Statutory Changes to Virginia Real Estate Law for 2012

It’s July, which means new and improved laws for the Commonwealth of Virginia. So, for my fellow Virginian’s – especially the attorneys, realtors, and lenders – I write today to draw your attention to some of the recent changes to Virginia law governing real estate transactions. In particular, I’m looking at deeds. First, let’s deal with the easy one.

§ 58.1-802. Additional tax paid by grantor; collection.

Subsection A of this section of the Code of Virginia has been amended to require that for all deeds presented before the Clerk of the Circuit Courts for recording shall have “the amount of the consideration [] stated on the first page of the document to be admitted to record.” So, check your deeds and make sure that, for example, the amount that was paid for the house at issue is stated clearly at the beginning of the deed.

§ 17.1-223. Duty of clerk to record writings, etc., and make index.

Things get a little trickier here. Subsection A of this section of the Code of Virginia has been amended in two important ways. First,

the clerk [of the Circuit Court] has the authority to reject any writing for filing or recordation unless . . . the first page of the document bears an entry showing the name of either the person or entity who drafted the instrument, except that papers or documents prepared outside of the Commonwealth shall be recorded without such an entry

(emphasis added). In other words, deeds must include an indicator of who drafted the deed or risk rejection by the clerk. However, note also that the use of the words “shall be” forbids this notification if the documents were prepared by someone in another state (or sovereign jurisdiction, such as Washington, DC). “Shall” is the way lawmakers and contract drafters create mandatory terms. If this exception were optional, the statute would have said, “may.” So, let’s see what else changed.

The clerk [of the Circuit Court] has the authority to reject any deed for filing or recordation . . . unless the deed states on the first page of the document that it was prepared by the owner of the real property or by an attorney licensed to practice law in the Commonwealth where such statement by an attorney shall include the name and Virginia State Bar number of the attorney who prepared the deed

(emphasis added). So what does this say? It says that unless there’s an indication of the name and, if applicable, bar number of the person that drafted the deed right on its face, there’s a risk that the deed will be rejected by the clerk.

But didn’t the prior excerpt forbid exactly that for deeds drafted out of Commonwealth? Yes, it did, which means that if you draft a deed from out of state, you run a risk that the deed will be rejected. The only reason I can fathom for this combination of amendments is that the Virginia legislature didn’t want people – even attorneys licensed in the Commonwealth of Virginia – to be able to draft deeds if their offices are outside the Commonwealth. Without reviewing the audio transcripts of the discussion of the bill by the lawmakers, it’s impossible to know if that was the legislature’s intent, but if it was, I’d say the risk of rejection is high (probably 100%). I doubt the bean counters in the Clerk’s office are going to want to rock the boat.

Whatever the intent of the legislature or the clerk’s offices, the safest course of action under the text of the statute is to have your Virginia deeds prepared by an attorney physically located within the borders of the Commonwealth of Virginia. Any other approach is done at your own risk.

Soapbox Alert

If this sounds like a self-serving conclusion on the part of an attorney practicing within Virginia’s borders, it’s because it is, though I’m not the “guilty” party. This is likely just in-state bias, designed to protect the Commonwealth’s attorneys, and by extension, the Commonwealth’s economy. I guess I should thank the lawmakers for protecting a source of income, but that doesn’t mean I’m going to say it’s actually necessary in order to protect the interests of my clients. Out-of-state drafting isn’t a dangerous practice, but even if it were necessary to visit real property to do my job (it certainly is not), to my recollection I’ve never been to Pittsylvania County. So how am I any better suited to deal with properties there than a Virginia attorney who’s located just over the border in North Carolina and frequently visits the county?

In fairness, though, even if my assumption is correct as to intent, this wouldn’t be the first time Virginia law favored in-state attorneys (see, for example, the reciprocity rules for out of state attorneys wanting to waive into Virginia), nor can this be seen as an oddity among the laws of other  states. Every state protects its own sovereignty in a wide variety of ways (perhaps even in the way discussed here), and if they’re all doing it, than Virginia needs to do it to keep things even. This shouldn’t be considered crooked, dishonest, or surprising, but it is what it is.

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