[WSBAPT] Non-judicial foreclosure: notice of default successorin interest

Wed Jan 17 16:49:04 PST 2018

I think this is an issue of notice from the borrower before the NOD went out. The section (030) says ‘last known address’. You don’t have an obligation to go searching for possible changes of addresses, if you have no notice of a change of address. I think the same applies to notice of transfer of the interest, in respect to the definition of Grantor cited by John McCrady. The statute does not presuppose that you will obtain a TSG before initiating a Notice of Default.  There is no implication of due diligence searching in 030.

The due diligence regarding notices arises under the language found in 040, where there a litany of people who may have potential claims or rights found in the public record, thus, must be given notice to foreclose their interests.

Did your client have notice of the change of ownership to the LP? If not, then I think the Notice of Default is in compliance. If the lender had notice of the change of ownership before sending the Notice of Default then the responsibility to send the notice to the successor would attach. I would inquire of the lender to determine if they knew of the change of property ownership to the LP or any change of address notice, for that matter.

In this case, it appears that Rich, as the Trustee, only learned of the change or attempted change in ownership after receiving the TSG. The burden then, under the statute, is to send notice of Foreclosure and Notice of Trustee’s Sale to the successor.  It is my practice to send notice to all possible address and parties, sparing no expense on certified mail, once I have notice of changes of address or changes of ownership or additional possible claims to the property.

Given that posting was completed, and assuming no notice of change of ownership before sending the NOD, and given that both entities had the same mailing address, the risk here seems extremely minimal. The court cases look for “substantial compliance” with the statute, not absolute perfection. Under these facts, I don’t see the need to resend the NOD.

Michael A. Winslow
1204 Cleveland Ave.
Mount Vernon, WA 98273
Ph. 360-336-3321
Em. Mike at winslegal.com

This message is from an attorney, so it’s confidential. If you are not the intended recipient, it’s too late to stop reading this message, but you may not use it for any improper purpose. Huge Disclaimer available upon request.

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John McCrady
Sent: Wednesday, January 17, 2018 4:10 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Non-judicial foreclosure: notice of default successorin interest

But keep in mind that the statute defines “Grantor” as follows:
(7) "Grantor" means a person, or its successors, who executes a deed of trust to encumber the person's interest in property as security for the performance of all or part of the borrower's obligations.

I haven’t researched how the courts have construed “successors”, but I would be concerned about that.

John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98467
253-476-5721
j.mccrady at pstitle.com

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Mike Winslow
Sent: Wednesday, January 17, 2018 11:34 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Non-judicial foreclosure: notice of default successorin interest

The statute on default notices says you send the Notice of Default to the Grantor, and Borrower (if different from the Grantor). That is all that is required. See portion of 030, below. 
Once you proceed to perform the second step of Notice of Foreclosure/Notice of Trustee Sale you pick up the subsequent transferee’s, giving them notice per the sections below. 
If you gave the original Grantor notice of default, that should be sufficient for step one. The courts have been very good about construing compliance based strictly on the provisions of the statute. You did not mention posting or service, but you must also do one of those as well. If you did not post or serve, then do one of them, then count 30 days from that later event as your time frame. You don’t need to resend the mailing. 

RCW 61.24.030 
Requisites to trustee's sale. 
It shall be requisite to a trustee's sale: 

(8) That at least thirty days before notice of sale shall be recorded, transmitted or served, written notice of default shall be 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. 

RCW 61.24.040 
Foreclosure and sale—Notice of sale. 
A deed of trust foreclosed under this chapter shall be foreclosed as follows: 
(1) At least ninety days before the sale, or if a letter under RCW 61.24.031 <http://app.leg.wa.gov/RCW/default.aspx?cite=61.24.031>  is required, at least one hundred twenty days before the sale, the trustee shall: 
(a) Record a notice in the form described in (f) of this subsection in the office of the auditor in each county in which the deed of trust is recorded; 
(b) To the extent the trustee elects to foreclose its lien or interest, or the beneficiary elects to preserve its right to seek a deficiency judgment against a borrower or grantor under RCW 61.24.100 <http://app.leg.wa.gov/RCW/default.aspx?cite=61.24.100> (3)(a), and if their addresses are stated in a recorded instrument evidencing their interest, lien, or claim of lien, or an amendment thereto, or are otherwise known to the trustee, cause a copy of the notice of sale described in (f) of this subsection to be transmitted by both first-class and either certified or registered mail, return receipt requested, to the following persons or their legal representatives, if any, at such address: 
(i) The borrower and grantor; 
(ii) The beneficiary of any deed of trust or mortgagee of any mortgage, or any person who has a lien or claim of lien against the property, that was recorded subsequent to the recordation of the deed of trust being foreclosed and before the recordation of the notice of sale; 
(iii) The vendee in any real estate contract, the lessee in any lease, or the holder of any conveyances of any interest or estate in any portion or all of the property described in such notice, if that contract, lease, or conveyance of such interest or estate, or a memorandum or other notice thereof, was recorded after the recordation of the deed of trust being foreclosed and before the recordation of the notice of sale; 
(iv) The last holder of record of any other lien against or interest in the property that is subject to a subordination to the deed of trust being foreclosed that was recorded before the recordation of the notice of sale; 
(v) The last holder of record of the lien of any judgment subordinate to the deed of trust being foreclosed; and 
(vi) The occupants of property consisting solely of a single-family residence, or a condominium, cooperative, or other dwelling unit in a multiplex or other building containing fewer than five residential units, whether or not the occupant's rental agreement is recorded, which notice may be a single notice addressed to "occupants" for each unit known to the trustee or beneficiary; 

Michael A. Winslow 
1204 Cleveland Ave. 
Mount Vernon, WA 98273 
Ph. 360-336-3321 
Em. Mike at winslegal.com 

This message is from an attorney, so it’s confidential. If you are not the intended recipient, it’s too late to stop reading this message, but you may not use it for any improper purpose. Huge Disclaimer available upon request. 

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of J Richard McEntee, Jr.
Sent: Tuesday, January 16, 2018 6:25 PM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Non-judicial foreclosure: notice of default successor in interest 

Hello Listmates 

I am serving as trustee in a non-judicial foreclosure. About 30 days ago, I sent notice of default to the grantor of the deed of trust and guarantors of the note that was secured by the deed of trust. As I am preparing the notice of foreclosure and notice of trustee sale, I just received a commitment for a trustee sale guarantee. I note that several months after the note and deed of trust were signed. The grantor LLC formed a LP comprised (apparently - the same members of the LLC are listed as governors of the LP) of the same folks who were members of the LLC and guarantors of the original note. Same address for both entities as well. The LLC then a few months later gave a quit claim deed to the LP. It recites that no consideration was given and contains a legal description that is actually the abbreviate legal description. The full legal is not contained within the quit claim deed. As such, it may feeling is that it may be invalid to transfer ownership of the property. After the transfer and 14 months before the notice of default, the LP was administratively dissolved.  

After my lengthy preamble, my question is do I need to delay the process and send another notice of default specifically addressed to the LP? All of the LP’s governors listed at the secretary of state are the same persons who were guarantors of the note and who were transmitted the notice of default. The notice of default was not directly addressed to the LP. My feeling is that the governors of the LP would have a hard time stating that notice was never sent to the “LP.” Has anyone had any issue like this before?  

Thank you 
Rich 

RICH McENTEE 
McENTEE LAW OFFICE 
3800 Bridgeport Way W, Ste A411 
University Place, WA 98466 
253.227.9894(m) 
jrmcentee at gmail.com        

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20180117/500ee102/attachment.html>