2014 Legislative Update Amendments to the Virginia Code

This past year was not an overly active year in the Virginia General Assembly for the passage of legislation of interest to the banking industry; however, the following summarizes the limited legislation passed during the 2014 session that may be of interest. This legislation becomes effective July 1, 2014.

(i) Corrections to Deeds of Trust - Virginia Code § 55-109.2

Virginia Code section 55-109.2 is a new section that allows for the correction of “obvious descriptive errors” in deeds, deeds of trust, and mortgages by affidavit. “Obvious descriptive errors” is defined in this section as:

an error in a real property parcel description contained in a recorded deed, deed of trust, or mortgage where (i) such parcel is identified and shown as a separate parcel on a recorded subdivision plat; (ii) such error is apparent by reference to other information on the face of such deed, deed of trust, or mortgage or on an attachment to such deed, deed of trust, or mortgage or by reference to other instruments in the chain of title for the property conveyed thereby; and (iii) such deed, deed of trust, or mortgage recites elsewhere the parcel's correct address or tax map identification number. An "obvious description error" includes (a) an error transcribing courses and distances, including the omission of one or more lines of courses and distances or the omission of angles and compass directions; (b) an error incorporating an incorrect recorded plat or a deed reference; (c) an error in a lot number or designation; or (d) an omitted exhibit supplying the legal description of the real property thereby conveyed. An "obvious description error" does not include (1) missing or improper signatures or acknowledgments or (2) any designation of the type of tenancy by which the property is owned or whether or not a right of survivorship exists.

Prior to recording a corrective affidavit in the land records the attorney seeking to record the affidavit must deliver, in accordance with the statute, a copy of the affidavit and notice of intent to record the affidavit to all parties to the deed, deed of trust, or mortgage, the title insurance company and preparing attorney (if known). Provided no objection is received, then upon the expiration of 30 days (of confirmed receipt) or 45 days after delivery, the corrective affidavit may be recorded in the land records. The correction relates back to the date the deed, deed of trust, and mortgage was first recorded. The statute does not address the procedure for when an objection is received, but presumably the traditional rules and procedures would then apply, such as filing a reformation suit if the parties could not otherwise resolve the objection.

Prior to this legislation, the only way to have a correction date back to the original filing was by bringing a suit to reform the document. This legislation should streamline the process of correcting obvious errors that are not disputed by any parties.

(ii) Business Records as Evidence - Virginia Code §§ 8.01-390.3 & 8.01-391

The amendments to these code sections are intended to simplify the introduction of business records into evidence in some civil proceedings by eliminating the need for live witness testimony authenticating business records. Prior to this legislation, if a civil litigant intended to introduce business records into evidence, the litigant was required to put on testimony of a “custodian of records,” or other witness who could properly authenticate the business records.

Virginia Code Section 8.01-390.3 now provides that if a business record is “material and otherwise admissible,” it may be authenticated by: (i) witness testimony; (ii) a certification by affidavit of a custodian of records or other qualified witness; or (iii) a combination of witness testimony and a certification. In order to take advantage of the new certification by affidavit provision, a litigant must: (i) provide written notice to all other parties; and (ii) provide a copy of the business record and the certification to all other parties, so that all parties have a fair opportunity to challenge the record and certification. The notice and copy of the business record and certification must be provided to the other parties no later than 15 days in advance of the trial or hearing, unless an order of the court specifies a different time. Objections to the certification or record must be made within 5 days thereafter, unless the court specifies a different time. If a party timely objects to reliance upon the certification, the business records must be authenticated by witness testimony as previously required. However, if there is no timely objection, the affidavit certification will satisfy the authentication requirement set forth in the Virginia Rules of Evidence.

These amendments may, in some circumstances, save corporate litigants the time and expense associated with having a witness appear for the sole purpose of authenticating documents to which no party objects. Now, an entity can authenticate documents via affidavit, provided that proper and timely notice is given and no party objects.

(iii) Noting Payments on Judgments - Virginia Code § 8.01-454

Virginia law currently requires a judgment creditor to note the payment or satisfaction of a judgment within 30 days of the date of payment or satisfaction and imposes a $50 fine if the judgment creditor fails to do so within 10 days of receipt of notice from the judgment debtor requesting the creditor to do so. The amended code section keeps the 30 day deadline to note the payment and satisfaction of the judgment but amends the fines imposed on the judgment creditor for failure to comply with this section. Under the new law, the judgment creditor will be subject to a $100 fine, as well as, the cost of releasing the judgment if the judgment creditor fails to: (i) note the payment or satisfaction within 90 days of the date of payment or satisfaction or (ii) within 10 days of receipt of notice from the judgment debtor to note the payment or satisfaction of the judgment. This amendment emphasizes the importance for a lending institution to monitor payments timely for satisfying judgments.