Virginia recently enact House Bill (HB) 1882, which covers some scenarios that affect, among other things, liens on recorded documents. The changes made by HB 1882 come into effect on July 1, 2021.
HB 1882 provides for cases where a trust deed that has been recorded and secures debt or other obligations under a loan document generally secures a loan document in the amended, modified, supplemented or adapted form without any change to that deed being recorded by must be trusted and has the same priority as the original deed based on a specific language included in the original recorded deed for that purpose.
For the purposes of the above provision, a loan document includes a note, loan agreement, credit agreement, or other document indicating a loan or other indebtedness. However, this provision, which provides for such a change, does not apply to changes, modifications, additions or adjustments to the loan receipt if: (i) the trust deed securing the loan receipt conveys an interest in residential real estate that contains no more than one residential unit; or (ii) any action taken in relation to the Loan Document will increase the aggregate principal amount of the Indebtedness secured by the original Trust Deed, modify or replace certain designated parties in the original Trust Deed, or extend the due date of the Indebtedness or any obligation that is secured if that date was included in the original trust deed. In this case, the effect of the measure is governed by other applicable law outside of this provision.
HB 1882 also addresses certain residential real estate priority issues related to refinancing, which generally require a subordinated mortgage to have the interest rate of the mortgage in relation to a refinancing mortgage that had the subordinated mortgage with the previous mortgage previous mortgage must be specified in a special way on the first page of the refinancing mortgage in addition to other existing requirements.