Foreclosure is the process by which a lender ends a borrower’s interest in real property, either to acquire title or cause a sale, to satisfy an unpaid debt secured by the realty.* In Virginia, lenders may pursue either judicial or non-judicial means of foreclosure. Judicial foreclosures operate through the court system, while non-judicial foreclosures occur outside of the court system under the terms of a contract. As a practical matter, the great majority of Virginia foreclosures are non-judicial.

Non-judicial foreclosures are often referred to as “power-of-sale” foreclosures. Power of sale refers to a power specifically detailed and granted by a contract which permits a party to sell the real estate under certain circumstances and with certain requirements. The relevant documents that enable this process are typically a promissory note and a deed of trust. The deed of trust appoints a “Trustee” with a power of sale to foreclose upon the property in the event of a default on the related note.

While notice requirements and procedures are required by the contract and by certain federal and state statutes, the non-judicial foreclosure process is often markedly less burdensome for the lender than a judicial foreclosure. Because of the availability and operations of its non-judicial process, Virginia’s foreclosure system is frequently painted by commentators as more favorable to creditors than are many other jurisdictions. So long as the lender complies with its statutory and contractual obligations, the pace of the non-judicial process is largely in the lenders control – most often unimpeded by delays of the court system.

Considering these conditions, creditors can most advantageously posture themselves for an expedient foreclosure when they maintain records that are readily accessible, complete, and accurate. While there are procedures to operate in the absence of the original deed of trust and promissory note, it is best practice to maintain both of those records in original form.

Finally, certain federal and state statutes and regulations must be navigated during this process. Perhaps most notable of these regimes is the Fair Debt Collection Practices Act, but depending on the circumstances, other requirements and proscriptions arise when either a Veteran’s Affairs (VA) Loan, Federal Housing Administration loans, or Bankruptcy occur in the scenario. This is why it is best to consult a knowledgeable attorney before pursuing foreclosure for appropriate legal guidance.

*Foreclosure, Black’s Law Dictionary, Ninth Edition (2009).