Amendments to the Virginia Code took effect on July 1, 2012. An overview of several of these amendments that may be of particular interest to banks and lending institutions are provided below.
(i) Va. Code § 6.2-872 (Bank Owned Real Estate). Addresses the purposes for which banks may purchase, hold, and convey real estate. The amendment deleted a requirement that if a bank holds real estate that is (i) encumbered; (ii) held in satisfaction of a debt; or (iii) held as security for an obligation for a period of over ten (10) years then the bank was required to obtain written approval from the State Corporation Commission to do so. The amendment also deleted a provision that stated if the bank reduced the nominal value of the real estate asset to one dollar then written approval of the State Corporation Commission was not necessary.
(ii) Va. Code § 8.01-511 (Garnishment). Addresses the procedures and requirements for instituting a garnishment. The amendment provides that if the judgment debtor does not reside in the city or county were the judgment was entered, then the judgment creditor may docket the case in the city or county where the judgment debtor resides and a court in that city or county may issue an execution on the judgment.
The amendment permits the issuance of a garnishment without including the debtor’s social security number, provided that the judgment creditor represents that it has made a good faith effort to obtain the social security number.
Finally, the amendment provides that all costs incurred by the judgment creditor after entry of judgment that are in aid of execution and paid to a clerk of court, sheriff, or process server are chargeable to the judgment debtor, unless otherwise allocated to the judgment creditor by Virginia law.
(iii) Va. Code § 55-82.1 (Fraudulent Conveyance). Provides that if a court finds that there has been a fraudulent conveyance, then the court may assess sanctions, including such attorney fees, against all parties over which it has jurisdiction who, with the intent to defraud and having knowledge of the judgment, participated in the conveyance.
(iv) Va. Code § 55-82.2 (Fraudulent and Voluntary Conveyance). Clarifies the current law, by stating that a court has the authority to set aside a fraudulent or voluntary conveyance provided all parties who have an interest in the property subject to the conveyance or transfer are given notice of the proceeding.
(v) Va. Code § 8.01-435 (Confession of Judgment). Provides that a noteholder may appoint a substitute attorney-in-fact for any attorney-in-fact authorized to confess judgment that is specifically named in such note or bond, by specifically naming the substitute attorney-in-fact in an instrument appointing the substitute attorney-in-fact. The instrument must be recorded in the clerk’s office for the jurisdiction where the terms of the note provide judgment is to be confessed. If the note at issue has no express provision that a substitute attorney-in-fact may be appointed by the person entitled to payment under the note or bond, then—within ten (10) days after the instrument is recorded—the person who appoints the substitute attorney-in-fact shall send notice of the appointment by certified mail to the debtor’s last known address.
(vi) Article 9 of the Uniform Commercial Code. The Virginia legislature also adopted the revisions to Article 9 of the Uniform Commercial Code, which will not take effect until July 2013. A detailed update of the changes and their implications for banks will follow later.