AN ACT Relating to the forfeiture of real property for violations involving controlled substances; adding new sections to chapter 69.50 RCW; creating a new section; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that:

(1) Drug offenses and crimes resulting from illegal drug use are destructive of society.

(2) The nature of drug trafficking results in many property crimes and crimes of violence.

(3) State and local governmental agencies incur immense expenses in the investigation, prosecution, adjudication, incarceration, and treatment of drug-related offenders and the compensation of their victims.

(4) Drug-related offenses are difficult to eradicate because of the large profits derived from the criminal activities, which can be invested in legitimate assets and later used for further criminal activities.

(5) It is necessary to establish fair procedures for the comprehensive forfeiture of drug-related assets, while protecting the legitimate property interests of creditors and other third parties.

(6) The forfeiture of these assets will provide a significant deterrent to crime by removing the huge profit incentive of drug trafficking, and will provide a revenue source that will partially defray the large costs of government incurred as a result of these crimes.

NEW SECTION. Sec. 2. A new section is added to chapter 69.50 RCW to read as follows:

The definitions in this section apply throughout this chapter.

(1) "Controlled substance" includes, in addition to controlled substances under chapter 69.50 RCW, legend drugs under chapter 69.41 RCW and imitation controlled substances under chapter 69.52 RCW.

(2) "Controlled substance offense" means a violation of chapter 69.41, 69.50, or 69.52 RCW.

(3) "Seizing entity" means the state of Washington or a municipal corporation in this state which may be authorized to bring an action under this chapter.

NEW SECTION. Sec. 3. A new section is added to chapter 69.50 RCW to read as follows:

(a) Real property is subject to seizure and forfeiture if the real property has been used as a site for manufacturing, compounding, processing, delivering, importing, exporting, distributing, dispensing, selling, administering, or possessing controlled substances or counterfeit controlled substances in violation of this chapter or any other law.

(b) Real property is also subject to seizure and forfeiture if the property has been acquired with the proceeds of offenses involving controlled substances or counterfeit controlled substances as defined in section 2 of this act.

(1) The property has been acquired with legitimately obtained funds and the owner of any interest has no knowledge of the illegal activities occurring at the property.

(2) A party has acquired a security interest to secure payment of a bona fide debt and had no knowledge of the illegal activities.

(3) Except as provided in section 5(b)(2) of this act, if the property is used as a residence and is and has been occupied by an owner claiming the exemption of an undivided interest or as a dependent of the owner, the property is not forfeitable, even as to the interest of the owner involved in violations specified in subsection (a) of this section, if the person claiming the exemption did not participate in the violation.

(4) When marijuana is possessed in amounts of five or less plants or one pound or less of marijuana.

(5) The offender made less than two sales of less than forty grams of marijuana in each sale, or no other evidence demonstrates the offender's intent to engage in commercial activity.

(6) The manufacture of marijuana that was not intended for sale. In such a case, the intent of the offender shall be determined by the preponderance of the evidence, including the offender's prior criminal history, the amount of marijuana possessed by the offender, and the sophistication of the activity or equipment used by the offender.

NEW SECTION. Sec. 4. A new section is added to chapter 69.50 RCW to read as follows:

(a) To obtain forfeiture of real property under this chapter, the seizing entity must file an action in superior court within three years after the date of the last illegal transaction or illegal use of the real property, or if the property is acquired with proceeds, within ten years of acquisition of the property.

(b) To seize real property, the seizing entity shall file a lis pendens.

(1) The court may issue interim orders to protect the property or to prevent illegal use of the property, upon a proper showing by the state of the need for the order.

(2) If the property is used as a residence, the residential use may be continued subject to restrictions to prevent the illegal use or destruction of the property.

(c) Service shall be made according to the rules of civil procedure. However, the state may not obtain a default judgment against a party who is served by substituted service absent an affidavit stating that a good faith effort has been made to ascertain if the defaulted party is incarcerated within the state, and that there is no present basis to believe that the party is incarcerated within the state.

(d) Trial shall be to the court.

(e) The rules of civil discovery shall apply. However, the criminal rules of discovery shall apply if a motion is made to obtain the identity of informants. An order of postponement of discovery shall be entered if a showing is made that a criminal prosecution has been requested or that a criminal investigation is continuing against associates of individuals shown to have an ownership interest in the property.

(1) A secured party of record shall provide, upon request of the plaintiff, a statement of the debt, interest, and periodic payments due and to become due to the secured party.

(2) No action to realize upon the security interest may be taken by a secured party during the pendency of the forfeiture action if the party seeking forfeiture provides written assurance that it will pay periodic payments due the secured party at the conclusion of the action.

(g) If a portion of a commercial or agricultural property is used by the owner or one of several owners in the commission of a drug offense, the state may forfeit that owner's entire interest and seek partition under chapter 7.52 RCW.

(h) If the property is owned by a corporation or artificial entity, including a marital community with shareholders, partners, or spouse who are involved in drug offenses and other shareholders or partners who are not so involved, the state may seek partition under chapter 7.52 RCW and forfeit the interests of the shareholders, partners, or spouse involved. The interests of the drug offenders are presumed to be proportional to their interests in the corporation or entity. However, the presumption shall not apply to the residential exemption granted to spouses.

(i) When a decree of forfeiture is issued, the state may distribute any proceeds as provided in RCW 69.50.505. If the plaintiff is awarded the real property, the property may be retained for public use or sold in the same manner as provided for other property pursuant to RCW 69.50.505.

NEW SECTION. Sec. 5. A new section is added to chapter 69.50 RCW to read as follows:

(a) In a forfeiture case involving proceeds of drug offenses brought under this chapter, the plaintiff has the burden of establishing probable cause that proceeds of drug offenses were used to finance the acquisition of the property.

(1) Once the plaintiff has established probable cause, persons claiming an interest in the real property have the burden of showing that their interest was acquired with legitimate funds.

(2) Any security interest placed of record by a partnership or corporation in the business of banking or commercial lending and regulated or licensed by the state of Washington or the federal government may not be forfeited under this chapter. A recorded security interest, including a security interest shown by a real estate excise tax affidavit shall be presumed to be valid unless the party seeking forfeiture can establish by a preponderance of the evidence that a secured party had knowledge of the acts giving rise to the forfeiture action at the time the security interest was acquired. A secured party whose interest is not of record or reflected in an excise tax affidavit has the burden of proving the bona fide nature of the security interest.

(3) To prevail against a bona fide purchaser with title of record after the date of the acts giving rise to the forfeiture action but before the filing of the lis pendens, the plaintiff must show that the purchaser had knowledge of prior acts which could subject the property to forfeiture.

(b) In a forfeiture case involving illicit use as listed in section 3 of this act, the plaintiff must establish probable cause that the individuals whose interests are sought to be forfeited participated or conspired in such use, and if title is in an artificial entity, that the individuals had an interest in the entity.

(1) After a prima facie case has been established by the plaintiff, persons claiming ownership have the burden of proving that they are entitled to a residential exemption or their lack of participation or knowledge.

(2) If a party claiming an ownership interest has established residential use, the plaintiff must show the party's actual participation in the illegal activities by a preponderance of the evidence to secure forfeiture of that party's interest. If that showing is not made as to the party, the court may order the forfeiture to that party of the interests of the parties who actually participated in the activities.

NEW SECTION. Sec. 6. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 7. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.