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Can a Property Owner Evict a Tenant Who Contests Title in the General District Court? - July 2016

July 12, 2016

A recent Virginia case will make it much harder for purchasers of foreclosed properties to evict residents of the purchased property and could allow tenants to remain in the property until there is a decision on the validity of the foreclosure.

In Parrish v. Fannie Mae[1], the Virginia Supreme Court held that when a resident in an eviction action challenges the title of the plaintiff, the General District Court may not have jurisdiction to hear the case. The General District Court will not have jurisdiction in any matter where the resident lived in the property before the Plaintiff had any ownership and where ownership was in dispute. The factual scenario in Parrish and what would be the most common situation is where a purchaser at a foreclosure sale is attempting to evict the prior owner of the home. In such a case, the General District Court is allowed to hear the case only to determine whether title to the property is properly at issue. If the Court finds that there is not a bona fide dispute regarding title, the court can hear the case. To determine if there is a bona fide dispute as to title, the court must decide if the evidence regarding title would be sufficient to make a claim that the ownership of the real property remains with the original owner and not the purchaser at the foreclosure sale. Should the General District Court find that there is sufficient evidence to make a claim that ownership of the property is at issue, the Court must dismiss the case. This dismissal is without prejudice, which means that it could be refiled, but it would need to be filed in the Circuit Court which can determine ownership of real estate.

The Parrish decision creates some challenges for foreclosure purchasers and some benefits for the original owners of foreclosed properties. Many purchasers of foreclosed properties will now be forced to bring their evictions in Virginia’s Circuit Courts and not be able to take advantage of the quick proceedings available in General District Court, where possession can often be obtained at the first court date. Additionally, purchasers of foreclosed properties will incur greater costs in a Circuit Court proceeding. Parrish allows the original owners of the properties to have their cases heard in a court that can determine who rightfully owns the property before they are evicted from their home. Moreover, the original owners will have more options to obtain information due to the expanded discovery in the Circuit Court.

Jesse Gordon, a Pender & Coward attorney, assists property owners with evictions and collections and focuses his practice on construction law and creditor’s rights. Contact Jesse with question by calling (757) 490-6266 or emailing jgordon@pendercoward.com.

 

[1] Virginia Supreme Court Record No. 150454, 2016 LEXIS 76 (June 16, 2016)