Present: Carrico, C.J., Hassell, Keenan, Koontz, Kinser,
and Lemons, JJ., and Compton, S.J.
HOMESIDE LENDING, INC.
v. Record No. 000590
OPINION BY JUSTICE CYNTHIA D. KINSER
January 12, 2001
UNIT OWNERS ASSOCIATION OF
ANTIETAM SQUARE CONDOMINIUM, ET AL.
FROM THE CIRCUIT COURT FOR PRINCE WILLIAM COUNTY
LeRoy F. Millette, Jr., Judge
In this appeal, we address the question whether, under
Code § 55-79.84(A) and (E), court costs, attorneys’ fees,
and repair expenses incurred by a condominium unit owners’
association in instituting and maintaining a suit to
enforce liens for unpaid assessments, as well as the fees
of a special commissioner, have priority over payment of
sums remaining due on a note secured by a first deed of
Because we conclude that Code § 55-79.84(A)
establishes the priority of liens, we will reverse that
part of the judgment of the circuit court directing payment
of the costs and other reimbursements allowed under Code
§ 55-79.84(E) before payment of the note secured by the
first deed of trust.
The appellee, Unit Owners Association of Antietam
Square Condominium (Association), filed a bill of complaint
pursuant to Code § 55-79.84 to enforce memoranda of liens
and a judgment lien for unpaid condominium assessments.
The Association named as defendants the owners of record of
the residence at 2734 Bordeaux Place in Woodbridge, also
known as Unit 25-B-3 in Phase VI, Block 25 of Antietam
Square Condominium (the subject property); BancPlus
Mortgage Corporation (BancPlus), appellant’s predecessorin-interest and the holder of a note secured by a purchase
money deed of trust on the subject property; the trustees
under that deed of trust; and a parks and recreation
association that had two judgment liens against the subject
In response, BancPlus and the trustees filed an
answer, asserting that the deed of trust securing payment
of the note was a first lien against the subject property
and therefore had priority over all claims asserted by the
BancPlus asked that no order be entered
adverse to its interests; that the circuit court sustain
the priority of its lien as to the subject property; and
that any sale of the subject property be made subject to
the lien of BancPlus, or in the alternative, that BancPlus
be paid in full. 1
The owners of the subject property, and the parks and
recreation association also filed answers. However, after
the subject property was sold, the circuit court entered a
decree dismissing those parties.
On motion of the Association, the court entered a
decree appointing a commissioner in chancery for the
purpose of determining, inter alia, the amounts of the
liens on the subject property and the priority of those
After conducting a hearing, the commissioner filed
a report, stating that the lien of the deed of trust held
by BancPlus was second only to the lien of any outstanding
real estate taxes owed on the subject property.
commissioner in chancery further reported that the
perfected liens and judgment liens for assessments filed by
the Association were next in priority after the deed of
The circuit court subsequently confirmed the report
of the commissioner in chancery and appointed a special
commissioner to sell the subject property.
A few months later, the appellant, HomeSide Lending,
Inc. (HomeSide), was substituted as a party in the place of
BancPlus since HomeSide was the current beneficiary under
the deed of trust. 2
HomeSide had already commenced
foreclosure proceedings on the subject property because
payment on the note secured by the deed of trust was in
Upon receipt of notice of HomeSide’s impending
foreclosure sale, the Association filed a motion seeking a
A substitute trustee under the deed of trust was also
named as a party to the proceedings.
temporary restraining order to prevent HomeSide from
proceeding with the sale.
HomeSide decided to postpone
(and later canceled) its scheduled foreclosure sale.
However, when HomeSide again advertised the subject
property for foreclosure, the Association renewed its
motion for a temporary restraining order, and the circuit
court granted the motion.
The court enjoined HomeSide from
proceeding with a foreclosure sale on the subject property
and directed that the injunction remain in effect until the
court entered a final decree in the cause and allocated the
proceeds from the prospective sale of the subject property.
Approximately a month later, the special commissioner
of sale moved the court to accept or reject a purchase
offer for the subject property.
The circuit court approved
an amended purchase offer in the amount of $43,900 and
directed that the liens and encumbrances of record on the
subject property be transferred to the sale proceeds. 3
The circuit court also fixed the amount of certain
seller’s charges in connection with the sale, leaving the
sum of $38,183.13 as the net proceeds from the sale of the
subject property. These seller’s charges included a real
estate commission in the amount of 6% of the sale price,
the grantor’s tax, the purchaser’s costs in the amount of
6% of the sale price, pro-rata and delinquent real estate
taxes, and a settlement attorney’s fee in the amount of
Nine months later, the special commissioner of sale
filed the following proposed scheme for distributing the
net sale proceeds in the amount of $38,183.13:
1. $8,880 to the special commissioner of sale;
2. $19,463.50 to the Association for attorney’s fees
incurred in instituting and maintaining this suit;
3. $4,010.84 to the Association for its costs incurred
in the suit;
4. $4,111.34 to the Association for repairs undertaken
in order to market the subject property; and
5. The balance of approximately $1,717.45, plus all
accrued interest, to HomeSide.
HomeSide objected to the proposed distribution.
alleged that, as of December 31, 1999, the amount owed to
HomeSide on the note secured by the deed of trust on the
subject property was $72,038.14, exclusive of attorney’s
fees and costs.
HomeSide asked the court to reject the
proposed scheme of distribution and to award HomeSide the
entire sum of $38,183.13 (plus accrued interest) in partial
satisfaction of its deed of trust.
After conducting a hearing on HomeSide’s objection,
the circuit court entered a decree disbursing the sale
proceeds in accordance with the proposed scheme of
distribution filed by the special commissioner of sale.
The court reasoned that the language used in Code § 5579.84 “means that, without limitation, the people who . . .
brought the suit, incurred the attorney’s fees, [and]
incurred the cost of the special commissioner are entitled
to . . . reimbursement for costs and attorney’s fees.”
awarded HomeSide this appeal.
The question on appeal is whether the circuit court
erred in approving a distribution of the sale proceeds that
gave priority to the attorney’s fees, costs, and repair
expenses incurred by the Association in instituting and
maintaining this suit and in selling the property, and also
to the fees of the special commissioner of sale, over the
sums unpaid on HomeSide’s deed of trust.
We believe that
the plain meaning of the terms used in Code § 55-79.84(A)
and (E) answer this question. 4
Thus, in interpreting those
subsections, we look no further than the words utilized by
the General Assembly.
Supinger v. Stakes, 255 Va. 198,
205-06, 495 S.E.2d 813, 817 (1998) (citing City of
Winchester v. American Woodmark Corp., 250 Va. 451, 457,
464 S.E.2d 148, 152 (1995)).
“We must . . . assume that
the legislature chose, with care, the words it used when it
enacted the relevant statute, and we are bound by those
words as we interpret the statute.”
Barr v. Town & Country
The General Assembly amended Code § 55-79.84 in 2000.
Those amendments are not applicable to this suit.
Therefore, we will cite to the version of Code § 55-79.84
in existence before the 2000 amendments.
Properties, Inc., 240 Va. 292, 295, 396 S.E.2d 672, 674
“The manifest intention of the legislature,
clearly disclosed by its language, must be applied.”
Anderson v. Commonwealth, 182 Va. 560, 566, 29 S.E.2d 838,
Subsection (A) of Code § 55-79.84 provides that a
condominium unit owners’ association “shall have a lien on
every condominium unit for unpaid assessments levied
against that condominium unit . . . .”
further states that any such lien,
once perfected, shall be prior to all other liens and
encumbrances except (i) real estate tax liens on that
condominium unit, (ii) liens and encumbrances recorded
prior to the recordation of the declaration, and (iii)
sums unpaid on any first mortgages or first deeds of
trust recorded prior to the perfection of said lien
for assessments and securing institutional lenders.
As applicable at the time of these events, subsection (E)
provided that “[t]he judgment or decree in an action
brought pursuant to this section shall include, without
limitation, reimbursement for costs and attorneys’ fees,
together with interest at the maximum lawful rate for the
sums secured by the lien . . . .”
Contrary to the circuit court’s holding and the
argument of the Association, subsection (E) of Code § 5579.84 did not establish an order of priority for the
disbursement of proceeds from the sale of the subject
That provision merely directed that any judgment
or decree entered in an action brought pursuant to Code
§ 55-79.84 to enforce a lien for unpaid condominium
assessments must include provisions addressing
reimbursement for costs and attorneys’ fees, and also
interest on the sums secured by such lien.
requirement that the enumerated reimbursements be “without
limitation” did not give priority to the payment of those
reimbursements over the payment of other liens or
In other words, subsection (E) allowed a
unit owners’ condominium association to recover more than
just the unpaid assessments when it brought a suit to
enforce its lien, but nothing in that subsection addressed
the priority of those allowed reimbursements in relation to
Instead, the priority of liens is governed by
subsection (A) of § 55-79.84.
That provision gives the
perfected lien of a condominium unit owners’ association
for unpaid assessments priority over other liens except
three specific types of liens, the third of which is
relevant to this suit, i.e., “sums unpaid on any first
mortgages or first deeds of trust recorded prior to the
perfection of said lien for assessments.”
Code § 55-
Thus, pursuant to that section, HomeSide’s deed
of trust on the subject property has priority over not only
the lien of the Association for unpaid assessments but also
the Association’s attorneys’ fees, costs, and interest on
the sums secured by its lien.
This was the conclusion
reached by the commissioner in chancery who reported that
HomeSide’s lien was second in priority only to any
outstanding real estate taxes.
Therefore, we conclude that the circuit court erred in
directing that the proceeds from the sale of the subject
property be disbursed to the Association for its attorneys’
fees, costs, and repair expenses before payment to HomeSide
on the note secured by its first deed of trust.
will reverse that portion of the judgment of the circuit
court and remand the case to the court for entry of an
order of distribution in accordance with this opinion.
However, we will affirm the judgment of the circuit
court with respect to the fees of the special commissioner
The court appointed the special commissioner
pursuant to the provisions of Code § 8.01-96.
part, that section states, “In decreeing a sale under any
provisions of law, the court may . . . appoint one or more
special commissioners to make such a sale.”
The amount of
a special commissioner’s fees under a decree for sale of
property is fixed by statute.
Under Code § 8.01-109, a
court may allow “a commission of five percent on amounts up
to and including $100,000, and two percent on all amounts
That section further specifies that, for
the purposes of determining the commission, “each piece of
property so sold shall constitute a separate sale, even
though more than one piece of property is sold under the
The sale of the subject property in this
suit was a judicial sale.
See Staples v. Somers, 196 Va.
581, 587-88, 84 S.E.2d 523, 526-27 (1954) (discussing
incidents of judicial sale).
By fixing the amount of the
commission in a judicial sale, we believe that the General
Assembly intended that such commission be paid from the
proceeds of that sale.
Cf. Code § 8.01-618.1 (paying fee
out of fund in court to special commissioner for making
report under Code § 8.01-617); Citizens Nat’l Bank of
Charlottesville v. Manoni, 76
Va. 802, 808 (1882) (when
property sold under decree of sale, taxed costs properly
paid from proceeds).
Thus, the circuit court properly
directed payment of the fees of the special commissioner
from the sale proceeds before any distribution of the funds
For these reasons, we will affirm in part, and reverse
in part, the judgment of the circuit court and remand for
further proceedings consistent with this opinion.
Affirmed in part,
reversed in part,