HOUSE BILL REPORT

SB 6754

BYSenator Nelson

Perfecting certain security interests upon recording.

House Committe on Judiciary

Majority Report:  Do pass.  (17)

      Signed by Representatives Appelwick, Chair; Crane, Vice Chair; Padden, Ranking Republican Member; Belcher, Brough, Dellwo, Forner, Hargrove, Inslee, R. Meyers, Moyer, H. Myers, Schmidt, Scott, D. Sommers, Tate and Wineberry.

House Staff:Regina Jones (786-7191)

AS REPORTED BY COMMITTEE ON JUDICIARY FEBRUARY 21, 1990

BACKGROUND:

In 1988, the Bankruptcy Court for the Western District of Washington held that an assignment of rent taken as security for an obligation remains an unperfected lien until the obligee takes possession of the rent or has a receiver appointed.  In 1989, legislation was passed providing that recording of an assignment, mortgage, or pledge of unpaid rent and profits of real property intended as security would be perfected as of the time of recording.  No further action by a subsequent holder of such a security interest is required to perfect the security interest.

Recent bankruptcy cases have held that the 1989 legislation does not retroactively affect assignments of rent for security.

SUMMARY:

Assignments of rent for security are perfected as of the time they are recorded.  No further action is required by the holder to perfect the security interest even if the assignment was recorded prior to July 23, 1989, the effective date of the 1989 legislation.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Larry Shannon, Washington Mortgage Bankers Association.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    The bill expresses the Legislature's original intent that the 1989 amendments governing assignments of rent apply retroactively.

House Committee - Testimony Against:      None.