SENATE BILL REPORT

SB 5246

BYSenators Pullen, Newhouse and Madsen

Foreclosing on deeds of trust.

Senate Committee on Law & Justice

Senate Hearing Date(s):January 16, 1989; January 19, 1989

Majority Report:  Do pass.

      Signed by Senators Pullen, Chairman; McCaslin, Vice Chairman; Hayner, Madsen, Nelson, Newhouse, Niemi, Rasmussen, Rinehart, Talmadge, Thorsness.

Senate Staff:Ben Barnes (786-7465)

                  February 13, 1989

AS PASSED SENATE, FEBRUARY 10, 1989

BACKGROUND:

RCW 61.24 authorizes nonjudicial foreclosures of deeds of trust as an efficient and inexpensive alternative to judicial foreclosure proceedings.  A nonjudicial foreclosure sale extinguishes all junior liens on the property provided the junior lienholders have received proper notice of the sale as required by statute.  Under current law, the mere recital of compliance with statutory notice requirements contained in a trustee's deed is considered conclusive evidence of such compliance.

Concern exists that the "conclusive evidence" rule of RCW 61.24.040(7) does not adequately protect junior lienors from flawed foreclosure proceedings.  It is therefore recommended that the present deeds of trust act be amended to preserve the interest of a junior lienor who has not had the opportunity to contest a nonjudicial foreclosure or to participate at the foreclosure sale.

SUMMARY:

The interest of a lienholder who is junior to a deed of trust beneficiary is not extinguished by a trustee's sale if the lienholder has not received the notice required pursuant to RCW 61.24.040(1).

An acknowledgement is no longer required on a Notice of Trustee's Sale.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Roger Jones, Washington State Bar Association