SENATE BILL REPORT

SB 6396

BYSenators Nelson, Talmadge and Newhouse

Revising the deed of trust act.

Senate Committee on Law & Justice

Senate Hearing Date(s):January 16, 1990

Majority Report:  Do pass.

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

Senate Staff:Vicki E. Schur (786-7415)

                  February 7, 1990

AS PASSED SENATE, FEBRUARY 6, 1990

BACKGROUND:

Current law provides that foreclosure satisfies an obligation secured by a deed of trust when the deed of trust is foreclosed; deficiency judgments are precluded.  The creditor must complete any trustee's sale under the deed of trust before exercising remedies against other collateral securing the obligation.  This causes difficulties in the case of commercial loans, especially when a loan is secured by assets in more than one county or state.  Other security may be inadvertently released by holding a trustee's sale on a deed of trust.  The prohibition against concurrent actions may force the creditor to pursue actions consecutively against different assets which secure the same debt.  This often takes a substantial period of time.  The creditor may also be forced to segregate the debt, securing different parts of the loan with different portions of the collateral.

SUMMARY:

The beneficiary on a commercial loan may exercise remedies against other collateral voluntarily granted to secure the same debt up to the amount necessary to satisfy the loan.  The creditor need not complete a trustee's sale under the deed of trust before exercising remedies against other collateral on a commercial loan.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: David Rockwell, Washington State Bar Association Real Property, Probate and Trust Committee