Real Property: Lienholder loses in suit over real property proceeds

Where a lienholder argued it was entitled to surplus funds from the judicial sale of real property, its claim was barred by a 10-year limitations period in Code § 8.01-241(A).

Background                                                       

CVE LLC appeals an order disbursing surplus funds from a judicial sale of property to satisfy a tax balance owed to the City of Richmond. CVE argues the court erred in determining that its own claim to the surplus funds— pursuant to a deed of trust against the property—was barred by a 10-year limitations period in Code § 8.01-241(A).

Analysis

Code § 8.01-241(A) bars actions to enforce a deed of trust brought more than 10 years after the maturity date of the secured loan. The maturity date of the secured debt was Feb. 12, 2013. The deadline for enforcing the deed of trust was thus Feb. 12, 2023. But CVE filed nothing until Dec. 8, 2023, when it requested disbursement of the surplus funds pursuant to the deed of trust.

Moreover, no predecessor-in-interest to CVE, nor the trustee itself, had ever attempted to enforce the deed of trust, so CVE did not step into the shoes of any litigant that had timely initiated an enforcement action. Although CVE entered a case initiated by the City prior to the expiration of the 10-year limitations period, the City’s lawsuit was for purposes of vindicating its tax lien, which was by statute superior to all other liens on the property.

The City’s lawsuit was not an action to enforce the deed of trust, nor would the City have had authority to enforce the deed of trust—only its own tax lien. Subordinate interests are adjudicated after the tax lien is satisfied. Because the deed of trust was unenforceable when CVE filed its motion attempting to claim the value of the secured debt, the court did not err in denying the action as time-barred under Code § 8.01-241(A).

CVE nevertheless insists that its “entitlement to the proceeds at issue was created within the timeframe” allotted by Code § 8.01-241(A)—that is, when Johnson defaulted on his tax obligation and the court entered the December 2021 confirmation order specifying that surplus funds were being held for CVE’s deed of trust. According to CVE, these events tolled the 10-year limitations period in Code § 8.01-241(A), and CVE then had two years to claim the surplus funds pursuant to Code § 58.1-3967.

The court disagrees. Code § 8.01-241(A) requires enforcing a deed of trust before the expiration of 10 years, and to “enforce” is to file a pleading to vindicate the right secured by the deed of trust. Indisputably, the court’s December 2021 confirmation order was not a pleading to enforce the deed of trust; nor was it even the result of a pleading to enforce the deed of trust.

The court also disagrees with CVE’s argument that the confirmation order triggered a “right to receive” the surplus funds that was viable for two years under Code § 58.1-3967, regardless of the limitations period in Code § 8.01-241(A). By the time CVE filed its claim, any lien on the property pursuant to the deed of trust was no longer “chargeable thereon” because the deed of trust had expired under Code § 8.01-241(A). Code § 58.1-3967 does not prolong the limitations period in Code § 8.01-241(A) or revive expired claims.

Finally, CVE argues that the deed of trust’s terms prevented it from waiving a right to enforce the lien. But a contract provision that merely excuses delays in enforcement does not waive the statute of limitations. Code § 8.01-232(A) permitted a written promise not to plead the statute of limitations “when (i) it is made to avoid or defer litigation pending settlement of any case, (ii) is not made contemporaneously with any other contract, and (iii) it is made for an additional term not longer than the applicable limitations period.” The deed-of-trust language meets none of these requirements and therefore did not waive the 10-year limitations period in Code § 8.01-241(A).

Affirmed.

CVE LLC v. Refund Recovery Specialists LLC, Record No. 0705-24-2, Sept. 9, 2025. CAV (unpublished opinion) (O’Brien). From the Circuit Court of the City of Richmond (Marchant). (Joshua Akil; Barber Law Firm, PLLC, on brief), for appellant. A. Blake Gayle (Zwerdling, Oppleman, Adams & Gayle, on brief), for appellee. VLW 025-7-245. 8 pp.