VA Underwriting Summary

Search/Exam

• Minimum Search Requirements -- No statutory requirements imposed by Virginia. The traditional standard is 60 years back to a General Warranty Deed. The traditional standard is universally followed for commercial transactions (where longer search periods may be required). For residential transactions, many title companies accept 40 year exams (back to a General Warranty Deed).
• Plant or other search restrictions -- None
• Additional Requirements for REO Searches -- N/A
• Foreclosure Checklist -- N/A
• Special Searches Required (Code, HOA, Utilities)? -- N/A
• Survey Requirements -- Owners Policy – Yes; Loan Policy – No
• UPL Hot Button Issues -- Document Preparation is UPL as is giving legal advice; title agents may close real estate transactions only if they are licensed in Virginia as "Settlement Agents."

UPL

Licensed Virginia attorneys must prepare legal documents including Deeds. A Title Agent employee, even if a licensed Virginia attorney, many not prepare deeds or other legal instruments.

The ability of title agents to close real estate transactions is established by statutes. See Virginia Code Sections 55-525.8 through 55-525.32. This statutory framework requires compliance with Virginia’s unauthorized practice of law guidelines. Be familiar with the guidelines. Willful failure to comply may result in a loss of license as well as penalties of up to $5,000.00 for each failure. See Virginia Code Section 55-525.30.

Vesting

Deeds are effective notice of the conveyance to third parties when recorded. As between the Grantor and the Grantee, a deed is effective when executed and delivered. For vesting upon death of the named property owner, see “Estates” below. Vesting is determined by the instrument creating the estate (Look at the Deed), not generally by subsequent events. Exceptions to this general statement are death and divorce (for T by E property).

Common forms of ownership: Tenants by the Entirety: limited to husband and wife; this form of ownership must be specifically identified. T by E ownership is severed by death or divorce.

Joint Tenants (with or without survivorship): If desired, survivorship must be explicitly stated in the Deed creating the interest.

Tenants in Common:

Witness Requirements

Acknowledgment only (required fro recordation); witnesses are not required on any deed or security instrument. See "Acknowledgments" under "odd Stuff" below.

Mortgage/Transfer Tax

• Deeds generally: The tax rate is 25 cents on every $100 (or fraction of $100) of the consideration or the actual value of the property conveyed, whichever is greater. An additional tax may be imposed by the localities equal to one-third of the state tax. In addition to the tax on deeds, a grantor tax is imposed at the rate of 50 cents on every $500 (or fraction of $500) of the consideration or value of the interest exclusive of the value of any lien or encumbrance.
• Deeds of trust or mortgages: The tax rates on the bonds or other obligations secured by the deed of trust or mortgage are as follows:
  • on the first $10 million, 25 cents on every $100 or portion thereof;
  • on the next $10 million, 22 cents on every $100 or portion thereof;
  • on the next $10 million, 19 cents on every $100 or portion thereof;
  • on the next $10 million, 16 cents on every $100 or portion thereof; and,
  • on all over $40 million, 13 cents on every $100 or portion thereof.
• An additional tax may be imposed by the localities equal to one-third of the state tax.
• Tax Rate for Refinanced Deeds of Trust: Effective for deeds of trust or mortgages recorded beginning July 1, 2012, the recordation tax rates on the bonds or other obligations secured by the refinanced deed of trust or mortgage are as follows:
  • on the first $10 million, 18 cents on every $100 or portion thereof;
  • on the next $10 million, 16 cents on every $100 or portion thereof;
  • on the next $10 million, 14 cents on every $100 or portion thereof;
  • on the next $10 million, 12 cents on every $100 or portion thereof; and,
  • on all over $40 million, 10 cents on every $100 or portion thereof.
  • These rates apply regardless of whether the loan is refinanced with the same lender or with a different lender.
• Congestion Relief Fee: Effective July 1, 2013, a regional congestion relief fee is imposed on the recording of any deed or instrument conveying real property that is situated in a locality included in the Northern Virginia Region when the consideration or value of the interest in such property, whichever is greater, equals or exceeds $100. The fee, which is to be paid by the seller (grantor), is imposed on the consideration or value in addition to any other required recordation taxes and fees at the rate of $0.15 per $100 or fraction thereof. Affected localities are the Cities of Alexandria, Fairfax, Falls

Source: Virginia Tax Facts, January 2014

Spousal Joinder Requirements/Homestead

Spousal joinder not required for BFP transactions. Spouse signature is required for all other transactions. Example: Spouse signature is required for a Deed of Gift.

Virginia replaced dower and curtesy (unless it vested prior to January 01, 1991) with the concept of the “augmented estate” which is an elective share that entitles the surviving spouse to 1/3 of the decedent’s “augmented estate” if the decedent left surviving children or their descendants or ½ of the “augmented estate” if the decedent left no children or their descendants. Although the intricacies of the “augmented estate” need not be addressed here, the augmented estate calculations exclude conveyances to BFPs as well as any transfer with the written consent or joinder of the surviving spouse. See generally Virginia Code Sections 64.2-300 to 308. Exclusions also include property that was inherited or belonged to the transferor prior to marriage.

Virginia provides for a Homestead allowance upon death of the property owner under certain circumstances. With certain exceptions, the homestead allowance ($20K) has priority over all claims against the Estate.

Power Of Attorney

Virginia enacted the Uniform Power of Attorney Act which addresses any Power of Attorney (POA) executed on or after July 01, 2010. See Virginia Code Sections 64.2-1600 through 64.2-1642. A POA must include an acknowledgement signed by a notary. A person asked to rely upon an acknowledged POA may request any rely upon an Agent’s certification under oath. A statutory form Agent’s Certification as to Validity of Power of Attorney and Agent’s Authority can be found at Virginia Code Section 64.2-1639.

Authority over real property is set forth in Virginia Code Section 64.2-1625. This section may be incorporated into a POA merely by reference to the code section.

A POA should be recorded with any instrument where the POA was used.

Construction Liens

Unlike many other states, mechanics’ liens can gain priority over previously recorded deeds of trust. Title companies have incurred huge losses due to MLs and improper or inappropriate underwriting practices. Check with State Underwriting Counsel if you have any doubts or questions.

Ordinary Home Sales: To eliminate an exception for MLs, Sellers must provide an affidavit stating no work has been performed on the property for the last 120 days. Such an affidavit is routine on home sales. In cases where some repair was made during that time period, check with your State Underwriting Counsel. Often the issue can be addresses by a ML waiver from the contractor, or, if necessary, by an escrow.

Routine Refinance Transactions: To eliminate an exception for MLs on the refinance policy, Borrowers must provide an affidavit stating no work has been performed on the property for the last 120 days. Such an affidavit is routine on home sales. In cases where some repair was made during that time period, check with your State Underwriting Counsel. Often the issue can be addresses by a ML waiver from the contractor, or, if necessary, by an escrow.

New Residential Construction Outsales: Provided a building permit identifying a Mechanics’ Lien Agent (MLA) was posted at the beginning of the project, WFG is generally willing to insure new construction outsales based on the MLA’s affidavit identifying all parties who provided notice, a Seller’s affidavit and lien waivers. Check with your State Underwriting Counsel for details.

Residential Construction Loans: In the event that the lender desires affirmative ML coverage, a building permit naming a Mechanics’ Lien Agent (MLA) must be posted at the one or two family residential dwelling (the only structures that qualify for this type of coverage). Contact your State Underwriting Counsel for additional details regarding requirements and exceptions.

Commercial Construction Loans: Any loan policy involving commercial construction must have a ML exception. WFG does not provide affirmative ML coverage on commercial construction loans.

Instrument Requirements

See generally Virginia Code Sections 55-106 through 55-142.15.

Who May Serve As Trustee On Deed Of Trust

• Deeds of Trust are prevailing security instrument, although Mortgages are acceptable.
• Trustees must be residents of the state. If corporation is to serve as trustee, VA must be principal place of business.

Time Limitations

• US Judgment Liens -- 20 years
• State Court Judgment Liens -- 20 years
• Federal Tax Liens -- 10 years (+ 30 days)
• State Tax Liens -- 20 years
• Estate Tax Lien -- 10 years
• State Inheritance Tax Liens --
• Mechanics Liens -- 6 months
• Financing Statements -- 5 years
• Mortgages --
• HOA Liens -- 3 years (2 years prior to 2005)
• Condominium assessments --
• Child Support Liens --