Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Housing Committee
E2SSB 5496
Brief Description: Preserving homeownership options by limiting excessive home buying by certain entities.
Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Alvarado, Orwall, Bateman, Conway, Frame, Hasegawa, Lovelett, Nobles, Saldaña, Stanford, Trudeau, Valdez, Wellman and Wilson, C.).
Brief Summary of Engrossed Second Substitute Bill
  • Prohibits an investment entity, or a business entity that has an interest in more than 100 single-family residential properties, from purchasing, acquiring, or otherwise obtaining an interest in another single-family residential property, with certain exceptions.
  • Provides enforcement and penalties under the Consumer Protection Act.
Hearing Date: 2/23/26
Staff: Serena Dolly (786-7150).
Background:

Business entities in Washington include associations, companies, firms, partnerships, corporations, limited liability companies, and limited liability partnerships.  These entities are regulated by various state laws governing registration, licensing, and tax requirements.

 

Investment entities, such as real estate investment trusts (REITs), are companies that own or finance income-producing real estate that may include residential or commercial real estate properties, or both.  Most REITs trade on major stock exchanges and are regulated by federal securities laws and, under certain circumstances, the Securities Act of Washington.  REITs are also subject to regulations that cover other business entities.

 

The Consumer Protection Act (CPA) prohibits unfair or deceptive acts or practices in trade or commerce; the formation of contracts, combinations, and conspiracies in restraint of trade or commerce; and monopolies.  A person injured by a violation of the CPA may bring a civil action to enjoin further violations and recover actual damages, costs, and attorneys' fees. 

 

The Attorney General (AG) may also bring an action to enjoin violations of the CPA and obtain restitution.  The AG may seek civil penalties up to the statutorily authorized maximums against any person who violates the CPA.  Civil penalties are paid to the state.
Summary of Bill:

A business entity that has an interest in more than 100 single-family residential properties may not purchase, acquire, or otherwise obtain an interest in another single-family residential property. 

 

An investment entity may not purchase, acquire, or otherwise obtain an interest in a single-family residential property. 

 

A business or investment entity is not subject to the ownership prohibitions if the entity is:

  • regulated under state or federal banking or finance laws operating as commercial banks, bank holding companies, savings banks, trust companies, savings and loan associations, credit unions, mortgage lenders, or mortgage servicers;
  • a nonprofit corporation or nonprofit legal entity;
  • purchasing an existing single-family residential property and making modifications necessary to achieve substantial compliance with existing building codes;
  • purchasing an existing single-family residential property to increase the number of residential units on the property, if the entity does not hold a single-family residential structure for more than five years without applying for building permits;
  • acquiring an ownership in single-family residential property through the construction of new properties; or
  • a business entity purchasing through foreclosure or otherwise acquiring a single-family residential property where the business entity is currently servicing a recorded loan on the property.

 

An ownership interest does not include mortgages or any interest obtained through foreclosure.

 

A violation of an ownership prohibition is a violation under the Consumer Protection Act, subject to a civil penalty of not more than $100,000 for each violation.  In addition, an entity must sell any property in violation to an independent third party within one year of a judgment. 

 

A seller of a single-family residential property, real estate broker, or title insurer is not liable for a violation of the ownership prohibition for single-family residential properties.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.