AN ACT Relating to nuisance abatement and foreclosures; amending RCW 35.21.955 and 61.24.030; adding a new section to chapter 35.21 RCW; adding a new section to chapter 61.24 RCW; and adding a new section to chapter 61.12 RCW.

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

Sec. 1.  RCW 35.21.955 and 2016 c 100 s 1 are each amended to read as follows:

(1) A city or town that exercises its authority under chapter 7.48 RCW, RCW 35.22.280, 35.23.440, or 35.27.410, or other applicable law to abate a nuisance which threatens health or safety must provide prior notice to the property owner and any identifiable mortgage servicer that abatement is pending and a special assessment may be levied on the property for the expense of abatement, excluding any associated fines or penalties. Such special assessment authority is supplemental to any existing authority of a city or town to levy an assessment or obtain a lien for costs of abatement, unless the city or town has utilized the special assessment authority provided for in this act. The notice must be sent by regular mail.

(2) A city or town that exercises its authority under chapter 7.48 RCW, RCW 35.22.280, 35.23.440, or 35.27.410, or other applicable law to declare a nuisance, abate a nuisance, or impose fines or costs upon persons who create, continue, or maintain a nuisance may levy a special assessment on the land or premises where the nuisance is situated to reimburse the city or town for the expense of abatement, excluding any associated fines or penalties. A city or town must, before levying a special assessment, notify the property owner and any identifiable mortgage holder that a special assessment will be levied on the property and provide the estimated amount of the special assessment. The notice must be sent by regular mail.

(3)(a) The special assessment authorized by this section constitutes a lien against the property, and is binding upon successors in title only from the date the lien is recorded in the county where the affected real property is located. Up to ((two)) ten thousand dollars of the recorded lien is of equal rank with state, county, and municipal taxes and shall be assessed against the real property upon which cost was incurred unless such amount is previously paid. After January 1, 2019, cities and towns may annually adjust the ten thousand dollar limit in this section for inflation for special assessments imposed in that calendar year.

(b) As used in this section, "inflation" shall be based on the consumer price index, using the official current base, compiled by the bureau of labor statistics, United States department of labor for the state of Washington. If the bureau of labor statistics develops more than one consumer price index for areas within the state, the index covering the city or town issuing the special assessment shall be used.

(4) A city or town levying a special assessment under this section may contract with the county treasurer to collect the special assessment in accordance with RCW 84.56.035 and 84.56.020. Upon certification to him or her by the municipality, the county treasurer shall enter the amount of such assessment upon the tax rolls against the property for the current year and the same shall become part of the general taxes for that year to be collected at the same time and with interest at such rates and in such manner as provided for in RCW 84.56.020 for delinquent taxes, and when collected to be deposited to the credit of the general fund of the municipality.

Sec. 2.  RCW 61.24.030 and 2012 c 185 s 9 are each amended to read as follows:

It shall be requisite to a trustee's sale:

(1) That the deed of trust contains a power of sale;

(2) That the deed of trust contains a statement that the real property conveyed is not used principally for agricultural purposes; provided, if the statement is false on the date the deed of trust was granted or amended to include that statement, and false on the date of the trustee's sale, then the deed of trust must be foreclosed judicially. Real property is used for agricultural purposes if it is used in an operation that produces crops, livestock, or aquatic goods;

(3) That a default has occurred in the obligation secured or a covenant of the grantor, which by the terms of the deed of trust makes operative the power to sell;

(4) That no action commenced by the beneficiary of the deed of trust is now pending to seek satisfaction of an obligation secured by the deed of trust in any court by reason of the grantor's default on the obligation secured: PROVIDED, That (a) the seeking of the appointment of a receiver, or the filing of a civil case to obtain court approval to access, secure, maintain, and preserve property from waste or nuisance, shall not constitute an action for purposes of this chapter; and (b) if a receiver is appointed, the grantor shall be entitled to any rents or profits derived from property subject to a homestead as defined in RCW 6.13.010. If the deed of trust was granted to secure a commercial loan, this subsection shall not apply to actions brought to enforce any other lien or security interest granted to secure the obligation secured by the deed of trust being foreclosed;

(5) That the deed of trust has been recorded in each county in which the land or some part thereof is situated;

(6) That prior to the date of the notice of trustee's sale and continuing thereafter through the date of the trustee's sale, the trustee must maintain a street address in this state where personal service of process may be made, and the trustee must maintain a physical presence and have telephone service at such address;

(7)(a) That, for residential real property, before the notice of trustee's sale is recorded, transmitted, or served, the trustee shall have proof that the beneficiary is entitled to enforce the ((owner of any)) promissory note or other obligation secured by the deed of trust. A declaration by the beneficiary made under the penalty of perjury stating that the beneficiary is entitled to enforce the ((actual holder of the)) promissory note or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection.

(b) Unless the trustee has violated his or her duty under RCW 61.24.010(4), the trustee is entitled to rely on the beneficiary's declaration as evidence of proof required under this subsection.

(c) This subsection (7) does not apply to association beneficiaries subject to chapter 64.32, 64.34, or 64.38 RCW;

(8) That at least thirty days before notice of sale shall be recorded, transmitted or served, written notice of default and the beneficiary declaration specified in subsection (7)(a) of this section shall be recorded in the office of the auditor in each county in which the deed of trust is recorded and transmitted by the beneficiary or trustee to the borrower and grantor at their last known addresses by both first-class and either registered or certified mail, return receipt requested, and the beneficiary or trustee shall cause to be posted in a conspicuous place on the premises, a copy of the notice, or personally served on the borrower and grantor. This notice shall contain the following information:

(a) A description of the property which is then subject to the deed of trust;

(b) A statement identifying each county in which the deed of trust is recorded and the document number given to the deed of trust upon recording by each county auditor or recording officer;

(c) A statement that the beneficiary has declared the borrower or grantor to be in default, and a concise statement of the default alleged;

(d) An itemized account of the amount or amounts in arrears if the default alleged is failure to make payments;

(e) An itemized account of all other specific charges, costs, or fees that the borrower, grantor, or any guarantor is or may be obliged to pay to reinstate the deed of trust before the recording of the notice of sale;

(f) A statement showing the total of (d) and (e) of this subsection, designated clearly and conspicuously as the amount necessary to reinstate the note and deed of trust before the recording of the notice of sale;

(g) A statement that failure to cure the alleged default within thirty days of the date of mailing of the notice, or if personally served, within thirty days of the date of personal service thereof, may lead to recordation, transmittal, and publication of a notice of sale, and that the property described in (a) of this subsection may be sold at public auction at a date no less than one hundred twenty days in the future, or no less than one hundred fifty days in the future if the borrower received a letter under RCW 61.24.031;

(h) A statement that the effect of the recordation, transmittal, and publication of a notice of sale will be to (i) increase the costs and fees and (ii) publicize the default and advertise the grantor's property for sale;

(i) A statement that the effect of the sale of the grantor's property by the trustee will be to deprive the grantor of all their interest in the property described in (a) of this subsection;

(j) A statement that the borrower, grantor, and any guarantor has recourse to the courts pursuant to RCW 61.24.130 to contest the alleged default on any proper ground;

(k) In the event the property secured by the deed of trust is owner-occupied residential real property, a statement, prominently set out at the beginning of the notice, which shall state as follows:

You may be eligible for mediation in front of a neutral third party to help save your home.

CONTACT A HOUSING COUNSELOR OR AN ATTORNEY LICENSED IN WASHINGTON NOW to assess your situation and refer you to mediation if you might benefit. Mediation MUST be requested between the time you receive the Notice of Default and no later than twenty days after the Notice of Trustee Sale is recorded.

DO NOT DELAY. If you do nothing, a notice of sale may be issued as soon as 30 days from the date of this notice of default. The notice of sale will provide a minimum of 120 days' notice of the date of the actual foreclosure sale.

BE CAREFUL of people who claim they can help you. There are many individuals and businesses that prey upon borrowers in distress.

REFER TO THE CONTACTS BELOW for sources of assistance.

Housing counselors and legal assistance may be available at little or no cost to you. If you would like assistance in determining your rights and opportunities to keep your house, you may contact the following:

The statewide foreclosure hotline for assistance and referral to housing counselors recommended by the Housing Finance Commission

Telephone: . . . . . . . Web site: . . . . . .

The United States Department of Housing and Urban Development

Telephone: . . . . . . . Web site: . . . . . . .

The statewide civil legal aid hotline for assistance and referrals to other housing counselors and attorneys

Telephone: . . . . . . . Web site: . . . . . ."

The beneficiary or trustee shall obtain the toll-free numbers and web site information from the department for inclusion in the notice; and

(l) In the event the property secured by the deed of trust is residential real property, the name and address of the owner of any promissory notes or other obligations secured by the deed of trust and the name, address, and telephone number of a party acting as a servicer of the obligations secured by the deed of trust; and

(9) That, for owner-occupied residential real property, before the notice of the trustee's sale is recorded, transmitted, or served, the beneficiary has complied with RCW 61.24.031 and, if applicable, RCW 61.24.163.

NEW SECTION.  Sec. 3.  A new section is added to chapter 35.21 RCW to read as follows:

(1)(a) For properties where a city or town has determined there is a code enforcement violation that constitutes a nuisance under chapter 7.48 RCW, RCW 35.22.280, 35.23.440, or 35.27.410 and a notice of default has been issued or a notice of trustee sale has been recorded with the county auditor, the city or town may, in addition to notifying any property owner, notify any identifiable mortgage servicer of the code enforcement violation and recover costs for nuisance abatement as outlined in this section.

(b) The notice to the property owner and any identifiable mortgage servicer shall include an affidavit or declaration describing the nuisance conditions, and, if meeting the criterion in (c) of this subsection, a determination that the city or town official believes the property to be abandoned. The notice shall be delivered by certified mail.

(c) A city or town official signing the affidavit or declaration under penalty of perjury may only indicate that the property is abandoned if at least three of the following indications of abandonment are visible from the exterior and supported with time and date stamped photographs memorializing the following conditions:

(i) The absence of furnishings and personal items consistent with residential habitation;

(ii) The gas, electric, or water utility services have been disconnected;

(iii) Statements by neighbors, delivery agents, or government employees that the property is abandoned;

(iv) Multiple windows on the property are boarded up, closed off, or are smashed through, broken, or unhinged, or multiple window panes are broken and unrepaired;

(v) Doors on the residence are smashed through, broken off, unhinged, or continuously unlocked;

(vi) The property has been stripped of copper or other materials or interior fixtures have been removed;

(vii) Law enforcement officials have received at least one report of trespassing or vandalism or other illegal activity occurring on the property within the preceding six months;

(viii) The property has been declared unfit for occupancy and ordered to remain unoccupied pursuant to an order issued by a municipal or county authority or a court of competent jurisdiction;

(ix) Construction was initiated on the property and was discontinued before completion leaving a building unsuitable for occupancy, and construction has not taken place for at least six months;

(x) Newspapers, circulars, flyers, or mail has accumulated on the property or the United States postal service has discontinued delivery to the property;

(xi) Rubbish, trash, debris, neglected vegetation, or natural overgrowth has accumulated on the property;

(xii) Hazardous, noxious, or unhealthy substances or materials have accumulated on the property;

(xiii) Other credible evidence exists indicating the property owner's intent to abandon the property.

(2)(a) The mortgage servicer or its designee may perform ongoing inspections to ensure code enforcement compliance upon notice from a city or town that:

(i) A property has a code enforcement violation that constitutes a nuisance under chapter 7.48 RCW, RCW 35.22.280, 35.23.440, or 35.27.410;

(ii) The city has reason to believe the property is abandoned under subsection (1) of this section; and

(iii) A notice of default has been recorded with the county auditor.

(b) The mortgage servicer, or its designee, within the time limits provided for in the notice from the city, may enter the property for the purpose of abating the identified nuisance, preserving property, or preventing waste and may take the following steps to secure the property including, but not limited to:

(i) Installing missing locks on exterior doors. Working locks may not be removed or replaced, unless all doors are secured and there is no means of entry, and in such cases only one working lock may be removed and replaced;

(ii) Replacing or boarding broken or missing windows;

(iii) Winterizing, including draining pipes and disconnecting or turning on utilities;

(iv) Eliminating building code or other code violations;

(v) Securing exterior pools and spas;

(vi) Perform routine yard maintenance on the exterior of the home; and

(vii) Perform pest and insect control services.

(c) The mortgage servicer or its designee must date and time-stamp photographs of entry and document personal items inside the dwelling and manner of entry.

(d) The mortgage servicer or its designee may not remove personal items from the property, unless the items are hazardous or perishable, and must take inventory of items removed.

(e) Record of entry into property described in this section must be kept by the mortgage servicer or its designee for four years from date of entry.

(f) If a mortgage servicer is contacted by the borrower and notified that the property is not abandoned, the mortgage servicer shall no longer enter the property regardless of whether the home complies with local code enforcement standards.

(3) Each time the mortgage servicer enters the property, the mortgage servicer or its designee must ensure a notice is posted on the property's front door that contains:

(a) A statement about the right of the property owner or lawful occupant to possession of the property until foreclosure is complete pursuant to RCW 7.28.230;

(b) A statement about the right of the property owner to have any locks installed by the mortgage servicer removed within twenty-four hours and replaced with new locks accessible by only the property owner;

(c) A local phone number that the property owner or lawful occupant can call twenty-four hours a day to gain immediate entry into the property;

(d) The phone number of the state foreclosure hotline approved by the housing finance commission, the phone number for civil legal aid, and a statement that the property owner may have the right to participate in foreclosure mediation pursuant to RCW 61.24.163.

(4) If a mortgage servicer is notified according to subsection (2) of this section and does not abate the nuisance within the time limits provided by the city or town, a city or town may exercise its authority under chapter  7.48 RCW, RCW  35.22.280,  35.23.440, or  35.27.410, or other applicable law to declare a nuisance, abate a nuisance, or impose fines or costs upon persons who create, continue, or maintain a nuisance and may levy a special assessment on the land or premises where the nuisance is situated to reimburse the city or town for the expense of abatement, excluding any associated penalties and fines. The special assessment authorized by this section constitutes a lien against the property, and is binding upon successors in title only from the date the lien is recorded in the county where the affected real property is located. The special assessment shall be of equal rank with state, county, and municipal taxes and shall be assessed against the real property upon which cost was incurred unless such amount is previously paid.

(5) Nothing in this section shall impact the authority of associations provided for in chapters 64.32 RCW, 64.34 RCW, or 64.38 RCW to perform property preservation and maintenance activities.

NEW SECTION.  Sec. 4.  A new section is added to chapter 61.24 RCW to read as follows:

(1) If a trustee under a deed of trust is named as a defendant in an action or proceeding in which that deed of trust is the subject, and if there are no substantive allegations that seek damages from the trustee and/or seek to enjoin the foreclosure based on any alleged unlawful actions or omissions by the trustee, including causes of action where the trustee is a codefendant alleged to be jointly or derivatively liable, not less than thirty-five days after service of the days of service of the summons and complaint on the trustee. The declaration must be served on the parties in the manner set forth in Washington court rule 5.

(2) The declaration of nonmonetary status must set forth the following: The status of the trustee as trustee under the deed of trust that is the subject of the action or proceeding, that the complaint or pleading does not assert any substantive allegations that seek damages from the trustee and/or seek to enjoin the foreclosure based on any alleged unlawful actions or omissions by the trustee that it has been named as a defendant in the proceeding solely in its capacity as a trustee under the deed of trust and that the trustee agrees to be bound by whatever order or judgment is issued by the court regarding the subject deed of trust.

(3) The parties who have appeared in the action or proceeding have thirty days from the service of the declaration by the trustee in which to object to the nonmonetary judgment status of the trustee. Any objection must set forth the allegations against the trustee, any general facts which gave rise to the allegations, and must be served on the trustee. An objection that sets forth allegations against the trustee and general facts will be sufficient to defeat the declaration of nonmonetary status.

(4) If an objection is not served within the thirty-day objection period, the trustee is not required to participate any further in the action or proceeding, is not subject to any monetary awards, damages, attorneys' fees, or costs, is required to respond to any discovery requests as a nonparty; and is bound by any court order relating to the subject deed of trust that is the subject of the action or proceeding. The trustee's nonmonetary status is not established until the thirty-day objection period has passed.

(5) If a timely objection to the declaration of nonmonetary status is made, the trustee must thereafter be required to participate in the action or proceeding.

(6) In the event parties elect not to or fail to timely object to the declaration of nonmonetary status, but later determine through discovery or other means that the trustee should participate in the action because of the performance of its duties as a trustee, the parties may file and serve on all parties and the trustee a motion pursuant to Washington court rule 15 that specifies the factual basis for the demand. Upon the court's granting of the motion, the trustee must thereafter be required to participate in the action or proceeding, and the court must provide sufficient time before trial for the trustee to be able to respond to the complaint, to conduct discovery, and to bring other pretrial motions in accordance with the Washington superior court civil rules.

(7) Upon the filing of the declaration of nonmonetary status, the time within which the trustee is required to file an answer or other responsive pleading is tolled for the period of time within which the opposing parties may respond to the declaration. Upon the timely service of an objection to the declaration of nonmonetary status, the trustee has thirty days from the date of service within which to file an answer or other responsive pleading to the complaint or cross-complaint.

(8) For purposes of this section, "trustee" includes any agent or employee of the trustee who performs some or all of the duties of a trustee under this chapter, and includes substitute trustees and agents of the beneficiary or trustee.

NEW SECTION.  Sec. 5.  A new section is added to chapter 61.12 RCW to read as follows:

(1) Before any mortgagee of residential real property may accelerate the maturity of any residential mortgage obligation or commence any legal action under RCW 61.12.040, such person shall give the mortgagor notice of such intention at least thirty-three days in advance. For the purposes of this section "residential real property" means property consisting solely of a single-family residence, a residential condominium unit, or a residential cooperative unit.

(2) Notice of intention to take action as specified in subsection (1) of this section shall be in writing and sent to the residential mortgagor by first-class and either certified or registered mail, return receipt requested, at his or her last known address and, if different, at the residence which is the subject of the residential mortgage.

(3) The written notice shall be in English and Spanish and shall clearly and conspicuously state:

(a) The particular obligation or real estate security interest;

(b) The nature of the default claimed;

(c) The right, if any, of the mortgagor to cure the default and exactly what performance, including what sum of money, if any, must be tendered to cure the default;

(d) The time within which the mortgagor must cure the default;

(e) A statement printed in no less than twelve-point font and bolded that reads:

"If you do nothing to cure the default, we intend to start a lawsuit to foreclose your mortgaged property. If the mortgage is foreclosed, your mortgaged property will be sold to pay off the mortgage debt. You should contact a housing counselor or attorney as soon as possible."; and

(f) The toll-free telephone number to find a department-approved housing counseling agency from the United States department of housing and urban development, the toll-free numbers for the statewide foreclosure hotline recommended by the housing finance commission, and the statewide civil legal aid hotline for assistance and referrals.

(4) Any violation of this chapter substantially affects the public interest and is an unfair and deceptive act or practice and unfair method of competition in the conduct of trade or commerce as set forth in RCW 19.86.020.

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