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. Real estate investment trusts 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.
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:
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.
As part of a pilot project, testimony in this section of the bill report was summarized by generative artificial intelligence and reviewed for accuracy by non-partisan legislative staff. Generative artificial intelligence was used only in this section of the bill report; all other sections were prepared by non-partisan legislative staff without the use of any generative artificial intelligence.
(In support) The testimony supports the proposed legislation as a targeted response to housing market conditions that have made homeownership increasingly unattainable for many Washington residents. It emphasizes that the growth of large institutional investors in the single-family housing market—rising from a relatively small share prior to 2011 to a significant portion of purchases in recent years—has intensified competition for available homes, often through all-cash offers that working families cannot match. Testimony notes that investors purchased a substantial share of single-family homes nationwide last year, further constraining inventory and placing average-income households at a structural disadvantage.
Supporters argue that, in the midst of a housing shortage, institutional investors should prioritize building new housing stock rather than acquiring existing homes that would otherwise be attainable for prospective homeowners. The bill is described as establishing a reasonable guardrail by limiting additional acquisitions after an investor reaches a specified threshold, without requiring divestment of existing holdings or restricting development that expands supply. Testimony underscores that the proposal is not intended to solve the housing crisis entirely but to make incremental progress toward improving access to homeownership and reducing speculative pressures.
Additional remarks highlight the broader consequences of treating single-family homes primarily as financial assets rather than places for people to live, stressing the role of stable homeownership in fostering community roots, long-term investment, and economic opportunity. Concern is also expressed about the use of automated systems and algorithms in setting housing prices, with testimony advocating for a market that better reflects human needs and supports proximity to employment and community resources to enhance overall affordability.
(Opposed) The testimony in opposition to the bill argues that the proposal is not supported by current market data and would constitute unnecessary government interference in the housing market. Opponents contend that institutional ownership of single-family homes in Washington remains relatively low, citing data indicating that such investors own a small percentage of available homes in key markets, and therefore asserting that the issue does not warrant a statutory change. Concerns are raised that imposing a numerical cap on ownership is arbitrary and disruptive, questioning the rationale for selecting a specific threshold and arguing that it interferes with transactions between willing buyers and sellers by potentially limiting sellers’ ability to obtain full market value.
Testimony also emphasizes the potential unintended consequences of the legislation, including impacts on real estate investment structures and retirement accounts, particularly with respect to real estate investment trusts. Opponents describe single-family rental providers as serving important populations—such as military families, traveling professionals, and others not yet ready for homeownership—by offering rental housing that can function as a bridge to eventual ownership. They further highlight programs intended to support tenants, including credit reporting, financial education, and down payment grants.
Finally, concerns are expressed about the bill’s structure, particularly distinctions drawn among different types of investment entities and the imposition of differing ownership restrictions, which opponents argue do not align with existing tax code or state law frameworks and may create inequitable treatment among organizations. Overall, the testimony urges rejection of the measure on the grounds that it disrupts market operations without sufficient evidence of need and could generate adverse economic consequences.
(In support) Senator Emily Alvarado, prime sponsor; Ryan Donohue, Habitat for Humanity Seattle-King and Kittitas Counties; and Joe Kunzler.
Steve Schaefer; Lauren McGowan, LISC Puget Sound; Matt Hoffman; Ralph Kline, investor; and Blake Lyon, City of Bellingham, WA.
The Appropriations Committee recommended specifying that the limits on ownership of single-family residential properties apply only to properties in Washington, and removing row homes and townhomes from the definition of "single-family residential properties." The Appropriations Committee also recommended exempting from the definition of "interest" home equity sharing products secured by a deed of trust and not subject to statutory provisions relating to reverse mortgages, offered by companies licensed by the Department of Financial Institutions (DFI), and for which the DFI may adopt rules under the Consumer Loan Act to regulate as residential mortgage loans.
(In support) Washington's housing market is broken. For a family with an average median income, it takes 20 years of saving to afford the average down payment on a home. Large investors do not face the same barriers. People have experienced being outbid by corporate offers on homes that were all in cash. Average people cannot compete with deep pockets. Large investors have purchased a significant portion of single-family homes nationwide. We should not allow for further consolidation of homes that families could otherwise buy. This bill will prohibit entities from purchasing more than 100 single-family homes. This will provide normal people a fair chance to compete to purchase a home.
(Opposed) The theory of this legislation is that institutional investors are beating out Washingtonians to purchase homes, but the data does not support this. Research has shown a very small percentage of homes are owned by institutional investors. This bill will impact the ability of renters to live in homes in good neighborhoods and slow down the growth of rental housing being built, which then will make it harder for renters to transition to becoming homeowners. If the bill is put in place, there is a risk of capital flight, and fewer projects will pencil out for developers. There are considerable legal and technical concerns that have not been addressed. The Attorney General's Office will see potentially significant impacts to enforce the provisions of the bill, as identifying violations may be cumbersome.
(Other) The city of Bellingham is currently completing their comprehensive plan and working on zoning. The bill would use a definition of single-family residential housing that is no longer used in some jurisdictions due to requirements under the middle housing bill passed in a previous session. Because some jurisdictions no longer use this term, that could impact the ability for the state to enforce the bill.
(In support) Ryan Donohue, Habitat for Humanity Seattle-King and Kittitas Counties; and Victoria N H O'Banion, Northwest Cooperative Development Center.