772 S.E.2d 571
Va.2015Background
- Plucky and Arrington held property as tenants with right of survivorship; divorce gave Plucky the property and required payments to Arrington. Arrington conveyed her interest to Plucky in 2004; Plucky later conveyed to Riemenschneider in 2005.
- Plucky purportedly executed a deed of trust to Deutsche Bank on August 22, 2006 (Deutsche Bank Deed of Trust); that deed was not recorded until May 21, 2008. A quitclaim reconveyance from Riemenschneider to Plucky (2006) existed but was not recorded.
- Following enforcement proceedings, the Franklin County court ordered Plucky to execute a deed of trust to Arrington on March 19, 2009 (Arrington Deed of Trust) to secure court-ordered obligations; Arrington recorded her deed of trust on July 17, 2009 at 1:11 p.m.
- Riemenschneider reconveyed the property to Plucky by general warranty deed on July 6, 2009, recorded July 17, 2009 at 1:10 p.m., one minute before Arrington’s recording.
- Deutsche Bank sued for a declaratory judgment that its deed of trust had first priority; the circuit court ruled for Arrington, holding her deed of trust had priority. Deutsche Bank appealed.
Issues
| Issue | Plaintiff's Argument (Deutsche Bank) | Defendant's Argument (Arrington) | Held |
|---|---|---|---|
| Does Va. Code § 55-52 (after-acquired title) retroactively cure a defect in Deutsche Bank’s 2006 deed of trust and affect third-party priorities? | § 55-52 cures Deutsche Bank’s defective 2006 conveyance when Plucky later acquired title, making Deutsche Bank’s interest effective as of 2006. | § 55-52 applies only "as between the parties" (grantor and grantee) and cannot affect third-party priorities. | Held: § 55-52 applies only between the deed’s parties and does not alter rights of third parties or priorities. |
| Does the term "deed" in § 55-52 include deeds of trust? | § 55-52 should apply to deeds of trust so lenders can rely on after-acquired title doctrine. | § 55-52 was not intended to overturn recording/priority rules for third parties. | Held: "Deed" includes deeds of trust; § 55-52 can estop grantors under deeds of trust vis-à-vis grantees. |
| Is Arrington a "lien creditor" under Va. Code § 55-96(A) such that Deutsche Bank’s unrecorded (in-chain) deed of trust is void as to her? | Arrington’s deed of trust was to purge contempt and is not a judgment-based lien; she did not record a judgment on the judgment lien docket. | The court-ordered obligations qualify as judgments; the deed of trust recorded to secure those obligations creates a lien and makes Arrington a lien creditor. | Held: Arrington is a lien creditor — the court orders are judgments under Code § 8.01-426 and the recorded deed of trust created a lien. |
| Was Deutsche Bank’s deed of trust "duly admitted to record" before Arrington became a lien creditor so as to have priority under § 55-96(A)? | Deutsche Bank’s earlier recording (2008) should give it priority over later claims. | Deutsche Bank’s deed was recorded outside Arrington’s chain of title (because Plucky lacked record title when deed executed), so it was not "duly admitted to record." | Held: Deutsche Bank’s deed was not "duly admitted to record" (recorded outside chain of title) and thus is void as to Arrington; Arrington’s deed has priority. |
Key Cases Cited
- Hausman v. Hausman, 233 Va. 1 (Va. 1987) (after-acquired title estoppel between parties to deed)
- Interstate R.R. Co. v. Roberts, 127 Va. 688 (Va. 1920) (deed of trust creates lien to secure debt)
- Neff v. Newman, 150 Va. 203 (Va. 1928) (recording statutes and priority principles)
- Matney v. Combs, 171 Va. 244 (Va. 1938) (judgment lien requires recording on judgment lien docket ordinarily)
- Capozzella v. Capozzella, 213 Va. 820 (Va. 1973) (delivery required for deed to pass title)
- Bulifant v. Slosjarik, 221 Va. 983 (Va. 1981) (delivery may be inferred from circumstances)
- High Knob Assocs. v. Douglas, 249 Va. 478 (Va. 1995) (deed of trust characterized as lien)
- St. Joe Co. v. Norfolk Redevelopment & Hous. Auth., 283 Va. 403 (Va. 2012) (standard of review for summary judgment)
- Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96 (Va. 2007) (statutory interpretation is reviewed de novo)