AN
ACT Relating to deeds of trust; amending RCW 61.24.010, 61.24.020, 61.24.030,
61.24.040, 61.24.050, 61.24.060, 61.24.070, 61.24.080, 61.24.090, 61.24.100,
61.24.110, 61.24.130, 7.28.300, and 7.60.020; and adding new sections to
chapter 61.24 RCW.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. A
new section is added to chapter 61.24 RCW to read as follows:
The
definitions in this section apply throughout this chapter unless the context
clearly requires otherwise.
(1)
"Grantor" means a person, or its successors, who executes a deed of
trust to encumber the person's interest in property as security for the
performance of all or part of the borrower's obligations.
(2)
"Beneficiary" means the holder of the instrument or document
evidencing the obligations secured by the deed of trust, excluding persons
holding the same as security for a different obligation.
(3)
"Affiliate of beneficiary" means any entity which controls, is
controlled by, or is under common control with a beneficiary.
(4)
"Trustee" means the person designated as the trustee in the deed of
trust or appointed under RCW 61.24.010(2).
(5)
"Borrower" means a person or a general partner in a partnership,
including a joint venture, that is liable for all or part of the obligations
secured by the deed of trust under the instrument or other document that is the
principal evidence of such obligations, or the person's successors if they are
liable for those obligations under a written agreement with the beneficiary.
(6)
"Guarantor" means any person and its successors who is not a borrower
and who guarantees any of the obligations secured by a deed of trust in any
written agreement other than the deed of trust.
(7)
"Commercial loan" means a loan that is not made primarily for
personal, family, or household purposes.
(8)
"Trustee's sale" means a nonjudicial sale under a deed of trust
undertaken pursuant to this chapter.
(9)
"Fair value" means the value of the property encumbered by a deed of
trust that is sold pursuant to a trustee's sale. This value shall be
determined by the court or other appropriate adjudicator by reference to the
most probable price, as of the date of the trustee's sale, which would be paid
in cash or other immediately available funds, after deduction of prior liens
and encumbrances with interest to the date of the trustee's sale, for which the
property would sell on such date after reasonable exposure in the market under
conditions requisite to a fair sale, with the buyer and seller each acting
prudently, knowledgeably, and for self-interest, and assuming that neither is
under duress.
(10)
"Record" and "recorded" includes the appropriate
registration proceedings, in the instance of registered land.
(11)
"Person" means any natural person, or legal or governmental entity.
Sec.
2. RCW
61.24.010 and 1991 c 72 s 58 are each amended to read as follows:
(1)
((The terms "record" and "recorded" as used in this
chapter, shall include the appropriate registration proceedings, in the
instance of registered land.
(2))) The
trustee of a deed of trust under this chapter shall be:
(a)
Any domestic corporation incorporated under Title 23B, 30, 31, 32, or 33 RCW of
which at least one officer is a Washington resident; or
(b)
Any title insurance company authorized to insure title to real property under
the laws of this state, or its agents; or
(c)
Any attorney who is an active member of the Washington state bar association at
the time ((he)) the attorney is named trustee; or
(d)
Any professional corporation incorporated under chapter 18.100 RCW, ((all of
whose shareholders are licensed attorneys)) any professional limited
liability company formed under chapter 25.15 RCW, any general partnership,
including limited liability partnerships, formed under chapter 25.04 RCW, all
of whose shareholders, members, or partners, respectively, are either licensed
attorneys or entities, provided all of the owners of those entities are
licensed attorneys, or any domestic corporation wholly owned by any of the
entities under this subsection (1)(d); or
(e)
Any agency or instrumentality of the United States government; or
(f)
Any national bank, savings bank, or savings and loan association chartered
under the laws of the United States.
(((3)))
(2) The trustee ((shall)) may resign ((at the request
of the beneficiary and may resign)) at its own election((.)) or
be replaced by the beneficiary. The trustee shall give prompt written notice
of its resignation to the beneficiary. The resignation of the trustee shall
become effective upon the recording of the notice of resignation in each county
in which the deed of trust is recorded. If a trustee is not appointed in the
deed of trust, or upon the resignation, incapacity, disability, absence,
or death of the trustee, or the election of the beneficiary to replace the
trustee, the beneficiary shall ((nominate in writing)) appoint a
trustee or a successor trustee. Upon recording ((in the mortgage
records of the county or counties)) the appointment of a successor
trustee in each county in which the ((trust)) deed of trust
is recorded, ((of the appointment of a successor trustee,)) the
successor trustee shall be vested with all powers of ((the)) an
original trustee.
Sec.
3. RCW
61.24.020 and 1985 c 193 s 2 are each amended to read as follows:
Except
as provided in this chapter, a deed of trust is subject to all laws relating to
mortgages on real property. A deed conveying real property to a trustee in
trust to secure the performance of an obligation of the grantor or another to
the beneficiary may be foreclosed ((as in this chapter provided)) by
trustee's sale. The county auditor shall record ((such)) the
deed as a mortgage and shall index the name of the grantor as mortgagor and the
names of the trustee and beneficiary as mortgagee. No person, corporation or
association may be both trustee and beneficiary under the same deed of trust:
PROVIDED, That any agency of the United States government may be both trustee
and beneficiary under the same deed of trust. A deed of trust conveying
real property that is used principally for agricultural purposes may be
foreclosed as a mortgage. Pursuant to RCW 62A.9‑501(4), when a deed of
trust encumbers both real and personal property, the trustee is authorized to
sell all or any portion of the grantor's interest in that real and personal
property at a trustee's sale.
Sec.
4. RCW
61.24.030 and 1990 c 111 s 1 are each amended to read as follows:
It
shall be requisite((, to foreclosure under this chapter)) to a
trustee's sale:
(1)
That the deed of trust contains a power of sale;
(2)
That the deed of trust ((provides in its terms)) contains a statement
that the real property conveyed is not used principally for agricultural ((or
farming)) purposes; provided, if the statement is false on the date the
deed of trust was granted or amended to include that statement, and false on
the date of the trustee's sale, then the deed of trust must be foreclosed
judicially. Real property is used for agricultural purposes if it is used in
an operation that produces crops, livestock, or aquatic goods;
(3)
That a default has occurred in the obligation secured or a covenant of the
grantor, which by the terms of the deed of trust makes operative the power to
sell;
(4)
That no action commenced by the beneficiary of the deed of trust ((or the
beneficiary's successor)) is now pending to seek satisfaction of an
obligation secured by the deed of trust in any court by reason of the grantor's
default on the obligation secured: PROVIDED, That (a) the seeking of the
appointment of a receiver shall not constitute an action for purposes of this
chapter; and (b) if a receiver is appointed, the grantor shall be entitled to
any rents or profits derived from property subject to a homestead as defined in
RCW 6.13.010. If the deed of trust was ((not)) granted to secure ((an
obligation incurred primarily for personal, family, or household purposes))
a commercial loan, this subsection shall not apply to actions brought to
enforce any other lien or security interest granted to secure the obligation
secured by the deed of trust being foreclosed;
(5)
That the deed of trust has been recorded in each county in which the land or
some part thereof is situated; ((and))
(6)
That prior to the date of the notice of trustee's sale and continuing
thereafter through the date of the trustee's sale, the trustee must have a
street address in this state where personal service of process may be made; and
(7)
That at least thirty days before notice of sale shall be recorded, transmitted
or served, written notice of default shall be transmitted by the beneficiary or
trustee to the borrower and grantor ((or any successor in interest))
at ((his)) their last known ((address)) addresses
by both first class and either registered or certified mail, return receipt
requested, and the beneficiary or trustee shall cause to be posted in a
conspicuous place on ((said)) the premises, a copy of ((said))
the notice, or personally served on the borrower and grantor ((or
his successor in interest)). This notice shall contain the following
information:
(a)
A description of the property which is then subject to the deed of trust;
(b)
((The book and the page of the book of records wherein the deed of trust is
recorded)) Each county in which the deed of trust is recorded and the
document number given to the deed of trust upon recording by each county
auditor or recording officer;
(c)
That the beneficiary has declared the borrower or grantor ((or any
successor in interest)) to be in default, and a concise statement of the
default alleged;
(d)
An itemized account of the amount or amounts in arrears if the default alleged
is failure to make payments;
(e)
An itemized account of all other specific charges, costs, or fees that
the borrower, grantor, or any guarantor is or may be obliged to
pay to reinstate the deed of trust before the recording of the notice of sale;
(f)
The total of ((subparagraphs)) (d) and (e) of this subsection,
designated clearly and conspicuously as the amount necessary to reinstate the
note and deed of trust before the recording of the notice of sale;
(g)
That failure to cure ((said)) the alleged default within thirty
days of the date of mailing of the notice, or if personally served, within
thirty days of the date of personal service thereof, may lead to recordation,
transmittal, and publication of a notice of sale, and that the property
described in ((subparagraph)) (a) of this subsection may be sold at
public auction at a date no less than one hundred twenty days in the future;
(h)
That the effect of the recordation, transmittal, and publication of a
notice of sale will be to (i) increase the costs and fees and (ii) publicize
the default and advertise the grantor's property for sale;
(i)
That the effect of the sale of the grantor's property by the trustee will be to
deprive the grantor ((or his successor in interest and all those who hold
by, through or under him)) of all their interest in the property described
in ((subsection)) (a) of this subsection; and
(j) That the borrower, grantor ((or any successor in
interest)), and any guarantor has recourse to the courts pursuant to
RCW 61.24.130 to contest the alleged default on any proper ground.
Sec.
5. RCW
61.24.040 and 1989 c 361 s 1 are each amended to read as follows:
A
deed of trust foreclosed under this chapter shall be foreclosed as follows:
(1)
At least ninety days before the sale, the trustee shall:
(a)
Record a notice in the form described in RCW 61.24.040(1)(f) in the office of
the auditor in each county in which the deed of trust is recorded;
(b)
To the extent the trustee elects to foreclose its lien or interest, or the
beneficiary elects to preserve its right to seek a deficiency judgment against
a borrower or grantor under RCW 61.24.100(3)(a), and if their addresses are
stated in a recorded instrument evidencing their interest, lien, or claim of
lien, or an amendment thereto, or are otherwise known to the trustee, cause a
copy of the notice of sale described in RCW 61.24.040(1)(f) to be transmitted
by both first class and either certified or registered mail, return receipt
requested, to the following persons or their legal representatives, if any, at
such address:
(i)
The borrower and grantor ((or the grantor's successor in interest));
(ii)
The beneficiary of any deed of trust or mortgagee of any mortgage, or any
person who has a lien or claim of lien against the property, that was recorded
subsequent to the recordation of the deed of trust being foreclosed and before
the recordation of the notice of sale;
(iii)
The vendee in any real estate contract, the lessee in any lease, or the
holder of any conveyances of any interest or estate in any portion or all of
the property described in such notice, if that contract, lease, or conveyance
of such interest or estate, or a memorandum or other notice thereof, was
recorded after the recordation of the deed of trust being foreclosed and before
the recordation of the notice of sale;
(iv)
The last holder of record of any other lien against or interest in the property
that is subject to a subordination to the deed of trust being foreclosed that
was recorded before the recordation of the notice of sale; ((and))
(v)
The last holder of record of the lien of any judgment subordinate to the deed
of trust being foreclosed; and
(vi)
The occupants of property consisting solely of a single-family residence, or a
condominium, cooperative, or other dwelling unit in a multiplex or other
building containing fewer than five residential units, whether or not the
occupant's rental agreement is recorded, which notice may be a single notice
addressed to "occupants" for each unit known to the trustee or
beneficiary;
(c)
Cause a copy of the notice of sale described in RCW 61.24.040(1)(f) to be
transmitted by both first class and either certified or registered mail, return
receipt requested, to the plaintiff or the plaintiff's attorney of record, in
any court action to foreclose a lien or other encumbrance on all or any part of
the property, provided a court action is pending and a lis pendens in
connection therewith is recorded in the office of the auditor of any county in
which all or part of the property is located on the date the notice is
recorded;
(d)
Cause a copy of the notice of sale described in RCW 61.24.040(1)(f) to be
transmitted by both first class and either certified or registered mail, return
receipt requested, to any person who has recorded a request for notice in
accordance with RCW 61.24.045, at the address specified in such person's most
recently recorded request for notice;
(e)
Cause a copy of the notice of sale described in RCW 61.24.040(1)(f) to be
posted in a conspicuous place on the property, or in lieu of posting, cause a
copy of said notice to be served upon any occupant of the property;
(f)
The notice shall be in substantially the following form:
NOTICE OF TRUSTEE'S SALE
I.
NOTICE
IS HEREBY GIVEN that the undersigned Trustee will on the . . . .
day of . . . . . ., ((19)). . ., at
the hour of . . . . o'clock . . . . M. at .......................................... [street
address and location if inside a building] in the City of
. . . . . ., State of Washington, sell at public
auction to the highest and best bidder, payable at the time of sale, the
following described real property, situated in the County(ies) of
. . . . . ., State of Washington, to-wit:
[If any personal property is to be included in the
trustee's sale, include a description that reasonably identifies such personal
property]
which
is subject to that certain Deed of Trust dated
. . . . . ., ((19)). . ., recorded
. . . . . ., ((19)). . ., under
Auditor's File No. . . . ., records of
. . . . . . County, Washington, from
. . . . . . . . ., as Grantor, to
. . . . . . . . ., as Trustee, to
secure an obligation in favor of
. . . . . . . . ., as Beneficiary, the
beneficial interest in which was assigned by
. . . . . . . . ., under an Assignment
recorded under Auditor's File No. . . . . [Include recording
information for all counties if the Deed of Trust is recorded in more than one
county.]
II.
No
action commenced by the Beneficiary of the Deed of Trust ((or the
Beneficiary's successor)) is now pending to seek satisfaction of the
obligation in any Court by reason of the Borrower's or Grantor's default
on the obligation secured by the Deed of Trust.
[If there is another action pending to foreclose other
security for all or part of the same debt, qualify the statement and identify
the action.]
III.
The default(s) for which this foreclosure is made is/are as follows:
[If default is for other than payment of money, set
forth the particulars]
Failure
to pay when due the following amounts which are now in arrears:
IV.
The sum
owing on the obligation secured by the Deed of Trust is: Principal
$ . . . . . ., together with interest as provided
in the note or other instrument secured from the . . . . day of
. . . . . ., ((19)). . ., and such
other costs and fees as are due under the note or other instrument secured, and
as are provided by statute.
V.
The
above-described real property will be sold to satisfy the expense of sale and
the obligation secured by the Deed of Trust as provided by statute. The sale
will be made without warranty, express or implied, regarding title, possession,
or encumbrances on the . . . . day of
. . . . . ., ((19)). . . The
default(s) referred to in paragraph III must be cured by the
. . . . day of . . . . . ., ((19)). . .
(11 days before the sale date), to cause a discontinuance of the sale. The
sale will be discontinued and terminated if at any time on or before the
. . . . day of . . . . . ., ((19)). . .,
(11 days before the sale date), the default(s) as set forth in paragraph III
is/are cured and the Trustee's fees and costs are paid. The sale may be
terminated any time after the . . . . day of
. . . . . ., ((19)). . . (11 days
before the sale date), and before the sale by the Borrower, Grantor ((or
the Grantor's successor in interest)), any Guarantor, or the holder
of any recorded junior lien or encumbrance paying the entire principal and
interest secured by the Deed of Trust, plus costs, fees, and advances, if any,
made pursuant to the terms of the obligation and/or Deed of Trust, and curing
all other defaults.
VI.
A written notice of default was transmitted by the Beneficiary or
Trustee to the Borrower and Grantor ((or the Grantor's successor in
interest)) at the following ((address)) addresses:
...................................
...................................
...................................
by both
first class and certified mail on the . . . . day of
. . . . . ., ((19)). . ., proof of which
is in the possession of the Trustee; and the Borrower and Grantor ((or
the Grantor's successor in interest was)) were personally served on
the . . . . day of . . . . . ., ((19)). . .,
with said written notice of default or the written notice of default was posted
in a conspicuous place on the real property described in paragraph I above, and
the Trustee has possession of proof of such service or posting.
VII.
The
Trustee whose name and address are set forth below will provide in writing to
anyone requesting it, a statement of all costs and fees due at any time prior
to the sale.
VIII.
The
effect of the sale will be to deprive the Grantor and all those who hold by,
through or under the Grantor of all their interest in the above-described
property.
IX.
Anyone having any objection to the sale on any grounds whatsoever will
be afforded an opportunity to be heard as to those objections if they bring a
lawsuit to restrain the sale pursuant to RCW 61.24.130. Failure to bring such
a lawsuit may result in a waiver of any proper grounds for invalidating the
Trustee's sale.
[Add Part X to this notice if applicable under RCW 61.24.040(9)]
.............................................
.................. , Trustee
.................. B
.................. C Address
.................. D
.................. } Phone
[((Individual
or corporate)) Acknowledgment]
(2)
In addition to providing the borrower and grantor ((or the grantor's
successor in interest)) the notice of sale described in RCW
61.24.040(1)(f), the trustee shall include with the copy of the notice which is
mailed to the grantor ((or the grantor's successor in interest)), a
statement to the grantor ((or the grantor's successor in interest)) in
substantially the following form:
NOTICE OF FORECLOSURE
Pursuant to the Revised Code of Washington,
Chapter 61.24 RCW
The
attached Notice of Trustee's Sale is a consequence of default(s) in the
obligation to . . . . . ., the Beneficiary of your
Deed of Trust and owner of the obligation secured thereby. Unless the
default(s) is/are cured, your property will be sold at auction on the
. . . . day of . . . . . ., ((19)). . .
To
cure the default(s), you must bring the payments current, cure any other
defaults, and pay accrued late charges and other costs, advances, and
attorneys' fees as set forth below by the . . . . day of
. . . . . ., ((19)). . . ((())[11
days before the sale date(()))]. To date, these arrears and
costs are as follows:
Estimated amount
Currently due that will be due
to reinstate to reinstate
on. . . . . on. . . . .
. . . . . . . . . . . .
(11 days before
the date set
for sale)
Delinquent payments
from . . . . . .,
((19)). . ., in the
amount of
$ . . . .
/mo.: $ . . . . $ . . . .
Late charges in
the total
amount
of: $ . . . . $ . . . .
Estimated
Amounts
Attorneys'
fees: $ . . . . $ . . . .
Trustee's
fee: $ . . . . $ . . . .
Trustee's expenses:
(Itemization)
Title
report $ . . . . $ . . . .
Recording
fees $ . . . . $ . . . .
Service/Posting
of
Notices $ . . . . $ . . . .
Postage/Copying
expense $ . . . . $ . . . .
Publication $ . . . . $ . . . .
Telephone
charges $ . . . . $ . . . .
Inspection
fees $ . . . . $ . . . .
. . . . . . $ . . . . $ . . . .
. . . . . . $ . . . . $ . . . .
TOTALS
$ . . . . $ . . . .
As
to the defaults which do not involve payment of money to the Beneficiary of
your Deed of Trust, you must cure each such default. Listed below are the
defaults which do not involve payment of money to the Beneficiary of your Deed
of Trust. Opposite each such listed default is a brief description of the
action necessary to cure the default and a description of the documentation
necessary to show that the default has been cured.
Default Description of
Action Required to Cure and Documentation Necessary to Show Cure
. . . . . . . .............................................
.............................................
.............................................
. . . . . . . .............................................
.............................................
.............................................
You
may reinstate your Deed of Trust and the obligation secured thereby at any time
up to and including the . . . . day of
. . . . . ., ((19)). . . ((())[11
days before the sale date(()))], by paying the amount set forth
or estimated above and by curing any other defaults described above. Of
course, as time passes other payments may become due, and any further payments
coming due and any additional late charges must be added to your reinstating
payment. Any new defaults not involving payment of money that occur after the
date of this notice must also be cured in order to effect reinstatement. In
addition, because some of the charges can only be estimated at this time, and
because the amount necessary to reinstate may include presently unknown
expenditures required to preserve the property or to comply with state or local
law, it will be necessary for you to contact the Trustee before the time you
tender reinstatement so that you may be advised of the exact amount you will be
required to pay. Tender of payment or performance must be made to:
. . . . . ., whose address is
. . . . . ., telephone ( )
. . . . . . AFTER THE . . . . DAY OF
. . . . . ., ((19)). . ., YOU MAY NOT
REINSTATE YOUR DEED OF TRUST BY PAYING THE BACK PAYMENTS AND COSTS AND FEES AND
CURING THE OTHER DEFAULTS AS OUTLINED ABOVE. In such a case, you will only be
able to stop the sale by paying, before the sale, the total principal balance
($ . . . . . .) plus accrued interest, costs and
advances, if any, made pursuant to the terms of the documents and by curing the
other defaults as outlined above.
You
may contest this default by initiating court action in the Superior Court of
the county in which the sale is to be held. In such action, you may raise any
legitimate defenses you have to this default. A copy of your Deed of Trust and
documents evidencing the obligation secured thereby are enclosed. You may wish
to consult a lawyer. Legal action on your part may prevent or restrain the
sale, but only if you persuade the court of the merits of your defense.
The
court may grant a restraining order or injunction to restrain a trustee's sale
pursuant to RCW 61.24.130 upon five days notice to the trustee of the time
when, place where, and the judge before whom the application for the
restraining order or injunction is to be made. This notice shall include
copies of all pleadings and related documents to be given to the judge. Notice
and other process may be served on the trustee at:
NAME:
..........................
ADDRESS:
.......................
.......................
TELEPHONE
NUMBER: ..............
If
you do not reinstate the secured obligation and your Deed of Trust in the
manner set forth above, or if you do not succeed in restraining the sale by
court action, your property will be sold ((to satisfy the obligations
secured by your Deed of Trust)). The effect of such sale will be to
deprive you and all those who hold by, through or under you of all interest in
the property;
(3)
In addition, the trustee shall cause a copy of the notice of sale described in
RCW 61.24.040(1)(f) (excluding the acknowledgment) to be published in a legal
newspaper in each county in which the property or any part thereof is situated,
once on or between the ((thirty-second)) thirty-fifth and
twenty-eighth day before the date of sale, and once on or between the ((eleventh))
fourteenth and seventh day before the date of sale;
(4)
On the date and at the time designated in the notice of sale, the trustee or
its authorized agent shall sell the property at public auction to the highest
bidder. The trustee may sell the property in gross or in parcels as the
trustee shall deem most advantageous;
(5)
The place of sale shall be at any designated public place within the county
where the property is located and if the property is in more than one county,
the sale may be in any of the counties where the property is located. The sale
shall be on Friday, or if Friday is a legal holiday on the following Monday, and
during the hours set by statute for the conduct of sales of real estate at
execution;
(6)
The trustee may for any cause the trustee deems advantageous, continue the sale
for a period or periods not exceeding a total of one hundred twenty days by a
public proclamation at the time and place fixed for sale in the notice of sale
or, alternatively, by giving notice of the time and place of the postponed sale
in the manner and to the persons specified in RCW 61.24.040(1) (b), (c), (d),
and (e) and publishing a copy of such notice once in the newspaper(s) described
in RCW 61.24.040(3), more than seven days before the date fixed for sale in the
notice of sale. No other notice of the postponed sale need be given;
(7)
The purchaser shall forthwith pay the price bid and on payment the trustee
shall execute to the purchaser its deed; the deed shall recite the facts
showing that the sale was conducted in compliance with all of the requirements
of this chapter and of the deed of trust, which recital shall be prima facie
evidence of such compliance and conclusive evidence thereof in favor of bona
fide purchasers and encumbrancers for value, except that these recitals shall
not affect the lien or interest of any person entitled to notice under RCW
61.24.040(1), if the trustee fails to give the required notice to such person.
In such case, the lien or interest of such omitted person shall not be affected
by the sale and such omitted person shall be treated as if such person was the
holder of the same lien or interest and was omitted as a party defendant in a
judicial foreclosure proceeding;
(8)
The sale as authorized under this chapter shall not take place less than one
hundred ninety days from the date of default in any of the obligations secured.
(9)
If the trustee elects to foreclose the interest of any occupant or tenant of
property comprised solely of a single-family residence, or a condominium,
cooperative, or other dwelling unit in a multiplex or other building containing
fewer than five residential units, the following notice shall be included as
Part X of the Notice of Trustee's Sale:
X.
NOTICE
TO OCCUPANTS OR TENANTS
The
purchaser at the trustee's sale is entitled to possession of the property on
the 20th day following the sale, as against the grantor under the deed of trust
(the owner) and anyone having an interest junior to the deed of trust,
including occupants and tenants. After the 20th day following the sale the
purchaser has the right to evict occupants and tenants by summary proceedings
under the unlawful detainer act, chapter 59.12 RCW.
(10)
Only one copy of all notices required by this chapter need be given to a person
who is both the borrower and the grantor. All notices required by this chapter
that are given to a general partnership are deemed given to each of its general
partners, unless otherwise agreed by the parties.
NEW
SECTION. Sec. 6. A
new section is added to chapter 61.24 RCW to read as follows:
The
beneficiary may give the notices of default, trustee's sale, and foreclosure
referred to in RCW 61.24.030(7) and 61.24.040 to any one or more of the
guarantors of a commercial loan at the time they are given to the grantor. In
addition to the information contained in the notices provided to the grantor,
these notices shall state that (1) the guarantor may be liable for a deficiency
judgment to the extent the sale price obtained at the trustee's sale is less
than the debt secured by the deed of trust; (2) the guarantor has the same
rights to reinstate the debt, cure the default, or repay the debt as is given
to the grantor in order to avoid the trustee's sale; (3) the guarantor will
have no right to redeem the property after the trustee's sale; (4) subject to
such longer periods as are provided in the Washington deed of trust act,
chapter 61.24 RCW, any action brought to enforce a guaranty must be commenced
within one year after the trustee's sale, or the last trustee's sale under any
deed of trust granted to secure the same debt; and (5) in any action for a
deficiency, the guarantor will have the right to establish the fair value of
the property as of the date of the trustee's sale, less prior liens and
encumbrances, and to limit its liability for a deficiency to the difference
between the debt and the greater of such fair value or the sale price paid at
the trustee's sale, plus interest and costs. The failure of the beneficiary to
provide any guarantor the notice referred to in this section does not invalidate
either the notices given to the borrower or the grantor, or the trustee's sale.
Sec.
7. RCW
61.24.050 and 1965 c 74 s 5 are each amended to read as follows:
((The
deed of the trustee, executed to the purchaser,)) When delivered to the
purchaser, the trustee's deed shall convey all of the right,
title, and interest in the real and personal property sold at the
trustee's sale which the grantor had or had the power to convey at the time
of the execution ((by him)) of the deed of trust, and such as ((he))
the grantor may have thereafter acquired. If the trustee accepts a
bid, then the trustee's sale is final as of the date and time of such
acceptance if the trustee's deed is recorded within fifteen days thereafter.
After a trustee's sale, ((as in this chapter provided,)) no
person shall have any right, by statute or otherwise, to redeem
((from the deed of trust or from)) the property sold at the trustee's
sale.
Sec.
8. RCW
61.24.060 and 1967 c 30 s 2 are each amended to read as follows:
The
purchaser at the trustee's sale shall be entitled to possession of the property
on the twentieth day following the sale, as against the grantor under the deed
of trust ((or anyone claiming through him,)) and anyone having an
interest junior to the deed of trust, including occupants and tenants, who were
given all of the notices to which they were entitled under this chapter. The
purchaser shall also have a right to the summary proceedings to
obtain possession of real property provided in chapter 59.12 RCW.
Sec.
9. RCW
61.24.070 and 1965 c 74 s 7 are each amended to read as follows:
(1)
The trustee may not bid at the trustee's sale. Any other person,
including the beneficiary ((under the deed of trust)), may bid at
the trustee's sale.
(2)
The trustee shall, at the request of the beneficiary, credit toward the
beneficiary's bid all or any part of the monetary obligations secured by the
deed of trust. If the beneficiary is the purchaser, any amount bid by the
beneficiary in excess of the amount so credited shall be paid to the trustee in
the form of cash, certified check, cashier's check, money order, or funds
received by verified electronic transfer, or any combination thereof. If the
purchaser is not the beneficiary, the entire bid shall be paid to the trustee
in the form of cash, certified check, cashier's check, money order, or funds
received by verified electronic transfer, or any combination thereof.
Sec.
10. RCW
61.24.080 and 1981 c 161 s 5 are each amended to read as follows:
The
trustee shall apply the proceeds of the sale as follows:
(1)
To the expense of sale, including a reasonable charge by the trustee and by his
or her attorney: PROVIDED, That the aggregate of the charges by the
trustee and his or her attorney, for their services in the sale, shall
not exceed the amount which would, by the superior court of the county in which
the trustee's sale occurred, have been deemed a reasonable attorney fee, had
the trust deed been foreclosed as a mortgage in a noncontested action in ((the
said)) that court;
(2)
To the obligation secured by the deed of trust; and
(3)
The surplus, if any, less the clerk's filing fee, shall be deposited,
together with written notice of the amount of the surplus, a copy of the
((recorded)) notice of trustee's sale, and an affidavit of
mailing as provided in this subsection, with the clerk of the superior
court of the county in which the sale took place. The trustee shall mail
copies of the notice of the surplus, the notice of trustee's sale, and the
affidavit of mailing to each party to whom the notice of trustee's sale was
sent pursuant to RCW 61.24.040(1). The clerk shall index such funds under
the name of the grantor as set out in the recorded notice. Upon ((depositing
such surplus)) compliance with this subsection, the trustee shall be
discharged from all further responsibilities ((therefor)) for the
surplus. Interests in, or liens or claims of liens against the property
eliminated by sale under this section shall attach to ((such)) the
surplus in the order of priority that it had attached to the property. A
party seeking disbursement of the surplus funds shall file a motion requesting
disbursement in the superior court for the county in which the surplus funds
are deposited. Notice of the motion shall be personally served upon, or mailed
in the manner specified in RCW 61.24.040(1)(b), to all parties to whom the
trustee mailed notice of the surplus, and any other party who has entered an
appearance in the proceeding, not less than twenty days prior to the hearing of
the motion. The clerk shall not disburse such surplus except upon order of
the superior court of such county.
Sec.
11. RCW
61.24.090 and 1987 c 352 s 4 are each amended to read as follows:
(1)
At any time prior to the eleventh day before the date set by the trustee for
the sale in the recorded notice of sale, or in the event the trustee continues
the sale pursuant to RCW 61.24.040(6), at any time prior to the eleventh day
before the actual sale, the borrower, grantor ((or his successor in
interest)), any guarantor, any beneficiary under a subordinate deed
of trust, or any person having a subordinate lien or encumbrance of
record on the trust property or any part thereof, shall be entitled to cause a
discontinuance of the sale proceedings by curing the default or defaults set
forth in the notice, which in the case of a default by failure to pay, shall be
by paying to the trustee:
(a)
The entire amount then due under the terms of the deed of trust and the
obligation secured thereby, other than such portion of the principal as would
not then be due had no default occurred, and
(b)
The expenses actually incurred by the trustee enforcing the terms of the note
and deed of trust, including a reasonable trustee's fee, together with the
trustee's reasonable attorney's fees, together with costs of recording the
notice of discontinuance of notice of trustee's sale.
(2)
Any person entitled to cause a discontinuance of the sale proceedings shall
have the right, before or after reinstatement, to request any court, excluding
a small claims court, for disputes within the jurisdictional limits of that
court, to determine the reasonableness of any fees demanded or paid as a
condition to reinstatement. The court shall make such determination as it
deems appropriate, which may include an award to the prevailing party of its
costs and reasonable attorneys' fees, and render judgment accordingly. An
action to determine fees shall not forestall any sale or affect its validity.
(3)
Upon receipt of such payment the proceedings shall be discontinued, the deed of
trust shall be reinstated and the obligation shall remain as though no
acceleration had taken place.
(4)
In the case of a default which is occasioned by other than failure to make
payments, the person or persons causing the said default shall pay the expenses
incurred by the trustee and the trustee's fees as set forth in subsection
(1)(b) of this section.
(5)
Any person having a subordinate lien of record on the trust property and who
has cured the default or defaults pursuant to this section shall thereafter
have included in his lien all payments made to cure any defaults, including
interest thereon at eight percent per annum, payments made for trustees' costs
and fees incurred as authorized ((herein)), and ((his))
reasonable attorney's fees and costs incurred resulting from any judicial
action commenced to enforce his or her rights to advances under this section.
(6)
If the default is cured and the obligation and the deed of trust reinstated in
the manner ((hereinabove)) provided, the trustee shall properly execute,
acknowledge, and cause to be recorded a notice of discontinuance of
trustee's sale under ((such)) that deed of trust. A notice of
discontinuance of trustee's sale when so executed and acknowledged is entitled
to be recorded and shall be sufficient if it sets forth a record of the deed of
trust and the auditor's file number under which the deed of trust is recorded,
and a reference to the notice of sale and the auditor's file number under which
the notice of sale is recorded, and a notice that ((such)) the
sale is discontinued.
(7)
Any payments required under this section as a condition precedent to
reinstatement of the deed of trust shall be tendered to the trustee in the form
of cash, certified check, cashier's check, money order, or funds received by
verified electronic transfer, or any combination thereof.
Sec.
12. RCW
61.24.100 and 1990 c 111 s 2 are each amended to read as follows:
((Foreclosure,
as in this chapter provided, shall satisfy the obligation secured by the deed
of trust foreclosed, regardless of the sale price or fair value, and no
deficiency decree or other judgment shall thereafter be obtained on such
obligation, except that if such obligation was not incurred primarily for
personal, family, or household purposes, such foreclosure shall not preclude
any judicial or nonjudicial foreclosure of any other deeds of trust, mortgages,
security agreements, or other security interests or liens covering any real or
personal property granted to secure such obligation. Where foreclosure is not
made under this chapter, the beneficiary shall not be precluded from enforcing
the security as a mortgage nor from enforcing the obligation by any means
provided by law.)) (1) Except to the extent permitted in this section
for deeds of trust securing commercial loans, a deficiency judgment shall not
be obtained on the obligations secured by a deed of trust against any borrower,
grantor, or guarantor after a trustee's sale under that deed of trust.
(2)(a)
Nothing in this chapter precludes an action against any person liable on the
obligations secured by a deed of trust or any guarantor prior to a notice of
trustee's sale being given pursuant to this chapter or after the discontinuance
of the trustee's sale.
(b)
No action under (a) of this subsection precludes the beneficiary from
commencing a judicial foreclosure or trustee's sale under the deed of trust
after the completion or dismissal of that action.
(3)
This chapter does not preclude any one or more of the following after a
trustee's sale under a deed of trust securing a commercial loan executed after
the effective date of this section:
(a)(i)
To the extent the fair value of the property sold at the trustee's sale to the
beneficiary or an affiliate of the beneficiary is less than the unpaid
obligation secured by the deed of trust immediately prior to the trustee's sale,
an action for a deficiency judgment against the borrower or grantor, if such
person or persons was timely given the notices under RCW 61.24.040, for (A) any
decrease in the fair value of the property caused by waste to the property
committed by the borrower or grantor, respectively, after the deed of trust is
granted, and (B) the wrongful retention of any rents, insurance proceeds, or
condemnation awards by the borrower or grantor, respectively, that are
otherwise owed to the beneficiary.
(ii)
This subsection (3)(a) does not apply to any property that is occupied by the
borrower as its principal residence as of the date of the trustee's sale;
(b)
Any judicial or nonjudicial foreclosures of any other deeds of trust,
mortgages, security agreements, or other security interests or liens covering
any real or personal property granted to secure the obligation that was secured
by the deed of trust foreclosed; or
(c)
Subject to this section, an action for a deficiency judgment against a
guarantor if the guarantor is timely given the notices under section 6 of this
act.
(4)
Any action referred to in subsection (3)(a) and (c) of this section shall be
commenced within one year after the date of the trustee's sale, or a later date
to which the liable party otherwise agrees in writing with the beneficiary
after the notice of foreclosure is given, plus any period during which the
action is prohibited by a bankruptcy, insolvency, moratorium, or other similar
debtor protection statute. If there occurs more than one trustee's sale under
a deed of trust securing a commercial loan or if trustee's sales are made
pursuant to two or more deeds of trust securing the same commercial loan, the
one-year limitation in this section begins on the date of the last of those
trustee's sales.
(5)
In any action against a guarantor following a trustee's sale under a deed of
trust securing a commercial loan, the guarantor may request the court or other
appropriate adjudicator to determine, or the court or other appropriate
adjudicator may in its discretion determine, the fair value of the property
sold at the sale and the deficiency judgment against the guarantor shall be for
an amount equal to the sum of the total amount owed to the beneficiary by the
guarantor as of the date of the trustee's sale, less the fair value of the
property sold at the trustee's sale or the sale price paid at the trustee's
sale, whichever is greater, plus interest on the amount of the deficiency from
the date of the trustee's sale at the rate provided in the guaranty, the deed
of trust, or in any other contracts evidencing the debt secured by the deed of
trust, as applicable, and any costs, expenses, and fees that are provided for
in any contract evidencing the guarantor's liability for such a judgment. If
any other security is sold to satisfy the same debt prior to the entry of a
deficiency judgment against the guarantor, the fair value of that security, as
calculated in the manner applicable to the property sold at the trustee's sale,
shall be added to the fair value of the property sold at the trustee's sale as
of the date that additional security is foreclosed. This section is in lieu of
any right any guarantor would otherwise have to establish an upset price
pursuant to RCW 61.12.060 prior to a trustee's sale.
(6)
A guarantor granting a deed of trust to secure its guaranty of a commercial
loan shall be subject to a deficiency judgment following a trustee's sale under
that deed of trust only to the extent stated in subsection (3)(a)(i) of this
section. If the deed of trust encumbers the guarantor's principal residence,
the guarantor shall be entitled to receive an amount up to the homestead
exemption set forth in RCW 6.13.030, without regard to the effect of RCW
6.13.080(2), from the bid at the foreclosure or trustee's sale accepted by the
sheriff or trustee prior to the application of the bid to the guarantor's
obligation.
(7)
A beneficiary's acceptance of a deed in lieu of a trustee's sale under a deed
of trust securing a commercial loan exonerates the guarantor from any liability
for the debt secured thereby except to the extent the guarantor otherwise
agrees as part of the deed in lieu transaction.
(8)
This chapter does not preclude a beneficiary from foreclosing a deed of trust
in the same manner as a real property mortgage and this section does not apply
to such a foreclosure.
(9)
Any contract, note, deed of trust, or guaranty may, by its express language,
prohibit the recovery of any portion or all of a deficiency after the property
encumbered by the deed of trust securing a commercial loan is sold at a
trustee's sale.
(10)
A trustee's sale under a deed of trust securing a commercial loan does not
preclude an action to collect or enforce any obligation of a borrower or
guarantor if that obligation, or the substantial equivalent of that obligation,
was not secured by the deed of trust.
(11)
Unless the guarantor otherwise agrees, a trustee's sale shall not impair any
right or agreement of a guarantor to be reimbursed by a borrower or grantor for
a deficiency judgment against the guarantor.
(12)
Notwithstanding anything in this section to the contrary, the rights and
obligations of any borrower, grantor, and guarantor following a trustee's sale
under a deed of trust securing a commercial loan or any guaranty of such a loan
executed prior to the effective date of this section shall be determined in
accordance with the laws existing prior to the effective date of this section.
Sec.
13. RCW
61.24.110 and 1981 c 161 s 7 are each amended to read as follows:
The
trustee shall reconvey all or any part of the property ((covered)) encumbered
by the deed of trust to the person entitled thereto on written request of the
beneficiary, or upon satisfaction of the obligation secured and written request
for reconveyance made by the beneficiary or the person entitled thereto.
Sec.
14. RCW
61.24.130 and 1987 c 352 s 5 are each amended to read as follows:
(1)
Nothing contained in this chapter shall prejudice the right of the borrower,
grantor, ((the grantor's successor in interest)) any guarantor,
or any person who has an interest in, lien, or claim of lien against the
property or some part thereof, to restrain, on any proper ground, a trustee's
sale. The court shall require as a condition of granting the restraining order
or injunction that the applicant pay to the clerk of the court the sums that
would be due on the obligation secured by the deed of trust if the deed of
trust was not being foreclosed:
(a)
In the case of default in making the periodic payment of principal, interest,
and reserves, such sums shall be the periodic payment of principal, interest,
and reserves paid to the clerk of the court every thirty days.
(b)
In the case of default in making payment of an obligation then fully payable by
its terms, such sums shall be the amount of interest accruing monthly on said
obligation at the nondefault rate, paid to the clerk of the court every thirty
days.
In
the case of default in performance of any nonmonetary obligation secured by the
deed of trust, the court shall impose such conditions as it deems just.
In
addition, the court may condition granting the restraining order or injunction
upon the giving of security by the applicant, in such form and amount as the
court deems proper, for the payment of such costs and damages, including
attorneys' fees, as may be later found by the court to have been incurred or
suffered by any party by reason of the restraining order or injunction. The
court may consider, upon proper showing, the grantor's equity in the property
in determining the amount of said security.
(2)
No court may grant a restraining order or injunction to restrain a trustee's
sale unless the person seeking the restraint gives five days notice to the
trustee ((and the beneficiary)) of the time when, place where, and the
judge before whom the application for the restraining order or injunction is to
be made. This notice shall include copies of all pleadings and related
documents to be given to the judge. No judge may act upon such application
unless it is accompanied by proof, evidenced by return of a sheriff, the
sheriff's deputy, or by any person eighteen years of age or over who is competent
to be a witness, that the notice has been served on the trustee.
(3)
If the restraining order or injunction is dissolved after the date of the
trustee's sale set forth in the notice as provided in RCW 61.24.040(1)(f) ((and
after the period for continuing sale as allowed by RCW 61.24.040(6))), the
court granting such restraining order or injunction, or before whom the order
or injunction is returnable, ((has the right to)) shall, at the
request of the trustee, set a new sale date which shall be not less than
forty-five days from the date of the order dissolving the restraining order.
((At least thirty days before the new sale date,)) The trustee
shall:
(a)
Comply with the requirements of RCW 61.24.040(1) (a) through (f) at least
thirty days before the new sale date; and
(b)
Cause a copy of the notice of trustee's sale as provided in RCW 61.24.040(1)(f)
to be published ((once weekly during the three weeks preceding the time of
sale)) in a legal newspaper in each county in which the property or any
part thereof is situated once between the thirty-fifth and twenty-eighth day
before the sale and once between the fourteenth and seventh day before the sale.
(4)
If a trustee's sale has been stayed as a result of the filing of a petition in
federal bankruptcy court and((, after the period for continuing sale as
allowed by RCW 61.24.040(6),)) an order is entered in federal bankruptcy
court granting relief from the stay or closing or dismissing the case, or
discharging the debtor with the effect of removing the stay, the trustee may
set a new sale date which shall not be less than forty-five days after the date
of the bankruptcy court's order. The trustee shall:
(a)
Comply with the requirements of RCW 61.24.040(1) (a) through (f) at least
thirty days before the new sale date; and
(b)
Cause a copy of the notice of trustee's sale as provided in RCW
61.24.040(1)(f) to be published in a legal newspaper in each county in which
the property or any part thereof is situated, once between the ((thirty-second))
thirty-fifth and twenty-eighth day before the sale and once between the
((eleventh)) fourteenth and seventh day before the sale.
(5)
Subsections (3) and (4) of this section are permissive only and do not prohibit
the trustee from proceeding with a trustee's sale following termination of any
injunction or stay on any date to which such sale has been properly continued
in accordance with RCW 61.24.040(6).
NEW
SECTION. Sec. 15. A
new section is added to chapter 61.24 RCW to read as follows:
It
is an unfair or deceptive act or practice under the consumer protection act,
chapter 19.86 RCW, for any person, acting alone or in concert with others, to
offer, or offer to accept or accept from another, any consideration of any type
not to bid, or to reduce a bid, at a sale of property conducted pursuant to a
power of sale in a deed of trust. However, it is not an unfair or deceptive
act or practice for any person, including a trustee, to state that a property
subject to a recorded notice of trustee's sale or subject to a sale conducted
pursuant to this chapter is being sold in an "as-is" condition, or
for the beneficiary to arrange to provide financing for a particular bidder or
to reach any good faith agreement with the borrower, grantor, any guarantor, or
any junior lienholder.
NEW
SECTION. Sec. 16. A
new section is added to chapter 61.24 RCW to read as follows:
The
beneficiary shall not enforce or attempt to enforce an assignment of rents by
demanding or collecting rent from a tenant occupying property consisting solely
of a single-family residence, or a condominium, cooperative, or other dwelling
unit in a multiplex or other building containing fewer than five residential
units, without first giving the tenant either a court order authorizing payment
of rent to the beneficiary or a written consent by the tenant's landlord to the
payment. It is a defense to an eviction based on nonpayment of rent that the
tenant paid the rent due to the beneficiary pursuant to a court order or a
landlord's written consent.
Sec.
17. RCW
7.28.300 and 1937 c 124 s 1 are each amended to read as follows:
The
record owner of real estate may maintain an action to quiet title against the
lien of a mortgage or deed of trust on the real estate where an action
to foreclose such mortgage or deed of trust would be barred by the
statute of limitations, and, upon proof sufficient to satisfy the court, may have
judgment quieting title against such ((mortgage)) a lien.
Sec.
18. RCW
7.60.020 and 1937 c 47 s 1 are each amended to read as follows:
A
receiver may be appointed by the court in the following cases:
(1)
In an action by a vendor to vacate a fraudulent purchase of property, or by a
creditor to subject any property or fund to his or her claim;
(2)
In an action between partners, or other persons jointly interested in any
property or fund;
(3)
In all actions where it is shown that the property, fund, or rents and profits
in controversy are in danger of being lost, removed, or materially
injured;
(4)
In an action or proceeding by a mortgagee or beneficiary for the
foreclosure of a mortgage or deed of trust and the sale of the mortgaged
property; when the mortgagee or beneficiary has a perfected assignment of
rents pursuant to RCW 7.28.230(3)((,)); or when it appears
that such property is in danger of being lost, removed, or materially injured;
(or when such property is insufficient to discharge the debt, to secure the
application of the rents and profits accruing, before a sale can be had);
(5)
When a corporation has been dissolved, or is in the process of dissolution or
is insolvent, or is in imminent danger of insolvency, or has forfeited its
corporate rights, and when the court in its sound discretion deems that the
appointment of a receiver is necessary to secure ample justice to the parties((.));
and
(6)
((And)) In such other cases as may be provided by law, or when,
in the discretion of the court, it may be necessary to secure ample justice to
the parties: PROVIDED, That no party or attorney or other person interested in
an action shall be appointed receiver therein.
