 2005 Va. LEXIS 73 (2005).

I.[Reserved.]

II.Decided Under Prior Law.

This section is merely an affirmation of the common law. Whitmore v. Margaret Paxton Mem. for Convalescent Children, 151 Va. 1018 , 145 S.E. 827 , 1928 Va. LEXIS 287 (1928).

The recording statutes are designed primarily to protect prospective purchasers against encumbrances and only incidentally to memorialize passage of appurtenances. Corbett v. Ruben, 223 Va. 468 , 290 S.E.2d 847, 1982 Va. LEXIS 226 (1982).

Deed to land embraces underlying minerals. —

Where land is sold without reservation of any kind it embraces the underlying minerals. Steinman v. Vicars, 99 Va. 595 , 39 S.E. 227 , 1901 Va. LEXIS 84 (1901).

And may include easement of waterway. —

Pursuant to this section a grant of all the grantor’s “right, title and claim of whatever kind, in and to” certain property carries with it, as an appurtenance, the easement of a waterway over the lands of the grantor to and for the use of the premises granted, although such easement be not expressly mentioned. Norfolk & W. Ry. v. Obenchain, 107 Va. 596 , 59 S.E. 604 , 1907 Va. LEXIS 77 (1907).

An easement continues to adhere to the dominant estate to which it is appurtenant, and passes with it to the grantee thereof, even though not specifically mentioned. Corbett v. Ruben, 223 Va. 468 , 290 S.E.2d 847, 1982 Va. LEXIS 226 (1982).

Easement extinguished by express agreement. —

Although an easement remained with the dominant estate to which it was appurtenant and passed to a subsequent grantee even though not specifically mentioned in the deed to that grantee, where an original easement was expressly abandoned by an agreement creating the new easement, any rights to the original easement were extinguished. Taylor v. McConchie, 264 Va. 377 , 569 S.E.2d 35, 2002 Va. LEXIS 96 (2002).

Easement by implication. —

Where there are no descriptive words of grant or reservation in the deed, an easement by implication from former use will arise only where the use of the property has been continuous, apparent, reasonably necessary for the enjoyment of the dominant tract, and in existence at the time of the conveyance. Haynie v. Brenner, 216 Va. 722 , 222 S.E.2d 546, 1976 Va. LEXIS 192 (1976).

License vs. Easement. —

Where the original deed to sellers contained no reference to nearby swimming pool privileges but reference thereto was made in the original contract of sale, sellers enjoyed a license and therefore did not convey an easement or privilege to use the pool to purchasers. Bunn v. Offutt, 216 Va. 681 , 222 S.E.2d 522, 1976 Va. LEXIS 185 (1976).

No right to apportion easement to third parties. —

Language allowing a park authority to grant third-party easements “of any nature” subject to approval by a power company demonstrated the exclusivity of the power company’s easement; the deed language unambiguously provided the power company a non-exclusive easement in gross, and thus, the power company did not have the right to apportion the easement to third parties. Va. Elec. & Power Co. v. N. Va. Reg'l Park Auth., 270 Va. 309 , 618 S.E.2d 323, 2005 Va. LEXIS 73 (2005).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

City’s right of way could not be relocated because one-third of its interest in the right of way was held in fee simple, and the court had no authority to move that interest to another plot of land. City of Fredericksburg v. Yarboro, 57 Va. Cir. 124, 2001 Va. Cir. LEXIS 320 (Spotsylvania County Nov. 6, 2001).

I.[Reserved.]

II.Decided Under Prior Law.

Failure to state claim. —

Landowners were unable to state a private nuisance claim under § 55-50.1 against a gas company because they failed to allege any direct, physical damages related to certain construction, which breached the parties’ right of way agreement. O'Connor v. Columbia Gas Transmission Corp., 643 F. Supp. 2d 799, 2009 U.S. Dist. LEXIS 65414 (W.D. Va. 2009).

I.[Reserved.]

II.Decided Under Prior Law.

Seal. —

Neither § 55-57 nor § 55-48 contain seal requirements that § 55-51 operates to suspend, and neither of these statutes imposes a seal requirement on deeds, which the common law and the Statute of Conveyances, have already accomplished; these provisions only offer recommended language, purely permissive, not mandatory, for deeds already required to be under seal, and the presence or absence of either statute has no effect on the seal requirement. Game Place, L.L.C. v. Fredericksburg 35, LLC, 295 Va. 396 , 813 S.E.2d 312, 2018 Va. LEXIS 54 (2018).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Deed valid. —

Defendant’s demurrer to a motion for judgment seeking recovery on a commercial lease was overruled because while there were statutory formalities for a deed, failure to comply with them was not necessarily fatal to an enforcement action between parties to deed. Only the intent to grant needed to be manifest. Kassco, L.L.C. v. Geodigital Mapping, Inc., 69 Va. Cir. 137, 2005 Va. Cir. LEXIS 327 (Loudoun County Oct. 12, 2005).

I.[Reserved.]

II.Decided Under Prior Law.

Section prevents grantor from denying that title actually passed to grantee. —

This section, a codification of the equitable doctrine of estoppel by deed, operates to prevent the grantor from denying that title has actually passed to the grantee. Thus, as between the parties, the statute permits the passage of title. It does not prejudice the rights of third parties. Hausman v. Hausman, 233 Va. 1 , 353 S.E.2d 710, 3 Va. Law Rep. 1835, 1987 Va. LEXIS 164 (1987).

Lien of child support judgment had priority over recorded deed of trust on entirety property. —

The lien of a child support judgment docketed after couple’s divorce had priority over a recorded deed of trust on entirety property executed solely by the husband prior to the divorce, despite the bank’s argument that the entry of the divorce decree, in conjunction with the application of this section (the after-acquired property doctrine), transformed the bank’s interest into a viable lien, as the bank’s deed of trust with respect to the property was void as to wife and children. Hausman v. Hausman, 233 Va. 1 , 353 S.E.2d 710, 3 Va. Law Rep. 1835, 1987 Va. LEXIS 164 (1987).

Recording of deed of trust before Chapter 11 debtor acquired title did not affect lien. —

Chapter 11 debtor was not entitled to summary judgment on her claim that she was to be treated as a bona fide purchaser under 11 U.S.C.S. § 544(a)(3) where she had signed a deed of trust that was recorded before she actually acquired title to the property, under § 55-52, that fact did not affect the deed’s validity, and applicable judicial precedent held that 11 U.S.C.S. § 544(a) barred a debtor-in-possession from avoiding a deed of trust that would have been binding on the debtor herself. Wilson v. Moir (In re Wilson), No. 05-13928-SSM, No. 06-1063, 2006 Bankr. LEXIS 1001 (Bankr. E.D. Va. May 26, 2006).

Application of estoppel by deed. —

Appeals court rejected an argument that the circuit court erred in overruling an LLC’s motion in limine that sought to enforce via an estoppel by deed, on grounds that a widow attempted by her evidence to contradict the clear wording of the 1972 deed from which she derived her ownership interest; moreover, the widow was not estopped from claiming that she owned more than a one-half interest in the property and from asserting that she and her decedent husband were not divorced. 1924 Leonard Rd., L.L.C. v. Van Roekel, 272 Va. 543 , 636 S.E.2d 378, 2006 Va. LEXIS 114 (2006).

Rights of third parties. —

Case did not deal solely with the rights of the party that first recorded a deed of trust vis-a-vis debtor, but rather with the rights of third parties, including a lender. Consequently, § 55-52 did not insulate the deed of trust from an attack predicated on § 55-105. Wilson v. Moir, 359 Bankr. 123, 2006 Bankr. LEXIS 3635 (Bankr. E.D. Va. 2006).

Circuit court properly ruled that an ex-wife’s deed of trust had priority over a bank’s deed of trust because, while the bank’s deed of trust was recorded before the ex-wife’s deed of trust, the after-acquired-title statute did not purport to affect the deeds of third parties or influence the relative priority of their interests, the bank’s deed of trust was void against the ex-wife as a judgment lien creditor, and the bank’s deed of trust was not properly recorded in the ex-wife’s chain of title. Deutsche Bank Nat'l Trust Co. v. Arrington, 290 Va. 109 , 772 S.E.2d 571, 2015 Va. LEXIS 83 (2015).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Contingent remainders. —

Because there was no reason that would prevent a beneficiary from alienating a part of the beneficiary’s interest in a trust, pursuant to §§ 55-6 and 55-52, a commissioner’s determination that a beneficiary’s expectancy went directly to the beneficiary’s surviving children was affirmed. Bowman v. Mericle, 69 Va. Cir. 87, 2005 Va. Cir. LEXIS 259 (Norfolk Aug. 31, 2005).

OPINIONS OF THE ATTORNEY GENERAL

Editor’s note. —

The opinion cited below refers to prior law.

“Deed.” —

The term “deed” as used in § 58.1-817 should be construed to include deeds of trust and leases, so long as the instruments are recorded in a jurisdiction in which open-space easements are held by the Virginia Outdoors Foundation. See opinion of Attorney General to Ms. Brett C. Glymph, Executive Director, Virginia Outdoors Foundation, 15-081, (9/1/16).

I.[Reserved.]

II.Decided Under Prior Law.

Vendor’s implied lien was abolished in 1850. —

In 1842, the common-law implied vendor’s lien was in existence, it not having been abolished until 1850, and could be enforced against a purchaser for value with notice, either actual or constructive; but, even as between parties, vendors and vendees, it might be waived by taking other securities, or a security of different form. Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903).

Object of section was to make lien a matter of record. —

The object of this section in requiring the lien to be reserved on the face of the deed was to make it a matter of record, and thus furnish to all persons dealing with the property the necessary information of all liens and incumbrances thereon. Patton v. Hoge, 63 Va. (22 Gratt.) 443, 1872 Va. LEXIS 35 (1872); Coles v. Withers, 74 Va. (33 Gratt.) 186, 1880 Va. LEXIS 32 (1880).

The uncertainty in the state of the law, and the perplexing litigation growing out of it, led to the passage of this section. Coles v. Withers, 74 Va. (33 Gratt.) 186, 1880 Va. LEXIS 32 (1880).

This section leaves unaffected a lien expressly reserved upon the face of the conveyance, which lien continues to have the same force and effect it always had. The reason for this is obvious. None of the evils growing out of the vendor’s implied lien result from a lien expressly reserved on the face of the conveyance. The lien being set forth in the first link of the vendee’s chain of title, purchasers from him have just as much notice of it as they would have of a lien upon the land by deed of trust or mortgage. Patton v. Hoge, 63 Va. (22 Gratt.) 443, 1872 Va. LEXIS 35 (1872).

It does not impart any new quality to vendor’s lien. —

This section provides that the vendor shall have no lien for unpaid purchase money unless a lien is reserved on the face of the deed, thus abolishing the lien by implication of law and substituting in its place a lien by express contract. This provision was not intended to impart any new quality to the vendor’s lien, but to end the vexatious litigation growing out of claims for unpaid purchase money against bona fide purchasers of the legal title. Day v. Hale, 63 Va. (22 Gratt.) 146, 1872 Va. LEXIS 9 (1872); Gordon v. Rixey, 76 Va. 694 , 1882 Va. LEXIS 69 (1882); Stoner v. Harris, 81 Va. 451 , 1886 Va. LEXIS 112 (1886); Roanoke Brick & Lime Co. v. Simmons, 20 S.E. 955 , 1895 Va. LEXIS 149 (Va. 1895).

Express lien is as valid as implied lien formerly was. —

A vendor’s lien expressly reserved on the face of a conveyance, as required by this section, is as valid as to the estate or interest in the land conveyed as the implied vendor’s lien formerly was, whether the estate in the land conveyed is an absolute fee simple title or a mere equitable interest therein. Dingus v. Minneapolis Imp. Co., 98 Va. 737 , 37 S.E. 353 , 1900 Va. LEXIS 100 (1900).

Extent of reserved lien depends upon contract. —

The extent of the lien reserved on the face of a deed does not depend upon the extent of the vendor’s interest in the land conveyed, but upon the contract of the parties as gathered from the deed itself, in reserving the lien. Patterson v. Grottoes Co., 93 Va. 578 , 25 S.E. 602 , 1896 Va. LEXIS 114 (1896).

It creates no property in land. —

Reserving lien for purchase money creates no property in the land. It passes as personalty. Assigning the debt carries the lien. It binds the land for the purchase money, excluding other claims. Gordon v. Rixey, 76 Va. 694 , 1882 Va. LEXIS 69 (1882).

Statement not constituting reservation of lien. —

The statement in a deed that it is made “in consideration of five hundred dollars secured to be paid,” without more, does not constitute an express reservation of a lien on the land on the face of the deed to secure its payment within the meaning of this section. Harris v. Shield, 111 Va. 643 , 69 S.E. 933 , 1911 Va. LEXIS 13 (1911).

Section does not apply where no conveyance made by vendor. —

The statute abolishing the implied lien has no application, it will be perceived, where no conveyance is made by the vendor. By retaining the legal title the vendor preserves his lien unaffected by this section. Day v. Hale, 63 Va. (22 Gratt.) 146, 1872 Va. LEXIS 9 (1872); Stoner v. Harris, 81 Va. 451 , 1886 Va. LEXIS 112 (1886) (see Stovall v. Hardy, 1 Va. Dec. 342 (1879)).

And vendor has lien as long as he retains title. —

In case of a contract to convey, passing equitable title, of course there is a lien, as a vendor has a lien for purchase money as long as he retains title. Yancey v. Mauck, 56 Va. (15 Gratt.) 300, 1859 Va. LEXIS 17 (1859).

Lien is enforceable against subsequent vendee or lienor. —

If the vendor has sold the legal title, but not conveyed, the land would be charged with the purchase money in the hands of a subsequent purchaser or encumbrancer, even without notice, and notwithstanding that the vendor had taken personal or other security. Day v. Hale, 63 Va. (22 Gratt.) 146, 1872 Va. LEXIS 9 (1872); Stoner v. Harris, 81 Va. 451 , 1886 Va. LEXIS 112 (1886).

For a court of equity will never compel a vendor to part with the legal title until the purchase money has been paid, or the lien therefor has been waived or extinguished. Yancey v. Mauck, 56 Va. (15 Gratt.) 300, 1859 Va. LEXIS 17 (1859); Coles v. Withers, 74 Va. (33 Gratt.) 186, 1880 Va. LEXIS 32 (1880).

I.[Reserved.]

II.Decided Under Prior Law.

Bound by recorded deed of repurchase. —

Where debtor purchased her residential real property from Habitat for Humanity subject to a limitation imposed by a recorded deed of repurchase, the court concluded that a hypothetical chapter 7 trustee would be bound by the deed of right to repurchase. The trustee could not avoid the recorded deed of repurchase under Virginia law. In re Plascencia, 354 Bankr. 774, 2006 Bankr. LEXIS 3066 (Bankr. E.D. Va. 2006).

I.[Reserved.]

II.Decided Under Prior Law.

The objects of this section are to preserve a general form for deeds of trust, where the parties do not prefer some other form, and to save labor in the preparation of such instruments. Michie v. Jeffries, 62 Va. (21 Gratt.) 334, 1871 Va. LEXIS 57 (1871).

Deed held deed of trust and not mortgage. —

A deed substantially in the form prescribed for a deed of trust by this section is a deed of trust, and not a mortgage, and the fact that it does not prescribe any terms of sale is immaterial, where the trustee, making a sale thereunder, complies in all respects with § 55-59. Hopkins v. Givens, 119 Va. 578 , 89 S.E. 871 , 1916 Va. LEXIS 131 (1916).

Debtor retains equitable right to repay indebtedness secured by the trust and obtain the property upon full payment. The trustee has the right upon default to accelerate the debt secured on behalf of the trust beneficiary, take possession of the property and sell it. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

Virginia law requires deed to transfer legal title to real property. However, this rule does not change the fact that petitioners possessed neither a legal nor an equitable interest in the property once the auctioneer’s hammer fell and the memorandum of sale was signed. At this point, and before settlement, the trustee retains legal title to the property, while the purchaser possesses the right to enforce the sale in equity. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

Foreclosure sale occurring prior to filing of bankruptcy petition cuts off debtor’s interest in foreclosed property, and a deed of trust conveys legal title to the property to the trustee. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

I.[Reserved.]

II.Decided Under Prior Law.

Out-of-state lender. —

If the lender who initiates foreclosure is an out-of-state entity, a Virginia resident must be appointed to serve as trustee. United States v. Romer, 148 F.3d 359, 1998 U.S. App. LEXIS 13468 (4th Cir. 1998), cert. denied, 525 U.S. 1141, 119 S. Ct. 1032, 143 L. Ed. 2d 41, 1999 U.S. LEXIS 1065 (1999).

Federal preemption. —

Because § 55-58.1 granted state banks, but not national banks with no principal office in Virginia, the power to act as a deed of trust trustee and foreclose, a power incidental to a national bank’s real estate lending power, the National Bank Act preempted § 55-58.1; a national bank could act as a deed of trust trustee with power to foreclose against borrowers. Jaldin v. Recontrust Co., N.A., 539 Fed. Appx. 97, 2013 U.S. App. LEXIS 18073 (4th Cir. 2013), cert. denied, 572 U.S. 1115, 134 S. Ct. 2293, 189 L. Ed. 2d 174, 2014 U.S. LEXIS 3494 (2014).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

“Principal office.” —

Highest bidder at a foreclosure sale was entitled to summary judgment in her action to recover her deposit and the contract and memo of sale were void and unenforceable by either party because the trustee lacked both the capacity and authority to be named or act as substitute trustee where it knew when it was named as substitute trustee and entered into the memo of sale with the bidder that its principal office was not within the Commonwealth of Virginia. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 149 (Westmoreland County Aug. 5, 2013).

Corporate trustee had to have principal office within Commonwealth. —

Actions of a corporate trustee that had its principal office outside Virginia rendered the trustee auction and the memo executed pursuant thereto voidable because the statute required that in order for the trustee to be named or to act as trustee, it had to have its principal office within the Commonwealth; the requirements for a corporation serving as a trustee cannot be read as optional. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

Trustee’s capacity and authority. —

Bidder’s deposit at a foreclosure sale was to be returned to her by a trustee and lender because the memo of sale between the bidder and the trustee was void and unenforceable where the trustee lacked both the capacity and authority to be named or act as substitute trustee, and while the lender was not a party to the memo, it currently held the funds based solely upon its claim to the deposit. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2014 Va. Cir. LEXIS 14 (Westmoreland County Jan. 24, 2014).

Foreign trustee serving with Virginia trustee. —

Mere appointment of a foreign corporation, who did not qualify as a trustee, together with a Virginia corporation as co-trustees did not render two foreclosure sales invalid and, therefore, an exception to a commissioner’s report invalidating the sales was sustained since the otherwise qualified co-trustee was a Virginia corporation. In re Trustee's Sale, 67 Va. Cir. 204, 2005 Va. Cir. LEXIS 182 (Norfolk Mar. 25, 2005).

Conclusive presumption. —

Purchaser’s claim to set aside the memo by which she bought the property at the trustee sale was not barred by the statute; the conclusive presumption language must be limited to validating the correctness of the residence or business address of the trustee as it appears in the deed of trust. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

Breach of contract action. —

Corporate trustee’s ground of demurrer that the statute did not create a private cause of action in favor of a defaulting buyer was overruled because although the buyer alleged that the trustee violated the statute, her cause of action was for common-law breach of contract. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

OPINIONS OF THE ATTORNEY GENERAL

Editor’s note. —

The opinions cited below refer to prior law.

A limited liability company has the authority to serve as a trustee

in a deed of trust on real property. See opinion of Attorney General to The Honorable Albert Teich Jr., Clerk, Circuit Court of the City of Norfolk, 01-006, (6/22/01).

A registered limited liability partnership

organized under the laws of the Commonwealth may serve as a trustee under a deed of trust covered by § 55-58.1. See opinion of Attorney General to The Honorable Gregory D. Habeeb, Member, House of Delegates, 11-131, (3/23/12).

“Principal office.” —

For purposes of subdivision (2) of § 55-58.1 [now subsection A of § 55-58.1], “principal office” may be defined according to the definition of this term provided in Title 13.1. A corporation’s registered office does not satisfy the requirements of subdivision (2) of § 55-58.1 [now subsection A of § 55-58.1] unless such office also meets the definition of “principal office.” See opinion of Attorney General to The Honorable J. Chapman Petersen, Member, Senate of Virginia, 11-053, (9/14/2012).

I.[Reserved.]

II.Decided Under Prior Law.

“Credit line deed of trust.” —

Notwithstanding that a creditor sued on a note secured by a credit line deed of trust and was awarded a judgment lien, which it properly recorded under § 8.01-458 , the creditor’s credit line deed of trust note remained secured by the debtors’ property. In Virginia, a mortgage remained valid and enforceable until the debt was satisfied or the mortgage was released, and under § 55-58.2, a credit line deed of trust was a general term used to describe a variety of instruments, including a mortgage. Didlake v. Wachovia Bank, 454 Bankr. 349, 2011 Bankr. LEXIS 2928 (Bankr. W.D. Va. 2011).

Inapplicability of this section to former § 8.9-312(7) (see now § 8.9A-323 ). —

Language of this section concerning future advances under a line of credit secured by real property would not be applied to a case governed by former § 8.9-312(7) (see now § 8.9A-323 ) by employment of the doctrine of pari materia; this doctrine did not apply, as it requires that the statute being interpreted must be ambiguous, which former § 8.9-312(7) (see now § 8.9A-323 ) was not, and further requires that the statutes being compared relate to the same thing or have a common purpose, which this section and former § 8.9-312(7) (see now § 8.9A-323) do not. In re Enfolinc, Inc., 233 Bankr. 351, 1999 Bankr. LEXIS 862 (Bankr. E.D. Va. 1999).

I.[Reserved.]

II.Decided Under Prior Law.

Application. —

Where an assignee sought a determination that its deed of trust maintained priority over previously recorded judgment liens, dismissal was appropriate because § 55-58.3, which applied to the deed of trust because the deed of trust paid the debt owned under the original loan secured by the prior mortgage, did not entitle the deed of trust to retain the position of the prior mortgage as to liens that were subordinate to the prior mortgage because the deed of trust did not contain the required language in bold on the front of the document and exceeded the prior mortgage by more than $5,000. Deutsche Nat'l Bank Trust Co. v. Batmanghelidj, No. 1:07cv683, 2007 U.S. Dist. LEXIS 68499 (E.D. Va. Sept. 17, 2007).

I.[Reserved.]

II.Decided Under Prior Law.

A.General Consideration.

Section regulates conduct of trustee only so far as deed fails to do so. —

It will be seen, on examination, that the object of this section is to prescribe the duties and regulate the conduct of the trustee only so far as the deed fails to do so. Clark v. Moore, 76 Va. 262 , 1882 Va. LEXIS 28 (1882).

Deed is sole source of his authority. —

The trustee can only do with the trust property what the deed, either in express terms or by necessary implication, authorizes him to do. Williams v. Jones, 165 Va. 398 , 182 S.E. 280 , 1935 Va. LEXIS 307 (1935).

Deed of trust considered a contract. —

As a deed of trust was a contract under the law, it was clear that plaintiff’s claim sounded in contract, not tort; thus, the trial court erred in characterizing the claim was a common-law negligence claim. Crosby v. ALG Trustee, LLC, 296 Va. 561 , 822 S.E.2d 185, 2018 Va. LEXIS 196 (2018).

Only statute that addresses the trustee’s duties with regard to a foreclosure sale expressly indicates that it does not cover the entire field of duties the trustee has in this area; the statute states that in the event of sale under a deed of trust, the trustee shall have the following powers and duties in addition to all others, and this language clearly indicates that the legislature did not intend to limit a trustee’s powers and duties to those enumerated in the statute. Crosby v. ALG Trustee, LLC, 296 Va. 561 , 822 S.E.2d 185, 2018 Va. LEXIS 196 (2018).

Section controlling unless otherwise provided. —

The provisions of this section are controlling when the deeds of trust do not otherwise provide. Colonial Inv. Co. v. Cherrydale Cement Block Co., 194 Va. 454 , 73 S.E.2d 419, 1952 Va. LEXIS 251 (1952).

According to this section, when the deed of trust provides otherwise, the statutory requirements are inapplicable and a trustee thus did not violate subsection (7) by selling the property at auction without having declared the debt immediately payable where the deed of trust provided that the beneficiary could declare the debt immediately payable prior to the auction. Riley v. Robey, 122 F. Supp. 2d 684, 2000 U.S. Dist. LEXIS 17426 (W.D. Va. 2000).

The validity of an acceleration clause in a deed of trust is recognized. Where it is not otherwise provided by the deed of trust, this section requires such a clause to be read into it. Devany v. Colgin, 163 Va. 848 , 178 S.E. 15 , 1935 Va. LEXIS 245 (1935).

A due-on-sale acceleration clause in a deed of trust is not an unreasonable restraint on alienation. Lipps v. First Am. Serv. Corp., 223 Va. 131 , 286 S.E.2d 215, 1982 Va. LEXIS 179 (1982); United Va. Bank/National v. Best, 223 Va. 112 , 286 S.E.2d 221, 1982 Va. LEXIS 176, cert. denied, 459 U.S. 879, 103 S. Ct. 175, 74 L. Ed. 2d 144, 1982 U.S. LEXIS 3739 (1982).

Incorporation of section in deed by reference. —

Suit was brought to set aside a sale of property under a deed of trust upon the ground that the sale had not been advertised once a week for four successive weeks in a newspaper as required by this section. At the time the deed was made, this section did not require a newspaper advertisement, and the statute, as it existed at that time, was expressly referred to, incorporated in and made a part of the deed of trust. It was held that the provisions of this section, as it existed at the time the deed of trust was made, became a material portion of the contract between the parties. Gloucester Realty Corp. v. Guthrie, 182 Va. 869 , 30 S.E.2d 686, 1944 Va. LEXIS 242 (1944).

This section and § 55-60 do not affect the determination of lien priorities, but merely define certain language employed in the deed of trust. W.T. Jones & Co. v. Foodco Realty, Inc., 318 F.2d 881, 1963 U.S. App. LEXIS 5236 (4th Cir. 1963).

Priority of real estate taxes over payment of foreclosure sale proceeds. —

This section and § 58.1-3340 give real estate taxes a priority over the payment of the proceeds of a foreclosure sale. They direct that the foreclosure trustee must satisfy all outstanding tax deficiencies before distributing the proceeds, and in the event that this section fails, it is provided that the delinquent taxes shall remain a debt outstanding against the purchaser at the sale. In re Polumbo, 271 F. Supp. 640, 1967 U.S. Dist. LEXIS 11470 (W.D. Va. 1967).

Power of court to enjoin settlement of trustees’ account. —

A court of equity had jurisdiction to entertain a bill of complaint filed by beneficiaries under a second deed of trust seeking injunction against excessive settlement by the trustees under first deed of trust. Bradley v. Canter, 201 Va. 747 , 113 S.E.2d 878, 1960 Va. LEXIS 156 (1960).

Equity of redemption. —

Upon default in payment of the indebtedness secured by the deed of trust, the secured creditor may accelerate the indebtedness and request the trustee under the deed of trust to execute a sale. The creditor or the trustee must notify the debtor in writing of the acceleration and pending sale. At this point, the trustee holds legal title to the property conveyed in trust and the debtor has an “equity of redemption.” This is an equitable right incident to every mortgage which allows the mortgagor to pay the indebtedness and require the secured creditor to reconvey the property free of the deed of trust lien. Rolen v. Southwest Va. Nat'l Bank, 39 Bankr. 260, 1983 Bankr. LEXIS 7002 (Bankr. W.D. Va. 1983).

Debtor retains equitable right to repay indebtedness secured by trust and obtain property upon full payment. The trustee has the right upon default to accelerate the debt secured on behalf of the trust beneficiary, take possession of the property and sell it. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

Foreclosure sale occurring prior to filing of bankruptcy petition cuts off debtor’s interest in foreclosed property, and a deed of trust conveys legal title to the property to the trustee. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

Virginia law requires deed to transfer legal title to real property. However, this rule does not change the fact that petitioners possessed neither a legal nor an equitable interest in the property once the auctioneer’s hammer fell and the memorandum of sale was signed. At this point, and before settlement, the trustee retains legal title to the property, while the purchaser possesses the right to enforce the sale in equity. Abdelhaq v. Pflug, 82 Bankr. 807, 1988 U.S. Dist. LEXIS 1586 (E.D. Va. 1988).

Frazier-Lemke Act was invalid as regards this section. —

The Frazier-Lemke Act, in spite of its amendments, was unconstitutional under the Fourteenth Amendment of the federal Constitution as regards this section. In re Sherman, 12 F. Supp. 297, 1935 U.S. Dist. LEXIS 1359 (D. Va. 1935).

Bankruptcy court bound by provision stipulating attorney’s fees to creditor. —

The bankruptcy court was bound by a provision in a secured note awarding stipulated attorney’s fees to the secured creditor in the event he found it necessary to employ counsel for purposes of collection, since, in Virginia, where provision for stipulated attorney’s fees is made in a note secured by a deed of trust, which deed specifies that it is given as security for the note, the attorney’s fees themselves are part of the secured debt, and since the validity in bankruptcy proceedings of a provision in a secured note calling for stipulated attorney’s fees presents a question of state law. In re Crafty Fox, Ltd., 475 F. Supp. 634, 1979 U.S. Dist. LEXIS 10211 (W.D. Va. 1979). But see In re Saunders, 130 Bankr. 208, 1991 Bankr. LEXIS 1527 (Bankr. W.D. Va. 1991).

Pursuant to 11 U.S.C. § 1322(b)(5), a debtor may cure defaults under a deed of trust and reinstate such obligation if done within a reasonable amount of time. In re Stokes, 39 Bankr. 336, 1984 Bankr. LEXIS 5990 (Bankr. E.D. Va. 1984).

Action under federal question jurisdiction not permitted. —

This section did not involve sufficient state action to permit plaintiffs to maintain a cause of action under federal question jurisdiction. Levine v. Stein, 560 F.2d 1175, 1977 U.S. App. LEXIS 11759 (4th Cir. 1977), cert. denied, 434 U.S. 1046, 98 S. Ct. 891, 54 L. Ed. 2d 797, 1978 U.S. LEXIS 560 (1978).

Beneficiary necessary parties. —

Both the trustee and the named beneficiary of an antecedent deed of trust are necessary parties in a suit to enforce a mechanic’s lien. Mendenhall v. Douglas L. Cooper, Inc., 239 Va. 71 , 387 S.E.2d 468, 6 Va. Law Rep. 1013, 1990 Va. LEXIS 29 (1990).

Holder to foreclose on a deed of trust. —

Virginia law allowed a holder to foreclose on a deed of trust because, inter alia, the mortgage note was a negotiable instrument under § 8.3A-104 , both the note and the deed of trust demonstrated that the parties intended to allow the loan to be freely transferred, the note was endorsed in blank, the note was currently in the holder’s hands, there was no alteration to the note or deed of trust at any time, and the owner was in default on his obligations. Bernardo v. Nat'l City Real Estate Servs., LLC, 435 Fed. Appx. 240, 2011 U.S. App. LEXIS 10812 (4th Cir. 2011).

B.Foreclosure by Sale.

Requests by beneficiary. —

Although the beneficiary did not actually request the trustee to sell, it was clear from the circumstances that his actions were tantamount to a request. Rogers v. Runyon, 201 Va. 814 , 113 S.E.2d 679, 1960 Va. LEXIS 164 (1960).

Statute determining method of advertising. —

Under a provision in a deed of trust that in event of default the trustee should sell the real estate pursuant to this section, the method of advertising the sale is to be measured and determined by the language of the statute which was in effect at the date of the execution and delivery of the deed, and not by that which was in effect at the time of the sale. Cromer v. DeJarnette, 188 Va. 680 , 51 S.E.2d 201, 1949 Va. LEXIS 239 (1949).

Provision as to advertising is not retroactive. —

The legislature, in providing that sales under deeds of trust shall be advertised once a week for four successive weeks in a newspaper, did not intend that this provision should affect deeds of trust, executed prior to its effective date, which embodied agreed terms of sale and an agreed manner of advertisement in event of foreclosure. Gloucester Realty Corp. v. Guthrie, 182 Va. 869 , 30 S.E.2d 686, 1944 Va. LEXIS 242 (1944).

Newspaper advertisement not a substitute for mandatory posting. —

The provisions of the deed of trust providing for posting of notices in three public places as well as advertising in the newspaper were, in effect, conjunctive provisions rather than disjunctive provisions and the newspaper advertisement did not substitute for the mandatory posting under the terms of the instrument since the terms of the deed of trust required such posting as well as the statutory requirement for public advertising in the newspaper and the statute gave the trustee no option and the debtor was entitled to have the deed of trust terms complied with. Burke v. Fleet Fin., Inc., 98 Bankr. 746, 1989 Bankr. LEXIS 644 (Bankr. W.D. Va. 1989).

Lack of authority in trustee invalidates sale. —

Lack of authority in the trustee under a deed of trust to foreclose goes to the validity of the sale itself. Willis v. Chesapeake W. Ry., 178 Va. 314 , 16 S.E.2d 649, 1941 Va. LEXIS 166 (1941).

But misapplication of proceeds does not. —

Failure of the trustee to apply the proceeds properly does not invalidate the sale. Willis v. Chesapeake W. Ry., 178 Va. 314 , 16 S.E.2d 649, 1941 Va. LEXIS 166 (1941).

Trustee has power to sell either for cash or on time. —

Even before the incorporation in this section of the present authority to sell “upon such terms and conditions as the trustee may deem best” such power was usually written in deeds of trust in this State. And from time immemorial such language has been interpreted by the profession to include the power to sell either for cash or on time. Obviously it was the purpose of the legislature to have the language of this section conform to the accepted practice, and thus to broaden and not to restrict the powers of the trustee. Woodhouse v. Harrison, 168 Va. 574 , 191 S.E. 776 , 1937 Va. LEXIS 254 (1937).

But his discretion is reviewable by the court. —

The discretion granted by this section to a trustee under a deed of trust, as to the incidents of the sale, is reviewable by the courts. Perdue v. Davis, 176 Va. 102 , 10 S.E.2d 558, 1940 Va. LEXIS 237 (1940).

Advertisement for cash followed by sale on credit held not an abuse of discretion. Rogers v. Runyon, 201 Va. 814 , 113 S.E.2d 679, 1960 Va. LEXIS 164 (1960).

The trustee has a fiduciary duty to obtain the highest possible purchase price for the property. United States v. Romer, 148 F.3d 359, 1998 U.S. App. LEXIS 13468 (4th Cir. 1998), cert. denied, 525 U.S. 1141, 119 S. Ct. 1032, 143 L. Ed. 2d 41, 1999 U.S. LEXIS 1065 (1999).

Trustee should apply to court to remove impediments to fair sale. —

If there is doubt or uncertainty as to the debts secured, or the amount thereof, or disputes or conflicts among creditors, or any other impediment to a fair sale, the trustee should file a bill to have the matter determined, and he may and should delay the sale until the matter has been adjusted. If he fails or refuses to discharge his duty in this respect, any party interested or who would be injured by his default, may apply to a court of equity to have the necessary steps taken. Muller's Adm'r v. Stone, 84 Va. 834 , 6 S.E. 223 , 1888 Va. LEXIS 152 (1888); Stull v. Harvey, 112 Va. 816 , 72 S.E. 701 , 1911 Va. LEXIS 155 (1911).

By removal of cloud from title. —

Where there is a cloud on the title to the trust property, the trustee should apply to a court of equity to have it removed before making the sale, and if he fails or refuses to discharge his duty in this respect any party interested or who would be injured by his default may apply to a court of equity to have it removed. Muller's Adm'r v. Stone, 84 Va. 834 , 6 S.E. 223 , 1888 Va. LEXIS 152 (1888).

Or account of liens. —

Where the land conveyed by a deed of trust is subject to various liens, it is essential that the trustee should make application to a court of equity to have an account taken of the liens and of their priorities. Alexander v. Howe, 85 Va. 198 , 7 S.E. 248 , 1888 Va. LEXIS 28 (1888).

Section provides machinery for collection of taxes. —

The provisions of this section, in the case of a foreclosure, set up a simple and expeditious machinery for the collection of a city’s taxes. The city has nothing to do in the premises, but it receives the benefit of the services of the trustee. Broun v. City of Roanoke, 172 Va. 227 , 1 S.E.2d 279, 1939 Va. LEXIS 233 (1939).

And purchaser takes property free of delinquent tax liens. —

This section and § 8.01-102 assure purchasers, at trustees’ and commissioners’ sales, that they will take the property free of delinquent tax liens, and that the taxes will be paid by the trustee out of the purchase price which he has collected. Broun v. City of Roanoke, 172 Va. 227 , 1 S.E.2d 279, 1939 Va. LEXIS 233 (1939).

Sale will not be enjoined because of financial depression. —

A financial depression, or unprecedented scarcity of money for ordinary transactions, or enforced stagnation of the real estate market, is not sufficient to warrant a court of equity in restraining the exercise of the power of sale in a deed of trust. Williams v. Jones, 165 Va. 398 , 182 S.E. 280 , 1935 Va. LEXIS 307 (1935).

Or because time is unpropitious. —

Allegations to the effect that the time is unpropitious for a sale, that the land could likely be sold for a better price later, that the large cash payment required would be attended with great, if not irreparable, loss and injury to the debtor, present no grounds for the interposition of equity jurisdiction by injunction or otherwise. Williams v. Jones, 165 Va. 398 , 182 S.E. 280 , 1935 Va. LEXIS 307 (1935).

Right of bank to bid in property. —

The bank, as a holder of a note secured by a deed of trust, has a right to bid in the property at a foreclosure sale. Rolen v. Southwest Va. Nat'l Bank, 39 Bankr. 260, 1983 Bankr. LEXIS 7002 (Bankr. W.D. Va. 1983).

When foreclosure sale is complete. —

In a sale by a trustee under a deed of trust, the sale is complete when the trustee knocks the land down to the bidder, makes a memorandum of the sale and its terms, and signs the same. The contract is as complete at this time as the contract for sale made by a commissioner is when the court accepts the bid by confirming the sale. Rolen v. Southwest Va. Nat'l Bank, 39 Bankr. 260, 1983 Bankr. LEXIS 7002 (Bankr. W.D. Va. 1983).

Substitute trustee. —

Argument by plaintiff homeowners that under subdivision 9 of § 55-59 defendant beneficiary of a Deed to Trust could not appoint a substitute trustee to conduct the foreclosure proceedings failed because the homeowners signed the Deed of Trust and received a copy of the Deed of Trust and other documents, and knew that the beneficiary was also the nominee of the Lender, and that the Deed of Trust authorized the nominee to act on behalf of the Lender to foreclose in the event of a default on the loans. Tapia v. United States Bank, N.A., 718 F. Supp. 2d 689, 2010 U.S. Dist. LEXIS 62448 (E.D. Va. 2010).

Substitute trustee appointment. —

Borrower’s claim that the appointment of a substitute trustee was invalid was rejected where there was no authority for her assertion that subdivision 9 of § 55-59 required an instrument of appointment to be completely intact when it was executed. Wolf v. Fannie Mae, 830 F. Supp. 2d 153, 2011 U.S. Dist. LEXIS 135259 (W.D. Va. 2011), aff'd, 512 Fed. Appx. 336, 2013 U.S. App. LEXIS 4300 (4th Cir. 2013).

Borrowers had not alleged, nor could they, that defendant trustee had any basis for asserting a competing ownership claim to the property; the trustee was properly appointed under the deed of trust, and had authority to act as substitute trustee and to perform the attendant duties authorized by Virginia law. McFadden v. Fannie Mae, 525 Fed. Appx. 223, 2013 U.S. App. LEXIS 10067 (4th Cir. 2013).

C.Right of Trustee to Compensation and Expenses.

Compensation is controlled by deed or by this section. —

The compensation is determined either by the contract in the deed itself, or by this section, which controls where there is no specific agreement. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

In Virginia, if the terms of an indenture trustee’s compensation are not specified in the trust document, his compensation is controlled by statute. In re Manning, 43 Bankr. 712, 1984 Bankr. LEXIS 4692 (Bankr. W.D. Va. 1984).

Commission may not be fixed by deed of trust without determining reasonableness. —

An indentured trustee’s commission may not be fixed by a deed of trust without due consideration by the bankruptcy court as to what fee is reasonable under the circumstances where the proposed foreclosure and sale of the property has been stayed by the filing of a Chapter 13 petition. In re Manning, 43 Bankr. 712, 1984 Bankr. LEXIS 4692 (Bankr. W.D. Va. 1984).

Under this section compensation is conditioned upon sale. —

In this section provision is made for compensation of the trustee in case he sells the property under the deed of trust. For this service and for no other the statute provides, and that provision controls unless, as allowed by the statute, there are other provisions in the deed for the compensation of the trustee. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924) (see Littleton v. Kincaid, 179 F.2d 848 (4th Cir.), cert. denied, 340 U.S. 809, 71 S. Ct. 38, 95 L. Ed. 595 (1950)).

But trustee is entitled to be reimbursed for expenses. —

A trustee who in good faith engages the services of counsel to aid him in the exercise of his duties is entitled to pay them out of the trust fund, or to be reimbursed out of that fund for all expenses which he has incurred, including reasonable fees to attorneys, notwithstanding that he has made no sale so as to be entitled to the compensation provided by this section. Stull v. Harvey, 112 Va. 816 , 72 S.E. 701 , 1911 Va. LEXIS 155 (1911).

The accepted rule is that the court shall exercise just discretion and make or withhold allowances as the peculiar circumstances require. Littleton v. Kincaid, 179 F.2d 848, 1950 U.S. App. LEXIS 3441 (4th Cir.), cert. denied, 340 U.S. 809, 71 S. Ct. 36, 95 L. Ed. 595, 1950 U.S. LEXIS 1601 (1950), cert. denied, 340 U.S. 809, 71 S. Ct. 38, 95 L. Ed. 595 (1950).

Effect of sale by debtor. —

Where a debtor has given a deed of trust to secure the payment of his debt, under ordinary circumstances he always has the right to sell the property himself to pay his debt. Generally, when there has been no sale by the trustee, the trustee has no claim for compensation. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

Compensation to trustee of executory trust. —

A trustee, chosen to hold a legal title as a mere security for debt, with power to sell in case of default, possession to remain with the grantor and not the trustee, is not entitled to invoke the jurisdiction of a court of equity to adjudicate his compensation, when he has not been and may never be called upon to execute the trust. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

If the trust had been either partly or completely executed, and the trustee had then invoked the jurisdiction of equity for the settlement of his accounts, or its direction as to the distribution of the trust fund, or the court had acquired jurisdiction over the estate upon any equitable ground, then unquestionably the court would consider and determine the amount of the trustee’s compensation for all the services previously rendered. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

Compensation for holding insurance policy. —

The holding of insurance policies on the property conveyed by the trustee in a deed of trust was a mere incidental service, for which the trustee was not entitled to compensation from the creditors secured or from the property, where the grantor, not the creditors, covenanted to keep the property insured. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924) (see § 55-60, subdivision (8)).

For countersigning bonds. —

Where no compensation was provided for the countersigning of bonds for the purpose of identification, such act being expressly required of the trustee, while this service could not be required without compensation, yet when it was rendered without expressed or implied agreement for compensation it must be regarded as voluntary, either as incidental to the acceptance of the trusteeship or as satisfied by the anticipated compensation in case there should be a default and sale. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

For representing beneficiaries in bankruptcy. —

Where a trustee in a deed of trust appeared for the beneficiaries under the deed in bankrupt proceedings against the grantor, but the grantees failed to file proofs of their claim, choosing to rely upon the security afforded by the deed, the grantees cannot be held personally liable for attorney’s fees, nor was the property pledged liable. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

The trustee is entitled to compensation whether his services were rendered as attorney or as trustee. But a court is only justified in paying attorney’s fees out of the trust fund under its control where parties in interest have stood by without counsel, and reaped benefits by reason of the efforts of counsel with whom they were not in privity. Dillard v. Serpell, 138 Va. 694 , 123 S.E. 343 , 1924 Va. LEXIS 60 (1924).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Substitute trustee. —

Corporation’s deed of trust was inferior to the lien of a partnership’s deed of trust because the lien of the partnership deed of trust was not effectively released and was a first lien on a golf course; the partnership had the authority under its deed of trust and subdivision 9 of § 55-59 to substitute trustees. Bristol County Ret. Sys. v. Senior Tour Players Fund I, L.P., 2006 Va. Cir. LEXIS 337 (Loudoun County Mar. 10, 2006).

Demurrer filed by the beneficiary of a deed of trust was sustained in a mortgagor’s action seeking a declaratory judgment that the foreclosure of her property was unlawful and alleging that the beneficiary did not have authority to appoint a substitute trustee because the deed of trust specifically authorized the beneficiary to appoint a substitute trustee to conduct foreclosure proceedings; when a deed of trust provides otherwise the statutory requirements in § 55-59 are inapplicable. Graves v. Mortg. Elec. Registration Sys., 96 Va. Cir. 457, 2011 Va. Cir. LEXIS 97 (Fairfax County June 29, 2011).

Deeds of trust permitted a bank to appoint a limited liability company to serve as substitute trustee because there was no language in the deeds of trust indicating that the parties intended otherwise; the statute clearly contemplates that limited liability companies without residences may serve as substitute trustees under deeds of trust. Southern Bank & Trust Co. v. Woodhouse, 92 Va. Cir. 402, 2016 Va. Cir. LEXIS 81 (Norfolk May 26, 2016).

Deeds of trust permitted a bank to appoint a limited liability company to serve as substitute trustee because there was no language in the deeds of trust indicating that the parties intended otherwise; nothing in the deeds of trust suggested that the parties intended to limit the bank to using individual persons rather than corporate trustees. Southern Bank & Trust Co. v. Woodhouse, 92 Va. Cir. 402, 2016 Va. Cir. LEXIS 81 (Norfolk May 26, 2016).

No authority to enjoin substitute trustee. —

County board of supervisors was not entitled to enjoin a substitute trustee from foreclosing on an affordable dwelling unit (ADU) because there was no authority under the deed of trust or § 55-59 to enjoin the substitute trustee from selling the property at public auction to the highest bidder when the buyer of the property defaulted. Moreover, nothing in county ordinances or the ADU covenants at the time the property was transferred altered this requirement, as an added covenant and amendment to the ordinances could not be applied retroactively to the buyer. Loudoun County Bd. of Supervisors v. Jefferson, 83 Va. Cir. 464, 2011 Va. Cir. LEXIS 226 (Loudoun County Oct. 20, 2011).

Deed interpretation. —

Deed of trust, which granted the holder of a note the power to appoint a trustee or substitute trustee, but did not grant that appointee the ability to appoint an agent or to not be present at the foreclosure sale, also allowed the holder to render said sale voidable. Wachovia Bank, N.A. v. Van Huyck, 64 Va. Cir. 306, 2004 Va. Cir. LEXIS 180 (Norfolk Apr. 1, 2004).

Duties arose by virtue of contractual relationship. —

Property owners failed to assert a valid claim for negligence against a trustee because the duties of impartiality and ordinary care of a fiduciary the trustee allegedly breached arose by virtue of the parties’ contractual relationship under a deed of trust, which constituted a contract under § 55-59, and not the common law; but for the existence of the deed of trust, the trustee would not have owed any fiduciary duties to the owners, and since the trustee had no relationship with the owners absent the deed of trust, any fiduciary duty allegedly breached existed solely because of that contractual relationship. Salazar v. US Bank NA, 82 Va. Cir. 344, 2011 Va. Cir. LEXIS 30 (Fairfax County Mar. 9, 2011).

Deed of trust did not create duty. —

Demurrer filed by a law firm and an attorney was sustained in investors’ action alleging legal malpractice because the investors failed to allege any privity between the parties; the deed of trust did not create an attorney-client relationship or a duty to the investors, other than the specific duties set out in the deed of trust and § 55-59. Sellman v. Florance Gordon Brown, P.C., 2010 Va. Cir. LEXIS 319 (Richmond Nov. 18, 2010).

Judgment was entered in favor of foreclosure trustees on a corporation’s third-party claim alleging that they breached their obligations and duties because neither the deed of trust and guaranty agreement nor § 55-59 listed any of the duties the corporation and guarantors would have imposed on the trustees in foreclosure sales. W. Harold Talley I, L.L.C. v. North Richmond Investments, Inc., 84 Va. Cir. 1, 2011 Va. Cir. LEXIS 268 (Richmond Oct. 20, 2011).

Bank’s response. —

Under 12 U.S.C.S. § 2605(e)(2)(C), a bank’s response was adequate to meet its obligation as servicer to the loan, because it sent a timely response, explained the reason for any missing information, and provided contact information to answer any additional questions. Buzbee v. United States Bank, N.A., 84 Va. Cir. 485, 2012 Va. Cir. LEXIS 39 (Fairfax County May 2, 2012).

Default. —

Corporation and guarantors were held properly in default, and the amounts due accelerated, triggering foreclosure because both the deed of trust and the guaranty agreement described default as a failure to pay the agreed upon amounts at the agreed upon time on a monthly basis. W. Harold Talley I, L.L.C. v. North Richmond Investments, Inc., 84 Va. Cir. 1, 2011 Va. Cir. LEXIS 268 (Richmond Oct. 20, 2011).

I.[Reserved.]

II.Decided Under Prior Law.

Both this section and § 55-59.2 were adopted as part of single enactment, Acts 1979, c. 12. But there is a significant difference between them. After providing for written notice to the debtor, this section provides: “Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale under the deed of trust . . . .” Section 55-59.2, although a part of the same act, contains no such ameliorative language in case of failure to follow its mandatory time periods. It is apparent that the General Assembly intended that different consequences would flow from violations of these respective sections. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Purchaser’s knowledge of notice to debtor of foreclosure sale. —

It might be difficult for a purchaser at a foreclosure sale to ascertain whether 14 days’ personal notice had been given to the debtor as required by this section, and the legislature, undoubtedly for that reason, relieved the purchaser of the consequences of the trustee’s failure in that respect. By contrast, a purchaser who has been attracted to a sale by a series of newspaper advertisements has ready means of ascertaining whether the sale falls within the prescribed time period after publication, as required by § 55-59.2. If the sale falls without that period, he need not bid. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Right of acceleration in deed of trust. —

While a notice of a foreclosure sale may act as the exercise of the “right of acceleration” under a deed of trust, subsection A of § 55-59.1 does not establish a statutory mandate as to whether such “right of acceleration” is in existence and capable of being exercised by the foreclosure notice. Such a determination remains a matter of contract between the parties. Bayview Loan Servicing, LLC v. Simmons, 275 Va. 114 , 654 S.E.2d 898, 2008 Va. LEXIS 20 (2008).

Where condition precedent for acceleration in deed of trust is not fulfilled, there is no right to accelerate or foreclose. While subsection A of § 55-59.1 allowed a notice of foreclosure sale to act as an exercise of the right of acceleration, as the holder of mortgage failed to fulfill a contractual condition precedent that would have given it such a right, serving the mortgagor or sending her by certified mail a notice of breach and intent to accelerate, its right to accelerate and to foreclose never matured, and it was liable to the mortgagor for the equity she lost in the foreclosure sale. Bayview Loan Servicing, LLC v. Simmons, 275 Va. 114 , 654 S.E.2d 898, 2008 Va. LEXIS 20 (2008).

Sale held valid. —

Where holder of mechanic’s lien asserts that third party which had interest in property sold at foreclosure sale did not receive notice of sale, this section provides such a sale is nevertheless valid. Nelson White Constr. Mgt. Corp. v. McConaghy, 15 Bankr. 480, 1981 Bankr. LEXIS 2564 (Bankr. E.D. Va. 1981).

Requisite notice provided. —

Defendant did not fail to provide requisite notice of a foreclosure sale because the notice of sale indicated that it was mailed to plaintiff more than fourteen days prior to the sale pursuant to subsection A of § 55-59.1; the notice of sale was published once a week for two successive weeks as required by the deed of trust, and the foreclosure sale was then held more than eight days following the first advertisement and less than thirty days following the last advertisement, as required by subdivision A 2 of § 55-59.2.Gallant v. Deutsche Bank Nat'l Trust Co., 766 F. Supp. 2d 714, 2011 U.S. Dist. LEXIS 10209 (W.D. Va. 2011).

Defendant’s inability to produce the original note did not render a foreclosure sale invalid because the note was freely transferable without prior notice under Virginia law, and plaintiff’s claim that a secured party was required to prove its authority or standing to foreclose on the secured property was contrary to the Virginia non-judicial foreclosure laws; by signing the deed of trust, plaintiff specifically acknowledged that “the note or a partial interest in the note (together with the security instrument) could be sold one or more times without prior notice to borrower.” Gallant v. Deutsche Bank Nat'l Trust Co., 766 F. Supp. 2d 714, 2011 U.S. Dist. LEXIS 10209 (W.D. Va. 2011).

Requisite notice not provided. —

Mortgage lender’s acceleration notice pursuant to § 55-59.1 did not excuse the lender from sending notice as required by the deed of trust, which contained “prior to” acceleration language and provided requirements that went beyond those set out in § 55-59.1.Bennett v. Bank of Am., N.A., No. 3:12CV34-HEH, 2012 U.S. Dist. LEXIS 54725 (E.D. Va. Apr. 18, 2012).

Although Virginia did not recognize claims for wrongful foreclosure, because defendant failed to provide adequate notice of its foreclosure, plaintiff could cite this statute along with additional facts to plead a tort action related to that failure upon which relief could be granted. Yerion v. Branch Banking & Trust Co., 27 F. Supp. 3d 677, 2014 U.S. Dist. LEXIS 87345 (E.D. Va. 2014).

“Standing.” —

Argument by plaintiff homeowners that defendant financial institutions and lender servicers could not demonstrate standing to institute a foreclosure because they could not prove U.S. Const., Art. III injury failed to the extent “standing” was used to refer to the requirement that a secured party first prove in court its right to initiate a foreclosure before the procedure commences, because Virginia, the state in which the foreclosure took place, was a non-judicial foreclosure state with such foreclosures being governed by the procedures and requirements of §§ 55-59.1, 55-59.2, 55-59.3, and 55-59.4, and such non-judicial foreclosures did not require an interested party to prove “standing” in a court of law before initiating the foreclosure process. Tapia v. United States Bank, N.A., 718 F. Supp. 2d 689, 2010 U.S. Dist. LEXIS 62448 (E.D. Va. 2010).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Purchaser’s knowledge of notice to debtor of foreclosure sale. —

Lender, and hence the assignee, were responsible for the misnomer on the deed of trust because their borrower’s name was typed incorrecly on the loan documents. Because lender enjoyed no protection from subsection A of § 55-59.1, bank was granted declaratory judgment and the property, now owned by the assignee, nonetheless remained subject to the bank’s deed of trust. SunTrust Bank v. Wells Fargo Bank, N.A., 79 Va. Cir. 115, 2009 Va. Cir. LEXIS 58 (Fairfax County June 24, 2009).

Adequate notice. —

Mortgagors received adequate notice of foreclosures because the substitute trustee was properly appointed when it mailed the foreclosure notices since the appointment of the substitute trustee became effective upon the execution of the deed of appointment. Southern Bank & Trust Co. v. Woodhouse, 92 Va. Cir. 402, 2016 Va. Cir. LEXIS 81 (Norfolk May 26, 2016).

Bank’s response valid. —

Under 12 U.S.C.S. § 2605(e)(2)(C), a bank’s response was adequate to meet its obligation as servicer to the loan, because it sent a timely response, explained the reason for any missing information, and provided contact information to answer any additional questions. Buzbee v. United States Bank, N.A., 84 Va. Cir. 485, 2012 Va. Cir. LEXIS 39 (Fairfax County May 2, 2012).

Violation of § 8.3A-309 has no effect on creditor’s right to foreclosure. —

Bank was in violation of § 8.3A-309 , which provided that lost negotiable instruments were only enforceable by persons who were in possession of the instrument when it was lost, because the bank conceded that it was not in possession of the promissory note a mortgagor executed and that a prior holder lost the note, but the bank’s violation of § 8.3A-309 did not extinguish the mortgagor’s debt obligation; the deed of trust remained valid and enforceable through foreclosure, and the bank’s violation of § 8.3A-309 had no effect on its right to foreclose under the deed of trust pursuant to § 55-59.1.Benkahla v. White, 82 Va. Cir. 116, 2011 Va. Cir. LEXIS 2 (Fairfax County Jan. 18, 2011).

Violation of § 8.3A-309 does not extinguish a borrowers debt obligation, it merely precludes the creditor from enforcing a security as a negotiable instrument under the Virginia Uniform Commercial Code, and a violation of § 8.3A-309 , by itself, has no effect on a creditors foreclosure action under Virginia’s foreclosure laws; enforcement of a promissory note and enforcement of a security instrument are separate and distinct remedies governed by different laws, and a creditor’s foreclosure on a security property is governed by Virginia’s foreclosure statutes and not by Virginia’s Uniform Commercial Code. Benkahla v. White, 82 Va. Cir. 116, 2011 Va. Cir. LEXIS 2 (Fairfax County Jan. 18, 2011).

Sale held valid. —

When the owner of mortgaged property died, and the mortgagee sent notice of a foreclosure sale to the deceased owner at the property’s address, this notice was sufficient under subsection A of § 55-59.1, because it was sent to the owner’s last known address, as it appeared in the mortgagee’s records, so the foreclosure sale was valid. SunTrust Bank v. Wright, 63 Va. Cir. 396, 2003 Va. Cir. LEXIS 205 (Roanoke Nov. 12, 2003).

When the owner of mortgaged property died, and the mortgagee sent notice of a foreclosure sale to the deceased owner at the property’s address, if the notice was insufficient, under subsection A of § 55-59.1, the foreclosure sale was still valid, under the provisions of subsection B of § 55-59.1.SunTrust Bank v. Wright, 63 Va. Cir. 396, 2003 Va. Cir. LEXIS 205 (Roanoke Nov. 12, 2003).

Mere appointment of a foreign corporation, who did not qualify as a trustee, together with a Virginia corporation as co-trustees did not render two foreclosure sales invalid and, therefore, an exception to a commissioner’s report invalidating the sales was sustained since the otherwise qualified co-trustee was a Virginia corporation. In re Trustee's Sale, 67 Va. Cir. 204, 2005 Va. Cir. LEXIS 182 (Norfolk Mar. 25, 2005).

I.[Reserved.]

II.Decided Under Prior Law.

This section evidences strong legislative concern with the sufficiency of advertisements preceding foreclosure sales, with a purpose to insure a degree of publication that will generate sufficient interest to obtain the highest price available as well as to offer the debtor a reasonable time to redeem the debt. That legislative concern has increased with the passage of time. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Both § 55-59.1 and this section were adopted as part of single enactment, Acts 1979, c. 12. But there is a significant difference between them. After providing for written notice to the debtor, § 55-59.1 provides: “Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale under the deed of trust . . . .” This section, although a part of the same act, contains no such ameliorative language in case of failure to follow its mandatory time periods. It is apparent that the General Assembly intended that different consequences would flow from violations of these respective sections. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Purchaser’s knowledge of notice to debtor of foreclosure sale. —

It might be difficult for a purchaser at a foreclosure sale to ascertain whether 14 days’ personal notice had been given to the debtor as required by § 55-59.1, and the legislature, undoubtedly for that reason, relieved the purchaser of the consequences of the trustee’s failure in that respect. By contrast, a purchaser who has been attracted to a sale by a series of newspaper advertisements has ready means of ascertaining whether the sale falls within the prescribed time period after publication, as required by § 55-59.2. If the sale falls without that period, he need not bid. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Duty to give public notice of sale is contractual and statutory. —

Deed of trust expressly set out the amount of advertising that must precede the foreclosure sale, and the minimum amount of advertising necessary under the deed of trust mirrored the minimum requirements stated in the statute, plus the contents of the advertisements were governed by § 55-59.3; the duty to give public notice of the sale by advertising is both contractual and statutory, and not an implied fiduciary duty. Crosby v. ALG Trustee, LLC, 296 Va. 561 , 822 S.E.2d 185, 2018 Va. LEXIS 196 (2018).

Minimum and maximum periods between advertisement and sale are mandatory. —

It is apparent from the language of this section, that the 8-day minimum and 30-day maximum periods between advertisement and sale are intended to be mandatory, overriding both the discretion of the trustee and the contractual terms adopted by the parties to the deed of trust. In this crucial respect, the statute before us differs from all its predecessors. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Sales made in violation of this section’s mandatory time periods are void, not merely voidable. The result is to render the sale ineffectual. No title, legal or equitable, passes to the purchaser. Deep v. Rose, 234 Va. 631 , 364 S.E.2d 228, 4 Va. Law Rep. 1601, 1988 Va. LEXIS 1 (1988).

Compliance with publication requirements. —

Although the borrower alleged that defendants violated the federal publication requirements for foreclosure sales pursuant to 12 U.S.C.S. § 3758(3)(A), the Single Family Mortgage Foreclosure Act of 1994 (SFMFA), 12 U.S.C.S. § 3751 et seq., was not applicable because the borrower’s loan was not a federal loan or a federally secured loan and even if the SFMFA was applicable, defendants complied with Virginia law when they adhered to publication requirements contained in the deed of trust. Mubeidin v. Homecomings Fin. Network, Inc., No. 7:05CV00794, 2006 U.S. Dist. LEXIS 1112 (W.D. Va. Jan. 9, 2006), aff'd, 183 Fed. Appx. 318, 2006 U.S. App. LEXIS 13367 (4th Cir. 2006).

Defendant did not fail to provide requisite notice of a foreclosure sale because the notice of sale indicated that it was mailed to plaintiff more than fourteen days prior to the sale pursuant to subsection A of § 55-59.1; the notice of sale was published once a week for two successive weeks as required by the deed of trust, and the foreclosure sale was then held more than eight days following the first advertisement and less than thirty days following the last advertisement, as required by subdivision A 1 of § 55-59.2.Gallant v. Deutsche Bank Nat'l Trust Co., 766 F. Supp. 2d 714, 2011 U.S. Dist. LEXIS 10209 (W.D. Va. 2011).

“Standing.” —

Argument by plaintiff homeowners that defendant financial institutions and lender servicers could not demonstrate standing to institute a foreclosure because they could not prove U.S. Const., Art. III injury failed to the extent “standing” was used to refer to the requirement that a secured party first prove in court its right to initiate a foreclosure before the procedure commences, because Virginia, the state in which the foreclosure took place, was a non-judicial foreclosure state with such foreclosures being governed by the procedures and requirements of §§ 55-59.1, 55-59.2, 55-59.3, and 55-59.4, and such non-judicial foreclosures did not require an interested party to prove “standing” in a court of law before initiating the foreclosure process.. Tapia v. United States Bank, N.A., 718 F. Supp. 2d 689, 2010 U.S. Dist. LEXIS 62448 (E.D. Va. 2010).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Notice. —

Creditor’s motion to plea in bar of the statute of limitations was denied because constructive notice could not begin on the date a deed of trust was filed without evidence that would give rise to a duty for the debtor to conduct a records search at the clerk’s office; although notice would have been sufficient when the trustee sale was first advertised, a second advertisement did not run creating a question of valid notice to the creditor. U.S. Bank Nat'l Ass'n v. Clay, 2017 Va. Cir. LEXIS 82 (Newport News May 11, 2017).

I.[Reserved.]

II.Decided Under Prior Law.

Advertisement of sale gave sufficient notice to possible buyers. —

Trustee’s advertisement of sale under deed of trust gave adequate notice to debtor and any potential 3rd-party bidder that both real and personal property would be sold as part of the foreclosure, where the notes and deed of trust clearly made reference to real and personal property as collateral for the loan and where the advertisement referred to the deed of trust for a description of the property to be sold and expressly stated that the personal property would be conveyed by the bill of sale. Virginia Hous. Dev. Auth. v. Fox Run Ltd. Partnership, 255 Va. 356 , 497 S.E.2d 747, 1998 Va. LEXIS 45 (1998).

Duty to give public notice of sale is contractual and statutory. —

Deed of trust expressly set out the amount of advertising that must precede the foreclosure sale, and the minimum amount of advertising necessary under the deed of trust mirrored the minimum requirements stated in the statute, plus the contents of the advertisements were governed by § 55-59.3; the duty to give public notice of the sale by advertising is both contractual and statutory, and not an implied fiduciary duty. Crosby v. ALG Trustee, LLC, 296 Va. 561 , 822 S.E.2d 185, 2018 Va. LEXIS 196 (2018).

Substantial compliance with this section is sufficient so long as the rights of the parties are not affected in any material way. Riley v. Robey, 122 F. Supp. 2d 684, 2000 U.S. Dist. LEXIS 17426 (W.D. Va. 2000).

District court did not err in concluding that the advertisement relative to a property substantially complied with § 55-59.3, as defendant mortgage holder’s advertisement of sale included a description of the property, the only address listed in the deed of trust, and a reference to the deed book and page number where the deed of trust could be found, and even assuming error in the advertisement, plaintiff failed to demonstrate material prejudice, as she presented no evidence to support her conclusion that the failure to include both addresses in the sale notice prejudiced the sale against obtaining the best price. Wood v. MorEquity, Inc., 331 Fed. Appx. 243, 2009 U.S. App. LEXIS 10906 (4th Cir. 2009).

Failure to include street address not fatal. —

Publication in the notice of sale of a description of the property, combined with the mailing address as listed in the deed of trust and reference to the deed book for further descriptions of the property, constituted substantial compliance with the notice requirements of this section and the failure to include the street address did not affect the owner’s rights in any material way or invalidate the sale. Riley v. Robey, 122 F. Supp. 2d 684, 2000 U.S. Dist. LEXIS 17426 (W.D. Va. 2000).

“Standing.” —

Argument by plaintiff homeowners that defendant financial institutions and lender servicers could not demonstrate standing to institute a foreclosure because they could not prove U.S. Const., Art. III injury failed to the extent “standing” was used to refer to the requirement that a secured party first prove in court its right to initiate a foreclosure before the procedure commences, because Virginia, the state in which the foreclosure took place, was a non-judicial foreclosure state with such foreclosures being governed by the procedures and requirements of §§ 55-59.1, 55-59.2, 55-59.3, 55-59.4, and such non-judicial foreclosures did not require an interested party to prove “standing” in a court of law before initiating the foreclosure process. Tapia v. United States Bank, N.A., 718 F. Supp. 2d 689, 2010 U.S. Dist. LEXIS 62448 (E.D. Va. 2010).

I.[Reserved.].

II.Decided Under Prior Law.

Construction. —

Only statute that addresses the trustee’s duties with regard to a foreclosure sale expressly indicates that it does not cover the entire field of duties the trustee has in this area; the statute states that in the event of sale under a deed of trust, the trustee shall have the following powers and duties in addition to all others, and this language clearly indicates that the legislature did not intend to limit a trustee’s powers and duties to those enumerated in the statute. Crosby v. ALG Trustee, LLC, 296 Va. 561 , 822 S.E.2d 185, 2018 Va. LEXIS 196 (2018).

This section is permissive, authorizing but not mandating a deposit requirement. Such a requirement is solely for the trustee’s protection, and the trustee had authority to impose it or to waive it at his discretion. Yaffe v. Heritage Sav. & Loan Ass'n, 235 Va. 577 , 369 S.E.2d 404, 4 Va. Law Rep. 3093, 1988 Va. LEXIS 74 (1988).

Where the deposit requirement was never made a condition precedent to the sale and the trustee waived the deposit requirement by recording the sale without a deposit and demanding settlement, an advertisement which contained the words: “Cash. Bidder’s deposit of 10% of the bid price may be required” did not relieve bidder who failed to make payment at trustee’s sale. Yaffe v. Heritage Sav. & Loan Ass'n, 235 Va. 577 , 369 S.E.2d 404, 4 Va. Law Rep. 3093, 1988 Va. LEXIS 74 (1988).

Deposit to be paid after bidding. —

The ten percent deposit this section permits a trustee to demand is not required prior to the bidding on the property at auction but after the sale price is determined. Riley v. Robey, 122 F. Supp. 2d 684, 2000 U.S. Dist. LEXIS 17426 (W.D. Va. 2000).

Continuation of lien in proceeds of foreclosure sale. —

Because the debtor’s divorce decree awarded creditor ex-wife $190,000 as an equitable distribution award and it was to be paid from the sale of the marital home, with child support addressed in a separate section under a separate title, the equitable distribution award was not entitled to 11 U.S.C.S. § 507(a)(1)(A) priority, however, since the award was secured by the marital home and the marital home was sold in a foreclosure, the ex-wife’s lien continued in the proceeds of the sale after payment of the mortgage. In re Uzaldin, 418 Bankr. 166, 2009 Bankr. LEXIS 3447 (Bankr. E.D. Va. 2009).

“Standing.” —

Argument by plaintiff homeowners that defendant financial institutions and lender servicers could not demonstrate standing to institute a foreclosure because they could not prove U.S. Const., Art. III injury failed to the extent “standing” was used to refer to the requirement that a secured party first prove in court its right to initiate a foreclosure before the procedure commences, because Virginia, the state in which the foreclosure took place, was a non-judicial foreclosure state with such foreclosures being governed by the procedures and requirements of §§ 55-59.1, 55-59.2, 55-59.3, and 55-59.4, and such non-judicial foreclosures did not require an interested party to prove “standing” in a court of law before initiating the foreclosure process. Tapia v. United States Bank, N.A., 718 F. Supp. 2d 689, 2010 U.S. Dist. LEXIS 62448 (E.D. Va. 2010).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

“Reasonable commission” to be paid. —

Reasonable commission for a trustee under a deed of trust conducting a foreclosure sale was $9,180 on a sale price of $409,000 pursuant to § 55-59.4, which allowed a “reasonable commission.” The trustee, who had paid himself five percent of the sale price, was ordered to return $11,270. Exceptions to the Comm'r of Account's Report on Account of Sale of Prop. Located at 401 Princess Anne Rd., 79 Va. Cir. 664, 2009 Va. Cir. LEXIS 137 (Virginia Beach Nov. 8, 2009).

Buyer’s remedy. —

Substitute trustee’s demurrer to a buyer’s complaint was sustained because although the memorandum or agreement of sale limited the buyer’s remedy to the refund of her deposit, it allowed the trustee plenary rights or remedies of recovery when the deposit was forfeited; that redirection of payment contra to the statute could mean that the trustee could pursue a claim against the buyer, which it could not have had if the net balance had gone directly to the trustee as compensation. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2012 Va. Cir. LEXIS 211 (Northumberland County June 12, 2012), dismissed in part, 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

Buyer’s premium. —

Memorandum or agreement of sale could be shown to be void because the trustee exceeded its legal authority at the sale by imposing an unannounced surcharge in the form of a buyer’s premium on the sales price; without factual evidence, the way in which the buyer’s premium was to be applied in the sale was not known, and thus, the trustee’s demurrer to the buyer’s claim that the memo was void was overruled. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2012 Va. Cir. LEXIS 211 (Northumberland County June 12, 2012), dismissed in part, 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

Trustee owed no fiduciary duty to buyer. —

Substitute trustee owed no fiduciary duty to a buyer because the Trustee was not the agent of the buyer, and no statute embodied as public policy the goal of protecting bidders at a foreclosure sale from trustee fraud;.Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2012 Va. Cir. LEXIS 211 (Northumberland County June 12, 2012), dismissed in part, 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

“Standing.” —

Purchaser did not have standing to complain about the application of a forfeited deposit because the purchaser failed to allege any detriment or prejudice to herself for signing an agreement that varied the application of her forfeited deposit from that provided in the statute; the purchaser was not a party to the deed of trust but only to the memo seeking the sole remedy to which she was contractually entitled upon default by the trustee, the refund of her deposit. Hu v. CorpServe, Inc., 88 Va. Cir. 450, 2013 Va. Cir. LEXIS 147 (Westmoreland County Feb. 26, 2013).

I.[Reserved.]

II.Decided Under Prior Law.

This section and § 55-59 do not affect the determination of lien priorities, but merely define certain language employed in the deed of trust. W.T. Jones & Co. v. Foodco Realty, Inc., 318 F.2d 881, 1963 U.S. App. LEXIS 5236 (4th Cir. 1963).

Time price differential as “interest.” —

Although a time price differential is not interest for purposes of the usury statutes, under any interpretation it represents a charge for credit and this section does not require a construction so narrow as to exclude such charges from the term “interest.” GECC v. Lunsford, 209 Va. 743 , 167 S.E.2d 414, 1969 Va. LEXIS 171 (1969).

Case applying to subdivision 5. —

Thompson v. Miller, 195 Va. 513 , 79 S.E.2d 643, 1954 Va. LEXIS 129 (1954).

I.[Reserved.]

II.Decided Under Prior Law.

This section merely prescribes a permissible form of notice. Bailey v. Pioneer Fed. Sav. & Loan Ass'n, 210 Va. 558 , 172 S.E.2d 730, 1970 Va. LEXIS 162 (1970).

Notice need not carry names of grantors. —

There is no statutory requirement that the names of the grantors in a deed of trust be carried in the notice of sale. Bailey v. Pioneer Fed. Sav. & Loan Ass'n, 210 Va. 558 , 172 S.E.2d 730, 1970 Va. LEXIS 162 (1970).

I.[Reserved.]

II.Decided Under Prior Law.

Motion to reopen. —

Debtor’s motion to reopen her closed chapter 7 case, pursuant to 11 U.S.C.S. § 350(b), was granted for the court to determine whether creditor, an assignee of debtor’s mortgage, had violated the discharge injunction under 11 U.S.C.S. § 524(a)(2), in commencing foreclosure proceedings, although no recordation was required under § 55-66.01.In re Roberts, No. 10-51861, 2013 Bankr. LEXIS 1859 (Bankr. W.D. Va. Apr. 1, 2013).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Recordation not required. —

Mortgagee’s demurrer to a mortgagor’s claim that the mortgagee did not hold a deed of trust note when appointing a trustee was sustained because (1) the lack of a recorded document evidencing a transfer of the note to the mortgagee proved nothing, as the transfer did not have to be recorded, and (2) the appointment of substitute trustee showed the mortgagee held the note at the foreclosure sale, so, between an assignment to a prior mortgagee and the foreclosure sale, the mortgagee acquired the note in an unrecorded transaction, and the mortgagor had no basis to claim that acquisition followed, rather than preceded, the appointment of a substitute trustee. Burgest v. HSBC Bank, USA, N.A., 91 Va. Cir. 266, 2016 Va. Cir. LEXIS 16 (Norfolk Feb. 26, 2016).

I.[Reserved.]

II.Decided Under Prior Law.

Requisites for release. —

In order to obtain a release under this section there must be a concurrence of two separate and distinct acts: (1) The lien creditor must cause the payment or satisfaction to be entered on the margin of the page of the book where the encumbrance is recorded, signed by the creditor, or his duly authorized agent or attorney; and (2) the evidence of debt, duly canceled, must be produced before the clerk, or an affidavit filed with the clerk that the debt has been paid and the evidence of debt canceled or lost or destroyed. Waynesboro Nat'l Bank v. Smith, 151 Va. 481 , 145 S.E. 302 , 1928 Va. LEXIS 248 (1928).

Although a certificate of release of deed of trust executed by a noteholder with respect to a debtor’s property did not literally follow any of the statutory forms in § 55-66.4:1, the court had little difficulty in concluding that the certificate, even though omitting the word “partial” in its title, did not release the deed of trust in its entirety but only as to the debtor’s other property. Bank of N.Y. Mellon Trust Co., N.A. v. Botero-Paramo, 445 Bankr. 530, 2011 Bankr. LEXIS 447 (Bankr. E.D. Va. 2011), aff'd, 483 Fed. Appx. 779, 2012 U.S. App. LEXIS 11688 (4th Cir. 2012).

While defendant creditor’s release of a refinancing deed of trust did not comply exactly with either a “Certificate of Satisfaction” or a “Certificate of Partial Satisfaction” under § 55-66.3, its plain language showed it applied only to a lien against one property, and because it was recorded earlier than plaintiff creditor’s lien, it had priority on the other property. Bank of N.Y. Mellon Trust Co., N.A. v. Tysons Fin., LLC, 483 Fed. Appx. 779, 2012 U.S. App. LEXIS 11688 (4th Cir. 2012).

Effect of payment by insurance company of debt secured. —

The fact that an insurance company discharged its liability to a mortgagee by paying off the debt secured and became subrogated to the rights of the mortgagee, but denied liability to the mortgagor, does not show such a discharge under this section as to sustain a cancellation of the deed of trust. Wagner v. Peters, 142 Va. 412 , 128 S.E. 445 , 1925 Va. LEXIS 347 (1925) (see note to this case under § 55-66.5).

Guarantors not released. —

Certificate of satisfaction did not release guarantors as a matter of Virginia law in the bank’s action to collect on a deficiency judgment because the guaranties specifically provided that the release of any property connected to the debt was not a release of the guarantors’ obligations. U.S. Bank Nat'l Ass'n v. Zarrabi, 560 Fed. Appx. 181, 2014 U.S. App. LEXIS 4407 (4th Cir. 2014).

Statute of limitations. —

Claim based on creditor’s failure to timely release a lien against a consumer’s residence after the underlying debt obligation was satisfied was barred by the statute of limitations, since the limitations period began to run when the creditor failed to file a certificate of satisfaction within the statutory period after payment rather than when the consumer demanded that the creditor record a certificate of satisfaction. Poindexter v. Mercedes-Benz Credit Corp., 792 F.3d 406, 2015 U.S. App. LEXIS 11650 (4th Cir. 2015).

I.[Reserved.]

II.Decided Under Prior Law.

Requisites for release. —

Although a certificate of release of deed of trust executed by a noteholder with respect to a debtor’s property did not literally follow any of the statutory forms in § 55-66.4:1, the court had little difficulty in concluding that the certificate, even though omitting the word “partial” in its title, did not release the deed of trust in its entirety but only as to the debtor’s other property. Bank of N.Y. Mellon Trust Co., N.A. v. Botero-Paramo, 445 Bankr. 530, 2011 Bankr. LEXIS 447 (Bankr. E.D. Va. 2011), aff'd, 483 Fed. Appx. 779, 2012 U.S. App. LEXIS 11688 (4th Cir. 2012).

While defendant creditor’s release of a refinancing deed of trust did not comply exactly with either a “Certificate of Satisfaction” or a “Certificate of Partial Satisfaction,” its plain language showed it applied only to a lien against one property, and because it was recorded earlier than plaintiff creditor’s lien, it had priority on the other property. Bank of N.Y. Mellon Trust Co., N.A. v. Tysons Fin., LLC, 483 Fed. Appx. 779, 2012 U.S. App. LEXIS 11688 (4th Cir. 2012).

I.[Reserved.]

II.Decided Under Prior Law.

Requisites for release. —

Although a certificate of release of deed of trust executed by a noteholder with respect to a debtor’s property did not literally follow any of the statutory forms in § 55-66.4:1, the court had little difficulty in concluding that the certificate, even though omitting the word “partial” in its title, did not release the deed of trust in its entirety but only as to the debtor’s other property. Bank of N.Y. Mellon Trust Co., N.A. v. Botero-Paramo, 445 Bankr. 530, 2011 Bankr. LEXIS 447 (Bankr. E.D. Va. 2011), aff'd, 483 Fed. Appx. 779, 2012 U.S. App. LEXIS 11688 (4th Cir. 2012).

While defendant creditor’s release of a refinancing deed of trust did not comply exactly with either a “Certificate of Satisfaction” or a “Certificate of Partial Satisfaction,” its plain language showed it applied only to a lien against one property, and because it was recorded earlier than plaintiff creditor’s lien, it had priority on the other property. Bank of N.Y. Mellon Trust Co., N.A. v. Tysons Fin., LLC, 483 Fed. Appx. 779, 2012 U.S. App. LEXIS 11688 (4th Cir. 2012).

I.[Reserved.]

II.Decided Under Prior Law.

Section does not confer jurisdiction to litigate collateral issues. —

Under this section there is only a single fact to be established; that is, the payment or discharge of the debt secured. The section does not confer jurisdiction to litigate other decisive collateral issues. Wagner v. Peters, 142 Va. 412 , 128 S.E. 445 , 1925 Va. LEXIS 347 (1925).

The court had no jurisdiction under this section to determine the liability of an insurance company to the owner of property destroyed upon which he had given a deed of trust. Wagner v. Peters, 142 Va. 412 , 128 S.E. 445 , 1925 Va. LEXIS 347 (1925).

Determination of collateral issues are excluded from a proceeding under this section. GECC v. Lunsford, 209 Va. 743 , 167 S.E.2d 414, 1969 Va. LEXIS 171 (1969).

Presumption of payment is not affected by passage of statute of limitations. —

The presumption of payment of a debt, secured by deed of trust, arising from the lapse of 20 years, is not affected by the passage of Acts 1897-98, p. 516, providing a statute of limitations for trust deeds. Turnbull v. Mann, 99 Va. 41 , 37 S.E. 288 , 1900 Va. LEXIS 121 (1900) (see § 8.01-241 and the note to this case thereunder.).

Burden of proof is on party seeking release. —

In a proceeding under this section the burden of proof is upon one who applies to have a lien or encumbrance released or discharged to prove payment of the debt secured. Hall Bldg. Corp. v. Edwards, 142 Va. 209 , 128 S.E. 521 , 1925 Va. LEXIS 331 (1925).

Subsection A relates to payment or discharge. GECC v. Lunsford, 209 Va. 743 , 167 S.E.2d 414, 1969 Va. LEXIS 171 (1969).

Subsection B relates to tender and refusal of the sum due. GECC v. Lunsford, 209 Va. 743 , 167 S.E.2d 414, 1969 Va. LEXIS 171 (1969).

A determination of what amount constitutes the “sum due” under an exercise of a right of anticipation in a deed of trust is contemplated by this section and is necessary to a determination of whether the “sum due” has been tendered, and cannot be termed a collateral issue. GECC v. Lunsford, 209 Va. 743 , 167 S.E.2d 414, 1969 Va. LEXIS 171 (1969).

Notice. —

Where the suit is one in equity under the general equity jurisdiction of the court, and not a summary statutory proceeding, even though some of the relief obtainable under this section is sought (as well as other relief), the giving of the notice in the manner provided for under this section is not mandatory. Bertels v. Sullivan, 312 F. Supp. 63, 1970 U.S. Dist. LEXIS 12869 (E.D. Va. 1970).

Trial court to be sustained if possible. —

Upon an application under this section to have a deed of trust released, the finding of a trial court must be sustained unless it is plainly wrong or without supporting evidence. Hall Bldg. Corp. v. Edwards, 142 Va. 209 , 128 S.E. 521 , 1925 Va. LEXIS 331 (1925).

Incorrect “satisfied in bankruptcy” order. —

Trial court incorrectly ordered a judgment creditor’s recorded judgment marked “satisfied in bankruptcy”; the trial court could only order the release of judgment creditor’s lien in a § 8.01-455 proceeding upon proof that it had been discharged in bankruptcy; furthermore, debtor had the burden of proof as to his entitlement to relief under § 8.01-455 , and the trial court erred in imposing the burden on judgment creditor to show that debtor had property in the county that was subject to its lien. Leasing Serv. Corp. v. Justice, 243 Va. 441 , 416 S.E.2d 439, 8 Va. Law Rep. 2783, 1992 Va. LEXIS 35 (1992).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Attorney fees denied. —

Borrowers were not entitled to an award of attorney’s fees because, although a bank ultimately was mistaken about its entitlement to prepayment penalties, the bank did not act both unjustifiably and without good cause in refusing to release encumbrances until it was paid prepayment penalties for the borrowers’ payments on promissory notes. Chick's Marina Props., LLC v. Xenith Bank, 95 Va. Cir. 124, 2017 Va. Cir. LEXIS 32 (Virginia Beach Jan. 27, 2017).

I.[Reserved.]

II.Decided Under Prior Law.

No preclusion to eviction requirement. —

In a utility’s counterclaim that landowners’ lawsuit breached a covenant to the utility of quiet possession, nothing in § 55-72 or § 55-68 precluded the common-law requirement that some type of eviction, either actual or constructive, needed to occur before the action for the breach of the covenant could be maintained. Fisher v. Va. Elec. & Power Co., 258 F. Supp. 2d 445, 2003 U.S. Dist. LEXIS 6995 (E.D. Va. 2003).

CIRCUIT COURT OPINIONS

Editor’s note. —

The case cited below was decided under prior law.

Attorney’s fees awarded. —

Defendants, who were the heirs of the original grantor in the deed, were liable for attorney’s fees and costs where (1) plaintiff’s request for attorney’s fees stemmed from the covenant of general warranty contained in the deed, (2) the case constituted a defense of title as contemplated by this section, (3) the award of attorney’s fees was authorized by this section, (4) which clearly stated that the obligation ran not only to the grantor, but also to the grantor’s heirs and personal representatives, (5) while it was true that any award of attorney’s fees may have had a “chilling effect” on future litigation, the court could not have used that as a ground to overrule § 55-68, and (6) the General Assembly made the public policy determination when it authorized an award of attorney’s fees in such actions. Green v. Knott, 63 Va. Cir. 18, 2003 Va. Cir. LEXIS 322 (Mecklenburg County Apr. 4, 2003).

I.[Reserved.]

II.Decided Under Prior Law.

An after-acquired title by a grantor who conveys with covenants of special warranty and quiet possession inures to the benefit of his grantee. Hurley v. Charles, 112 Va. 706 , 72 S.E. 689 , 1911 Va. LEXIS 140 (1911).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Statute of limitations. —

Property buyer’s action for breach of warranty of title under § 55-69 was not barred by the two year statute of limitations under subsection A of § 8.01-243 because the action accrued at the instigation of the neighboring owner’s lawsuit against the buyer’s title to property. Bear Ridge Developers, L.L.C. v. Cooper, 78 Va. Cir. 50, 2008 Va. Cir. LEXIS 182 (Fairfax County Dec. 2, 2008).

Claims. —

Because the claims against the parking spaces conveyed by a bank to the buyers by a special warranty deed, pursuant to § 55-69, were not made by persons claiming by, through, or under the bank, and because the buyer’s complaint only made out a cause of action for breach of warranty, not breach of contract, the bank’s demurrer was sustained with prejudice. Shehadeh v. Fountains at McLean Condo. Unit Owners Ass'n, 78 Va. Cir. 357, 2009 Va. Cir. LEXIS 30 (Fairfax County June 1, 2009).

I.[Reserved.]

II.Decided Under Prior Law.

A grantor who executes a deed using the words “with general warranty” and “with English covenants of title” covenants that “he is seized in fee simple of the property conveyed”; that he had “the right to convey . . . the land, with all the buildings thereon”; that he had done “no act to encumber the said lands”; that he would execute such “further assurances” as may be required; and that the grantee would have “quiet possession of the said land . . . with all the buildings thereon.” Richmond v. Hall, 251 Va. 151 , 466 S.E.2d 103, 1996 Va. LEXIS 8 (1996).

I.Decided Under Current Law.

Claim dismissed. —

Circuit court did not err in dismissing the negligence tort counts in all the complaints as to builder’s alleged failures during the original construction phase. Tingler v. Graystone Homes, Inc., 298 Va. 63 , 834 S.E.2d 244, 2019 Va. LEXIS 138 (2019).

II.Decided Under Prior Law.

Filing action within two years from date buyer notified builder. —

If the buyer notifies the builder of any defects covered by the statutory warranty within the one-year statutory warranty period, and the builder fails to remedy such defects, then the builder has breached its statutory duty, and the buyer is entitled to file an action for damages against the builder within two years from the date that the buyer notified the builder of the defect. Davis v. Tazewell Place Assocs., 254 Va. 257 , 492 S.E.2d 162, 1997 Va. LEXIS 88 (1997), limited, Vaughn, Inc. v. Beck, 262 Va. 673 , 554 S.E.2d 88, 2001 Va. LEXIS 126 (2001).

Filing action without notice to builder. —

Purchasers of a new home were not required to provide the home builder with notice of a construction defect within the one-year statutory warranty period as a prerequisite for bringing suit for breach of a statutory warranty. Vaughn, Inc. v. Beck, 262 Va. 673 , 554 S.E.2d 88, 2001 Va. LEXIS 126 (2001).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Implied warranties of a vendor. —

Home purchasers stated a cause of action against the corporate president as they adequately alleged that the corporate president’s joint venture constructed the new home of the home purchasers, and, as a result, an implied warranty existed that the home was free from structural defects and built in a workmanlike manner; conversely, the home purchasers did not state a cause of action with regard to the individual and the construction company because the applicable statute required the cause of action be brought against a vendor of the new home and neither of them was a vendor, which meant their demurrer against the home purchasers’ complaint as to the breach of warranty claim against them had to be granted. Weiss v. Cassidy Dev. Corp., 63 Va. Cir. 76, 2003 Va. Cir. LEXIS 183 (Fairfax County Aug. 18, 2003).

Warranties not mentioned with specificity. —

Builder’s motion to dismiss the buyers’ breach of implied warranty claim was overruled because, while the contract provided that the statutory warranty was specifically waived, the contract did not include the language “as is” and did not mention any warranties with specificity. Winston v. Tingley Constr. Co., 97 Va. Cir. 163 (Richmond 2013).

Filing action without notice to builder. —

Seller and builder were entitled to dismissal of a home purchaser’s action for breach of the implied statutory warranty for a foundation because the seller and builder made affirmative representations that the required statutory notice had not been received by them. Frye v. B & B Contr., Inc., 85 Va. Cir. 475, 2012 Va. Cir. LEXIS 194 (Roanoke County Oct. 31, 2012).

Notice to builder adequate. —

Builder’s motion to strike the homeowners’ breach of warranty was denied where a list of deficiencies was included in a follow-up letter and was sent via certified mail to the address used by the builder, the managing partner of the builder admitted that he received the follow-up letter, and thus, the requirements of subsection D of § 55-70.1 were met. Bessant v. Dey St. Props., LLC, 94 Va. Cir. 493, 2016 Va. Cir. LEXIS 180 (Norfolk Nov. 21, 2016).

Waiver. —

Contract provision was ineffective to waive the implied warranties in the sale of a new home, as the font size of the warranty waiver text — which was capitalized — was not two points larger than the remainder of the contract. Speier v. Renaissance at Victoria Farms, 58 Va. Cir. 90, 2001 Va. Cir. LEXIS 365 (Fairfax County Dec. 3, 2001).

Warranty waiver clause in a contract for the construction of a new home was found to be ineffective, as the contractual provision for the waiver of warranties was not effective to waive the implied warranties under § 55-70.1.Weiss v. Cassidy Dev. Corp., 61 Va. Cir. 237, 2003 Va. Cir. LEXIS 22 (Fairfax County Feb. 21, 2003).

Demurrer. —

Because a buyer did not contest the contractor’s demurrer to the implied warranty, and because express warranty under § 8.2-313 did not apply to a home construction contract, the contrator’s demurrers were sustained thereto. Sturmfels v. Mays, 68 Va. Cir. 142, 2005 Va. Cir. LEXIS 101 (Amherst County June 13, 2005).

Home buyers did not sufficiently allege that a builder breached the warranty on new homes under § 55-70.1 since any such warranties expired one year after the buyers took possession of the home under subsection E of § 55-70.1; there was no indication that the air conditioner was defective while the home was allegedly warranted by the builder, and the statute of limitations on § 55-70.1 claims had lapsed. French v. York Int'l Corp., 72 Va. Cir. 538, 2007 Va. Cir. LEXIS 142 (Greene County Feb. 27, 2007).

Because the buyers of a modular home, considered a “good” under the Virginia Uniform Commercial Code, could not maintain an action as if their contract was one for the sale of real property, and even if § 55-70.1 applied, the buyers failed to comply with the statute, as they never alleged that they provided written notice of the warranty claim, and that the homebuilders failed to cure the defects within a reasonable period of time, demurrers to the buyers’ § 55-70.1 claim filed by the homebuilders were granted. Cash v. GWVA Corp., 74 Va. Cir. 243, 2007 Va. Cir. LEXIS 195 (Fairfax County Nov. 9, 2007).

In multiple actions involving allegedly defective Chinese drywall, demurrers to claims under the statutory warranty provided in § 55-70.1 were overruled because the pleadings met the requirements of Va. Sup. Ct. R. l:4(j) and § 55-70.1 did not expressly limit the benefit of its warranty to an initial transferee as opposed to subsequent vendees. In re Chinese Drywall Cases, 80 Va. Cir. 69, 2010 Va. Cir. LEXIS 43 (Norfolk Mar. 29, 2010).

Purported rent-to-own buyer of a residential property was not entitled to relief under the statutory new home warranties because, as alleged in the complaint, the buyer was not a vendee, but rather a tenant, when the buyer took possession of the property pursuant to the terms of a lease rather than the sales contract. Accordingly, the new home warranties, which were for the exclusive benefit of a vendee, were not applicable to the buyer. Davis v. Randolph Williams at Goose Creek, LLC, 106 Va. Cir. 477, 2020 Va. Cir. LEXIS 498 (Loudoun County Dec. 31, 2020).

Homeowner entitled to damages. —

Although the evidence presented at trial was insufficient to support the jury’s damages award, the verdict was set aside and judgment was entered pursuant to § 8.01-430 where the evidence showed needed floor, subfloor, and porch repairs, as well as porch column replacement, and thus, the homeowners were entitled to $3,900 in damages. Bessant v. Dey St. Props., LLC, 94 Va. Cir. 493, 2016 Va. Cir. LEXIS 180 (Norfolk Nov. 21, 2016).

I.[Reserved.]

II.Decided Under Prior Law.

Antecedent contracts merged in deeds. —

Where certain deeds contained no reference to antecedent contracts reserving possession in the vendor, but contained the usual covenant, whereby, under this section, grantees were given, in praesenti, the right to enter, receive the rents and enjoy the premises without interruption and free from encumbrance, as the stipulations in the contracts of sale and the covenants in the deeds were in irreconcilable conflict on the question of possession, the antecedent contracts were merged in the deeds, and the vendees were entitled to possession. Woodson v. Smith, 128 Va. 652 , 104 S.E. 794 , 1920 Va. LEXIS 125 (1920).

No preclusion to eviction requirement. —

In a utility’s counterclaim that landowners’ lawsuit breached a covenant to the utility of quiet possession, nothing in § 55-72 or § 55-68 precluded the common-law requirement that some type of eviction, either actual or constructive, needed to occur before the action for the breach of the covenant could be maintained. Fisher v. Va. Elec. & Power Co., 258 F. Supp. 2d 445, 2003 U.S. Dist. LEXIS 6995 (E.D. Va. 2003).

I.[Reserved.]

II.Decided Under Prior Law.

Effect of covenant in contract to sell land. —

A vendor in a contract for the sale of land covenanted that on payment of the first installment of the purchase price he would make title in fee, and, by such conveyances as the grantees or their counsel might reasonably require, convey and release the land in possession to the grantees, free of encumbrances or demands. It was held that, the covenant being in the usual form for a covenant for “further assurances” in respect to an accepted title, its meaning was that a deed with proper covenants would be made, conveying the premises in question, and it did not constitute the grantees’ satisfaction with the title necessary as a condition precedent to make the acceptance of the deed obligatory on them. Gish v. Moomaw, 89 Va. 376 , 17 S.E. 324 , 1893 Va. LEXIS 65 (1893).

I.[Reserved.]

II.Decided Under Prior Law.

Possession of grantor is unnecessary. —

Under the provisions of this section a release deed is effectual to convey all the right, title, and interest by the grantor in the premises released, whether he were at the time in the possession of the premises or not. Harman v. Stearns, 95 Va. 58 , 27 S.E. 601 , 1897 Va. LEXIS 11 (1897).

Effect of deed by joint devisees with right of survivorship. —

Under the provisions of this section and §§ 55-6 and 55-49, the effect of a joint devise to testator’s three sons, with a conditional limitation over that if one or more of them shall die, leaving no issue, his or their share shall go to his surviving brothers or brother, is to vest the devisees with the authority to convey and relinquish all their right, title and interest in the land devised, and the grantee of the three of them takes a fee simple estate. Smith v. Smith, 112 Va. 617 , 72 S.E. 119 , 1911 Va. LEXIS 127 (1911).

A.General Consideration.

The section is itself but declaratory of the common law, and deeds may be assailed by creditors at large for many causes not embraced within its purview. Notably is this so in respect to assignments of choses in action in fraud or hindrance of creditors. Shufeldt v. Jenkins, 22 F. 359, 1884 U.S. App. LEXIS 2529 (C.C.D. Va. 1884), dismissed, Gibson v. Mill Creek Distilling Co., 131 U.S. 437, 9 S. Ct. 798, 33 L. Ed. 224, 1888 U.S. LEXIS 2466 (1888).

This section is merely declaratory of the common law, and, stated simply, provides that a fraudulent conveyance is voidable. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

The fraudulent conveyance section and the common-law doctrine of “alter ego” are complementary rather than contradictory. APAC-Virginia, Inc. v. Jenkins Landscaping & Excavating, Inc., 93 Bankr. 84 (Bankr. W.D. Va. 1988).

This section does not authorize in personam judgment when a fraudulent conveyance is set aside. Cheatle v. Rudd's Swimming Pool Supply Co., 234 Va. 207 , 360 S.E.2d 828, 4 Va. Law Rep. 805, 1987 Va. LEXIS 230 (1987).

Alternative pleadings. —

Here, the creditor’s allegations in the bill of complaint and the nature of the relief sought adequately pled alternative theories of fraudulent and voidable voluntary transfer in the context of this section and § 55-81. Balzer & Assocs. v. Lakes on 360, Inc., 250 Va. 527 , 463 S.E.2d 453, 1995 Va. LEXIS 139 (1995).

The creditor made out a prima facie case of a fraudulent transfer and the chancellor thus erred in granting the motion to strike under this theory of recovery. Balzer & Assocs. v. Lakes on 360, Inc., 250 Va. 527 , 463 S.E.2d 453, 1995 Va. LEXIS 139 (1995).

Res judicata. —

Former employee who had obtained a judgment against his employer, an LLC, arising out of its failure to pay him according to a compensation agreement, was not barred by res judicata from bringing a later action to collect the judgment and asserting fraudulent transfer claims under §§ 55-80 and 55-81, as well as an alter ego claim. Bennett v. Garner, 913 F.3d 436, 2019 U.S. App. LEXIS 1423 (4th Cir. 2019).

Sufficiency of pleading. —

Where a liquidating trustee of corporate bankruptcy debtors asserted that transfers from the debtors to corporate insiders were avoidable as fraudulent transfers under 11 U.S.C.S. § 544(b) and § 55-80, the trustee sufficiently pleaded fraud; for each of the transfers the trustee alleged the approximate date, the transferor, the initial and subsequent transferees, and the approximate amount transferred, and the properly alleged fraudulent intent of the insiders was imputed to the debtors. Schnelling v. Crawford, 360 Bankr. 139, 2007 Bankr. LEXIS 159 (Bankr. E.D. Va. 2007).

Remedies. —

Given the unique set of facts, jurisdictional issues, and complexity of attempting to undo the sale of the property, voiding the transfer was not a feasible option, but the court was reluctant to say that the General Assembly intended to provide a § 55-80 cause of action without a remedy. It appeared that a monetary judgment against those who transferred debtor’s interests away from it would have been the most appropriate course of action, and debtor, therefore, was awarded an in personam judgment against numerous defendants, jointly and severally, in the amount of $1,615,000. Wellington Apt., LLC v. Clotworthy (In re Wellington Apt., LLC), No. 04-50301-DHA, No. APN 05-5029, 2006 Bankr. LEXIS 1954 (Bankr. E.D. Va. July 27, 2006), reprinted, 350 Bankr. 213, 2006 Bankr. LEXIS 2362 (Bankr. E.D. Va. 2006).

B.Form and Mode of Conveyances.

The particular form or mode of conveyance is an immaterial matter, as this section embraces all transfers and dispositions of property where the intent is to hinder, delay or defraud creditors in enforcing their just claims. Coleman v. Cocke, 27 Va. (6 Rand.) 618, 1828 Va. LEXIS 46 (1828); Spence v. Bagwell, 47 Va. (6 Gratt.) 444, 1849 Va. LEXIS 67 (1849); Stigler's Ex'rx v. Stigler, 77 Va. 163 , 1883 Va. LEXIS 46 (1883); Spence v. Repass, 94 Va. 716 , 27 S.E. 583 , 1897 Va. LEXIS 130 (1897).

Bona fide preference is valid. —

Save so far as prohibited by the federal Bankruptcy Act, neither at common law nor in Virginia is it immoral or illegal to prefer one creditor to another in a deed of assignment, neither having any lien, provided there is no design to secure some fraudulent or illegal pecuniary advantage or benefit therefrom to the debtor himself. Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921) (see Johnson v. Lucas, 103 Va. 36 , 48 S.E. 497 (1904)).

Under this section it is well settled that an insolvent debtor, known by himself at the time to be insolvent, may make a valid conveyance of a portion or the whole of his assets to a bona fide creditor or creditors, in satisfaction or on account of existing indebtedness, if that is the sole purpose of the debtor, and the transfer is for full value, although such conveyance may and is intended by the grantor and grantee or grantees to give such creditor or creditors a preference to the exclusion of others in the distribution of the assets of the debtor. Surratt v. Eskridge, 131 Va. 325 , 108 S.E. 677 , 1921 Va. LEXIS 27 (1921).

Not all preferential transfers are invalid. At common law and under this section, an insolvent debtor may generally make a valid transfer of a portion or the whole of his assets to a bona fide creditor on account of an existing indebtedness, if that is the sole purpose of the debtor and the transfer is for full value. This is true even though such transfer may and is intended by the debtor and creditor to give such creditor a preference to the exclusion of others in the distribution of the debtor’s assets. This rule applies to corporations which are not banks or trust companies. Bank of Commerce v. Rosemary & Thyme, Inc., 218 Va. 781 , 239 S.E.2d 909, 1978 Va. LEXIS 147 (1978).

Preferential transfers for full value to bona fide creditors by an insolvent debtor are not invalid absent fraud. It follows, as a corollary, that successful efforts by such creditors to receive preferential treatment from an insolvent debtor will not be invalidated unless fraud is established. S.W. Rawls, Inc. v. Forrest, 224 Va. 264 , 295 S.E.2d 791, 1982 Va. LEXIS 290 (1982).

Generally, an insolvent debtor, whether an individual or a corporation, may prefer some bona fide creditors to the exclusion of others. Absent clear and convincing proof that a debtor made the preference with intent to defraud the other creditors and that the preferred creditor had notice thereof, the unpaid creditors cannot successfully attack the preference as a fraudulent conveyance under this section. Mills v. Miller Harness Co., 229 Va. 155 , 326 S.E.2d 665, 1985 Va. LEXIS 187 (1985).

But if the purpose to make a bona fide preference is merely incidental to the transaction and is used as a cloak for some other purpose which is fraudulent in actual intent, the transfer is invalid. Bank of Commerce v. Rosemary & Thyme, Inc., 218 Va. 781 , 239 S.E.2d 909, 1978 Va. LEXIS 147 (1978).

To prefer one creditor to another, neither having any lien, is not in contravention of any rule of law in this State. Until there is a legal lien by judgment or execution fixed upon a debtor’s property, he may, though in failing circumstances, assign his estate in trust; and if it be done in good faith, he may thereby prefer one creditor to another, without committing a fraud, within this section, upon the creditors who are delayed and hindered. Nor is it an objection that the conveyance defeats all other creditors of their legal remedies, though they may amount to a majority in number and value. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886).

But directors of corporation may not grant themselves preference over other creditors. —

The weight of authority seems to be that the directors of an insolvent corporation, who are also creditors of the corporation, have no right to grant themselves a preference or an advantage over other creditors in the payment of their claims. This rule is based upon simple justice. Darden v. George G. Lee Co., 204 Va. 108 , 129 S.E.2d 897, 1963 Va. LEXIS 122 (1963) (commented on in 21 Wash. & Lee L. Rev. 353 (1964)).

And preference to creditor-director in control of insolvent corporation is void. —

A preferential transfer by an insolvent corporation was void under this section where the preferred creditor owned half of the corporation’s stock, was a director and secretary-treasurer of the corporation, and plainly was in complete control of the corporation’s affairs. Darden v. George G. Lee Co., 204 Va. 108 , 129 S.E.2d 897, 1963 Va. LEXIS 122 (1963) (commented on in 21 Wash. & Lee L. Rev. 353 (1964)).

Where principal shareholders exercised complete control over the affairs of corporation and consequently transferred corporate assets to themselves in violation of this section, the appropriate remedy in such a situation was to return the fraudulently conveyed assets for a ratable distribution to all legitimate creditors, which might include the recipient of the fraudulent conveyance and the principal shareholders, as legitimate creditors of the corporation were entitled to share in the distribution of the bankrupt’s estate, after they returned the fraudulently conveyed assets, or their value, to the estate. APAC-Virginia, Inc. v. Jenkins Landscaping & Excavating, Inc., 93 Bankr. 84 (Bankr. W.D. Va. 1988).

Payment of promissory note was not invalid preference. —

Payment by an insolvent corporation of a promissory note upon which the controlling officers, directors and stockholders were secondarily liable as endorsers, which note evidenced a debt of the insolvent corporation incurred before insolvency, was not an invalid preference which constituted a fraudulent conveyance as to the corporation’s unsecured creditors. Bank of Commerce v. Rosemary & Thyme, Inc., 218 Va. 781 , 239 S.E.2d 909, 1978 Va. LEXIS 147 (1978).

This section is not applicable to a mortgage given for an existing debt. —

Christian v. Gray Endowment, 33 F.2d 759, 1929 U.S. App. LEXIS 2820 (4th Cir. 1929).

Unmatured life insurance policy is not “property.” —

In Virginia a life insurance policy, before it has matured, which has no cash surrender value, is not property in contemplation of this section and § 55-81, and these sections do not render invalid a change of beneficiary in a life insurance policy which has no cash value. Coalter v. Willard, 156 Va. 79 , 158 S.E. 724 (1931) (see note to).White v. Pacific Mut. Life Ins. Co., 150 Va. 849 , 143 S.E. 340 (1928), under § 55-81 .

Nothing in the statute authorizes a court to award an in personam judgment when a fraudulent conveyance is set aside. The amount fraudulently paid should be returned for a ratable distribution. Mills v. Miller Harness Co., 229 Va. 155 , 326 S.E.2d 665, 1985 Va. LEXIS 187 (1985).

C.Operation and Effect.

1.Validity as to Parties.

Fraudulent conveyance is valid between the parties. —

A deed made by a grantor to defraud his creditors is valid between the parties thereto, and cannot be assailed by the grantor or those claiming in privity with him. Robertson v. Ewell, 17 Va. (3 Munf) 1, 1812 Va. LEXIS 9 (1812); Starke's Ex'rs v. Littlepage, 25 Va. (4 Rand.) 368, 1826 Va. LEXIS 48 (1826); Terrell v. Imboden, 37 Va. (10 Leigh) 321, 1839 Va. LEXIS 36 (1839); Harris v. Harris, 64 Va. (23 Gratt.) 737, 1873 Va. LEXIS 66 (1873); Spooner's Adm'r v. Hibish's Ex'r, 92 Va. 333 , 23 S.E. 571 (1895); Tatum v. Tatum's Adm'r, 101 Va. 77 , 43 S.E. 184 , 1903 Va. LEXIS 5 (1903); Ratliff v. Ratliff, 102 Va. 880 , 47 S.E. 1007 , 1904 Va. LEXIS 49 (1904); Catron v. Bostic, 123 Va. 355 , 96 S.E. 845 , 1918 Va. LEXIS 37 (1918).

But this rule has no application to a grantor who, at the time the deed was made, was mentally incapable of contracting. Tatum v. Tatum's Adm'r, 101 Va. 77 , 43 S.E. 184 , 1903 Va. LEXIS 5 (1903).

And their privies. —

While this section avoids fraudulent gifts, conveyances, etc., as to creditors, it confers no power on the personal representative of the fraudulent debtor to impeach them, such gifts, conveyances, etc., being valid between the parties and their privies. Spooner's Adm'r v. Hibish's Ex'r, 92 Va. 333 , 23 S.E. 751 , 1895 Va. LEXIS 122 (1895).

Personal judgments against a transferee are not precluded under all circumstances in every case when a fraudulent conveyance is declared void. Price v. Hawkins, 247 Va. 32 , 439 S.E.2d 382, 10 Va. Law Rep. 712, 1994 Va. LEXIS 17 (1994).

2.Validity as to Creditors.

This section applies to cases of actual fraud, in which case the transactions therein referred to are avoided both as to existing and subsequent creditors. Battle v. Rock, 144 Va. 1 , 131 S.E. 344 , 1926 Va. LEXIS 225 (1926).

This section and § 55-81 recognize legal interest of unsecured creditor in estate of her debtor. United States v. Reckmeyer, 836 F.2d 200, 1987 U.S. App. LEXIS 16788 (4th Cir. 1987).

Unsecured creditors of persons whose property subject to forfeiture have “legal interest” in debtor’s property. United States v. Reckmeyer, 836 F.2d 200, 1987 U.S. App. LEXIS 16788 (4th Cir. 1987).

Transactions may be impeached by existing and subsequent creditors. —

Transactions which are condemned by this section may be impeached by both prior and subsequent creditors, while such as are included in § 55-81 can only be set aside at the suit of existing creditors. This section deals with fraudulent acts that are void, and therefore its operation is not limited to any particular class of creditors. It applies alike to all creditors who are delayed, hindered or defrauded of their rights by the device of the grantor, whether they be existing or subsequent creditors. On the other hand, § 55-81 deals with gifts, conveyances, etc., that are voluntary, or upon consideration of marriage, which are only declared to be void as to “creditors whose debts shall have been contracted at the time it was made.” Consolidated Tramway Co. v. Germania Bank, 121 Va. 331 , 93 S.E. 572 , 1917 Va. LEXIS 38 (1917) (see Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 (1887); Quinn-Marshall Co. v. Whittaker, 116 Va. 965 , 83 S.E. 398 (1914); Catron v. Bostic, 123 Va. 355 , 96 S.E. 845 (1918)).

And by their assigns. —

The right to avoid a fraudulent conveyance, it seems, is not personal to the then existing creditor. His successors and assigns may enforce the right. Thus, the subsequent purchaser of a preexisting note may attack a transfer. Shirley v. Long, 27 Va. (6 Rand.) 735, 1827 Va. LEXIS 52 (1827); National Valley Bank v. Hancock, 100 Va. 101 , 40 S.E. 611 , 1902 Va. LEXIS 4 (1902).

Priority not refused where obtained independently of debtor. —

Since a creditor may lawfully receive preferential treatment with the nonfraudulent cooperation of his debtor, there is no reason to refuse priority to a creditor who perfects his lien entirely independently of the debtor and without fraud. A creditor who acts without the assistance of his debtor should not be held to a more stringent standard than a creditor who is intentionally preferred. S.W. Rawls, Inc. v. Forrest, 224 Va. 264 , 295 S.E.2d 791, 1982 Va. LEXIS 290 (1982).

Grants of preferences by corporate officers. —

Except within bankruptcy, or in a general deed of assignment for benefit of creditors, or in situations of fraud or bad faith, corporate officers in Virginia may make preferences among creditors. Tanner's Transf. & Storage of Va., Inc. v. Florance, 22 Bankr. 24, 1982 Bankr. LEXIS 3681 (Bankr. E.D. Va. 1982).

Perfection before appointment of receiver. —

Absent fraud a bona fide creditor may obtain a valid priority by perfecting his lien at any time until the appointment of a receiver. S.W. Rawls, Inc. v. Forrest, 224 Va. 264 , 295 S.E.2d 791, 1982 Va. LEXIS 290 (1982).

Trustee in bankruptcy stands in the shoes of creditors when a liquidation petition is filed. Wick v. Yost, 47 Bankr. 697, 1985 Bankr. LEXIS 6526 (Bankr. W.D. Va. 1985).

Preference of creditor in complete control of corporation’s affairs. —

When an insolvent corporation prefers a creditor who is in complete control of the corporation’s affairs over other creditors of the corporation, the preference is fraudulent per se. Mills v. Miller Harness Co., 229 Va. 155 , 326 S.E.2d 665, 1985 Va. LEXIS 187 (1985).

Alter ego theory cannot be used defensively to avoid creditors’ claims of fraudulent conveyance. —

Former business associate was not entitled to dismissal of claims for fraudulent and voluntary conveyance of real property under §§ 55-80 and 55-81, because the associate could not use the theories of veil-piercing and alter ego defensively to protect himself from the claims of creditors; the equitable doctrine of alter ego would not be used conversely to achieve a result opposing its purpose. Hung-Lin Wu v. Tseng, No. 2:06cv346, No. 2:06cv580, 2007 U.S. Dist. LEXIS 5025 (E.D. Va. Jan. 23, 2007).

3.Validity as to “Other Persons.”.

“Creditors” and “purchasers” come within classification of “other persons.” —

General words following more specific words in a statute are to be restricted in their meaning to a sense analogous to the less general, more particular words, and applying this rule to this section, the more general provision for “other persons” is qualified by the preceding more particular provision for “creditors” and “purchasers”; therefore, only “creditors” and “purchasers,” or perhaps others similarly situated can be “other persons” within the meaning of this section. Estate Constr. Co. v. Miller & Smith Holding Co., 14 F.3d 213, 1994 U.S. App. LEXIS 557 (4th Cir. 1994).

Wife having claim for divorce and alimony may take advantage of section. —

Immediately upon desertion entitling a wife to a divorce and to alimony as incidental thereto, there has been a breach of duty on the part of the husband for the enforcement of which the law gives the wife a remedy against him and his property, and if he transfers his property to another with intent to hinder, delay or defraud her in the enforcement of her right, the transfer is void. She comes within the classification of “other persons” mentioned in this section, who are protected against being defrauded by such a transfer, of “what they are or may be entitled to.” It is not necessary that she should be a creditor in a technical sense. Crowder v. Crowder, 125 Va. 80 , 99 S.E. 746 , 1919 Va. LEXIS 8 (1919).

Wife as “other person.” —

Where a wife was an “other person” entitled to payment under § 55-80 after the husband sold certain equipment to his father and transferred money to his parents 11 months after the parties separated knowing of the wife’s marital/property rights under § 20-107.3 , the husband was not entitled to summary judgment. Buchanan v. Buchanan, 266 Va. 207 , 585 S.E.2d 533, 2003 Va. LEXIS 87 (2003).

Trial court’s finding in a fraudulent conveyance action that, in a divorce, the husband’s repayment of certain loans were fraudulent conveyances did not preclude the court, under res judicata, from crediting the husband with these loans when it entered an equitable distribution under § 20-107.3 , because there was not an identity of relief sought between the two actions. Buchanan v. Buchanan, 2003 Va. App. LEXIS 494 (Va. Ct. App. Sept. 30, 2003).

Conveyance in fraud of holder of unliquidated tort claim is void. —

A deed made with intent to defraud a recovery by a third person of damages in an action of tort, even before trial and judgment, was fraudulent and void to the same extent as a conveyance to hinder, delay and defraud existing creditors. Bruce v. Dean, 149 Va. 39 , 140 S.E. 277 , 1927 Va. LEXIS 173 (1927); Colonial Inv. Co. v. Cherrydale Cement Block Co., 194 Va. 454 , 73 S.E.2d 419, 1952 Va. LEXIS 251 (1952).

4.Validity as to Bona Fide Purchasers.

This section protects innocent purchasers for value. Morriss v. Bronson, 170 Va. 516 , 197 S.E. 479 , 1938 Va. LEXIS 207 (1938).

Purchaser of land from bankrupt’s transferee held bona fide purchaser for valuable consideration and within the saving clause of this section. Bryan v. Jackson, 178 Va. 123 , 16 S.E.2d 366, 1941 Va. LEXIS 150 (1941).

Valuable consideration has no effect without bona fides. —

Where the transferee corporation had actual and legal notice of the fraudulent intent of the transferor, the transferor’s creditors could subject the transferred Interstate Commerce Commission certificate to the liens of their judgments, even though the transferee assumed the secured debt against the certificate and arranged payment for the debt, since, without bona fides on the part of the transferee, valuable consideration has no effect in rescuing such a transaction from the literal terms and the spirit of this section. National Carloading Corp. v. Astro Van Lines, 593 F.2d 559, 1979 U.S. App. LEXIS 16588 (4th Cir. 1979).

Bankruptcy trustee, standing in the shoes of a bona fide purchaser, under § 544(a)(3) of the Bankruptcy Code, has standing to defeat a creditor’s attempt to avoid a fraudulent conveyance pursuant to this section. In re Stuckey, 126 Bankr. 697, 1990 Bankr. LEXIS 2863 (Bankr. E.D. Va. 1990).

5.Limitations and Laches.

There is no statute of limitations on an action brought under this section to avoid a transfer made with actual intent to hinder, delay, or defraud creditors. The bringing of such an action is limited only by the doctrine of laches. In re Massey, 225 Bankr. 887, 1998 Bankr. LEXIS 1338 (Bankr. E.D. Va. 1998).

Chapter 7 trustee’s action to avoid a debtor’s July 16, 2004, transfer of its interest in a limited liability company to its president was viable because the debtor commenced the bankruptcy case on April 3, 2006, and the statute of limitations for an action to avoid a voluntary transfer under § 55-81 was five years under § 8.01-253 and the action under § 55-80 for a fraudulent transfer was subject only to laches. Bartl v. Ochsner (In re Ichiban, Inc.), No. 06-10316-SSM, No. 06-1134, 2007 Bankr. LEXIS 1255 (Bankr. E.D. Va. Apr. 4, 2007).

Section 8.01-253 does not apply to cases of actual fraud. —

Under § 8.01-253 , limiting the period in which suits may be brought to set aside conveyances or transfers of property on consideration not deemed valuable in law, cases of actual fraud are not included. Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902).

Where the donee of land has knowledge of the fact that the donor is insolvent, and the natural and necessary effect of the transaction is to hinder, delay or defraud the donor’s creditors, it is actually fraudulent not only as to the donor, but as to the donee also, and § 8.01-253 has no application to it. Atkinson v. Solenberger, 112 Va. 667 , 72 S.E. 727 , 1910 Va. LEXIS 86 (1910).

D.Intent to Hinder, Delay or Defraud.

1.In General.

Rule stated. —

To come within the scope of the statute the transfer or act must be done or made with intent to hinder, delay or defraud. Bullock v. Gordon, 18 Va. (4 Munf) 450, 1815 Va. LEXIS 32 (1815); Briscoe v. Clarke, 22 Va. (1 Rand.) 213, 1822 Va. LEXIS 23 (1822); Spence v. Bagwell, 47 Va. (6 Gratt.) 444, 1849 Va. LEXIS 67 (1849); Bolling's Ex'r v. Harrison, 2 Patton & H. 532 (1857); Johnson v. Wagner & Sons, 76 Va. 587 , 1882 Va. LEXIS 61 (1882); Batchelder v. White, 80 Va. 103 , 1885 Va. LEXIS 44 (1885); Moore v. Ullman, 80 Va. 307 , 1885 Va. LEXIS 68 (1885); Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886); Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 , 1887 Va. LEXIS 55 (1887); Roanoke Nat'l Bank v. Farmers' Nat'l Bank, 84 Va. 603 , 5 S.E. 682 , 1888 Va. LEXIS 115 (1888); Ferguson & Co. v. Daughtrey, 94 Va. 308 , 26 S.E. 822 , 1897 Va. LEXIS 77 (1897); Fischer v. Lee, 98 Va. 159 , 35 S.E. 441 , 1900 Va. LEXIS 21 (1900); Anderson v. Mossy Creek Woolen Mills Co., 100 Va. 420 , 41 S.E. 854 , 1902 Va. LEXIS 40 (1902); Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902); Wheby v. Moir, 102 Va. 875 , 47 S.E. 1005 , 1904 Va. LEXIS 48 (1904); Catron v. Bostic, 123 Va. 355 , 96 S.E. 845 , 1918 Va. LEXIS 37 (1918).

This section requires an intent on the part of the debtor to delay, hinder or defraud creditors. In re Decker, 295 F. Supp. 501, 1969 U.S. Dist. LEXIS 13331 (W.D. Va. 1969), aff'd, Woodson v. Gilmer, 420 F.2d 378, 1970 U.S. App. LEXIS 10951 (4th Cir. 1970).

This section applies only to transfers effected with intent to hinder, delay or defraud creditors. This statutory language would require the court to make an affirmative finding of fraudulent intent on the part of the debtor. Bartl v. Twardy (In re Claxton), 32 Bankr. 224, 1983 Bankr. LEXIS 5661 (Bankr. E.D. Va. 1983).

Section 55-81 compared. —

Unlike this section, § 55-81 does not require finding of an intent to hinder, delay or defraud on the part of the grantor or grantee. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

A fraudulent intent concurred in by both grantor and grantee always vitiates a conveyance, as indeed this section declares affirmatively by pronouncing its nullity, and negatively by providing that it shall not be void if founded on a valuable consideration, and the grantee had no notice of the fraudulent intent. Briscoe v. Clarke, 22 Va. (1 Rand.) 213, 1822 Va. LEXIS 23 (1822); Garland v. Rives, 25 Va. (4 Rand.) 282, 1826 Va. LEXIS 37 (1826); Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921).

The words, “hinder,” “delay” and “defraud” are not synonymous. A conveyance may be made with intent to hinder or delay, without any intent absolutely to defraud. Either intent is sufficient. This section is in the disjunctive, and attempts to attach a separate and specific meaning to each of the words which it employs. Quarles v. Kerr, 55 Va. (14 Gratt.) 48, 1857 Va. LEXIS 17 (1857).

Purchase in good faith is valid though disadvantageous to creditors. —

If there is no evidence of an intent on the part of the debtor to hinder, delay or defraud his creditors, they cannot assail a purchase of land by him, even though he made a bad bargain and agreed to pay more for the land than it is worth. In the absence of fraud, unsecured creditors cannot question the contracts of their debtors and undo all that is not beneficial to them. Catron v. Bostic, 123 Va. 355 , 96 S.E. 845 , 1918 Va. LEXIS 37 (1918).

This section permits a court to look back through an intermediate transfer to avoid an earlier fraudulent conveyance. Bartl v. Garfinkel (In re Claxton), 30 Bankr. 199, 1983 Bankr. LEXIS 6230 (Bankr. E.D. Va. 1983).

Effect of pre-existing debt. —

The fact that defendant owed a pre-existing debt to his mother-in-law did not, ipso facto, prevent the conveyance of his interest in a house and land he owed to his mother-in-law from being fraudulent, and the government was not barred from seeking an order setting aside the conveyance where evidence showed that the conveyance was made by defendant to avoid payment of a money judgment which he expected a federal judge to issue as part of his sentence for conspiracy to sell marijuana. United States v. Maxwell, 189 F. Supp. 2d 395, 2002 U.S. Dist. LEXIS 4856 (E.D. Va. 2002).

Notice of debtor’s intent not merely an affirmative defense. —

Notice of the debtor’s fraudulent intent is not merely an affirmative defense to an action under § 55-80, but rather is an element of the plaintiff’s case that must be alleged in the complaint in order to state a claim for relief. It seems clear that a plaintiff attacking a fraudulent conveyance under § 55-80 must always allege, as part of its cause of action, not only the debtor’s fraudulent intent in making the transfer, but the transferee’s notice of that intent. Gold v. Sovereign, 453 Bankr. 618, 2011 Bankr. LEXIS 1549 (Bankr. E.D. Va. 2011), aff'd, No. 1:12-cv-264, 2012 U.S. Dist. LEXIS 109337 (E.D. Va. July 3, 2012).

2.Participation of Alienee in Fraud.

Knowledge of fraud must be brought home to alienee. —

It is not enough that the purpose of the grantor be fraudulent. Knowledge of such purpose must be clearly brought home to the alienee. Garland v. Rives, 25 Va. (4 Rand.) 282, 1826 Va. LEXIS 37 (1826); Herring v. Wickham, 70 Va. (29 Gratt.) 628, 1878 Va. LEXIS 2 (1878); Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902); Crowder v. Crowder, 125 Va. 80 , 99 S.E. 746 , 1919 Va. LEXIS 8 (1919); Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921).

The privity of the grantee in the fraud of the grantor is sufficiently alleged by charging that the deed was made, not only without any valuable consideration, but with intent to hinder, delay, and defraud the creditors of the grantor. The charge as made necessarily implies such privity, though the better practice is to charge it expressly. Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902).

But it is sufficient to show knowledge of facts putting him on notice. —

Where the fraud of a grantor in a deed, or of a seller of personal property, has been clearly shown, and it is sought to charge the grantee or purchaser with guilty knowledge, it is not necessary to prove that the latter had positive knowledge of the fraudulent intent. It is sufficient if he has knowledge of such facts and circumstances as would have excited the suspicion of a man of ordinary care and prudence, and put him upon such inquiry as to the bona fides of the transaction as would necessarily have led to the discovery of the fraud of the grantor or seller. Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902); Crowder v. Crowder, 125 Va. 80 , 99 S.E. 746 , 1919 Va. LEXIS 8 (1919); Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921).

But while notice may be inferred from circumstances as well as proved by direct evidence, the proof must be such as to affect the conscience of the purchaser, and be so strong and clear as to fix upon him the imputation of bad faith. Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902).

Corporate transferee held continuation of transferor. —

Where the transferee corporation had actual and legal notice of the fraudulent intent of the transferor, and where (for practical purposes) the sole stockholder of the transferor was the sole stockholder of the transferee, where he was the president of both corporations, where two of the three directors and two of the three officers in each corporation were the same people, and where there was no consideration for the conveyance except the assumption of secured indebtedness leaving unsecured creditors to fend for themselves, the trial court properly entered judgment against the transferee corporation in the amount of the debts of the transferor, since the transferee was a continuation of the transferor, and the transaction was not in good faith but to evade debts, and the transferor was left with no assets with which to pay its debts. National Carloading Corp. v. Astro Van Lines, 593 F.2d 559, 1979 U.S. App. LEXIS 16588 (4th Cir. 1979).

Individual defendant held liable for debts of transferor corporation. —

Where the individual defendant was the dominant stockholder, president, and director of both the transferor and transferee corporations, the defendant caused the election of the directors of both corporations, two of three of which were the same, and the transferor and transferee corporations had knowledge of the fraudulent circumstances of the transfer, the trial court properly found the individual defendant liable for the debts of the transferor corporation. National Carloading Corp. v. Astro Van Lines, 593 F.2d 559, 1979 U.S. App. LEXIS 16588 (4th Cir. 1979).

E.Evidence, Presumptions and Burden of Proof.

1.In General.

In order to set aside a preference, the plaintiff must not only prove that the debtor intended to delay, hinder or defraud his other creditors, he must also show that the preferred creditor had notice of such intent. Bank of Commerce v. Rosemary & Thyme, Inc., 218 Va. 781 , 239 S.E.2d 909, 1978 Va. LEXIS 147 (1978).

Embodied within the concept of fraudulent conveyances is the fact that all preferential transfers necessarily hinder and delay other creditors in their efforts to collect their claims. But that fact alone is not sufficient reason under this section to set aside an assignment as it applies to a purchaser for a valuable consideration; it is sufficient if the assignee had notice of the fact that the assignment was made with “intent to hinder.” Bank of Commerce v. Rosemary & Thyme, Inc., 218 Va. 781 , 239 S.E.2d 909, 1978 Va. LEXIS 147 (1978).

Proof of conveyance. —

Defendants, a company, an individual, and a corporation, were entitled to summary judgment with respect to plaintiff’s fraudulent conveyance claim, under § 55-80, because plaintiff failed to establish the necessary conveyance that was to be set aside as fraudulent because plaintiff could not show that the company ever owned a business’s assets to convey them to the corporation. Bocek v. JGA Assocs., LLC, No. 1:11-cv-546, 2012 U.S. Dist. LEXIS 49122 (E.D. Va. Apr. 5, 2012), aff'd in part and rev'd in part, 537 Fed. Appx. 169, 2013 U.S. App. LEXIS 15839 (4th Cir. 2013).

Proof of actual knowledge of the debtor-grantor’s fraudulent intent is not necessary, it being sufficient to show that the grantee had knowledge of such facts and circumstances as would have excited the suspicion of a man of ordinary care and prudence, and put him upon such inquiry as to the bona fides of the transaction as would necessarily have led to the discovery of the fraud of the grantor. Bank of Commerce v. Rosemary & Thyme, Inc., 218 Va. 781 , 239 S.E.2d 909, 1978 Va. LEXIS 147 (1978).

Knowledge of such facts and circumstances as would put a reasonable person on inquiry is sufficient. Bartl v. Garfinkel (In re Claxton), 30 Bankr. 199, 1983 Bankr. LEXIS 6230 (Bankr. E.D. Va. 1983).

Proof must be clear, cogent and convincing. —

In a suit to set aside a conveyance as in fraud of creditors, the proof must be clear, cogent, and convincing. Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921); Bartl v. Twardy (In re Claxton), 32 Bankr. 224, 1983 Bankr. LEXIS 5661 (Bankr. E.D. Va. 1983).

In Virginia the rule is firmly established that fraud, when relied upon, must be expressly charged and must be proved by evidence that is clear, cogent and convincing. McClintock v. Royall, 173 Va. 408 , 4 S.E.2d 369, 1939 Va. LEXIS 208 (1939); Colonial Inv. Co. v. Cherrydale Cement Block Co., 194 Va. 454 , 73 S.E.2d 419, 1952 Va. LEXIS 251 (1952).

Virginia courts require that circumstantial evidence of fraud be clear and convincing, and such as to satisfy the conscience of the chancellor, who should be cautious not to lend too ready an ear to the charge. In re Decker, 295 F. Supp. 501, 1969 U.S. Dist. LEXIS 13331 (W.D. Va. 1969), aff'd, Woodson v. Gilmer, 420 F.2d 378, 1970 U.S. App. LEXIS 10951 (4th Cir. 1970).

But it may be circumstantial. —

Evidence of fraud must be sufficient to satisfy the conscience of the court, but may be, and generally must be, circumstantial. Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 , 1887 Va. LEXIS 55 (1887).

A claim of fraud must be proved by clear, cogent and convincing evidence. However, the evidence may be, and generally will be, circumstantial only. Bartl v. Garfinkel (In re Claxton), 30 Bankr. 199, 1983 Bankr. LEXIS 6230 (Bankr. E.D. Va. 1983).

Presumption and burden of proof. —

The maxim, “Fraud must be proven and is never to be presumed,” is true only when understood as affirming that a contract or conduct apparently honest and lawful must be regarded as such, until shown to be otherwise by evidence, either positive or circumstantial; but fraud may be inferred from facts calculated to establish it; and fraud should be so inferred when the facts and circumstances are such as to lead a reasonable man to the conclusion that a debtor has attempted to withdraw his property from the reach of his creditors, with the intent to prevent them from recovering their just debts; and if such fraudulent intent is thus established prima facie, it must be regarded as conclusively established unless it is rebutted by facts and circumstances which are proven. Land v. Jeffries, 26 Va. (5 Rand.) 599, 1827 Va. LEXIS 26 (1827); Herring v. Wickham, 70 Va. (29 Gratt.) 628, 1878 Va. LEXIS 2 (1878); Keagy v. Trout, 85 Va. 390 , 7 S.E. 329 , 1888 Va. LEXIS 46 (1888).

Conspiracy or aiding and abetting. —

Chapter 7 trustee’s causes of action for conspiracy to fraudulently transfer and for aiding and abetting fraudulent transfers under state law were dismissed because trustee had not alleged that defendants received transferred property or benefitted from a transfer. Matson v. Rescue Rangers, LLC, 576 Bankr. 521, 2017 Bankr. LEXIS 3320 (Bankr. E.D. Va. 2017), dismissed in part, 582 Bankr. 669, 2018 Bankr. LEXIS 829 (Bankr. E.D. Va. 2018).

Proof of grantee’s fraudulent intent. —

A number of Virginia cases require that to set aside a conveyance under this section the fraudulent intent of the grantee must also be proven. Like the proof required of the grantor’s or transferor’s intent, the creditor need not prove the grantee’s or transferee’s intent by direct evidence. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

When the evidence shows a prima facie case of fraud, the burden shifts to the upholder of the transaction to establish its fairness. Herring v. Wickham, 70 Va. (29 Gratt.) 628, 1878 Va. LEXIS 2 (1878); Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921).

When the evidence demonstrates a prima facie case of fraud, it is then incumbent upon he who would sustain the validity of the transaction to establish its fairness. Bartl v. Garfinkel (In re Claxton), 30 Bankr. 199, 1983 Bankr. LEXIS 6230 (Bankr. E.D. Va. 1983).

Evidence showing fraud. —

See Colonial Inv. Co. v. Cherrydale Cement Block Co., 194 Va. 454 , 73 S.E.2d 419, 1952 Va. LEXIS 251 (1952).

The evidence was sufficient to support a finding that the transfer of assets to a new corporation and the declaration of a dividend to the principal shareholders were made with the specific intent to defraud the creditors of the old corporation and were consequently void pursuant to this section. APAC-Virginia, Inc. v. Jenkins Landscaping & Excavating, Inc., 93 Bankr. 84 (Bankr. W.D. Va. 1988).

Where the sellers sought to preclude the debtor-purchasers from completing the exercise of an option to purchase real property, the court allowed the debtors to proceed under 11 U.S.C.S. § 548(a)(1)(B) on a less than equivalent value theory, but not under 11 U.S.C.S. § 548(a)(1)(A) on a voidable transfer theory. Banks Auto Parts, Inc. v. Banks Invs. I, LC (In re Banks Auto Parts, Inc.), 385 Bankr. 142, 2008 Bankr. LEXIS 430 (Bankr. E.D. Va. 2008).

Sufficient evidence supported judgment in favor of creditors on their fraudulent convenience claim as the district court properly relied on the negative inference drawn from the failure to produce shipping company documents, the evidence showed that the shipping company transferred the charter for the vessel, the creditors established fraud with respect to payments the shipping company made to a related individual that it claimed were commissions, and the district court properly held that the vessel owner, the alter ego of the shipping company, was liable for the total amount of the creditors’ judgments against the shipping company. Flame S.A. v. Freight Bulk Pte Ltd., 807 F.3d 572, 2015 U.S. App. LEXIS 20401 (4th Cir. 2015).

2.Badges of Fraud.

What constitute badges of fraud. —

The badges of fraud have been stated to include: (1) retention of an interest in the transferred property by the transferor; (2) transfer between family members for allegedly antecedent debt; (3) pursuit of the transferor or threat of litigation by his creditors at the time of the transfer; (4) lack of or gross inadequacy of consideration for the conveyance; (5) retention or possession of the property by transferor; and (6) fraudulent incurrence of indebtedness after the conveyance. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

Circumstances indicative of fraud are sometimes designated as badges thereof. As summarized these are: (1) the relationship of the parties; (2) the grantor’s insolvency; (3) pursuit of him by his creditors at the time; (4) want of consideration; (5) retention of possession of the property by the grantor; and (6) fraudulent incurrence of indebtedness after the conveyance. Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 , 1921 Va. LEXIS 94 (1921); Bartl v. Garfinkel (In re Claxton), 30 Bankr. 199, 1983 Bankr. LEXIS 6230 (Bankr. E.D. Va. 1983).

To come within the scope of this section, the transfer or act assailed must be done with intent to hinder, delay or defraud. Because of the difficulty of establishing “actual intent,” evidence of fraud may be, and generally must be, circumstantial. Consequently, without differentiating between delaying, hindering or defrauding, courts have relied historically upon presumptions of fraud, known also as “badges of fraud,” which consist of facts and circumstances which the law admits to be the signs of fraud; and from which the fraudulent intent may be inferred. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

Certain facts are indicia of fraud, such as the relationship of the parties, the insolvency of the debtor, the consideration or lack of consideration for the transfer, and retention of the benefits of the transferred property, among others. Wick v. Yost, 47 Bankr. 697, 1985 Bankr. LEXIS 6526 (Bankr. W.D. Va. 1985).

Because of difficulty of proving actual intent, courts have relied on presumptions, or “badges,” of fraud. From the existence of certain circumstances, fraudulent intent may legitimately be inferred. These circumstances are, among others, (1) the close relationship of the parties, (2) the grantor’s insolvency, (3) pursuit of the grantor by creditors at the time of the transfer, (4) inadequate consideration, and (5) retention of possession of the property by the grantor. Armstrong v. United States, 7 F. Supp. 2d 758, 1998 U.S. Dist. LEXIS 7939 (W.D. Va. 1998).

Badge of fraud establishes prima facie case. —

The party seeking to avoid a fraudulent conveyance may shift the burden of proof by establishing a prima facie case of fraud. Moreover, a prima facie case is established by demonstrating a badge of fraud. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

Prima facie case for fraud unrebutted. —

Where in the month prior to its filing for bankruptcy the debtor made a $70,000 contribution to the retirement plan, where this contribution was twice as large as any other contribution to the plan, and where five days before such contribution, the debtor’s unaudited balance sheet indicated a negative cash balance of $69,376.23, debtor failed to rebut the bankruptcy trustee’s prima facie case for fraud. Moore v. Manson (In re Springfield Furn., Inc.), 145 Bankr. 520, 1992 Bankr. LEXIS 1553 (Bankr. E.D. Va. 1992).

Transfers from a debtor corporation to the co-owners of the corporation were fraudulent conveyances because the co-owners removed funds from the debtor corporation for their personal use before the debtor corporation completed a construction project, which caused a gross disparity between the value of the work performed and the payments made on the project. McCarthy v. Giron, No. 1:13-cv-01559-GBL-TCB, 2014 U.S. Dist. LEXIS 79007 (E.D. Va. June 6, 2014).

Effect of badges of fraud. —

In the absence of direct and positive testimony, there are many facts and circumstances which the law admits to be the marks or signs of fraud; and from which, therefore, the fraudulent intent may be inferred. Some of these circumstances afford only prima facie evidence of it; but others afford conclusive evidence and establish it decisively. Land v. Jeffries, 26 Va. (5 Rand.) 599, 1827 Va. LEXIS 26 (1827).

Under this section a court may indulge in presumptions of fraud based upon suspicious circumstances, or “badges of fraud,” attending the transaction. In re Decker, 295 F. Supp. 501, 1969 U.S. Dist. LEXIS 13331 (W.D. Va. 1969), aff'd, Woodson v. Gilmer, 420 F.2d 378, 1970 U.S. App. LEXIS 10951 (4th Cir. 1970).

As to what are, and what are not, badges of fraud, see generally,.Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886).

Insolvency of debtor is not conclusive evidence of fraud. —

The mere fact that an insolvent debtor makes a conveyance of his real estate is not conclusive evidence that he has perpetrated a fraud upon his creditors. It is, however, a material circumstance to be considered in connection with other circumstances which tend to show a fraudulent intention. McClintock v. Royall, 173 Va. 408 , 4 S.E.2d 369, 1939 Va. LEXIS 208 (1939).

The voluntary character of the transaction may be one element in the proof of fraud, but not sufficient proof, because this section says it shall not be. Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918) (see Taylor v. Mallory, 96 Va. 18 , 30 S.E. 472 (1898)).

Inadequacy of price. —

It is a well-settled rule of law that mere inadequacy of price is no ground for setting aside a conveyance, unless so gross as to shock the conscience and furnish decisive evidence of fraud. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886); Flook v. Armentrout, 100 Va. 638 , 42 S.E. 686 , 1902 Va. LEXIS 70 (1902).

False recital of valuable consideration. —

Where a husband, indebted at the time, conveyed the major portion of his property to his wife by a deed which falsely recited a valuable consideration and which was in fact voluntary, the facts were sufficient, in the absence of satisfactory explanation, to sustain a decree in a suit promptly brought by subsequent creditors adjudging that the conveyance was fraudulent and void. Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918).

Failure to take security. —

One of the usual badges of fraud is that no security was taken for the purchase money. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886); Didier v. Patterson, 93 Va. 534 , 25 S.E. 661 , 1896 Va. LEXIS 108 (1896).

Reservation of inconsistent powers and stipulations. —

Where a deed reserves to the grantor a power inconsistent with the avowed object for which the deed is made, it will be null and void, as against creditors and purchasers. Janney v. Barnes, 38 Va. (11 Leigh) 100, 1840 Va. LEXIS 26 (1840); Burton v. Mill, 78 Va. 468 , 1884 Va. LEXIS 22 (1884).

It is well settled that conveyances professedly to indemnify creditors, but expressly or impliedly reserving to the grantors powers inconsistent with and adequate to defeat such purpose, are void as to creditors and purchasers. Garland v. Rives, 25 Va. (4 Rand.) 282, 1826 Va. LEXIS 37 (1826).

To reserve any benefit to the grantor himself, or to introduce limitations and contingencies such as will give him such control over the property or to its proceeds as to enable him in effect to defeat the conveyance, or if the deed contains a power, in any way equivalent in its effects to a power of revocation, reservations to the grantor made expressly or reserved impliedly, inconsistent with and adequate to defeat the declared purpose, will be fatal to the conveyance. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886).

Reservation of power of sale in grantor in deed of trust. —

A deed of trust provided that until default should be made in the payment of the principal or interest of any of the bonds secured by it, the trustee should permit the grantor to sell the property covered by the deed, provided, however, that in the event of a sale of the property, the proceeds should be reinvested in other property, which should immediately become subject to the deed of trust. It was held that, as a matter of law, the absolute power of sale reserved to the grantor in the deed rendered it per se fraudulent and void under this section. Consolidated Tramway Co. v. Germania Bank, 121 Va. 331 , 93 S.E. 572 , 1917 Va. LEXIS 38 (1917).

That the reservation of an interest in the property, by postponing the time of sale, or directing a sale on credit, or providing for the payment of the surplus after satisfying the creditors secured, do not of themselves furnish evidence of fraudulent intent, has been affirmed by the repeated decisions of the Virginia courts. Dance v. Seaman, 52 Va. (11 Gratt.) 778, 1854 Va. LEXIS 56 (1854); Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886).

Grantor remaining in possession. —

One of the badges whereby a fraudulent intent may be discovered is the circumstance that the grantor remains in possession of the granted property; yet the retention of possession of the property may be provided for in the conveyance, and be consistent with its terms and objects. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886).

It is true that in the most natural and usual course of things a fair purchaser desires and obtains the possession of the property, and, hence, its being retained by the grantor gives rise to a suspicion of fraud, such as, in view of the frequent arts and contrivances against the rights of creditors, warrants a presumption against the fairness of the transaction, requiring full and satisfactory explanation; a presumption which cannot be too strongly stated, to the effect of throwing the whole burden of proving the genuineness and sufficiency of the consideration upon the grantee, and in the naked case of an alleged absolute sale, and possession notwithstanding retained, requiring the conclusion of fraud. But there is no sound principle upon which the mere nondelivery of possession can be treated as conclusive against the fairness and good faith of the contract. Davis v. Turner, 45 Va. (4 Gratt.) 422, 1848 Va. LEXIS 12 (1848) (see also Dance v. Seaman, 52 Va. (11 Gratt.) 778 (1854)).

Retention of interest in the thing transferred. —

Judgment creditor presented sufficient evidence to establish a prima facie case for its claims of fraudulent conveyance and voluntary conveyance under §§ 55-80 and 55-81 because it demonstrated several badges of fraud, including the debtor’s retention of an interest in the funds transferred, shifting the burden to the judgment debtor to establish that the conveyances were legitimate. Fox Rest Assocs., L.P. v. Little, 282 Va. 277 , 717 S.E.2d 126, 2011 Va. LEXIS 183 (2011).

An unreasonable postponement of the period of sale, and of payment, would tend to delay, hinder, or defraud creditors, and would invalidate a deed of trust. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886).

Taking an absolute assignment as security for a debt is a mere badge of fraud which may be repelled by evidence showing the bona fides of the transaction. Didier v. Patterson, 93 Va. 534 , 25 S.E. 661 , 1896 Va. LEXIS 108 (1896).

Transfers pendente lite. —

A conveyance made by a party of his entire property during the pendency of a suit brought to recover judgment against him on a debt is a badge of fraud. Young v. Willis, 82 Va. 291 , 1886 Va. LEXIS 32 (1886); Didier v. Patterson, 93 Va. 534 , 25 S.E. 661 , 1896 Va. LEXIS 108 (1896).

Badges of fraud found. —

Transfers of a Chapter 7 debtor’s properties to his wife and himself were fraudulent based on the existence of multiple badges of fraud, including that the transfers were to the debtor’s wife and himself as tenants by the entirety, the debtor retained an interest in the properties, there was no consideration for the transfers, and the transfers were made when the debtor’s business was heavily in debt, a debt he had personally guaranteed. Gold v. Laines, 352 Bankr. 397, 2005 Bankr. LEXIS 2971 (Bankr. E.D. Va. 2005).

In an action in which a debtor filed suit against defendants based on their allegedly fraudulent conduct surrounding the placement of one creditor’s Second Deed of Trust on the debtor’s apartment complex, debtor was awarded an in personam judgment against defendants, jointly and severally, in the amount of $1,615,000, where the debtor had a legal claim to the ownership interest in the building in New Orleans. Consequently, the debtor met its burden of proof and the transfer was void as fraudulent. Wellington Apt., LLC v. Clotworthy, 350 Bankr. 213, 2006 Bankr. LEXIS 2362 (Bankr. E.D. Va. 2006).

Where a Chapter 7 debtor transferred her home to her sister-in-law and gave the proceeds from the sale back to the sister-in-law two weeks later, the transfer was avoidable under § 55-80 and 11 U.S.C.S. § 544(b)(1) as made with the intent to delay, hinder, or defraud creditors because of the presence of several badges of fraud, including that: (1) the transfer was between family members; (2) there was no consideration for the transfer; and (3) the debtor retained possession of the transferred property under a rental contract. Phillips v. Moazzeni, 378 Bankr. 128, 2007 Bankr. LEXIS 3343 (Bankr. E.D. Va. 2007).

First corporation fraudulently transferred the charter of the vessel and assets to the second corporation because the first corporation was insolvent at the time it gave the charter of the vessel to the second corporation and made money transfers to the second corporation, the second corporation gave no consideration for the charter nor the initial funds, and the second corporation paid nothing for the charter but made a substantial profit on the charter and received substantial funds from or through the first corporation. Flame S.A. v. Indus. Carriers, 39 F. Supp. 3d 769, 2014 U.S. Dist. LEXIS 131981 (E.D. Va. 2014), aff'd, 807 F.3d 572, 2015 U.S. App. LEXIS 20401 (4th Cir. 2015).

3.Confidential Relationship Between the Parties.

Confidential relationship strengthens presumption of fraud. —

It seems to be well settled that any relation which gives rise to confidence, though not a badge of fraud, strengthens the presumption that may arise from other circumstances and serves to elucidate, explain or give color to the transaction. Johnson v. Lucas, 103 Va. 36 , 48 S.E. 497 , 1904 Va. LEXIS 5 (1904).

Relationship between parties, by blood or affinity, calls upon the court for careful and close scrutiny of the transaction and the conduct of, and evidence offered by, the grantee. But mere relationship of itself is not a badge of fraud. Johnson v. Lucas, 103 Va. 36 , 48 S.E. 497 , 1904 Va. LEXIS 5 (1904) (see also Hutcheson v. Savings Bank, 129 Va. 281 , 105 S.E. 677 (1921)).

Transactions between husband and wife must be closely scrutinized to see that they are fair and honest, and not merely contrivances resorted to for the purpose of placing the husband’s property beyond the reach of his creditors, and, in a contest between the creditors of a husband and his wife, the burden of proof is upon her to show by clear and satisfactory evidence the bona fides of the transaction. In all such cases the presumptions are in favor of the creditors and not in favor of the title of the wife. Richardson v. Pierce, 105 Va. 628 , 54 S.E. 480 , 1906 Va. LEXIS 71 (1906); Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918).

Where husband is not indebted, no presumption of fraud arises. —

Where the husband is not indebted at the time of the transaction, no presumption of fraudulent intent arises, and the burden of proof is upon the subsequent creditor to show that a prospective fraud was contemplated and directed against him; and this principle applies also to voluntary settlements by the husband upon the wife. Hutchison v. Kelly, 40 Va. (1 Rob.) 123, 1842 Va. LEXIS 17 (1842); Bank of Alexandria v. Patton, 40 Va. (1 Rob.) 499, 1843 Va. LEXIS 6 (1843); Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 , 1887 Va. LEXIS 55 (1887).

Any conveyance in payment of or as security for loan is valid. —

A conveyance of a husband’s property, either in payment of a loan made to him by his wife, or as security for such a loan, with a promise of repayment by him, is a valid conveyance, and not subject to successful attack by his other creditors. Bryan v. Jackson, 178 Va. 123 , 16 S.E.2d 366, 1941 Va. LEXIS 150 (1941) (holding, however, that the deed in question was a preferential payment under the federal Bankruptcy Act).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Construction. —

Statute protects from liability those who merely are involved in ministerial conduct unknowing of its implication and who do not share the intent of an unlawful wrongdoer; the statute is primarily targeted at conduct and the undoing of a wrongful transfer, and those who participate in occasioning the transfer are called upon in equity to undo their conduct if the plaintiff prevails in order to restore the status quo. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Fraudulent conveyance. —

Corporate director’s and majority shareholder’s act of directing the proceeds from the sale of corporate property to be made to them primarily, which was done while the corporation was insolvent and when the shareholder knew that it had at least two judgments against it, was a voluntary act made with the intent to hinder or defraud creditors; thus, such was voided as a fraudulent conveyance. Lawyers Title Ins. Corp. v. P.R.T. Enters., 65 Va. Cir. 271, 2004 Va. Cir. LEXIS 286 (Norfolk July 30, 2004).

Judgment creditor proved a prima facie case for fraudulent conveyance because numerous transfers supported judgment in its favor in that they encompassed “badges of fraud” and otherwise met the elements of the claim; the evidence produced by a seller, purchaser, and lender was insufficient to outweigh the prima facie case the judgment creditor established or even leave the evidence in a state of equipoise. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Badges of fraud. —

Although the Commonwealth failed to prove that a taxpayer was insolvent when the taxpayer transferred property to his girlfriend as required by § 55-81, the Commonwealth presented badges of fraud that the taxpayer did not rebut; therefore, the conveyance was fraudulent and void under this section. Dep't of Taxation v. Nicolet, 62 Va. Cir. 372, 2003 Va. Cir. LEXIS 281 (Richmond July 31, 2003).

Record did no support a finding of “badges of fraud” against corporations because one corporation did not appear to have been involved in any transactions; although the other corporation succeeded to the assets of a law center, because it could not be determined with specificity the reachable amount of those assets at the time of transfer, the claim against that corporation failed. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Record supported a finding of one or more “badges of fraud” because there was pursuit of the transferor or threat of litigation by its creditors at the time of the transfer and lack of or gross inadequacy of consideration for the conveyance, among others; from the first day of its operation, a purchaser was insolvent, and its insolvency allowed a business associate to determine which creditors were to be paid. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Sufficiency of pleading. —

Creditor’s complaint alleged sufficient facts to state a valid cause of action for fraudulent conveyance because the creditor explicitly identified the agents of fraud by listing the companies, a purchaser and a debtor, that allegedly engaged in the fraud, and a “man of ordinary care and prudence” would have concluded that purchasing all the assets of a limited liability company would infringe on the creditor’s contractual right to first refusal for the debtor; since the purchaser likely knew that the debtor controlled and owned all of the limited liability company’s assets, and the debtor owned no other significant assets, the purchaser knew, or should have known, that it was in fact purchasing the debtor. Alf v. Galen Capital Corp., 83 Va. Cir. 165, 2011 Va. Cir. LEXIS 93 (Fairfax County July 12, 2011).

Standing. —

Claimant, who sought recovery under a breach of contract action, had no standing to claim that the managing officers and members of a limited liability company (LLC) fraudulently converted the LLC’s funds to themselves. Mid Atl. Eng'g Tech. Servs. v. Miller Hardman Designs, LLC, 86 Va. Cir. 337, 2013 Va. Cir. LEXIS 74 (Chesapeake Mar. 25, 2013).

Statute of limitations. —

It is clear from the absence of a specified statute of limitations for fraudulent conveyance that the general assembly intended there be no set limitation on the period during which such claims could be advanced, so as to not allow fraudulent transfers or those designed to hinder creditors to become legal merely by the expiration of a fixed period of time; at the same time the law will not suffer a plaintiff who does not timely assert its equitable remedies. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Remedies. —

Defendant was entitled to vacate the default judgment against him because the plaintiffs’ complaint did not state a cause of action where the property fraudulently conveyed was realty and the complaint sought damages. Burrill v. Palmer, 95 Va. Cir. 289, 2017 Va. Cir. LEXIS 50 (Fairfax County Mar. 10, 2017).

Laches. —

Judgment creditor did not fail to enforce its rights for an unexplained period of time because some of the delay in reaching trial in the cause had to do with the relative opacity of the business arrangements between a purchaser and a business associate; even if the circuit court found an unexplained period of enforcement, the record was devoid of prejudice to the associate and purchaser. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

I.[Reserved.]

II.Decided Under Prior Law.

A.General Consideration.

Section 55-80 compared. —

Unlike § 55-80, this section does not require finding of an intent to hinder, delay or defraud on the part of the grantor or grantee. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

Trustee in bankruptcy stands in shoes of creditors when a liquidation petition is filed. Wick v. Yost, 47 Bankr. 697, 1985 Bankr. LEXIS 6526 (Bankr. W.D. Va. 1985).

Section 55-80 and this section recognize legal interest of unsecured creditor in estate of her debtor. United States v. Reckmeyer, 836 F.2d 200, 1987 U.S. App. LEXIS 16788 (4th Cir. 1987).

The fraudulent conveyance section and the common-law doctrine of “alter ego” are complementary rather than contradictory. APAC-Virginia, Inc. v. Jenkins Landscaping & Excavating, Inc., 93 Bankr. 84 (Bankr. W.D. Va. 1988).

A debtor is insolvent when he has insufficient property to pay all his debts. Hudson v. Hudson, 249 Va. 335 , 455 S.E.2d 14, 1995 Va. LEXIS 41 (1995).

Debtor is “insolvent” when he has insufficient property to pay all his debts. Shaia v. Meyer, 206 Bankr. 410, 1997 Bankr. LEXIS 410 (Bankr. E.D. Va. 1997), aff'd, No. 3:97cv352, 1998 U.S. Dist. LEXIS 4900 (E.D. Va. Mar. 12, 1998).

In order to prove insolvency, both the value of the debtor’s assets and the amount of his liabilities must be established. Hudson v. Hudson, 249 Va. 335 , 455 S.E.2d 14, 1995 Va. LEXIS 41 (1995).

Debtor not rendered insolvent. —

Under Virginia’s stranger to title doctrine, which it retained from the common law, debtor wife, who did not have title in property prior to a conveyance of debtor husband’s half interest to his daughter, did not become a grantor by virtue of the fact that the deed purported to reserve her a life estate. Applying the formula set forth in the Virginia statutes for valuing debtor husband’s single life estate in the real property, the court determined that debtor husband was not insolvent or rendered insolvent by the conveyance and thus, the transfer was not avoidable as constructively fraudulent under the Bankruptcy Code and Virginia law. Fraley v. Fraley (In re Fraley), No. 17-70067, No. 17-07027, 2018 Bankr. LEXIS 916 (Bankr. W.D. Va. Mar. 28, 2018).

Unsecured creditors of persons whose property is subject to forfeiture have “legal interest” in debtor’s property. United States v. Reckmeyer, 836 F.2d 200, 1987 U.S. App. LEXIS 16788 (4th Cir. 1987).

Contingent interests of debtor, which could not be reached by creditors under Virginia law, would not be figured into solvency calculation under this section. Shaia v. Meyer, 206 Bankr. 410, 1997 Bankr. LEXIS 410 (Bankr. E.D. Va. 1997), aff'd, No. 3:97cv352, 1998 U.S. Dist. LEXIS 4900 (E.D. Va. Mar. 12, 1998).

The 1988 amendment to this section deals with the creation of rights and duties. Prior to the effective date of the amendment, any person who transferred property without receiving consideration “deemed valuable in law” was subject to the provisions of this section. The amendment alters this section by restricting its applicability to insolvent transferors, thus limiting the rights of creditors and expanding the rights of transferors not found to be insolvent. Thus, the 1988 amendment affects substantive rights. Leake v. Mitchell, 108 Bankr. 112, 1989 Bankr. LEXIS 2038 (Bankr. W.D. Va. 1989).

Chapter 7 trustee was entitled to prejudgment interest in avoidance proceeding on monetary judgment awarded under this section. Shaia v. Meyer, 206 Bankr. 410, 1997 Bankr. LEXIS 410 (Bankr. E.D. Va. 1997), aff'd, No. 3:97cv352, 1998 U.S. Dist. LEXIS 4900 (E.D. Va. Mar. 12, 1998).

Adequate pleadings. —

Where liquidating trustee alleged that any claim by defendants that debtor transferred release to them of any debts they owed in marketing materials provided by representatives employed by debtor’s outside marketing agency constituted constructively fraudulent transfers, allegation that debtor received nothing in exchange for alleged releases and that debtor was insolvent were sufficient to make prima facie case under constructive fraudulent transfer statutes of Virginia. Arrowsmith v. Lemberg Law, LLC, 571 Bankr. 182, 2017 Bankr. LEXIS 870 (Bankr. E.D. Va. 2017).

Alternative pleadings. —

Here, the creditor’s allegations in the bill of complaint and the nature of the relief sought adequately pled alternative theories of fraudulent and voidable voluntary transfer in the context of § 55-80 and this section. Balzer & Assocs. v. Lakes on 360, Inc., 250 Va. 527 , 463 S.E.2d 453, 1995 Va. LEXIS 139 (1995).

Alter ego theory cannot be used defensively to avoid creditors’ claims of fraudulent conveyance. —

Former business associate was not entitled to dismissal of claims for fraudulent and voluntary conveyance of real property under §§ 55-80 and 55-81, because the associate could not use the theories of veil-piercing and alter ego defensively to protect himself from the claims of creditors; the equitable doctrine of alter ego would not be used conversely to achieve a result opposing its purpose. Hung-Lin Wu v. Tseng, No. 2:06cv346, No. 2:06cv580, 2007 U.S. Dist. LEXIS 5025 (E.D. Va. Jan. 23, 2007).

Res judicata. —

Former employee who had obtained a judgment against his employer, an LLC, arising out of its failure to pay him according to a compensation agreement, was not barred by res judicata from bringing a later action to collect the judgment and asserting fraudulent transfer claims under §§ 55-80 and 55-81, as well as an alter ego claim. Bennett v. Garner, 913 F.3d 436, 2019 U.S. App. LEXIS 1423 (4th Cir. 2019).

B.Voluntary Conveyances in General.

This section excludes all inquiry into the motives and circumstances of the grantor. It adopts the view that if the grantor is indebted at the time of the voluntary settlement, it is presumed to be fraudulent in respect to such debts, and no circumstances will permit those debts to be affected by the settlement, or repel the legal presumption of fraud. The effect of the section is to disable the debtor from making any voluntary settlement of his estate to stand in the way of his creditors whose debts were contracted at the time. Johnston v. Gill, 68 Va. (27 Gratt.) 587, 1876 Va. LEXIS 51 (1876).

The principle upon which voluntary conveyances are held void as to existing creditors is that a man should be just before he is generous. Battle v. Rock, 144 Va. 1 , 131 S.E. 344 , 1926 Va. LEXIS 225 (1926).

Word “void” is to be construed as “voidable.” —

The word “void” as used in this section must be construed in the sense of “voidable.” Norris & Co. v. Jones, 93 Va. 176 , 24 S.E. 911 , 1896 Va. LEXIS 63 (1896).

Rights of assignee of claim no greater than those of assignor. —

Creditor of bankrupt corporation, which had acquired by assignment claims filed originally by corporations owned by the same persons as the bankrupt corporation, stood in the shoes of its assignors; and where the assignors were comakers of the note under attack and thus were prohibited from challenging the transaction, the assignee could not rise higher or acquire rights superior to those its assignors could have asserted. Docter, Docter & Salus v. United States (In re Abingdon Realty Corp.), 21 Bankr. 290, 1982 Bankr. LEXIS 3842 (Bankr. E.D. Va. 1982).

The limitation of a suit to void an absolute conveyance on the sole ground that it is voluntary is five years from the time “the right to void it accrued.” See § 8.01-253 . Kinney v. Craig, 103 Va. 158 , 48 S.E. 864 , 1904 Va. LEXIS 22 (1904).

Bankruptcy trustee’s action to avoid transfer was within statute of limitations. —

Chapter 7 trustee’s action to avoid a debtor’s July 16, 2004, transfer of its interest in a limited liability company to its president was viable because the debtor commenced the bankruptcy case on April 3, 2006, and the statute of limitations for an action to avoid a voluntary transfer under § 55-81 was five years under § 8.01-253 and the action under § 55-80 for a fraudulent transfer was subject only to laches. Bartl v. Ochsner (In re Ichiban, Inc.), No. 06-10316-SSM, No. 06-1134, 2007 Bankr. LEXIS 1255 (Bankr. E.D. Va. Apr. 4, 2007).

Shareholders were not unjustly enriched by receipt of $20.00 share in merger transaction, and would not be required to disgorge the unjust enrichment; the transfer to the shareholders was not a voluntary conveyance in violation of this section. C-T of Va., Inc. v. Euroshoe Assocs., 762 F. Supp. 675, 1991 U.S. Dist. LEXIS 5294 (W.D. Va. 1991), aff'd, 953 F.2d 637, 1992 U.S. App. LEXIS 5853 (4th Cir. 1992).

Contracted debt. —

Chapter 7 trustee could not rely on voluntary conveyance statute to attack validity of contracted debt as fraudulent conveyance. Even if it could be construed to apply to obligation incurred by debtor, more specific language applicable to accommodation party in Virginia Code would override general provisions in voluntary conveyance statute. Tavenner v. Wells Fargo Bank, N.A. (In re Ferguson), No. 11-32141-KRH, No. APN 13-03067-KRH, 2014 Bankr. LEXIS 1046 (Bankr. E.D. Va. Mar. 18, 2014).

Effect of pre-existing debt. —

The fact that defendant owed a pre-existing debt to his mother-in-law did not, ipso facto, prevent the conveyance of his interest in a house and land he owned to his mother-in-law from being fraudulent, and the government was not barred from seeking an order setting aside the conveyance where evidence showed that the conveyance was made by defendant to avoid payment of a money judgment which he expected a federal judge to issue as part of his sentence for conspiracy to sell marijuana. United States v. Maxwell, 189 F. Supp. 2d 395, 2002 U.S. Dist. LEXIS 4856 (E.D. Va. 2002).

Conspiracy or aiding and abetting. —

Chapter 7 trustee’s causes of action for conspiracy to fraudulently transfer and for aiding and abetting fraudulent transfers under state law were dismissed because trustee had not alleged that defendants received transferred property or benefitted from a transfer. Matson v. Rescue Rangers, LLC, 576 Bankr. 521, 2017 Bankr. LEXIS 3320 (Bankr. E.D. Va. 2017), dismissed in part, 582 Bankr. 669, 2018 Bankr. LEXIS 829 (Bankr. E.D. Va. 2018).

C.Transactions Between Husband and Wife.

Purpose of section. —

This section was intended to defeat frauds perpetrated upon existing creditors by the marriage of an insolvent debtor, accompanied by gifts to his wife. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

Presumed fraudulent. —

Transactions between husband and wife, as a matter of public policy, are presumed to be fraudulent, because of the temptation to commit frauds upon creditors and the ease with which they may be perpetrated, and this presumption must be overcome by evidence. Where a husband who is indebted conveys his property to his wife, the wife must prove the good faith of the transaction by clear and satisfactory evidence, and if the deed is tainted with actual fraud, it is void as to all creditors, whether existing or subsequent. Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918) (see also Hughson v. Dameron, 113 Va. 607 , 75 S.E. 92 (1912)).

Determining kind of conveyance. —

The rule that transactions between husband and wife must be closely scrutinized and that the burden is upon the wife to show by clear and satisfactory evidence the bona fides of the transaction does not apply to a mere voluntary conveyance, such transfer being governed by the principles incorporated in this section. But the rule is used to determine the kind of conveyance that is under investigation. Morriss v. Bronson, 170 Va. 516 , 197 S.E. 479 , 1938 Va. LEXIS 207 (1938).

Postnuptial settlement for fair consideration is good. —

That a postnuptial settlement in favor of a wife, made in pursuance of a previous fair contract for a fair consideration, will be held good, is a doctrine supported by abundant authority. Penn v. Whitehead, 58 Va. (17 Gratt.) 503, 1867 Va. LEXIS 21 (1867).

But every such settlement is presumed to be voluntary. —

Every postnuptial settlement will be taken as voluntary, unless those claiming under it can show that it was made for a valuable consideration, and this cannot be shown either by the answer or by the recitals in the deed, but must be established by legal evidence. Hatcher v. Crews, 78 Va. 460 , 1884 Va. LEXIS 21 (1884); Lewis v. Mason's Adm'r, 84 Va. 731 , 10 S.E. 529 , 1885 Va. LEXIS 1 (1885); Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918). But see Morriss v. Bronson, 170 Va. 516 , 197 S.E. 479 , 1938 Va. LEXIS 207 (1938).

The burden of proving valuable consideration for a postnuptial settlement rests on those claiming under it. Hatcher v. Crews, 78 Va. 460 , 1884 Va. LEXIS 21 (1884); Lewis v. Mason's Adm'r, 84 Va. 731 , 10 S.E. 529 , 1885 Va. LEXIS 1 (1885).

Conveyance by husband was void as to wife. —

Where conveyance of money by husband to corporation owned by person he was living with was made as an inducement for person to terminate her marriage, such consideration was not deemed valuable at law because it was contrary to public policy, and thus wife whom husband owed support payments was a creditor of the husband at the time of the conveyance and because it was a voluntary conveyance, it was void as to the wife. Chattin v. Chattin, 245 Va. 302 , 427 S.E.2d 347, 9 Va. Law Rep. 1000, 1993 Va. LEXIS 25 (1993).

Creditors cannot set aside a gift of property which is exempt from their claims, such as a husband’s gift of his interest in entireties property to his wife. Oliver v. Givens, 204 Va. 123 , 129 S.E.2d 661, 1963 Va. LEXIS 124 (1963).

Gift of a husband to his wife of his interest in the proceeds from the sale of real property that they owned as tenants by the entireties was not fraud as to the rights of the husband’s creditor because the creditor was not prejudiced by a gift of property that was exempt from their claims. The gift was not void under § 55-81. Banc of Am. Leasing & Capital LLC v. Havel, No. 4:05cv90, 2006 U.S. Dist. LEXIS 70828 (E.D. Va. Sept. 29, 2006).

Thus, gift by husband to wife of interest in entireties property is not in fraud of them. —

A gift by husband to wife of his interest in entireties property is not in fraud of the husband’s creditors. This is so for the obvious reason that the husband’s interest is in any event exempt from their claims. Oliver v. Givens, 204 Va. 123 , 129 S.E.2d 661, 1963 Va. LEXIS 124 (1963).

If a husband invests a wife’s money according to her direction, and takes title in his own name, he will be held to be a trustee for her benefit. But the trust must be clearly established. Battle v. Rock, 144 Va. 1 , 131 S.E. 344 , 1926 Va. LEXIS 225 (1926).

Improvements placed on wife’s land by insolvent husband. —

Improvements put upon the separate estate of a married woman by her insolvent husband in fraud of creditors, may be followed in her hands by such creditors, and the separate estate charged with the value of such improvements. New S. Bldg. & Loan Ass'n v. Reed, 96 Va. 345 , 31 S.E. 514 , 1898 Va. LEXIS 99 (1898).

Bankrupt’s gift of diamond ring to fiancee. —

Assuming a completed purchase at the time of delivery to the bankrupt, the bankrupt’s gift of a diamond ring to his fiancee constituted a voluntary transfer under this section, and was, as to the bankrupt’s existing creditors at that time, a voidable transfer. In re Markham, 254 F. Supp. 948, 1966 U.S. Dist. LEXIS 10467 (W.D. Va. 1966).

Gift of services. —

The great weight of authority approves the principle that a debtor, even though insolvent, has committed no fraud in law or in fact by giving his labor away, for by so doing he has not concealed, withheld or disposed of anything on which his creditors have any claim in law or in equity; and, generally, this rule applies with equal force although the relationship of the debtor and his employer is that of husband and wife. Virginia has adopted this view, and early cases to the contrary have been impliedly overruled. Studds v. Fidelity & Deposit Co., 267 F.2d 875, 1959 U.S. App. LEXIS 3778 (4th Cir.), cert. denied, 361 U.S. 876, 80 S. Ct. 140, 4 L. Ed. 2d 114, 1959 U.S. LEXIS 253 (1959).

Transfer of funds into joint bank account. —

Judgment creditor presented sufficient evidence to establish a prima facie case for its claims of fraudulent conveyance and voluntary conveyance under §§ 55-80 and 55-81 because it demonstrated several badges of fraud, including the debtor’s retention of an interest in the funds transferred into a joint bank account with his wife, shifting the burden to the judgment debtor to establish that the conveyances were legitimate. Fox Rest Assocs., L.P. v. Little, 282 Va. 277 , 717 S.E.2d 126, 2011 Va. LEXIS 183 (2011).

D.Valuable Consideration.

Since the enactment of this section, marriage is no longer a valuable consideration as to existing creditors of the grantor, but it is still a valid consideration to support a conveyance as to subsequent creditors. Therefore, a deed made by a man to his intended wife, followed by marriage, is conclusively presumed to be in consideration of the marriage, and is based on a valuable consideration as to subsequent creditors, but is void as to existing creditors. This enactment was intended to defeat frauds perpetrated upon existing creditors by the marriage of an insolvent debtor, accompanied by gifts to his wife. Snyder v. Grandstaff, 96 Va. 473 , 31 S.E. 647 , 1898 Va. LEXIS 118 (1898).

The phrase “consideration deemed valuable in law” refers to any valuable consideration received by the transferor. Moore v. Manson (In re Springfield Furn., Inc.), 145 Bankr. 520, 1992 Bankr. LEXIS 1553 (Bankr. E.D. Va. 1992).

Debtor received valuable consideration and transfers could not be voided. —

In exchange for its contributions to the retirement plan, the debtor received “consideration deemed valuable at law” from its employees, and such transfers could not be voided pursuant to this section. Moore v. Manson (In re Springfield Furn., Inc.), 145 Bankr. 520, 1992 Bankr. LEXIS 1553 (Bankr. E.D. Va. 1992).

Attorney who sold a Virginia professional limited liability company (LLC) he created to practice law two years before the LLC declared Chapter 7 bankruptcy was entitled to summary judgment on a Chapter 7 trustee’s claims seeking an order under 11 U.S.C.S. § 547 and this section, requiring the attorney to turn over payments he received to the LLC’s bankruptcy estate. The attorney was not an “insider” as that term was used in the Bankruptcy Code, there was no evidence showing that the LLC was insolvent at the time the attorney agreed to sell the LLC, and the fact the attorney continued to work for the LLC after it was sold was sufficient to establish that the LLC received “consideration deemed valuable at law” under § 55-81. Smith v. Porter (In re Carr & Porter, LLC), 416 Bankr. 239, 2009 Bankr. LEXIS 979 (Bankr. E.D. Va.), aff'd, 416 Bankr. 264, 2009 U.S. Dist. LEXIS 60596 (E.D. Va. 2009).

Because the court determined that the securitization of the debtors’ antecedent debt constituted reasonably equivalent value under 11 U.S.C.S. § 548(a), it necessarily sufficed as any valuable consideration under § 55-81. Moreover, Virginia law made clear that antecedent debt constituted valuable consideration for granting of a deed of trust; thus, a trustee’s claim under 11 U.S.C.S. § 544(b)(1) and § 55-81 failed. Callahan v. Osteen (In re Osteen), No. 3:12-cv-00023, 2012 U.S. Dist. LEXIS 150484 (W.D. Va. Oct. 19, 2012).

In a Chapter 11 bankruptcy case, transfers were not avoidable under a Virginia voluntary conveyance statute because the requirement of consideration deemed valuable at law in Virginia was a substantially lower standard than that required for bankruptcy law. The transfers made between a debtor and a transferee were made in exchange for reasonably equivalent value. LandAmerica Fin. Group, Inc. v. Southern Cal. Edison (In re LandAmerica Fin. Group), No. 08-35994-KRH, No. APN 10-03819-KRH, 2014 Bankr. LEXIS 2213 (Bankr. E.D. Va. May 19, 2014), aff'd, 525 Bankr. 308, 2015 U.S. Dist. LEXIS 5677 (E.D. Va. 2015).

Payment of insurance premiums may be “voluntary transfer.” —

The obvious intent of this section is to invalidate as against existing claims of creditors every gift or voluntary assignment of the debtor’s property without regard to its object or form. To the extent that the means of the insured are withdrawn from creditors and applied to the payment of premiums on life insurance policies for the benefit of others the payments are void as against creditors, and they are entitled to have the sum so paid applied to the discharge of their claims out of the proceeds of the policies. White v. Pacific Mut. Life Ins. Co., 150 Va. 849 , 143 S.E. 340 (1928) (see note to).Coalter v. Willard, 156 Va. 79 , 158 S.E. 724 (1931), under § 55-80 .

Contract to support debtor’s mother is for valuable consideration. —

The consideration for a contract to support one’s destitute mother would be one “deemed valuable in law,” and not in violation of this section. But a debtor, under the guise of supporting his aged and destitute parent, and with fraudulent intent, will not be permitted to divest himself of his property and convey it beyond the reach of his creditors. Mitchell-Powers Hdwe. Co. v. Eaton, 171 Va. 255 , 198 S.E. 496 , 1938 Va. LEXIS 278 (1938).

But deed based on past services not performed at debtor’s request is not. —

A brother, entitled to insolvency, after suit brought, divested himself of all the property which he owned within the jurisdiction of the court by a deed to his sister, based upon past services alleged to have been rendered by her for their mother. The services were neither alleged nor proven to have been performed at the request of the brother, express or implied. It was held that such a consideration was in no sense a valuable consideration within the meaning of this section, and the grantee in the deed occupied the position of a volunteer, and not of a bona fide purchaser for value. Davis v. Anderson, 99 Va. 620 , 39 S.E. 588 , 1901 Va. LEXIS 88 (1901).

Transfers from corporation to shareholders in leveraged buyout not voided. —

Bankrupt corporation could not void the transfers of money from itself to the former shareholders paid in a leveraged buyout on the theory that transfers to shareholders were not made for consideration deemed valuable at law, because it was clear that corporation received some consideration deemed valuable at law through receipt of an investment and new management from parent corporation; furthermore, the investment and management assistance from parent corporation were consideration deemed valuable at law sufficient to support the entire transaction. C-T of Va., Inc. v. Euroshoe Assocs., 762 F. Supp. 675, 1991 U.S. Dist. LEXIS 5294 (W.D. Va. 1991), aff'd, 953 F.2d 637, 1992 U.S. App. LEXIS 5853 (4th Cir. 1992).

Debtor received nothing of reasonably equivalent value for transfer. —

Focus of the inquiry was whether debtor received something of equal value for its transfer of $1,615,000 loan proceeds that created a debt, and whether the transfer was made by an insolvent debtor or whether the transfer created an insolvent debtor, and the evidence clearly demonstrated that debtor received nothing of reasonably equivalent value for the transfer where the only thing it received was the correlating debt. The transfer also rendered debtor insolvent. Wellington Apt., LLC v. Clotworthy (In re Wellington Apt., LLC), No. 04-50301-DHA, No. APN 05-5029, 2006 Bankr. LEXIS 1954 (Bankr. E.D. Va. July 27, 2006), reprinted, 350 Bankr. 213, 2006 Bankr. LEXIS 2362 (Bankr. E.D. Va. 2006).

In an action in which a debtor filed suit against defendants based on their allegedly fraudulent conduct surrounding the placement of one creditor’s Second Deed of Trust on the debtor’s apartment complex, the debtor met its burden of proof under § 55-81 and the transfer was void where: (1) the evidence adduced at trial clearly demonstrated that the debtor received nothing of value for the transfer of its $1,615,000; (2) the debt, in the form of a lien on the debtor’s property, attached at the time of the transfer, therefore the debt was incurred at that time; and (3) the 2000 loan rendered the debtor insolvent as of April 6, 2000, the date of the loan. Wellington Apt., LLC v. Clotworthy, 350 Bankr. 213, 2006 Bankr. LEXIS 2362 (Bankr. E.D. Va. 2006).

Statute of limitations for action under this section to set aside transfer not made for valuable consideration is five years. In re Massey, 225 Bankr. 887, 1998 Bankr. LEXIS 1338 (Bankr. E.D. Va. 1998).

E.Validity of Voluntary Conveyances.

A voluntary conveyance is valid as between the immediate parties. Stokes v. Oliver, 76 Va. 72 , 1882 Va. LEXIS 6 (1882).

Voluntary and fraudulent conveyances distinguished. —

Transactions which are condemned by § 55-80 may be impeached by both prior and subsequent creditors, while such as are included in this section can only be set aside at the suit of existing creditors. Section 55-80 deals with fraudulent acts that are void, and, therefore, its operation is not limited to any particular class of creditors. It applies alike to all creditors who are delayed, hindered or defrauded of their rights by the device of the grantor, whether they be existing or subsequent creditors. On the other hand, this section deals with gifts, conveyances, etc., that are voluntary, or upon consideration of marriage, which are only declared to be void as to “creditors whose debts shall have been contracted at the time it was made, but shall not, on that account merely, be void as to creditors whose debts shall have been contracted . . . after it was made.” Consolidated Tramway Co. v. Germania Bank, 121 Va. 331 , 93 S.E. 572 , 1917 Va. LEXIS 38 (1917).

The rule seems settled that in respect to after-existing creditors a fraudulent deed differs from one that is merely void because not upon a consideration deemed valuable in law, in that the former is void as to such creditors, as well as those whose debts were created after the deed was made; while the latter is only void as to antecedent debts, and may be wholly sustained as to those coming in existence after its date. Penn v. Whitehead, 58 Va. (17 Gratt.) 503, 1867 Va. LEXIS 21 (1867); Whitten v. Saunders, 75 Va. 563 , 1881 Va. LEXIS 40 (1881); Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 , 1887 Va. LEXIS 55 (1887).

Where the conveyance is without consideration deemed valuable at law, such conveyance is void as to a creditor whose rights existed at the time of the transfer. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

A voluntary transfer is voidable only as to prior or existing creditors. Barnes v. Vadico Terms., Inc., 408 F.2d 31, 1969 U.S. App. LEXIS 13261 (4th Cir. 1969).

Voluntary conveyance is void only as to existing creditors. —

While under this section a voluntary conveyance, without fraud, is void as to existing creditors, it is void only as to them, and is good as to all others. Whitten v. Saunders, 75 Va. 563 , 1881 Va. LEXIS 40 (1881).

In the absence of fraud, a merely voluntary deed will not be set aside at the instance of subsequent creditors of the grantor. Whitten v. Saunders, 75 Va. 563 , 1881 Va. LEXIS 40 (1881); New S. Bldg. & Loan Ass'n v. Reed, 96 Va. 345 , 31 S.E. 514 , 1898 Va. LEXIS 99 (1898); Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918).

Certain facts are indicia of fraud, such as the relationship of the parties, the insolvency of the debtor, the consideration or lack of consideration for the transfer, and retention of the benefits of the transferred property, among others. Wick v. Yost, 47 Bankr. 697, 1985 Bankr. LEXIS 6526 (Bankr. W.D. Va. 1985).

Retention of interest in property was badge of fraud. —

Debtor’s retention of an interest in property transferred to retirement plan, a related party, constituted a badge of fraud sufficient to shift the burden of proof to trustee of the trust which held the assets of the plan. Moore v. Manson (In re Springfield Furn., Inc.), 145 Bankr. 520, 1992 Bankr. LEXIS 1553 (Bankr. E.D. Va. 1992).

Transfer back of sale proceeds to buyer of home by debtor. —

Where a Chapter 7 debtor received net proceeds from the sale of her home to her sister-in-law and gave the funds back to the sister-in-law two weeks later, the transfer was avoidable under § 55-81 and 11 U.S.C.S. § 544(b)(1) because it was for no valuable consideration, at a time when the debtor was insolvent, and depleted the bankruptcy estate of a valuable cash asset. Phillips v. Moazzeni, 378 Bankr. 128, 2007 Bankr. LEXIS 3343 (Bankr. E.D. Va. 2007).

A gift of a chattel, being without valuable consideration, is always void as to existing creditors of the donor; but as to subsequent creditors actual fraud must be proved. Morrisette v. Cook & Bernheimer Co., 122 Va. 588 , 95 S.E. 449 , 1918 Va. LEXIS 124 (1918).

Authorization for equitable lien found. —

Under voluntary conveyance statute, where Chapter 7 debtor paid off mortgage note with nonexempt cash received by will, then transferred property to self and wife by tenancy by the entirety, trustee could set aside transfer and impose equitable lien on the property. Shaia v. Meyer, 206 Bankr. 410, 1997 Bankr. LEXIS 410 (Bankr. E.D. Va. 1997), aff'd, No. 3:97cv352, 1998 U.S. Dist. LEXIS 4900 (E.D. Va. Mar. 12, 1998).

Question of fact. —

Bankruptcy court was unable to determine whether the companies were, as the debtor alleged, the entities for whose benefit the transfers were made as this was a question of fact and was not an issue that could be resolved on a Fed. R. Civ. P. 12(b)(6) motion to dismiss. Pathnet, Inc. v. Nortel Networks, Inc.(In re Pathnet, Inc.), No. 01-12264-SSM, No. 02-8068, 2002 Bankr. LEXIS 1262 (Bankr. E.D. Va. Aug. 14, 2002).

Recorded deed of repurchase. —

Where debtor purchased her residential real property from Habitat for Humanity subject to a limitation imposed by a recorded deed of repurchase, the court concluded that a hypothetical chapter 7 trustee would be bound by the deed of right to repurchase. The trustee could not avoid the recorded deed of repurchase under Virginia law. In re Plascencia, 354 Bankr. 774, 2006 Bankr. LEXIS 3066 (Bankr. E.D. Va. 2006).

F.Existing Creditors.

Who are existing creditors. —

The word “creditors” as used in this section and § 55-80 includes all creditors, whether with or without notice. Davis v. Bonney, 89 Va. 755 , 17 S.E. 229 , 1893 Va. LEXIS 100 (1893).

Holders of contingent claims are existing creditors. —

Virginia follows the general rule that holders of contingent claims are “existing creditors” for purposes of avoiding a voluntary conveyance. Hyman v. Porter, 37 Bankr. 56, 1984 Bankr. LEXIS 6472 (Bankr. E.D. Va. 1984).

Where the principal shareholders exercised complete control over the affairs of a corporation and consequently transferred corporate assets to themselves in violation of § 55-80, the appropriate remedy in such a situation was to return the fraudulently conveyed assets for a ratable distribution to all legitimate creditors, which might include the recipient of the fraudulent conveyance and the principal shareholders, as legitimate creditors of the corporation were entitled to share in the distribution of the bankrupt’s estate, after they returned the fraudulently conveyed assets, or their value, to the estate. APAC-Virginia, Inc. v. Jenkins Landscaping & Excavating, Inc., 93 Bankr. 84 (Bankr. W.D. Va. 1988).

CIRCUIT COURT OPINIONS

Editor’s note. —

The cases cited below were decided under prior law.

Fraudulent conveyance. —

Corporate director’s and majority shareholder’s act of directing the proceeds from the sale of corporate property to be made to them primarily, which was done while the corporation was insolvent and when the shareholder knew that it had at least two judgments against it, was a voluntary act made with the intent to hinder or defraud creditors; thus, such was voided as a fraudulent conveyance. Lawyers Title Ins. Corp. v. P.R.T. Enters., 65 Va. Cir. 271, 2004 Va. Cir. LEXIS 286 (Norfolk July 30, 2004).

Voluntary conveyance. —

Judgment creditor proved its voluntary conveyance claim because transfers were made at a time when a seller and a purchaser were insolvent; the relevant individual transfer transactions lacked adequate consideration and were made at a time after the seller and purchaser were already indebted to the judgment creditor. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Burden of proof. —

“Clear and convincing” standard seems to apply mostly to situations where the intent of a party might be in question, as opposed to mere evaluation of a fact that is objectively measurable; in the case of voluntary conveyance, the central operative fact is primarily a determination of “insolvency,” which is generally of easy measurement, and the standard of proof for voluntary conveyance claims is thus by a preponderance of the evidence. Westwood Bldgs. Ltd. P'ship v. Grayson, 96 Va. Cir. 312, 2017 Va. Cir. LEXIS 166 (Fairfax County Sept. 8, 2017), vacated, rev'd, 300 Va. 25 , 859 S.E.2d 651, 2021 Va. LEXIS 71 (2021).

Proof of insolvency. —

Although the Commonwealth failed to prove that a taxpayer was insolvent when the taxpayer transferred property to his girlfriend, the Commonwealth presented badges of fraud that the taxpayer did not rebut; therefore, the conveyance was fraudulent and void under § 55-80. Dep't of Taxation v. Nicolet, 62 Va. Cir. 372, 2003 Va. Cir. LEXIS 281 (Richmond July 31, 2003).

I.[Reserved.]

II.Decided Under Prior Law.

Creditor may sue under this section without first obtaining judgment. —

As the law was before this section a creditor could not attack a conveyance for fraud without first obtaining a judgment or decree against his debtor. This section, which originated in the Code of 1849, changed this rule and authorized a creditor at large to institute such a suit without first obtaining judgment. Wallace's Adm'r v. Treakle, 68 Va. (27 Gratt.) 479, 1876 Va. LEXIS 41 (1876); Johnston v. Straus, 26 F. 57, 1882 U.S. App. LEXIS 2252 (C.C.D. Va. 1882); Trimble v. Covington Grocery Co., 112 Va. 826 , 72 S.E. 724 , 1911 Va. LEXIS 156 (1911); Wood v. Lester, 126 Va. 169 , 101 S.E. 52 , 1919 Va. LEXIS 84 (1919).

This section allows a bill to be filed by a creditor to set aside a conveyance, etc., declared void by §§ 55-80 and 55-81, before obtaining judgment or decree, upon the ground that the above sections refer to fraudulent acts that are void. Brown v. Putney, 90 Va. 447 , 18 S.E. 883 , 1894 Va. LEXIS 11 (1894).

The lien given by this section is a lien only upon the property conveyed, and not, like the lien of a judgment, on all of a debtor’s estate. Davis v. Bonney, 89 Va. 755 , 17 S.E. 229 , 1893 Va. LEXIS 100 (1893).

It is inchoate until conveyance is adjudged void. —

This section was intended to benefit those creditors who, by their diligence, succeed in bringing into court for distribution a fund, or assets placed beyond the reach of the unsecured creditors by the fraudulent or voluntary act of the debtor, and such creditors as attack the fraudulent or voluntary act and succeed in subjecting such fund or assets. But the lien provided for is never perfected unless and until the deed or other act of the debtor attacked is adjudicated to be fraudulent and void. If there is no such adjudication, the lien is inchoate and ineffectual. Quinn-Marshall Co. v. Whittaker, 116 Va. 965 , 83 S.E. 398 , 1914 Va. LEXIS 110 (1914) (see Wood v. Lester, 126 Va. 169 , 101 S.E. 52 (1919)).

And it may be waived. —

The lien given by this section may be waived by the subsequent contracts and dealings of the creditor with the debtor. Quinn-Marshall Co. v. Whittaker, 116 Va. 965 , 83 S.E. 398 , 1914 Va. LEXIS 110 (1914).

Creditor may not be substituted to position of fraudulent grantee. —

A creditor who successfully assails a deed of trust on the ground that it secures a fraudulent debt is not entitled to be substituted to the position formerly occupied by the fraudulent creditor. His lien, if not previously acquired, dates only from the commencement of his suit, and is subordinate to liens previously acquired. The deed is valid as to bona fide debts, and the fraudulent debt is eliminated. Craig v. Hoge, 95 Va. 275 , 28 S.E. 317 , 1897 Va. LEXIS 36 (1897).

Parties are placed in same position as if conveyance had never been made. —

The result of setting aside a conveyance, under this section, is to place the parties in the same situation as if the conveyance had never been made, and to subject the property to the payment of the creditors of the grantor. Ferguson & Co. v. Daughtrey, 94 Va. 308 , 26 S.E. 822 , 1897 Va. LEXIS 77 (1897).

Provision as to personal decree to be liberally construed. —

If from any cause the result of the suit prove unavailing to any creditor united therein, the court may render a personal decree against the debtor for the amount of the creditor’s claim. This feature of this section is remedial and should be liberally construed, especially as this construction accomplishes the wise end of preventing a multiplicity of suits, terminates litigation, and does no substantial injury to the debtor. Battle v. Rock, 144 Va. 1 , 131 S.E. 344 , 1926 Va. LEXIS 225 (1926).

Service of attachment does not create debtor-creditor relation. —

The service of an attachment upon a garnishee did not create the relation of debtor and creditor between the garnishee and the attaching creditor, within the meaning of this section and former § 55-83, and did not confer upon such attaching creditor the right to avoid a sale in gross of merchandise by said garnishee for want of conformity to former § 55-83. Trimble v. Covington Grocery Co., 112 Va. 826 , 72 S.E. 724 , 1911 Va. LEXIS 156 (1911).

The filing of a homestead deed is not a conveyance which can be attacked under this section. Simon v. Ellison, 22 S.E. 860 (Va. 1895).

No lis pendens without interest in property. —

Pursuant to § 55-82, as limited by subsection B of § 8.01-268 , a plaintiff in an action claiming fraudulent conveyance as to a specific property is not free to file a memorandum of lis pendens on property in which he does not assert or claim an interest. Meliani v. Jade Dunn Loring Metro, L.L.C., 286 F. Supp. 2d 741, 2003 U.S. Dist. LEXIS 18178 (E.D. Va. 2003).

Condominium project owner’s motion to quash a lis pendens in a condominium purchaser’s breach of contract and fraud action was granted; because the purchaser neither contracted to purchase a unit in the other three phases, nor obtained a lien on the phases under § 55-82, it followed that the purchaser could not establish an interest in, or file a memorandum of lis pendens on, the three phases. Meliani v. Jade Dunn Loring Metro, L.L.C., 286 F. Supp. 2d 741, 2003 U.S. Dist. LEXIS 18178 (E.D. Va. 2003).

Interlocutory decree as res judicata. —

In a suit under this section to set aside a deed of trust as fraudulent, decrees, the first of which established appellant’s claim as a lien upon the property and referred the cause to a commissioner to take account of liens, and the second of which confirmed the report of the commissioner, to which there was exception, and ordered a sale of the land, did not establish the validity of appellant’s lien as res judicata, so that the court could not afterwards consider the question of the invalidity of the lien as against other lien creditors, afterwards setting up by petition alleged error of law in the holding of such decrees apparent from the record, whether appellees were or were not formal parties to the cause before the decrees were entered, since the decrees were not final. Motley v. H. Vicello & Bros., 132 Va. 281 , 111 S.E. 295 , 1922 Va. LEXIS 25 (1922).

Attorney fees. —

A fraudulent conveyance is not a fraud for which additional attorney’s fees, beyond what the statute allows, may be awarded. Simons v. Wassenaar, 268 Bankr. 477, 2001 U.S. Dist. LEXIS 17306 (W.D. Va. 2001).

The court did not err in determining the amount of attorney’s fees to be awarded where the court found (1) that some legal research was excessive, (2) that some fees were simply the normal collection activities of a creditor, and (3) that some fees were not related to the fraudulent conveyance action and were, therefore, unrecoverable under the statute. Simons v. Wassenaar, 268 Bankr. 477, 2001 U.S. Dist. LEXIS 17306 (W.D. Va. 2001).

I.[Reserved.]

II.Decided Under Prior Law.

Parol loan is taken to be fraudulent after five years. —

Under the act to prevent frauds and perjuries, a loan of goods and chattels made by parol, to a person with whom, or those claiming under him, possession remains five years, without demand made and pursued by due process of law on the part of the lender, is taken to be fraudulent as to the creditors and purchasers of the persons so remaining in possession. Beasley v. Owen, 13 Va. (3 Hen. & M.) 449, 1809 Va. LEXIS 14 (1809); Gay v. Moseley, 16 Va. (2 Munf) 543, 1812 Va. LEXIS 8 (1812); Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Garth's Ex'rs v. Barksdale, 19 Va. (5 Munf) 101, 1816 Va. LEXIS 19 (1816); Durham v. Dunkly, 27 Va. (6 Rand.) 135, 1828 Va. LEXIS 5 (1828); Pate v. Baker, 35 Va. (8 Leigh) 80, 1837 Va. LEXIS 8 (1837); Lightfoot v. Strother, 36 Va. (9 Leigh) 451, 1838 Va. LEXIS 33 (1838); London v. Turner, 38 Va. (11 Leigh) 403, 1840 Va. LEXIS 48 (1840); Taylor v. Beale, 45 Va. (4 Gratt.) 93, 1847 Va. LEXIS 27 (1847).

But it remains valid between the parties. —

A loan of chattels, though not in writing duly recorded, and therefore void as to creditors, the borrower having continued in possession five years without such demand as would bar their right, is nevertheless effectual between the parties and their representatives, however long the borrower may keep possession. Boyd v. Stainback, 19 Va. (5 Munf) 305, 1817 Va. LEXIS 3 (1817); Scott v. Jones, 76 Va. 233 , 1882 Va. LEXIS 24 (1882) (see London v. Turner, 38 Va. (11 Leigh) 403 (1840)).

As does parol trust. —

Although, where personal property is given to one upon a trust by parol for another, the declaration of trust by parol may be valid as between the donee and the cestui que trust, yet as between the cestui que trust and the creditors of the donee the case is essentially different. London v. Turner, 38 Va. (11 Leigh) 403, 1840 Va. LEXIS 48 (1840).

Choses in action are not “goods or chattels.” —

Sections 55-3 and 55-96 and this section all relate to gifts, loans, sales, or partition of the same kind of property, described by the same terms, namely, “goods or chattels” or “goods and chattels.” They are closely connected in subject matter and in the language employed, and it can hardly be doubted that whatever was meant by the words “goods or chattels” or “goods and chattels” in any one of these sections must have been intended of the same words in each of the other sections. These words do not apply to choses in action, but only to visible and tangible property. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

Section does not apply to property remaining in possession on hire. —

This section does not apply to the case of property remaining in possession of a debtor for more than five years on hire. M'Kenzie v. Macon, 46 Va. (5 Gratt.) 379, 1849 Va. LEXIS 6 (1849).

Nor to possession of mortgagor after mortgage duly recorded. See Rose's Adm'x v. Burgess, 37 Va. (10 Leigh) 186, 1839 Va. LEXIS 28 (1839).

And purchaser from borrower cannot claim benefit of his own possession. —

Where possession has not, at the time of a sale, remained five years with the borrower and those claiming under him, the purchaser can have no benefit from this section by reason of his own possession after the purchase. The circumstances that the possession by the borrower before the sale, and the possession by the purchaser after the sale, will together make five years cannot avail to give a title to the purchaser. Lightfoot v. Strother, 36 Va. (9 Leigh) 451, 1838 Va. LEXIS 33 (1838).

Operation of section is avoided by resumption of possession by grant of chattel to another. —

The operation of this section will be avoided by the lender’s resuming possession, or granting the chattels to another by writing duly recorded, within five years. Collins v. Lofftus & Co., 37 Va. (10 Leigh) 5, 1839 Va. LEXIS 14 (1839); Scott v. Jones, 76 Va. 233 , 1882 Va. LEXIS 24 (1882).

But not by private demand, receipt and redelivery to borrower. —

A demand for chattels by the lender, who thereupon receives and immediately redelivers them to the borrower to be held on the same terms as before, the demand, receipt, and redelivery being in private, is not sufficient to bar the rights of creditors under this section. Boyd v. Stainback, 19 Va. (5 Munf) 305, 1817 Va. LEXIS 3 (1817).

Or resumption of possession or recordation after five years. —

Five years peaceable and uninterrupted possession of chattels under a loan not evidenced by deed duly recorded, vests a title in the borrower which inures in favor of his creditors, and cannot be divested as to them by his returning the chattels to the lender after the five years have expired. Garth's Ex'rs v. Barksdale, 19 Va. (5 Munf) 101, 1816 Va. LEXIS 19 (1816); Taylor v. Beale, 45 Va. (4 Gratt.) 93, 1847 Va. LEXIS 27 (1847) (see London v. Turner, 38 Va. (11 Leigh) 403 (1840)).

If a debtor remains in possession of chattels for five years, under a parol loan, they are liable to satisfy his creditors, though possession is resumed by the lender before executions are levied upon them. Garth's Ex'rs v. Barksdale, 19 Va. (5 Munf) 101, 1816 Va. LEXIS 19 (1816); Taylor v. Beale, 45 Va. (4 Gratt.) 93, 1847 Va. LEXIS 27 (1847); Beale v. Digges, 47 Va. (6 Gratt.) 582, 1850 Va. LEXIS 7 (1850).

Where, after a loan to a person with whom, or with those claiming under him, possession has remained five years, a deed is made and recorded by the lender, the deed cannot affect a creditor of the person in possession, and ought not to be received as evidence against such creditor. Pate v. Baker, 35 Va. (8 Leigh) 80, 1837 Va. LEXIS 8 (1837).

Until five years after such resumption of possession. —

Where possession has remained with the borrower, or with those claiming under him, for five years, and is then resumed by the lender, the possession must continue with the lender for the full period of five years from the time it was actually resumed before the title will be revested in the lender as against a creditor of the borrower. Pate v. Baker, 35 Va. (8 Leigh) 80, 1837 Va. LEXIS 8 (1837).

But only creditors existing when lender resumes possession are protected. —

If no writing declaring a loan is recorded, or no demand is made by the lender and pursued by course of law, for more than five years after possession is commenced, the loan is void as to the borrower’s creditor, whose rights cannot be affected by lender’s subsequent resumption of possession. But the creditors meant are those whose debts were contracted before the resumption of possession, or conveyance of the chattels, by the lender, they having given credit to loanee on the apparent ownership of the property. Scott v. Jones, 76 Va. 233 , 1882 Va. LEXIS 24 (1882).

And recordation vacates loan as to debts subsequently contracted. —

A deed recorded after possession has remained with a borrower more than five years vacates the loan, not as to debts contracted by the borrower before, but as to those contracted after, its recordation; and the onus is on the creditor to show that his debt was contracted before the deed was recorded, in order to render the property liable. Scott v. Jones, 76 Va. 233 , 1882 Va. LEXIS 24 (1882).

Effect of defective recordation. —

See Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814).

I.[Reserved.]

II.Decided Under Prior Law.

The manifest purpose of this section and §§ 11-1 and 55-96 is to protect creditors against debtors who give a deceptive appearance of ownership by retaining possession after title has passed to a stranger to the creditor-debtor relationship. Graves Constr. Co. v. Rockingham Nat'l Bank, 220 Va. 844 , 263 S.E.2d 408, 1980 Va. LEXIS 175 (1980).

This section and §§ 11-1 and 55-96 to be read together. —

This section and §§ 11-1 and 55-96 were intended to render our registry laws more nearly perfect, and might very properly have been embraced in one section. This section and § 55-96 are so connected with and dependent upon § 11-1 that they must be read with it in order to ascertain what is meant by the terms any such contract” and “every such contract in writing,” as used in those sections, respectively. Norfolk & Portsmouth Traction Co. v. C.B. White & Bros., 113 Va. 102 , 73 S.E. 467 , 1912 Va. LEXIS 14 (1912).

Recordation of contract not required to be recorded. —

This section and §§ 11-1 and 55-96 do not authorize the recordation of any contract relating to personal property, except a contract for the sale of personalty made in consideration of marriage [and one under which possession is allowed to remain in the grantor], and recordation of a contract not required to be recorded is not notice to a subsequent purchaser of the property for value and without notice. Braxton v. Bell, 92 Va. 229 , 23 S.E. 289 , 1895 Va. LEXIS 109 (1895).

Abandonment of recorded contract. —

Appellant sought to enjoin the enforcement of a judgment lien against land which had been conveyed to her father by one to whom it had been conveyed by the judgment debtor by a deed which was never recorded. Prior to the conveyance to the grantor of appellant’s father, the judgment debtor and his wife had executed a title bond or contract of sale under which they were to convey the property to another party, which contract was duly recorded prior to the docketing of the judgment. Appellant contended that this title bond was in legal effect a deed, and, since it was recorded prior to the docketing of the judgment, that the judgment could never have been a lien against the land. The other party to the contract of sale joined with the judgment debtor in the conveyance to the grantor of appellant’s father, in which conveyance it was stated that the contract of sale had been rescinded and that the other party to the contract joined in such deed as a release deed. It was held that any claim under the title bond or contract had been abandoned and such bond or contract was a nullity, and the land was subject to the judgment lien. Cox v. Williams, 183 Va. 152 , 31 S.E.2d 312, 1944 Va. LEXIS 139 (1944).

The trustee in bankruptcy, as a lien creditor, takes the bankrupt’s real estate free from most hidden interests. In re Smith, 348 F. Supp. 1290, 1972 U.S. Dist. LEXIS 11686 (E.D. Va. 1972).

Resulting trust. —

Where one holds the legal title to real estate which is impressed in his hands with a resulting trust, such trust may be enforced and is good against his judgment creditors. In re Smith, 348 F. Supp. 1290, 1972 U.S. Dist. LEXIS 11686 (E.D. Va. 1972).

OPINIONS OF THE ATTORNEY GENERAL

Editor’s note. —

The opinion cited below refers to prior law.

Recordation tax based on amount of indebtedness. —

When the amount secured by a deed of trust is known, the clerk of court should calculate the recordation tax based on the amount of indebtedness rather than the fair market value of the encumbered property. See opinion of Attorney General to The Honorable Yvonne G. Smith, Clerk of the Circuit Court of Henrico County, 11-073, (5/27/11).

I.[Reserved.]

II.Decided Under Prior Law.

A.General Consideration.

For the history of this section, see Jones v. Folks, 149 Va. 140 , 140 S.E. 126 , 1927 Va. LEXIS 181 (1927).

The chief object of this section is to benefit creditors and subsequent purchasers, by enabling them to know whom they may credit, and from whom they may safely purchase. Pillow v. Southwest Va. Imp. Co., 92 Va. 144 , 23 S.E. 32 , 1895 Va. LEXIS 97 (1895).

The main purpose of recordation statutes such as this section is to give constructive notice to purchasers and encumbrancers who acquire or seek to acquire some interest or right in property. Chavis v. Gibbs, 198 Va. 379 , 94 S.E.2d 195, 1956 Va. LEXIS 218 (1956).

The manifest purpose of this section and §§ 11-1 and 55-95 is to protect creditors against debtors who give a deceptive appearance of ownership by retaining possession after title has passed to a stranger to the creditor-debtor relationship. Graves Constr. Co. v. Rockingham Nat'l Bank, 220 Va. 844 , 263 S.E.2d 408, 1980 Va. LEXIS 175 (1980).

This section states the “first in time, first in right” doctrine. In re Shirley, 128 Bankr. 724, 1991 Bankr. LEXIS 970 (Bankr. W.D. Va. 1991).

Section 8.01-458 must be read in conjunction with this section. Leake v. Finance One Mtg., Inc. (In re Snyder), 57 Bankr. 438, 1985 Bankr. LEXIS 5057 (Bankr. W.D. Va. 1985).

Section 43-21 modifies this section. —

The effect of § 43-21 is to modify the registry law as contained in this section so far as to give priority to a mechanics’ lien on the lands of the grantee, who has failed to record his deed, over judgments subsequently obtained against his grantor. Pace v. Moorman, 99 Va. 246 , 37 S.E. 911 , 1901 Va. LEXIS 35 (1901).

Time of recording held time of transfer for purposes of Bankruptcy Act. —

For the purpose of determining whether or not a transaction constitutes a voidable preference under the federal Bankruptcy Act, title to personal property, the subject of a bill of sale under which possession is to remain in the grantor, does not pass until the bill of sale is recorded. In re Montague, 143 F. 428, 1905 U.S. Dist. LEXIS 26 (D. Va. 1905).

The trustee in bankruptcy, as a lien creditor, takes the bankrupt’s real estate free from most hidden interests. In re Smith, 348 F. Supp. 1290, 1972 U.S. Dist. LEXIS 11686 (E.D. Va. 1972).

Resulting trust. —

Where one holds the legal title to real estate which is impressed in his hands with a resulting trust, such trust may be enforced and is good against his judgment creditors. In re Smith, 348 F. Supp. 1290, 1972 U.S. Dist. LEXIS 11686 (E.D. Va. 1972).

Pleading. —

In a suit by the grantee in an unrecorded deed to set aside a later conveyance of the same property, if the defendants were entitled to the protection of this section, that was a matter of defense to the benefit of which they could entitle themselves only by affirmative pleading setting up such defense and by proof sustaining such pleading. Blizzard v. Salyer, 125 Va. 604 , 100 S.E. 454 , 1919 Va. LEXIS 49 (1919).

B.What Instruments are Within Recording Act.

1.In General.

Applicability. —

Transfer of property to a debtor’s spouse pursuant to the terms of a marital agreement was deemed not to have occurred until the marital agreement was perfected by recording, pursuant to § 11-1 and § 55-96. Prunty v. Terry, 408 Bankr. 79, 2009 U.S. Dist. LEXIS 45623 (E.D. Va. 2009), aff'd, 388 Fed. Appx. 299, 2010 U.S. App. LEXIS 14613 (4th Cir. 2010).

United States is exempt from state registry laws. —

The United States, as an incident of its sovereignty, has capacity to contract coextensive with the duties and powers of government, and this power carries with it complete exemption from all obligation to comply with state registry laws. It is not necessary for it to comply with the registry laws of the State in order to preserve a lien created by contract with it. The lien, without recordation, simply takes its place, and is superior to the claims of all other creditors who have no prior lien. United States v. Wm. R. Trigg Co., 115 Va. 272 , 78 S.E. 542 , 1912 Va. LEXIS 1 (1912).

This section and §§ 11-1 and 55-95 to be read together. —

This section and §§ 11-1 and 55-95 were intended to render our registry laws more nearly perfect, and might very properly have been embraced in one section. This section and § 55-95 are so connected with and dependent upon § 11-1 that they must be read with it in order to ascertain what is meant by the terms “any such contract” and “every such contract in writing,” as used in these sections, respectively. Norfolk & Portsmouth Traction Co. v. C.B. White & Bros., 113 Va. 102 , 73 S.E. 467 , 1912 Va. LEXIS 14 (1912).

2.Instruments Relating to Real Estate.

Conveyances and contracts to convey are placed on same footing. —

This section effectually abrogates the rule laid down in Withers v. Carter, 45 Va. (4 Gratt.) 405 (1848), so far as executory contracts in writing for the sale of land are concerned, and places them on the same footing as conveyances of the legal title. Edison v. Huff, 70 Va. (29 Gratt.) 338, 1877 Va. LEXIS 26 (1877); Hart v. Haynes (1877).

Deeds of conveyance. —

A deed conveying real estate is void as against creditors and purchasers until and except from the time it is duly admitted to record. Tapp v. Beverley, 28 Va. (1 Leigh) 80, 1829 Va. LEXIS 9 (1829); M'Clure v. Thistle's Ex'r, 43 Va. (2 Gratt.) 182, 1845 Va. LEXIS 29 (1845); Russell v. Randolph, 67 Va. (26 Gratt.) 705, 1875 Va. LEXIS 52 (1875); Solenburger v. Duval (1876); Grasswitt's Assignee v. Connally, 68 Va. (27 Gratt.) 19, 1876 Va. LEXIS 3 (1876); Edison v. Huff, 70 Va. (29 Gratt.) 338, 1877 Va. LEXIS 26 (1877); Young v. Devries, 72 Va. (31 Gratt.) 304, 1879 Va. LEXIS 6 (1879); Slater v. Moore, 86 Va. 26 , 9 S.E. 419 , 1889 Va. LEXIS 3 (1889); Corey v. Moore, 86 Va. 721 , 11 S.E. 114 , 1890 Va. LEXIS 37 (1890); Robinson v. Commercial & Farmers' Bank, 17 S.E. 739 , 1893 Va. LEXIS 123 (Va. 1893); Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904).

Section applies to lien creditors irrespective of actual notice. —

Although this section applies only to those purchasers without notice, the statute nevertheless applies to lien creditors irrespective of actual notice. Because the contract of sale entered into upon the deed of trust sale in the instant case was not “duly admitted to record” at the time the finance company docketed its judgment, said contract was, pursuant to this section, void as against finance company. Leake v. Finance One Mtg., Inc. (In re Snyder), 57 Bankr. 438, 1985 Bankr. LEXIS 5057 (Bankr. W.D. Va. 1985).

An undelivered deed filed as an escrow in the proceedings of a court of equity, administering a trust fund belonging to a married woman and her infant children, is not within the terms or intendment of this section. Trout's Adm'r v. Warwick, 77 Va. 731 , 1883 Va. LEXIS 109 (1883).

Contracts affecting title. —

Under this section, contracts affecting title to real estate should be properly recorded to protect interested parties from losing priority to subsequent purchasers. In other words, the Code of Virginia requires owners or holders of an interest in property to disclose this interest. In re Wilkinson, 175 Bankr. 627, 1994 Bankr. LEXIS 2014 (Bankr. E.D. Va. 1994).

In a suit between individuals to set aside as a fraudulent conveyance a deed of trust regarding certain real property, where an intervenor bank did not have a claim to this property by an equitable lien from its possession and a certain contract regarding the property, even if the bank had an equitable interest in the property, its interest was junior to that of the parties because it failed to comply with state recording statutes, and under § 11-1 , a contract for the conveyance of real estate had to be in writing, and under § 55-96, a contract conveying property was void as to all bona fide purchasers or creditors without notice of it until it was recorded. Hung-Lin Wu v. Tseng, 459 F. Supp. 2d 468, 2006 U.S. Dist. LEXIS 75608 (E.D. Va. 2006).

Contract for purchase of right-of-way. —

A parol contract for the purchase of a right-of-way for a street railway over a strip of land is a contract “made in respect to real estate” within the meaning of this section. Norfolk & Portsmouth Traction Co. v. C.B. White & Bros., 113 Va. 102 , 73 S.E. 467 , 1912 Va. LEXIS 14 (1912) (see Moore v. Postal Tel. Cable Co., 3 Va. L. Reg. (n.s.) 111 (1917)).

Contract for lease for term of more than five years. —

This section and § 11-1 read together, provide that every contract in writing for the conveyance or sale of real estate, or of a term therein of more than five years, shall be void both at law and in equity, as to purchasers for valuable consideration without notice, until and except from the time that it is duly admitted to record. Great Atl. & Pac. Tea Co. v. Cofer, 129 Va. 640 , 106 S.E. 695 , 1921 Va. LEXIS 123 (1921).

A lease not recorded is void as to a purchaser. Knight v. Triplet, Jeff. 71 (1740).

Lease for two years with privilege of renewals must be recorded. —

By an indenture containing a demise of property for two years and one month, with the privilege to the lessee at his option of four successive renewals, each for a period of one year, the lessor has definitely parted with the control of his property for the full period to which the instrument related. Hence the paper constitutes a single contract giving the lessee a demise and four options, and it is not four several contracts of option. And a contract which provides an actual demise of real estate for two years and one month, and the means by which the lessee’s enjoyment of the premises can be extended for four years more, is a contract for a term of more than five years in real estate and, as against a subsequent purchaser for value and without notice, must be recorded. Great Atl. & Pac. Tea Co. v. Cofer, 129 Va. 640 , 106 S.E. 695 , 1921 Va. LEXIS 123 (1921).

Lease is not to be partitioned into a five-year portion and a greater than five-year portion. —

The court rejected defendant’s argument, based on Great Atl. & Pac. Tea Co. v. Cofer , 129 Va. 640 , 106 S.E. 695 (1921), that if the lease is indeed void under the Virginia recording statute, it is void only as to the portion of the lease for a term greater than five years. Because the lease in this case has run for slightly more than three years, the defendant could not then argue that the lease would be valid for a period of five years and only after that date would the lease be considered void. Watts Contrs., Inc. v. Watts, 360 Bankr. 489, 2007 Bankr. LEXIS 109 (Bankr. E.D. Va. 2007).

Long-term leases. —

Subdivision A 1 of § 55-96 can not be read to apply the recording requirement to deeds conveying estates only when possession of the deed is allowed to remain with the grantor: (1) the recording statute is consistently understood to say that deeds conveying leases for terms of more than five years are to be recorded; (2) the phrase, “when the possession is allowed to remain with the grantor,” clearly modifies only contracts for the sale of goods and chattels; (3) a lease for a term of more than five years must be recorded or it is void as to a bona fide purchaser; and (4) the Virginia recording statute does not allow unrecorded, long-term leases to be treated in a bifurcated fashion, voiding only that portion of the lease that extends beyond a five year term. Watts Contrs., Inc. v. Watts, 360 Bankr. 489, 2007 Bankr. LEXIS 109 (Bankr. E.D. Va. 2007).

3.Instruments Relating to Personal Property.

This section and § 55-3 should be construed together. —

Section 55-3 and this section are so closely related as to the subject matter of gifts that they may be said to be in pari materia, and should be construed together. Both relate to goods and chattels; § 55-3 wholly, and this section in part. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

“Goods and chattels” has same meaning in §§ 55-3, 55-87, 55-95 and this section. —

Sections 55-3, 55-87, 55-95 and this section all relate to gifts, loans, sales or partition of the same kind of property, described by the same terms — namely, “goods or chattels” or “goods and chattels.” They are closely connected in subject matter and in the language employed, and it can hardly be doubted that whatever was meant by the words “goods or chattels” or “goods and chattels” in any one of these sections must have been intended of the same words in each of the other sections. First Nat'l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 , 1901 Va. LEXIS 70 (1901).

Choses in action are not “goods and chattels.” —

The words “goods and chattels” as used in this section do not include a mere chose in action, as a debt, or claim on another for money due; and the assignment of a debt or claim for value, though not recorded, will be good against a subsequent attachment. Kirkland v. Brune, 72 Va. (31 Gratt.) 126, 1878 Va. LEXIS 33 (1878) (see First Nat’l Bank v. Holland, 99 Va. 495 , 39 S.E. 126 (1901)).

Term is restricted to visible, tangible and movable personalty. —

The words “goods and chattels” refer to and include only personal property which is visible, tangible, or movable. Kirkland v. Brune, 72 Va. (31 Gratt.) 126, 1878 Va. LEXIS 33 (1878).

And assignments of choses in action need not be recorded. Gregg v. Sloan, 76 Va. 497 , 1882 Va. LEXIS 54 (1882); Gordon v. Rixey, 76 Va. 694 , 1882 Va. LEXIS 69 (1882); Daily's Ex'r v. Warren, 80 Va. 512 , 1885 Va. LEXIS 89 (1885).

Assignments for the purpose of transferring certain bonds, with no purpose of creating or evidencing a contract with the obligor, who was not a party to the assignments, did not constitute a contract in writing between the obligor and the assignee within the meaning of this section. McClanahan's Adm'r v. Norfolk & W. Ry., 122 Va. 705 , 96 S.E. 453 , 1918 Va. LEXIS 137 (1918).

Debts secured by mortgage on land. —

Debtors in North Carolina granted all their property, including choses in action due from their debtors in Virginia and secured on land here. After recordation of the deed in North Carolina, but before its recordation in Virginia a creditor of the grantors, living in Virginia, attached the choses and the land securing them. In a contest for priority, it was held that the deed, though unrecorded in Virginia, being prior to the attachment, prevailed over it, for this section does not require the recordation of an assignment of a chose in action and its incidental security. Gregg v. Sloan, 76 Va. 497 , 1882 Va. LEXIS 54 (1882).

A conditional sale does not come within the scope of this section. McComb v. Donald's Adm'r, 82 Va. 903 , 5 S.E. 558 , 1886 Va. LEXIS 94 (1886).

A bank which discounts a draft with a bill of lading attached, if not the absolute owner of the goods, stands in the position of a mortgagee in possession and is not required, in order to protect its lien, to have the papers recorded under this section. Seward & Co. v. Miller, 106 Va. 309 , 55 S.E. 681 , 1906 Va. LEXIS 135 (1906).

Possession left with grantor. —

A bill of sale, not admitted to record, of personal property which has been permitted to remain in the possession of the seller, is void as to creditors of the seller, under the provisions of this section, and is not admissible in evidence in a proceeding by the purchaser to try the title to the property. It is not necessary, in order to render such a bill of sale void under this section, that it should appear by the provisions of the writing itself that the possession of the property was to remain with the seller. Fields-Watkins Co. v. Hensley, 117 Va. 661 , 86 S.E. 113 , 1915 Va. LEXIS 82 (1915).

Delivery to grantee validates sale as to subsequent creditors and purchasers. —

Where no real fraud is intended, a subsequent delivery would render a sale valid and effectual against all creditors whose debts were contracted, and all purchasers whose bargains were made, after such subsequent delivery. Deitz v. High, 131 Va. 7 , 109 S.E. 215 , 1921 Va. LEXIS 2 (1921).

A bill of sale was executed in West Virginia and the property remained in possession of the seller in that state after the execution of the bill of sale. Before the property was removed to Virginia and before an attaching creditor had acquired any right whatever to subject the property to the payment of his debt, it was turned over to the purchaser, and the property was in the possession of the purchaser when brought into Virginia. It was held that this section had no application to the transaction. Deitz v. Whyte, 131 Va. 19 , 109 S.E. 212 , 1921 Va. LEXIS 3 (1921).

Delivery of possession to trustee. —

A deed is made conveying personal property to trustees for the purpose of paying debts specified therein, and the trustees took possession of the property and proceeded to sell it for the purposes of the trust. Though the deed was not duly recorded, yet, the property having been delivered to the trustees, this was a valid transfer thereof, and protected the property against the demands of creditors who had not acquired liens upon it before the transfer was consummated. Clark v. Ward, 53 Va. (12 Gratt.) 440, 1855 Va. LEXIS 33 (1855).

Whether or not property allowed to remain with grantor is question for jury. —

Where the validity of a sale of personal property was attacked because the sale was not recorded as provided for by this section, whether or not the property was allowed to remain with the vendor after the sale was a question of fact. Deitz v. High, 131 Va. 7 , 109 S.E. 215 , 1921 Va. LEXIS 2 (1921).

C.Requisites and Sufficiency of Recordation.

The mere delivery of the deed to the clerk for recordation meets all the requirements of this section. Jones v. Folks, 149 Va. 140 , 140 S.E. 126 , 1927 Va. LEXIS 181 (1927) (see also Beverly v. Ellis, 22 Va. (1 Rand.) 102 (1822)).

A valid acknowledgment or proof of execution is a prerequisite to the registration of an instrument, and the recording of an unacknowledged or defectively acknowledged instrument has no effect whatever. Turner v. Stip, 1 Va. (1 Wash.) 319, 1 Wash. 319, 1794 Va. LEXIS 32 (1794); Moore's Ex'r v. Auditor of Pub. Accounts, 13 Va. (3 Hen. & M.) 232, 1808 Va. LEXIS 87 (1808); Carper v. M'Dowell, 46 Va. (5 Gratt.) 212, 1848 Va. LEXIS 42 (1848); Quesenberry v. Barbour, 75 Va. 491 , 1881 Va. LEXIS 31 (1881); Raines v. Walker, 77 Va. 92 , 1883 Va. LEXIS 40 (1883); Nicholson v. Gloucester Charity School, 93 Va. 101 , 24 S.E. 899 , 1896 Va. LEXIS 56 (1896); Iron Belt Bldg. & Loan Ass'n v. Groves, 96 Va. 138 , 31 S.E. 23 , 1898 Va. LEXIS 71 (1898).

Acknowledgment defect. —

Bankruptcy court did not err in holding that appellant bankruptcy trustee could not invoke strong-arm avoidance powers granted to him under 11 U.S.C.S. § 544(a)(1) because, under Virginia law, despite an acknowledgment defect, the deed of trust was valid between the parties, and thus title was validly conveyed following the foreclosure sale; therefore, debtors were divested of any property interest upon which appellant bankruptcy trustee, as a hypothetical lien creditor, could have attached a lien at the time debtors’ bankruptcy proceedings commenced, thus defeating the trustee’s strong-arm avoidance powers. Tyler v. Ownit Mortg. Loan Trust, 460 Bankr. 458, 2011 U.S. Dist. LEXIS 124789 (E.D. Va. 2011), aff'd, 474 Fed. Appx. 893, 2012 U.S. App. LEXIS 16166 (4th Cir. 2012).

Deed need not be indexed to constitute notice. —

This section no longer requires that a deed shall be indexed, as well as admitted to record, in order to constitute constructive notice; and this notwithstanding that the second paragraph provides in detail for an index. Jones v. Folks, 149 Va. 140 , 140 S.E. 126 , 1927 Va. LEXIS 181 (1927) (see Virginia Bldg. & Loan Co. v. Glenn, 99 Va. 460 , 39 S.E. 136 (1901)).

Once an instrument is delivered to the clerk for recording, the party delivering the instrument is not responsible for seeing that the instrument is properly indexed. Thus, whether or not a deed of trust was properly indexed, the mere fact that it was presented to the clerk for recordation would result in it being constructive notice to a subsequent mortgagee. United States v. Lomas Mtg., USA, Inc., 742 F. Supp. 936, 1990 U.S. Dist. LEXIS 11208 (W.D. Va. 1990).

Place of recording contracts relating to real estate. —

A deed or deed of trust conveying real estate must be recorded in the clerk’s office of the county or corporation court within the jurisdiction of which the real estate is situated. Pollard's Heirs v. Lively, 43 Va. (2 Gratt.) 216, 1845 Va. LEXIS 37 (1845); Horsley v. Garth, 43 Va. (2 Gratt.) 471, 1846 Va. LEXIS 8 (1846); Hassler's Lessee v. King, 50 Va. (9 Gratt.) 115, 1852 Va. LEXIS 50 (1852); Hannon v. Hannah, 50 Va. (9 Gratt.) 146, 1852 Va. LEXIS 44 (1852); Blackford v. Hurst, 67 Va. (26 Gratt.) 203, 1875 Va. LEXIS 13 (1875).

Chattel mortgages. —

As to recording of chattel mortgages under this section, see Lane v. Mason, 32 Va. (5 Leigh) 520 (1834); Cocke v. Haxall’s Ex’r, 41 Va. (2 Rob.) 470 (1843); Smith v. Smith, 60 Va. (19 Gratt.) 545 (1869); Lucado v. Tutwiler’s Adm’x, 69 Va. (28 Gratt.) 39 (1877). As to filing under Uniform Commercial Code, see §§ 8.9-302, 8.9-401 et seq .

Instrument may subsequently be recorded in another locality. —

There is no rule of law, statutory or otherwise, which prevents the valid subsequent recordation in other counties or cities of a deed once recorded in a given county or city. The circumstances that the other county or city is subsequently formed out of a portion of the county in which the deed was first recorded, and that it is not necessary to record the deed a second time in such other county or city, are immaterial. The original deed may be recorded in any county or city wherein the property embraced in the deed or any part thereof is located, and it will give the constructive notice provided for by this section. Abrahams v. Ball, 122 Va. 197 , 94 S.E. 799 , 1918 Va. LEXIS 87 (1918).

D.Effect of Record as Notice.

1.In General.

Object of section is to provide notice. —

The very object of the legislature in enacting this section was to give the purchaser or other person dealing with the property notice of any encumbrance thereon. McCormack v. James, 36 F. 14, 1886 U.S. Dist. LEXIS 224 (D. Va. 1886).

Of all facts which could be discovered by searching record. —

The recordation of an instrument entitled to be recorded furnishes constructive notice to subsequent purchasers and creditors of all facts which could be discovered by searching the record. Davison v. Waite, 16 Va. (2 Munf) 527, 1811 Va. LEXIS 108 (1811); Colquhoun v. Atkinsons, 20 Va. (6 Munf) 550, 1820 Va. LEXIS 53 (1820); Bell v. Hammond, 29 Va. (2 Leigh) 416, 1830 Va. LEXIS 51 (1830); M'Clanachan v. Siter, Price & Co., 43 Va. (2 Gratt.) 280, 1845 Va. LEXIS 46 (1845); Mundy v. Vawter, 44 Va. (3 Gratt.) 518, 1847 Va. LEXIS 7 (1847); Clayton v. Hensley, 73 Va. (32 Gratt.) 65, 1879 Va. LEXIS 47 (1879); Coles v. Withers, 74 Va. (33 Gratt.) 186, 1880 Va. LEXIS 32 (1880); Miller v. Holland, 84 Va. 652 , 5 S.E. 701 , 1888 Va. LEXIS 124 (1888); Chapman v. Chapman, 91 Va. 397 , 21 S.E. 813 , 1895 Va. LEXIS 37 (1895) (see also McCauley v. Grim, 115 Va. 610 , 79 S.E. 1041 (1913)).

What instrument recorded must show. —

In order that the registry of a conveyance may operate as constructive notice to subsequent purchasers and encumbrancers, the instrument must afford the means of not only ascertaining with accuracy what property is conveyed or affected by the instrument registered, and where it is, but its language must be such that, if a subsequent purchaser or encumbrancer should examine the instrument itself, he would obtain there actual notice of all the rights which were intended to be created or conferred by it. National Cash Register Co. v. Burrow, 110 Va. 785 , 67 S.E. 370 , 1910 Va. LEXIS 125 (1910).

Where a deed on its face conveyed a lot on the west side of a certain other lot, its recordation would not be constructive notice of the conveyance of the lot on the east side of the named lot. Blair v. Rorer's Adm'r, 135 Va. 1 , 116 S.E. 767 , 1923 Va. LEXIS 1, writ of error denied, 262 U.S. 734, 43 S. Ct. 704, 67 L. Ed. 1206, 1923 U.S. LEXIS 2999 (1923).

Recording gives no notice of instrument not required to be recorded. —

Assignments of choses in action, in Virginia, are not required to be recorded, and such recordation would not affect third persons with constructive notice. Gordon v. Rixey, 76 Va. 694 , 1882 Va. LEXIS 69 (1882).

Equitable liens. —

Where liens are equitable rather than statutory, they come into existence at the moment of recordation. Such recordation among the land records is sufficient notice to fulfill the requirement of notice. Guinee v. Prager (In re James R. Corbitt Co.), 20 Bankr. 460, 1982 Bankr. LEXIS 4050 (Bankr. E.D. Va. 1982).

Marginal correction to deed already recorded. —

In the instant case, a suit by a judgment creditor to subject the lands of his debtor to his judgments, complainant insisted that a marginal correction to a deed already recorded, made and signed by his debtor and acknowledged by him before the clerk and duly recorded before complainant’s judgments were recovered, did not carry constructive notice to him of the facts contained in that memorandum, on the ground that there was no law for recording such memorandum. It was held that the clerk was authorized to record such marginal correction, and the recordation carried with it the desired information as fully as if it had been formally set out in the deed, and therefore there was no merit in complainant’s contention. Blair v. Rorer's Adm'r, 135 Va. 1 , 116 S.E. 767 , 1923 Va. LEXIS 1, writ of error denied, 262 U.S. 734, 43 S. Ct. 704, 67 L. Ed. 1206, 1923 U.S. LEXIS 2999 (1923).

Statement in amended deed to land parcels which were subject to annual charges by homeowners’ association which clearly indicated that such assessment would become an equitable lien when due was sufficient to convey notice that the property might be encumbered, and was more than a mere suspicion of notice. Guinee v. Prager (In re James R. Corbitt Co.), 20 Bankr. 460, 1982 Bankr. LEXIS 4050 (Bankr. E.D. Va. 1982).

2.Persons Affected With Notice.

Only persons under obligation to search record are charged with notice. —

The record imparts constructive notice to such persons only as would have been entitled to protection against the conveyance in case it had not been recorded, or, in other words, to such persons as are under a legal obligation to search for it. Lynchburg Perpetual Bldg. & Loan Co. v. Fellers, 96 Va. 337 , 31 S.E. 505 , 1898 Va. LEXIS 98 (1898).

A record gives constructive notice only to persons in the same line of title, or, in other words, only to persons who must trace their title through the same grantor. Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892); Hulvey v. Hulvey, 92 Va. 182 , 23 S.E. 233 , 1895 Va. LEXIS 102 (1895); Jones v. Byrne's Ex'x, 94 Va. 751 , 27 S.E. 591 , 1897 Va. LEXIS 135 (1897).

Those who acquired rights before recording are unaffected. —

Only persons who acquire their rights subsequent to the recording of a prior instrument can be said to be charged with notice of it. Lynchburg Perpetual Bldg. & Loan Co. v. Fellers, 96 Va. 337 , 31 S.E. 505 , 1898 Va. LEXIS 98 (1898); Bridgewater Roller Mills Co. v. Strough, 98 Va. 721 , 37 S.E. 290 , 1900 Va. LEXIS 98 (1900); McClanahan's Adm'r v. Norfolk & W. Ry., 122 Va. 705 , 96 S.E. 453 , 1918 Va. LEXIS 137 (1918) (see also Rootes v. Holliday, 18 Va. (4 Munf.) 323 (1814); Bird v. Wilkinson, 31 Va. (4 Leigh) 266 (1833); Creigh’s Heirs v. Henson, 51 Va. (10 Gratt.) 231 (1853); Clarke v. McClure, 51 Va. (10 Gratt.) 305 (1853); Lucado v. Tutwiler’s Adm’x, 69 Va. (28 Gratt.) 39 (1877); Mercantile Coop. Bank v. Brown, 96 Va. 614 , 32 S.E. 64 (1899)).

After a purchaser of land has put his deed on record, he is not required to watch the records to ascertain whether thereafter other deeds by his grantor or judgments against him are docketed or recorded, and the same is true of deeds of trust conveying the land. The registry of a deed by a subsequent purchaser is no notice to parties who have acquired their rights before the time when the deed is registered. McClanahan's Adm'r v. Norfolk & W. Ry., 122 Va. 705 , 96 S.E. 453 , 1918 Va. LEXIS 137 (1918).

Subsequent purchasers. —

Deeds recorded pursuant to this section constitute constructive notice to subsequent purchasers, and the titles they take are subject to whatever adverse conveyances or encumbrances they should have discovered in a proper search of the records. Faison v. Union Camp Corp., 224 Va. 54 , 294 S.E.2d 821, 1982 Va. LEXIS 271 (1982).

The chapter 11 trustee’s strong-arm powers under 11 U.S.C.S. § 544(a) trumped the claim of a constructive trust asserted under 11 U.S.C.S. § 541(d) by a creditor whose deed of trust had been fraudulently released because, under § 55-96, a constructive trust would not be enforceable against a bona fide purchaser. HSBC Bank USA, N.A. v. Gold, 427 Bankr. 109, 2010 Bankr. LEXIS 863 (Bankr. E.D. Va. 2010).

Constructive notice. —

Trial court properly affirmed an easement claimed by plaintiff county in a road and landing, as defendant property owners were not innocent purchasers without constructive notice of the county’s interest in the landing and road, since instruments in the owners’ chain of title referring to a “public” road and landing gave them constructive notice of the county’s interest in them. Shaheen v. County of Mathews, 265 Va. 462 , 579 S.E.2d 162, 2003 Va. LEXIS 41 (2003).

E.Effect of Failure to Record.

1.As Between Parties.

Unrecorded instrument is good between parties. —

Recording, when required at all, is only requisite in order to perfect the instrument as against creditors and purchasers. As between the parties, a deed, mortgage or other instrument is valid without recordation. Turner v. Stip, 1 Va. (1 Wash.) 319, 1 Wash. 319, 1794 Va. LEXIS 32 (1794); Currie v. Donald, 2 Va. (2 Wash.) 58, 2 Wash. 58, 1795 Va. LEXIS 3 (1795); Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Wade's Heirs v. Greenwood, 41 Va. (2 Rob.) 474, 1843 Va. LEXIS 46 (1843); Withers v. Carter, 45 Va. (4 Gratt.) 407, 1848 Va. LEXIS 11 (1848); McCandlish v. Keen, 54 Va. (13 Gratt.) 615, 1857 Va. LEXIS 23 (1857); Raines v. Walker, 77 Va. 92 , 1883 Va. LEXIS 40 (1883); Welfley v. Shenandoah Iron, Lumber, Mining & Mfg. Co., 83 Va. 768 , 3 S.E. 376 , 1887 Va. LEXIS 121 (1887); Barton v. Brent, 87 Va. 385 , 13 S.E. 29 , 1891 Va. LEXIS 81 (1891); Thomas v. Stuart's Ex'r, 91 Va. 694 , 22 S.E. 611 (1895); Building, Light & Water Co. v. Fray, 96 Va. 559 , 32 S.E. 58 , 1899 Va. LEXIS 101 (1899); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903); Glens Falls Ins. Co. v. Sherritt, 95 F.2d 823, 1938 U.S. App. LEXIS 4794 (4th Cir. 1938).

Recordation is only necessary as to bona fide purchasers and lien creditors without notice under Commonwealth of Virginia recording statutes; thus, as between two parties, title transfers upon delivery of the deed. Chippenham Hosp. v. Munden, 8 Bankr. 142, 1981 Bankr. LEXIS 5192 (Bankr. E.D. Va. 1981).

An unrecorded partition deed is good as between the parties. In the absence of fraud, it is a mutual covenant in which the parties thereto are alone interested, and its validity does not depend upon recordation under this section, because the rights of creditors are not thereby injuriously affected. Miller v. Kemp, 157 Va. 178 , 160 S.E. 203 , 1931 Va. LEXIS 313 (1931).

2.As Against Creditors.

Deed is void as to creditors whose rights attached before recording. —

A judgment creditor, whose judgment has been duly docketed, and who has brought suit to enforce the lien on the judgment debtor’s land, is entitled to priority over a grantee of the judgment debtor claiming under a deed not recorded until after the commencement of the suit, after the expiration of 20 months from its execution and acknowledgment, since such a deed is void, under this section, as to creditors whose rights have attached before it was recorded. Robinson v. Commercial & Farmers' Bank, 17 S.E. 739 , 1893 Va. LEXIS 123 (Va. 1893).

Whether or not they have actual notice. —

A deed is void as against creditors “until and except from the time it is duly admitted to record.” Slater v. Moore, 86 Va. 26 , 9 S.E. 419 , 1889 Va. LEXIS 3 (1889).

Under this statute, a deed or instrument required to be recorded is void as to judgment creditors of the grantor, even though they have notice thereof. Cavalier Serv. Corp. v. Wise, 645 F. Supp. 31, 1986 U.S. Dist. LEXIS 23317 (E.D. Va. 1986).

Circuit court properly ruled that an ex-wife’s deed of trust had priority over a bank’s deed of trust because, while the bank’s deed of trust was recorded before the ex-wife’s deed of trust, the after-acquired-title statute did not purport to affect the deeds of third parties or influence the relative priority of their interests, the bank’s deed of trust was void against the ex-wife as a judgment lien creditor, and the bank’s deed of trust was not properly recorded in the ex-wife’s chain of title. Deutsche Bank Nat'l Trust Co. v. Arrington, 290 Va. 109 , 772 S.E.2d 571, 2015 Va. LEXIS 83 (2015).

This is so notwithstanding that they have actual notice of it. Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Dobyns' Adm'x v. Waring, 82 Va. 159 , 1886 Va. LEXIS 19 (1886); Heermans v. Montague, 20 S.E. 899 , 1890 Va. LEXIS 120 (Va. 1890); Price v. Wall, 97 Va. 334 , 33 S.E. 599 , 1899 Va. LEXIS 44 (1899) (see also Bankers Loan & Inv. Co. v. Blair, 99 Va. 606 , 39 S.E. 231 (1901)).

A deed to an innocent purchaser is and remains void as to creditors of the grantor until admitted to record, whether such creditors do or do not know of the deed. Fooshee v. Snavely, 58 F.2d 772, 1931 U.S. Dist. LEXIS 2055 (D. Va. 1931), aff'd, 58 F.2d 774, 1932 U.S. App. LEXIS 4774 (4th Cir. 1932).

Since the enactment of this section, it has never been held that an unrecorded deed of trust would be protected against judgment creditors with or without notice. Neff's Adm'r v. Newman, 150 Va. 203 , 142 S.E. 389 , 1928 Va. LEXIS 305 (1928).

And notwithstanding all subsequent conveyances and proceedings in relation to the property. —

See March, Price & Co. v. Chambers, 71 Va. (30 Gratt.) 299, 1878 Va. LEXIS 67 (1878).

But only lien creditors are protected. —

This section, in relation to the creditors and purchasers who shall be protected against unrecorded deeds, does not include creditors claiming under a devise for the payment of debts, or under the statute subjecting real estate to their payment. The creditor who may avoid such a deed must have some lien, by judgment or otherwise, which entitles him to charge the subject conveyed specially. McCandlish v. Keen, 54 Va. (13 Gratt.) 615, 1857 Va. LEXIS 23 (1857).

Prior notice does not affect priority of a creditor who first records his judgment. Cavalier Serv. Corp. v. Wise, 645 F. Supp. 31, 1986 U.S. Dist. LEXIS 23317 (E.D. Va. 1986).

A trustee in bankruptcy occupies the position of a lien creditor. B-W Acceptance Corp. v. Benjamin T. Crump Co., 199 Va. 312 , 99 S.E.2d 606, 1957 Va. LEXIS 192 (1957).

Chapter 7 trustee was not precluded from recovering an interest in two parcels of real property a Chapter 7 debtor conveyed to his wife as part of a divorce settlement, as a preferential transfer to an insider under 11 U.S.C.S. § 547, even though the debtor entered into the marital agreement more than a year before he declared bankruptcy. Neither the debtor nor his wife recorded the marital agreement, so the trustee did not have notice of the agreement under § 55-96. Terry v. Paschall, 403 Bankr. 366, 2009 Bankr. LEXIS 938 (Bankr. E.D. Va.), aff'd, 408 Bankr. 79, 2009 U.S. Dist. LEXIS 45623 (E.D. Va. 2009).

Judgment creditors. —

A deed or instrument required to be recorded is void as to judgment creditors of the grantor. M'Clure v. Thistle's Ex'r, 43 Va. (2 Gratt.) 182, 1845 Va. LEXIS 29 (1845); McCance v. Taylor, 51 Va. (10 Gratt.) 580, 1854 Va. LEXIS 65 (1854); Russell v. Randolph, 67 Va. (26 Gratt.) 705, 1875 Va. LEXIS 52 (1875); Edison v. Huff, 70 Va. (29 Gratt.) 338, 1877 Va. LEXIS 26 (1877); Robinson v. Commercial & Farmers' Bank, 17 S.E. 739 , 1893 Va. LEXIS 123 (Va. 1893); Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904); Blair v. Rorer's Adm'r, 135 Va. 1 , 116 S.E. 767 , 1923 Va. LEXIS 1, writ of error denied, 262 U.S. 734, 43 S. Ct. 704, 67 L. Ed. 1206, 1923 U.S. LEXIS 2999 (1923).

Nor are such creditors affected by knowledge of the conveyance and the fact that the alienee is making improvements. Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904).

Subsequent recorded deed to same property is valid. —

If a grantee of land who has failed to record his deed induces the grantor to make a new deed to the grantee’s wife, who records the same, and, together with her husband, executes a deed of trust on the property for a loan with which to pay the purchase price, the deed and deed of trust, when recorded, operate to invest the trustee with the title to the property, as against the creditors of the grantor, and they cannot subject it to judgments obtained against the grantor subsequent to the recordation. As against creditors of the grantor, the unrecorded deed is a mere nullity, and must be treated as if it had never been executed. The creditors cannot treat the deed as a nullity for some purposes, and as valid for others, nor are they affected by the fact that it may be valid between the parties and as to subsequent purchasers with notice. Bankers Loan & Inv. Co. v. Blair, 99 Va. 606 , 39 S.E. 231 , 1901 Va. LEXIS 86 (1901).

Creditor’s rights are not affected by possession and payment of consideration. —

Where an absolute purchaser has paid a part of the purchase price and entered into possession of the land, a court of equity will limit a judgment creditor to the beneficial interest of the debtor in the property (which is the balance due) on the equitable theory that the debtor holds the property in trust to that extent for the benefit of the purchaser. But this equitable ground of priority and relief is not admitted against the positive provisions of a statute, such as this section, declaring that the enumerated writings shall be void as to creditors if not recorded, whether or not the creditor had notice of the unrecorded writings when the debt was contracted. Neff's Adm'r v. Newman, 150 Va. 203 , 142 S.E. 389 , 1928 Va. LEXIS 305 (1928).

Or by fact that alienee is making improvements. —

As against the creditors of a judgment debtor an unrecorded deed of the latter is a mere nullity; nor are such creditors affected by knowledge of the conveyance and the fact that the alienee is making improvements. Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904) (see also Price v. Wall, 97 Va. 334 , 33 S.E. 599 (1899)).

Or by character of consideration for unrecorded deed. —

If upon an exchange of lands the parties execute mutual conveyances, but the grantee of one tract fails to record his deed, a judgment against his grantor binds the land so given in exchange as well as that received in exchange. The rights of the parties are not affected by the character of the consideration for the unrecorded deed. Price v. Wall, 97 Va. 334 , 33 S.E. 599 , 1899 Va. LEXIS 44 (1899).

Or by agreement to which creditor is not a party. —

The fact that two lien holders, whose liens were recorded, expressly agreed to subordinate their debts to an unrecorded deed of trust upon the same property is in no sense binding upon a judgment creditor as to whom the unrecorded deed of trust under this section was void. Neff's Adm'r v. Newman, 150 Va. 203 , 142 S.E. 389 , 1928 Va. LEXIS 305 (1928).

A postnuptial settlement, made in consideration of the wife’s releasing her dower in certain lands of her husband, is, if unrecorded, void as to creditors of the husband, and as against the creditors the wife will be held to the value of the interest relinquished. Strayer v. Long, 86 Va. 557 , 10 S.E. 574 , 1890 Va. LEXIS 12 (1890).

Bankruptcy sale. —

Pursuant to Virginia common law and subdivision A 1 of § 55-96, a deed conveying real property from a corporate entity to a debtor, which was delivered to the debtor before the creditor’s completed foreclosure sale, was not valid as to the creditor and the purchaser of property because it was not recorded until after the sale’s completion; accordingly, the sale was complete before the transfer of the entity’s interest to the debtor, the property was not part of the bankruptcy estate, and the sale did not violate the automatic stay of 11 U.S.C.S. § 362(a). Lee v. Midfirst Bank (In re Lee), No. 04-39257-DOT, 2005 Bankr. LEXIS 1203 (Bankr. E.D. Va. Feb. 11, 2005).

Trustee was entitled to avoid interest. —

Chapter 7 trustee was entitled to avoid the interest of creditor lender, under 11 U.S.C.S. §§ 544(a), 547, and § 55-96, where the lender’s deed of trust failed to name the proper grantor and was defective, and the recording of a lis pendens constituted an avoidable transfer. Terry v. Fidelity Nat'l Title Ins. Co. (In re Ware), No. 12-30566-DOT, No. 12-03091-DOT, 2013 Bankr. LEXIS 1051 (Bankr. E.D. Va. Mar. 20, 2013).

3.As Against Purchasers.

a.In General.

Purchasers without notice. —

Failure to record an instrument required to be recorded renders it void as to subsequent purchasers for value and without notice. Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Wickham v. Lewis Martin & Co., 54 Va. (13 Gratt.) 427, 1856 Va. LEXIS 24 (1856); Davis v. Miller, 55 Va. (14 Gratt.) 1, 1857 Va. LEXIS 21 (1857); Evans v. Greenhow, 56 Va. (15 Gratt.) 153, 1859 Va. LEXIS 8 (1859); Exchange Bank v. Knox, 60 Va. (19 Gratt.) 739, 1870 Va. LEXIS 18 (1870), writ of error dismissed, 79 U.S. 65, 20 L. Ed. 354, 1870 U.S. LEXIS 1165 (1871); Cammack v. Soran, 71 Va. (30 Gratt.) 292, 1878 Va. LEXIS 66 (1878); Harman v. Oberdorfer, 74 Va. (33 Gratt.) 497, 1880 Va. LEXIS 58 (1880); Williams v. Lord, 75 Va. 300 , 1881 Va. LEXIS 14 (1881); Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 , 1887 Va. LEXIS 55 (1887); Chapman v. Chapman, 91 Va. 397 , 21 S.E. 813 , 1895 Va. LEXIS 37 (1895); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903); Steinman v. Clinchfield Coal Corp., 121 Va. 611 , 93 S.E. 684 , 1917 Va. LEXIS 63 (1917); Moore v. Postal Tel. Cable Co., 3 Va. L. Reg. 111 (1917) (see also Price v. Wall’s Ex’r, 97 Va. 334 , 33 S.E. 599 (1899)).

A prior unrecorded deed from his vendor does not affect the rights of a purchaser, without notice, where his vendor appears, by the records of the county where the land lies, to be the legal owner thereof. Massie v. Greenhow's Adm'r, 2 Patton & H. 255 (1856).

In a debtor’s Chapter 7 proceeding, the debtor’s former spouse’s motion to dismiss the trustee’s complaint seeking to sell the debtor’s one-half interest in real property jointly owned by the debtor and his former spouse was denied because, if there was a constructive trust on the property for the former spouse’s benefit, the trustee’s bona fide purchaser without notice rights allowed him to take free from the constructive trust pursuant § 55-96, and protected him against any transfer embodied in the debtor’s and former spouse’s unrecorded property settlement agreement pursuant to § 20-107.3 .Peyton v. Robinson, 346 Bankr. 172, 2006 Bankr. LEXIS 1545 (Bankr. E.D. Va. 2006).

There was nothing out of the ordinary with recorded release of 2006 deed of trust such that purchaser would have been put on constructive notice of creditors’ interest in debtors’ real property. Beskin v. Bank of N.Y. Mellon, 498 Bankr. 560, 2013 Bankr. LEXIS 3757 (Bankr. W.D. Va. 2013).

Purchasers with notice. —

Purchasers who take with actual notice of a prior deed or encumbrance upon the property take subject to such deed or conveyance, though unrecorded. Roberts's Widow & Heirs v. Stanton, 16 Va. (2 Munf) 129, 1810 Va. LEXIS 90 (1810); Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Rootes v. Holliday, 20 Va. (6 Munf) 251, 1818 Va. LEXIS 53 (1818); Newman v. Chapman, 23 Va. (2 Rand.) 93, 1823 Va. LEXIS 42 (1823); Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Doswell v. Buchanan's Ex'rs, 30 Va. (3 Leigh) 365, 1831 Va. LEXIS 57 (1831); Beck's Adm'x v. DeBaptists, 31 Va. (4 Leigh) 349, 1833 Va. LEXIS 27 (1833); M'Clure v. Thistle's Ex'r, 43 Va. (2 Gratt.) 182, 1845 Va. LEXIS 29 (1845); Mundy v. Vawter, 44 Va. (3 Gratt.) 518, 1847 Va. LEXIS 7 (1847); Long v. Weller's Ex'r, 70 Va. (29 Gratt.) 347, 1877 Va. LEXIS 27 (1877); Wood v. Krebbs, 71 Va. (30 Gratt.) 708, 1878 Va. LEXIS 90 (1878); Vest v. Michie, 72 Va. (31 Gratt.) 149, 1878 Va. LEXIS 35 (1878); Smith's Ex'x v. Profitt's Adm'x, 82 Va. 832 , 1 S.E. 67 , 1887 Va. LEXIS 154 (1887); Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892); Mercantile Coop. Bank v. Brown, 96 Va. 614 , 32 S.E. 64 , 1899 Va. LEXIS 109 (1899); National Mut. Bldg. & Loan Ass'n v. Blair, 98 Va. 490 , 36 S.E. 513 , 1900 Va. LEXIS 68 (1900); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903) (see also Ely v. Johnson, 114 Va. 31 , 75 S.E. 748 (1912); Chavis v. Gibbs, 198 Va. 379 , 94 S.E.2d 195 (1956)).

Purchasers from person having notice. —

It seems that one who purchases in good faith and without notice from a person affected with notice of a prior unrecorded deed or lien, is a bona fide purchaser. Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892).

Purchaser with notice from bona fide purchaser. —

A purchaser from a bona fide purchaser is himself a bona fide purchaser although having actual notice of a prior unrecorded instrument affecting the title of his grantor. Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892).

Burden of proof. —

Plaintiff claimed to be a purchaser for value without notice of a prior unrecorded deed, under which defendant claimed. Defendant attempted to show that even if the plaintiff was a purchaser for value, he was a purchaser with notice of the defendant’s title. It was held that the burden was upon the plaintiff to show that he was a purchaser for value, and that the purchase price had been actually paid before notice of the defendant’s title; and that the burden of showing notice rested upon the defendant. Steinman v. Clinchfield Coal Corp., 121 Va. 611 , 93 S.E. 684 , 1917 Va. LEXIS 63 (1917).

A trustee and the creditor secured by a deed of trust are purchasers for valuable consideration within the meaning of this section, and their title is not affected by a prior deed of the grantor unless they had notice at the date of their purchase; and a prior deed not legally admitted to record cannot give them constructive notice. Quesenberry v. Barbour, 75 Va. 491 , 1881 Va. LEXIS 31 (1881); Gannaway v. Federal Land Bank, 148 Va. 176 , 138 S.E. 564 , 1927 Va. LEXIS 219 (1927).

They are not protected unless they take without notice. —

One who takes under a deed of trust is not protected by this section against a prior deed of trust upon the same property unless he is without notice of the prior deed when he takes and records his own; nor is his assignee of the debt secured, unless he takes the assignment without notice that his assignor had knowledge, before his deed to secure the debt, of the prior lien of the unrecorded deed first made. Fisher v. Borden, 111 Va. 535 , 69 S.E. 636 , 1910 Va. LEXIS 81 (1910).

Purchasers at a judicial sale are entitled to the same protection against an unrecorded deed of trust as a purchaser from a private individual. Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903).

One claiming under a quitclaim deed is not a purchaser for value within the meaning of this section, and he takes subject to a prior deed though it is unrecorded. Virginia & Tenn. Coal & Iron Co. v. Fields, 94 Va. 102 , 26 S.E. 426 , 1896 Va. LEXIS 148 (1896).

Consideration need not be “fair” or “adequate.” —

To constitute a purchaser for value in this State, it is not required that the consideration should be either fair or adequate, as is required in some states, but simply that the purchase should be for value; and even where adequate consideration is required it has been held that “no consideration of any value at all, upon which parties capable of contracting with each other, and in the absence of fraud, may agree, can be said, in a legal sense, to be inadequate.” Steinman v. Clinchfield Coal Corp., 121 Va. 611 , 93 S.E. 684 , 1917 Va. LEXIS 63 (1917).

Only complete purchasers are protected. —

To be protected against the prior unrecorded deed of their grantors to another complainants must have been complete purchasers for valuable consideration without notice of such prior unrecorded deed. Blizzard v. Salyer, 125 Va. 604 , 100 S.E. 454 (1919). But see § 55-104, the provisions of which limit the operation of this rule .

Consideration must have been paid. —

The allegation in the bill in the instant case that the deed to complainants was made in consideration of $150 was not a sufficient allegation that complainants were purchasers for valuable consideration. It is not enough that the consideration was secured to be paid, nor is a recital of payment in the deed sufficient; there must be actual payment. Blizzard v. Salyer, 125 Va. 604 , 100 S.E. 454 , 1919 Va. LEXIS 49 (1919). But see § 55-104 .

But it is not necessary that purchaser should have taken conveyance. —

It is not necessary that a purchaser for value claiming against an unrecorded deed of trust should have taken a conveyance of the legal title; it is sufficient if he has the best right to call for it. (Doswell v. Buchanan’s Ex’rs, 30 Va. (3 Leigh) 365 (1831), criticized.).Preston's Adm'r v. Nash, 75 Va. 949 , 1881 Va. LEXIS 66 (1881).

Though he must have title to bring ejectment. —

If a party claiming to be the purchaser of a tract of land for a valuable consideration and without notice of a prior unrecorded deed can maintain ejectment against the grantee therein, he must show that he received his conveyance and actually paid the purchase money before he had notice of the prior unrecorded deed. Bugg v. Leay, 107 Va. 648 , 60 S.E. 89 , 1908 Va. LEXIS 122 (1908).

Avoidance of long-term lease by bona fide purchaser for value. —

Chapter 11 debtor-in-possession (DIP) could avoid a 20 year lease of the debtor’s property pursuant to 11 U.S.C.S. § 544(a): (1) the DIP exercised the powers of a bona fide purchaser for value; (2) subdivision A 1 of § 55-96 required that the lease be recorded because it had longer than a five-year lease term; and (3) the failure to record the lease rendered the lease void with regard to bona fide purchasers for value. Watts Contrs., Inc. v. Watts, 360 Bankr. 489, 2007 Bankr. LEXIS 109 (Bankr. E.D. Va. 2007).

Bankruptcy trustee as bona fide purchaser. —

Because bankruptcy trustee qualified as bona fide purchaser under Virginia law as to creditors’ interest in debtors’ real property, and was entitled to rely on § 55-96 and avoid creditors’ unrecorded interest in debtors’ real property under 11 U.S.C.S. § 544(a)(3). Beskin v. Bank of N.Y. Mellon, 498 Bankr. 560, 2013 Bankr. LEXIS 3757 (Bankr. W.D. Va. 2013).

Chapter 7 trustee properly raised her status as a bona fide purchaser pursuant to 11 U.S.C.S. § 544(a)(3) as a defense to a bank’s attempt to reform an unrecorded deed of trust because the bankruptcy estate’s interest in the property was unencumbered under Virginia law. Southern Bank & Trust Co. v. Alexander (In re Alexander), No. 11-74515-SCS, No. APN 13-07146-SCS, 2014 Bankr. LEXIS 3048 (Bankr. E.D. Va. July 16, 2014), aff'd, 524 Bankr. 82, 2014 U.S. Dist. LEXIS 174745 (E.D. Va. 2014).

2.As Against Creditors.

Deed is void as to creditors whose rights attached before recording. —

A judgment creditor, whose judgment has been duly docketed, and who has brought suit to enforce the lien on the judgment debtor’s land, is entitled to priority over a grantee of the judgment debtor claiming under a deed not recorded until after the commencement of the suit, after the expiration of 20 months from its execution and acknowledgment, since such a deed is void, under this section, as to creditors whose rights have attached before it was recorded. Robinson v. Commercial & Farmers' Bank, 17 S.E. 739 , 1893 Va. LEXIS 123 (Va. 1893).

Whether or not they have actual notice. —

A deed is void as against creditors “until and except from the time it is duly admitted to record.” Slater v. Moore, 86 Va. 26 , 9 S.E. 419 , 1889 Va. LEXIS 3 (1889).

Under this statute, a deed or instrument required to be recorded is void as to judgment creditors of the grantor, even though they have notice thereof. Cavalier Serv. Corp. v. Wise, 645 F. Supp. 31, 1986 U.S. Dist. LEXIS 23317 (E.D. Va. 1986).

Circuit court properly ruled that an ex-wife’s deed of trust had priority over a bank’s deed of trust because, while the bank’s deed of trust was recorded before the ex-wife’s deed of trust, the after-acquired-title statute did not purport to affect the deeds of third parties or influence the relative priority of their interests, the bank’s deed of trust was void against the ex-wife as a judgment lien creditor, and the bank’s deed of trust was not properly recorded in the ex-wife’s chain of title. Deutsche Bank Nat'l Trust Co. v. Arrington, 290 Va. 109 , 772 S.E.2d 571, 2015 Va. LEXIS 83 (2015).

This is so notwithstanding that they have actual notice of it. Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Dobyns' Adm'x v. Waring, 82 Va. 159 , 1886 Va. LEXIS 19 (1886); Heermans v. Montague, 20 S.E. 899 , 1890 Va. LEXIS 120 (Va. 1890); Price v. Wall, 97 Va. 334 , 33 S.E. 599 , 1899 Va. LEXIS 44 (1899) (see also Bankers Loan & Inv. Co. v. Blair, 99 Va. 606 , 39 S.E. 231 (1901)).

A deed to an innocent purchaser is and remains void as to creditors of the grantor until admitted to record, whether such creditors do or do not know of the deed. Fooshee v. Snavely, 58 F.2d 772, 1931 U.S. Dist. LEXIS 2055 (D. Va. 1931), aff'd, 58 F.2d 774, 1932 U.S. App. LEXIS 4774 (4th Cir. 1932).

Since the enactment of this section, it has never been held that an unrecorded deed of trust would be protected against judgment creditors with or without notice. Neff's Adm'r v. Newman, 150 Va. 203 , 142 S.E. 389 , 1928 Va. LEXIS 305 (1928).

And notwithstanding all subsequent conveyances and proceedings in relation to the property. —

See March, Price & Co. v. Chambers, 71 Va. (30 Gratt.) 299, 1878 Va. LEXIS 67 (1878).

But only lien creditors are protected. —

This section, in relation to the creditors and purchasers who shall be protected against unrecorded deeds, does not include creditors claiming under a devise for the payment of debts, or under the statute subjecting real estate to their payment. The creditor who may avoid such a deed must have some lien, by judgment or otherwise, which entitles him to charge the subject conveyed specially. McCandlish v. Keen, 54 Va. (13 Gratt.) 615, 1857 Va. LEXIS 23 (1857).

Prior notice does not affect priority of a creditor who first records his judgment. Cavalier Serv. Corp. v. Wise, 645 F. Supp. 31, 1986 U.S. Dist. LEXIS 23317 (E.D. Va. 1986).

A trustee in bankruptcy occupies the position of a lien creditor. B-W Acceptance Corp. v. Benjamin T. Crump Co., 199 Va. 312 , 99 S.E.2d 606, 1957 Va. LEXIS 192 (1957).

Chapter 7 trustee was not precluded from recovering an interest in two parcels of real property a Chapter 7 debtor conveyed to his wife as part of a divorce settlement, as a preferential transfer to an insider under 11 U.S.C.S. § 547, even though the debtor entered into the marital agreement more than a year before he declared bankruptcy. Neither the debtor nor his wife recorded the marital agreement, so the trustee did not have notice of the agreement under § 55-96. Terry v. Paschall, 403 Bankr. 366, 2009 Bankr. LEXIS 938 (Bankr. E.D. Va.), aff'd, 408 Bankr. 79, 2009 U.S. Dist. LEXIS 45623 (E.D. Va. 2009).

Judgment creditors. —

A deed or instrument required to be recorded is void as to judgment creditors of the grantor. M'Clure v. Thistle's Ex'r, 43 Va. (2 Gratt.) 182, 1845 Va. LEXIS 29 (1845); McCance v. Taylor, 51 Va. (10 Gratt.) 580, 1854 Va. LEXIS 65 (1854); Russell v. Randolph, 67 Va. (26 Gratt.) 705, 1875 Va. LEXIS 52 (1875); Edison v. Huff, 70 Va. (29 Gratt.) 338, 1877 Va. LEXIS 26 (1877); Robinson v. Commercial & Farmers' Bank, 17 S.E. 739 , 1893 Va. LEXIS 123 (Va. 1893); Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904); Blair v. Rorer's Adm'r, 135 Va. 1 , 116 S.E. 767 , 1923 Va. LEXIS 1, writ of error denied, 262 U.S. 734, 43 S. Ct. 704, 67 L. Ed. 1206, 1923 U.S. LEXIS 2999 (1923).

Nor are such creditors affected by knowledge of the conveyance and the fact that the alienee is making improvements. Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904).

Subsequent recorded deed to same property is valid. —

If a grantee of land who has failed to record his deed induces the grantor to make a new deed to the grantee’s wife, who records the same, and, together with her husband, executes a deed of trust on the property for a loan with which to pay the purchase price, the deed and deed of trust, when recorded, operate to invest the trustee with the title to the property, as against the creditors of the grantor, and they cannot subject it to judgments obtained against the grantor subsequent to the recordation. As against creditors of the grantor, the unrecorded deed is a mere nullity, and must be treated as if it had never been executed. The creditors cannot treat the deed as a nullity for some purposes, and as valid for others, nor are they affected by the fact that it may be valid between the parties and as to subsequent purchasers with notice. Bankers Loan & Inv. Co. v. Blair, 99 Va. 606 , 39 S.E. 231 , 1901 Va. LEXIS 86 (1901).

Creditor’s rights are not affected by possession and payment of consideration. —

Where an absolute purchaser has paid a part of the purchase price and entered into possession of the land, a court of equity will limit a judgment creditor to the beneficial interest of the debtor in the property (which is the balance due) on the equitable theory that the debtor holds the property in trust to that extent for the benefit of the purchaser. But this equitable ground of priority and relief is not admitted against the positive provisions of a statute, such as this section, declaring that the enumerated writings shall be void as to creditors if not recorded, whether or not the creditor had notice of the unrecorded writings when the debt was contracted. Neff's Adm'r v. Newman, 150 Va. 203 , 142 S.E. 389 , 1928 Va. LEXIS 305 (1928).

Or by fact that alienee is making improvements. —

As against the creditors of a judgment debtor an unrecorded deed of the latter is a mere nullity; nor are such creditors affected by knowledge of the conveyance and the fact that the alienee is making improvements. Flanary v. Kane, 102 Va. 547 , 46 S.E. 312 , 1904 Va. LEXIS 101 (1904) (see also Price v. Wall, 97 Va. 334 , 33 S.E. 599 (1899)).

Or by character of consideration for unrecorded deed. —

If upon an exchange of lands the parties execute mutual conveyances, but the grantee of one tract fails to record his deed, a judgment against his grantor binds the land so given in exchange as well as that received in exchange. The rights of the parties are not affected by the character of the consideration for the unrecorded deed. Price v. Wall, 97 Va. 334 , 33 S.E. 599 , 1899 Va. LEXIS 44 (1899).

Or by agreement to which creditor is not a party. —

The fact that two lien holders, whose liens were recorded, expressly agreed to subordinate their debts to an unrecorded deed of trust upon the same property is in no sense binding upon a judgment creditor as to whom the unrecorded deed of trust under this section was void. Neff's Adm'r v. Newman, 150 Va. 203 , 142 S.E. 389 , 1928 Va. LEXIS 305 (1928).

A postnuptial settlement, made in consideration of the wife’s releasing her dower in certain lands of her husband, is, if unrecorded, void as to creditors of the husband, and as against the creditors the wife will be held to the value of the interest relinquished. Strayer v. Long, 86 Va. 557 , 10 S.E. 574 , 1890 Va. LEXIS 12 (1890).

Bankruptcy sale. —

Pursuant to Virginia common law and subdivision A 1 of § 55-96, a deed conveying real property from a corporate entity to a debtor, which was delivered to the debtor before the creditor’s completed foreclosure sale, was not valid as to the creditor and the purchaser of property because it was not recorded until after the sale’s completion; accordingly, the sale was complete before the transfer of the entity’s interest to the debtor, the property was not part of the bankruptcy estate, and the sale did not violate the automatic stay of 11 U.S.C.S. § 362(a). Lee v. Midfirst Bank (In re Lee), No. 04-39257-DOT, 2005 Bankr. LEXIS 1203 (Bankr. E.D. Va. Feb. 11, 2005).

Trustee was entitled to avoid interest. —

Chapter 7 trustee was entitled to avoid the interest of creditor lender, under 11 U.S.C.S. §§ 544(a), 547, and § 55-96, where the lender’s deed of trust failed to name the proper grantor and was defective, and the recording of a lis pendens constituted an avoidable transfer. Terry v. Fidelity Nat'l Title Ins. Co. (In re Ware), No. 12-30566-DOT, No. 12-03091-DOT, 2013 Bankr. LEXIS 1051 (Bankr. E.D. Va. Mar. 20, 2013).

3.As Against Purchasers.

a.In General.

Purchasers without notice. —

Failure to record an instrument required to be recorded renders it void as to subsequent purchasers for value and without notice. Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Wickham v. Lewis Martin & Co., 54 Va. (13 Gratt.) 427, 1856 Va. LEXIS 24 (1856); Davis v. Miller, 55 Va. (14 Gratt.) 1, 1857 Va. LEXIS 21 (1857); Evans v. Greenhow, 56 Va. (15 Gratt.) 153, 1859 Va. LEXIS 8 (1859); Exchange Bank v. Knox, 60 Va. (19 Gratt.) 739, 1870 Va. LEXIS 18 (1870), writ of error dismissed, 79 U.S. 65, 20 L. Ed. 354, 1870 U.S. LEXIS 1165 (1871); Cammack v. Soran, 71 Va. (30 Gratt.) 292, 1878 Va. LEXIS 66 (1878); Harman v. Oberdorfer, 74 Va. (33 Gratt.) 497, 1880 Va. LEXIS 58 (1880); Williams v. Lord, 75 Va. 300 , 1881 Va. LEXIS 14 (1881); Witz, Biedler & Co. v. Osburn, 83 Va. 227 , 2 S.E. 33 , 1887 Va. LEXIS 55 (1887); Chapman v. Chapman, 91 Va. 397 , 21 S.E. 813 , 1895 Va. LEXIS 37 (1895); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903); Steinman v. Clinchfield Coal Corp., 121 Va. 611 , 93 S.E. 684 , 1917 Va. LEXIS 63 (1917); Moore v. Postal Tel. Cable Co., 3 Va. L. Reg. 111 (1917) (see also Price v. Wall’s Ex’r, 97 Va. 334 , 33 S.E. 599 (1899)).

A prior unrecorded deed from his vendor does not affect the rights of a purchaser, without notice, where his vendor appears, by the records of the county where the land lies, to be the legal owner thereof. Massie v. Greenhow's Adm'r, 2 Patton & H. 255 (1856).

In a debtor’s Chapter 7 proceeding, the debtor’s former spouse’s motion to dismiss the trustee’s complaint seeking to sell the debtor’s one-half interest in real property jointly owned by the debtor and his former spouse was denied because, if there was a constructive trust on the property for the former spouse’s benefit, the trustee’s bona fide purchaser without notice rights allowed him to take free from the constructive trust pursuant § 55-96, and protected him against any transfer embodied in the debtor’s and former spouse’s unrecorded property settlement agreement pursuant to § 20-107.3 .Peyton v. Robinson, 346 Bankr. 172, 2006 Bankr. LEXIS 1545 (Bankr. E.D. Va. 2006).

There was nothing out of the ordinary with recorded release of 2006 deed of trust such that purchaser would have been put on constructive notice of creditors’ interest in debtors’ real property. Beskin v. Bank of N.Y. Mellon, 498 Bankr. 560, 2013 Bankr. LEXIS 3757 (Bankr. W.D. Va. 2013).

Purchasers with notice. —

Purchasers who take with actual notice of a prior deed or encumbrance upon the property take subject to such deed or conveyance, though unrecorded. Roberts's Widow & Heirs v. Stanton, 16 Va. (2 Munf) 129, 1810 Va. LEXIS 90 (1810); Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Rootes v. Holliday, 20 Va. (6 Munf) 251, 1818 Va. LEXIS 53 (1818); Newman v. Chapman, 23 Va. (2 Rand.) 93, 1823 Va. LEXIS 42 (1823); Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Doswell v. Buchanan's Ex'rs, 30 Va. (3 Leigh) 365, 1831 Va. LEXIS 57 (1831); Beck's Adm'x v. DeBaptists, 31 Va. (4 Leigh) 349, 1833 Va. LEXIS 27 (1833); M'Clure v. Thistle's Ex'r, 43 Va. (2 Gratt.) 182, 1845 Va. LEXIS 29 (1845); Mundy v. Vawter, 44 Va. (3 Gratt.) 518, 1847 Va. LEXIS 7 (1847); Long v. Weller's Ex'r, 70 Va. (29 Gratt.) 347, 1877 Va. LEXIS 27 (1877); Wood v. Krebbs, 71 Va. (30 Gratt.) 708, 1878 Va. LEXIS 90 (1878); Vest v. Michie, 72 Va. (31 Gratt.) 149, 1878 Va. LEXIS 35 (1878); Smith's Ex'x v. Profitt's Adm'x, 82 Va. 832 , 1 S.E. 67 , 1887 Va. LEXIS 154 (1887); Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892); Mercantile Coop. Bank v. Brown, 96 Va. 614 , 32 S.E. 64 , 1899 Va. LEXIS 109 (1899); National Mut. Bldg. & Loan Ass'n v. Blair, 98 Va. 490 , 36 S.E. 513 , 1900 Va. LEXIS 68 (1900); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903) (see also Ely v. Johnson, 114 Va. 31 , 75 S.E. 748 (1912); Chavis v. Gibbs, 198 Va. 379 , 94 S.E.2d 195 (1956)).

Purchasers from person having notice. —

It seems that one who purchases in good faith and without notice from a person affected with notice of a prior unrecorded deed or lien, is a bona fide purchaser. Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892).

Purchaser with notice from bona fide purchaser. —

A purchaser from a bona fide purchaser is himself a bona fide purchaser although having actual notice of a prior unrecorded instrument affecting the title of his grantor. Lacy v. Wilson, 18 Va. (4 Munf) 313, 1814 Va. LEXIS 49 (1814); Claiborne v. Holland, 88 Va. 1046 , 14 S.E. 915 , 1892 Va. LEXIS 71 (1892).

Burden of proof. —

Plaintiff claimed to be a purchaser for value without notice of a prior unrecorded deed, under which defendant claimed. Defendant attempted to show that even if the plaintiff was a purchaser for value, he was a purchaser with notice of the defendant’s title. It was held that the burden was upon the plaintiff to show that he was a purchaser for value, and that the purchase price had been actually paid before notice of the defendant’s title; and that the burden of showing notice rested upon the defendant. Steinman v. Clinchfield Coal Corp., 121 Va. 611 , 93 S.E. 684 , 1917 Va. LEXIS 63 (1917).

A trustee and the creditor secured by a deed of trust are purchasers for valuable consideration within the meaning of this section, and their title is not affected by a prior deed of the grantor unless they had notice at the date of their purchase; and a prior deed not legally admitted to record cannot give them constructive notice. Quesenberry v. Barbour, 75 Va. 491 , 1881 Va. LEXIS 31 (1881); Gannaway v. Federal Land Bank, 148 Va. 176 , 138 S.E. 564 , 1927 Va. LEXIS 219 (1927).

They are not protected unless they take without notice. —

One who takes under a deed of trust is not protected by this section against a prior deed of trust upon the same property unless he is without notice of the prior deed when he takes and records his own; nor is his assignee of the debt secured, unless he takes the assignment without notice that his assignor had knowledge, before his deed to secure the debt, of the prior lien of the unrecorded deed first made. Fisher v. Borden, 111 Va. 535 , 69 S.E. 636 , 1910 Va. LEXIS 81 (1910).

Purchasers at a judicial sale are entitled to the same protection against an unrecorded deed of trust as a purchaser from a private individual. Guerrant v. Anderson, 25 Va. (4 Rand.) 208, 1826 Va. LEXIS 27 (1826); Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903).

One claiming under a quitclaim deed is not a purchaser for value within the meaning of this section, and he takes subject to a prior deed though it is unrecorded. Virginia & Tenn. Coal & Iron Co. v. Fields, 94 Va. 102 , 26 S.E. 426 , 1896 Va. LEXIS 148 (1896).

Consideration need not be “fair” or “adequate.” —

To constitute a purchaser for value in this State, it is not required that the consideration should be either fair or adequate, as is required in some states, but simply that the purchase should be for value; and even where adequate consideration is required it has been held that “no consideration of any value at all, upon which parties capable of contracting with each other, and in the absence of fraud, may agree, can be said, in a legal sense, to be inadequate.” Steinman v. Clinchfield Coal Corp., 121 Va. 611 , 93 S.E. 684 , 1917 Va. LEXIS 63 (1917).

Only complete purchasers are protected. —

To be protected against the prior unrecorded deed of their grantors to another complainants must have been complete purchasers for valuable consideration without notice of such prior unrecorded deed. Blizzard v. Salyer, 125 Va. 604 , 100 S.E. 454 (1919). But see § 55-104, the provisions of which limit the operation of this rule .

Consideration must have been paid. —

The allegation in the bill in the instant case that the deed to complainants was made in consideration of $150 was not a sufficient allegation that complainants were purchasers for valuable consideration. It is not enough that the consideration was secured to be paid, nor is a recital of payment in the deed sufficient; there must be actual payment. Blizzard v. Salyer, 125 Va. 604 , 100 S.E. 454 , 1919 Va. LEXIS 49 (1919). But see § 55-104 .

But it is not necessary that purchaser should have taken conveyance. —

It is not necessary that a purchaser for value claiming against an unrecorded deed of trust should have taken a conveyance of the legal title; it is sufficient if he has the best right to call for it. (Doswell v. Buchanan’s Ex’rs, 30 Va. (3 Leigh) 365 (1831), criticized.).Preston's Adm'r v. Nash, 75 Va. 949 , 1881 Va. LEXIS 66 (1881).

Though he must have title to bring ejectment. —

If a party claiming to be the purchaser of a tract of land for a valuable consideration and without notice of a prior unrecorded deed can maintain ejectment against the grantee therein, he must show that he received his conveyance and actually paid the purchase money before he had notice of the prior unrecorded deed. Bugg v. Leay, 107 Va. 648 , 60 S.E. 89 , 1908 Va. LEXIS 122 (1908).

Avoidance of long-term lease by bona fide purchaser for value. —

Chapter 11 debtor-in-possession (DIP) could avoid a 20 year lease of the debtor’s property pursuant to 11 U.S.C.S. § 544(a): (1) the DIP exercised the powers of a bona fide purchaser for value; (2) subdivision A 1 of § 55-96 required that the lease be recorded because it had longer than a five-year lease term; and (3) the failure to record the lease rendered the lease void with regard to bona fide purchasers for value. Watts Contrs., Inc. v. Watts, 360 Bankr. 489, 2007 Bankr. LEXIS 109 (Bankr. E.D. Va. 2007).

Bankruptcy trustee as bona fide purchaser. —

Because bankruptcy trustee qualified as bona fide purchaser under Virginia law as to creditors’ interest in debtors’ real property, and was entitled to rely on § 55-96 and avoid creditors’ unrecorded interest in debtors’ real property under 11 U.S.C.S. § 544(a)(3). Beskin v. Bank of N.Y. Mellon, 498 Bankr. 560, 2013 Bankr. LEXIS 3757 (Bankr. W.D. Va. 2013).

Chapter 7 trustee properly raised her status as a bona fide purchaser pursuant to 11 U.S.C.S. § 544(a)(3) as a defense to a bank’s attempt to reform an unrecorded deed of trust because the bankruptcy estate’s interest in the property was unencumbered under Virginia law. Southern Bank & Trust Co. v. Alexander (In re Alexander), No. 11-74515-SCS, No. APN 13-07146-SCS, 2014 Bankr. LEXIS 3048 (Bankr. E.D. Va. July 16, 2014), aff'd, 524 Bankr. 82, 2014 U.S. Dist. LEXIS 174745 (E.D. Va. 2014).

b.Constructive Notice.

What constitutes constructive notice. —

It is well settled that what is sufficient to put a person of common prudence, ordinary diligence and business experience upon inquiry will charge him with the actual knowledge of the facts of which a diligent pursuit of that inquiry would have informed him. Fisher v. Borden, 111 Va. 535 , 69 S.E. 636 , 1910 Va. LEXIS 81 (1910).

Constructive notice imposes upon a purchaser such inquiry as is suggested by the facts which are known or disclosed in the transaction. But to affect a party with notice of the fact with which he is sought to be charged, whether he made inquiry or not, he must have had knowledge of facts and circumstances naturally calculated to excite suspicion in the mind of a person of ordinary care and prudence, and which would naturally prompt him to pause and inquire before consummating the transaction. Moreover, discovery of the fact should necessarily follow from the inquiry once embarked upon. Great Atl. & Pac. Tea Co. v. Cofer, 129 Va. 640 , 106 S.E. 695 , 1921 Va. LEXIS 123 (1921).

Mere suspicion is not sufficient. —

Notice, to affect a subsequent purchaser or encumbrancer, must be such as to affect his conscience. It may be either actual (direct and positive), or it may be circumstantial or presumptive. But it is not sufficient if it merely puts the party on inquiry. It must be clear and strong, and such as to fix upon him the imputation of bad faith. A mere suspicion of notice, even though it be a strong suspicion, is not sufficient. Hunton v. Wood, 101 Va. 54 , 43 S.E. 186 , 1903 Va. LEXIS 2 (1903).

Possession of land is no longer notice of title. —

The rights of a vendee of an interest in land of greater extent than a term of five years, under a verbal contract, who has paid the purchase price and is in possession, are inferior to those of a subsequent grantee of the land, who has no other evidence of the former’s title than his possession. The object of the proviso annexed to the first sentence of this section was to abolish the common-law doctrine that the possession of real estate was notice of the right of the possessor. Norfolk & Portsmouth Traction Co. v. C.B. White & Bros., 113 Va. 102 , 73 S.E. 467 , 1912 Va. LEXIS 14 (1912).

Under the common-law rule possession was sufficient to charge a purchaser with notice of an unrecorded deed. However, by statute enacted by the General Assembly of January 15, 1900, the common-law rule was abrogated by adding a proviso to the recording statute to the effect that mere possession shall not be notice to subsequent purchasers for valuable consideration. Kiser v. Clinchfield Coal Corp., 200 Va. 517 , 106 S.E.2d 601, 1959 Va. LEXIS 134 (1959).

Provision as to possession abolishes common-law doctrine. —

The rights of a vendee of an interest in land of greater extent than a term of five years, under a verbal contract, and who has paid the purchase price and is in possession, are inferior to those of a subsequent grantee of the land, who has no other evidence of the former’s title than his possession. The object of the proviso annexed to the first sentence of this section was to abolish the common-law doctrine that the possession of real estate was notice of the rights of the possessor. Norfolk & Portsmouth Traction Co. v. C.B. White & Bros., 113 Va. 102 , 73 S.E. 467 , 1912 Va. LEXIS 14 (1912).

It applies to possession under written or unwritten contract. —

The proviso annexed to the first sentence of this section, that “the mere possession of real estate shall not of itself be notice to purchasers thereof for value of any interest or estate therein of the person in possession,” applies to the possession of a prior purchaser of land, whether his purchase is under an unwritten contract, such as is mentioned in § 11-1 , or under a written instrument such as is described in this section. Norfolk & Portsmouth Traction Co. v. C.B. White & Bros., 113 Va. 102 , 73 S.E. 467 , 1912 Va. LEXIS 14 (1912).

To operate as constructive notice deed must be link in purchaser’s chain of title. —

In order for a deed and its recitals to operate as constructive notice to a bona fide purchaser of land it must be a link in the purchaser’s chain of title. No purchaser is chargeable with constructive notice of all matters of record but only with such as the title deeds of the estate refer to or put him on inquiry about. Kiser v. Clinchfield Coal Corp., 200 Va. 517 , 106 S.E.2d 601, 1959 Va. LEXIS 134 (1959).

Adverse conveyance recorded after deed to vendor. —

It was not incumbent upon a purchaser’s attorney to search the record for adverse conveyances by a remote grantor recorded after the recordation of the deed to the vendor. Kiser v. Clinchfield Coal Corp., 200 Va. 517 , 106 S.E.2d 601, 1959 Va. LEXIS 134 (1959).

Section does not protect purchaser with actual notice. —

The object of the provision was to prevent actual notice of possession from being construed as constructive notice of title. However, it was never intended that where the purchaser had actual notice of the existence of a prior contract or conveyance, though unrecorded, he would be protected in his purchase of the land. White v. Lee, 144 Va. 523 , 132 S.E. 307 , 1926 Va. LEXIS 268 (1926).

Deeds of trust. —

Corporation that declared Chapter 7 bankruptcy owned equitable title to real property that was owned by a Virginia partnership because the partners, who also owned the corporation, intended to transfer title to the corporation, the interest became part of the corporation’s bankruptcy estate, pursuant to 11 U.S.C.S. § 541(a)(1), on the date the corporation declared bankruptcy, and a trustee who was appointed to represent the corporation’s bankruptcy estate succeeded to the corporation’s interest and was entitled to receive a deed from the partnership. Because there was no transfer of title from the partnership to the corporation, however, the trustee was not charged with actual or constructive notice under § 55-96 with the fact that the corporation had issued a deed of trust to a banking association, and he had the right to avoid the deed of trust, pursuant to 11 U.S.C.S. §§ 544 and 550, and to preserve the avoided lien for the benefit of the corporation’s bankruptcy estate, pursuant to 11 U.S.C.S. § 551. First Cmty. Bank v. E.M. Williams & Sons, Inc. (In re E.M. Williams & Sons, Inc.), No. 08-30054-KRH, No. APN 08-03055-KRH, 2009 Bankr. LEXIS 1224 (Bankr. E.D. Va. May 8, 2009).

Equitable subrogation was not appropriate where creditors had failed to record their deed of trust. Beskin v. Bank of N.Y. Mellon, 498 Bankr. 560, 2013 Bankr. LEXIS 3757 (Bankr. W.D. Va. 2013).