Cygnus Newport-Phase 1B, LLC v. City of Portsmouth

In 2004, the prior owner of certain property acquired title to the property and granted a deed of trust on the property to Bank of America. The City of Portsmouth subsequently created the New Port Community Development Authority (CDA), which included the property at issue. In 2006, the CDA authorized the issuance of special assessment bonds, and the City enacted an ordinance establishing special assessments on properties in the CDA district. The prior owner subsequently subdivided the property and sold individual lots. In 2011, Bank of America sold the notes it held to Plaintiff and assigned it the deed of trust. Following the prior owner’s default, the property was foreclosed upon, and Plaintiff was the successful bidder. Plaintiff then filed suit, claiming that the special assessment lien was extinguished by the foreclosure sale and that the special assessments should be declared void because no CDA bond funds remained to construct additional improvements. The circuit court dismissed the complaint with prejudice. The Supreme Court affirmed, holding that a special assessment lien has priority over a deed of trust that was recorded before the special assessments, and therefore, Virginia law foreclosed Plaintiff’s challenge. View "Cygnus Newport-Phase 1B, LLC v. City of Portsmouth" on Justia Law