5810 AMS BENT S2493.1

SB 5810  - S AMD TO S AMD (S2359.1)239
     By Senator Benton

NOT ADOPTED 03/12/2009

     On page 6, beginning on line 33 of the amendment, strike all of section 5 and insert the following:

"NEW SECTION.  Sec. 5   A new section is added to chapter 61.24 RCW to read as follows:
     (1) The failure of the grantor to bring a civil action to enjoin a foreclosure sale under this chapter may not be deemed a waiver of a claim for damages asserting:
     (a) Common law fraud or misrepresentation; or
     (b) A violation of RCW 19.144.080.
     (2) The nonwaived claims listed under subsection (1) of this section may be (a) asserted in an unlawful detainer action brought by the lender against the grantor as a holdover tenant or (b) independently brought against a lender or trustee if a third party is the successful bidder at the foreclosure sale.
     (3) The nonwaived claims listed under subsection (1) of this section are subject to the following limitations:
     (a) The claim must be asserted or brought within one year from the date of the foreclosure sale;
     (b) The claim may not seek any remedy at law or in equity other than direct monetary damages;
     (c) The claim may not in any way affect the validity or finality of the foreclosure sale or a subsequent transfer of the property to a bona fide purchaser;
     (d) A grantor who files such a claim is prohibited from recording a lis pendens related to the real property foreclosed upon, or any other document purporting to create a similar effect against that property; and
     (e) The claim may not otherwise operate to encumber or cloud the title to the property that was subject to the foreclosure sale, except to the extent that a judgment on the claim in favor of the grantor may, consistent with RCW 4.56.190, become a judgment lien on real property then owned by the lender.
     (4) This section applies only to foreclosures of an owner-occupied one-to-four, single-family residence, condominium unit, residential cooperative unit, residential unit in any other type of planned unit development, or manufactured home in which title has been eliminated under RCW 65.20.040, which is the grantor's principal place of residence.
     (5) This section does not apply to the foreclosure of a deed of trust used to secure a debt incurred for business, investment, or commercial purposes or to secure a guaranty."

EFFECT:  (1) Removes the following provisions in S2359.1 concerning what claims survive a foreclosure sale:
     (a) Breach of contract;
     (b) Failure of trustee to materially comply with provisions of this chapter;
     (c) Allowing damages where the beneficiary still owns the property at the time the action is filed;
     (d) Relief to the grantor, if in the same action, the grantor is alleging a violation of chapter 19.86 RCW based on the same fact, is limited to actual damages, treble damages, costs of suit, including reasonable attorneys' fees.
     (2) The term in which a claim must be asserted is amended to one year from two.
     (3) Language is also amended so that claims may not in any way affect the validity or finality of the foreclosure sale or a subsequent transfer of the property to a bona fide purchaser.

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