HOUSE BILL REPORT
HB 1132
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
As Passed House:
February 23, 2009
Title: An act relating to distressed property conveyances.
Brief Description: Regulating distressed property conveyances.
Sponsors: Representatives Goodman, Rodne, Pedersen, Warnick, Maxwell, Ross, Eddy, Springer, Johnson, Kelley and Hinkle; by request of Attorney General, Department of Licensing and Department of Financial Institutions.
Brief History:
Committee Activity:
Judiciary: 1/19/09, 1/22/09 [DP].
Floor Activity
Passed House: 2/23/09, 97-0.
Brief Summary of Bill |
|
HOUSE COMMITTEE ON JUDICIARY |
Majority Report: Do pass. Signed by 11 members: Representatives Pedersen, Chair; Goodman, Vice Chair; Rodne, Ranking Minority Member; Shea, Assistant Ranking Minority Member; Flannigan, Kelley, Kirby, Ormsby, Roberts, Ross and Warnick.
Staff: Trudes Tango (786-7384)
Background:
Last year the Legislature passed House Bill 2791 (HB), which governs transactions between purchasers and homeowners whose homes are in foreclosure or in danger of foreclosure.
To address one common foreclosure rescue scam, the bill established strict requirements for "distressed home conveyances." Distressed home conveyances are transactions in which the homeowner transfers an interest in the property to the purchaser who then: (1) allows the homeowner to stay in the home as a tenant; and (2) promises to convey the property back to the homeowner or promises the homeowner an option to purchase the home later. These are often called "sale-leaseback" transactions.
In addition, HB 2791 established duties and requirements for "distressed home consultants." A person is a distressed home consultant if the person contacts a distressed homeowner and offers to perform certain services that the person claims will produce certain results. One of the services that could make a person a distressed home consultant is obtaining a purchase option on the distressed homeowner's residence within 20 days of a foreclosure sale. Another service that could make a person a distressed home consultant is if the person arranges for the distressed homeowner to stay in the residence as a lessee or tenant.
Real estate brokers and salespersons must be licensed in this state. They have a duty to act in good faith and are subject to sanctions for unprofessional conduct. Real estate brokers and salespersons raised concerns that their normal course of business would subject them to the duties imposed on distressed home consultants. During the interim, an informal work group consisting of state agencies, the Attorney General's Office, consumer advocates, legislators, and representatives for realtors met to examine the issues raised by real estate brokers and salespersons.
Summary of Bill:
A licensed real estate broker or salesperson is not a distressed home consultant when he or she is providing services that are governed by the real estate brokerage laws and the broker or salesperson is not engaged in activities designed to result in a distressed home conveyance.
A person is not a distressed home consultant when: (1) the person assists a homeowner in obtaining a contract to purchase the distressed home within 20 days of foreclosure; and (2) the homeowner is represented in the transaction by an attorney or a licensed real estate broker or salesperson.
A person is not a distressed home consultant when: (1) the person arranges for the homeowner to stay in the home as a lessee or tenant; (2) the continued residence is for no more than 20 days to arrange for a new residence; and (3) the homeowner is represented in the transaction by an attorney or a licensed real estate broker or salesperson.
The definition of "homeowner" is changed to include a person who owns and occupied the home within 180 days of the conveyance or mutual acceptance of an agreement to convey an interest in the home.
The definition of "dwelling" is changed to include condominiums, residential cooperative units and other types of residential planned unit development, and manufactured homes.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill contains an emergency clause and takes effect immediately.
Staff Summary of Public Testimony:
(In support) House bill 2791, passed by the Legislature last year, was intended to control scams. This bill is a result of a collaborative effort. The Attorney General’s Office, the Department of Licensing (DOL), the Department of Financial Institutions (DFI), consumer protection advocates, and members of the realtor community met during the interim and agreed on language. The DOL and the DFI have no regulatory concerns with the bill. This is not a “get out of jail free” card for realtors. The language in the bill is adequate to reach those realtors who are involved in scams. All other states with similar laws exempt realtors. The bill helps enhance consumer protection and allows realtors to help distressed homeowners. It reverses the unintended consequences of last year’s bill.
(Opposed) None.
Persons Testifying: Representative Goodman, prime sponsor; Paul Chiles, Washington State Real Estate Commission; Jerry McDonald, Department of Licensing; Joe Vincent, Department of Financial Institutions; Jim Sugarman, Office of the Attorney General; Chris Osborn, Northwest Multiple Listing Service; and Phil Harlan, Washington Realtors.
Persons Signed In To Testify But Not Testifying: None.