[WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale

[Joshua McKarcher]

Okay then I follow if it was indeed a pre-closing disclosure. I will not rant “too much” here, but I believe in allocating risk where it is most easily minimized (as I believe our legal system generally tried to do). I am not a big fan of Washington’s insurance commissioner recently, but in this case, I really dislike that Washington’s insurance rules allow that kind of exclusion without requiring the title company, which is in by far the best position to do so, to do one of two things:

1. Provide a great big disclaimer in red letters next to that exclusion that explains the practical effect of statutory liens like Medicaid lines that are not protected against by the proposed policy. (By the way, who says the DSHS lien would’ve been identified merely by administering the estate? The exclusion should be required to reference the 2 or 3 key RCWs that create “super liens” like this one that relate back to a time about which no ordinary buyer could reasonably be expected to have knowledge: before the death of the seller’s long-deceased spouse. Or the exclusion should be required to say much more about what happens during administration such as required notice to creditors and the state tax authorities and Medicaid authorities.)

2. Require title companies to ping DSHS via some automated or expedited system to check for liens or claims when there has been no probate or administration. (And charge an extra $25-$50 on such a deal, no problem.) The deceased spouse’s death certificate (required for the LOPA, so not unduly burdensome) contains an SSN and LOTS of data DSHS could easily check in minutes if asked to every now and again by a Washington title company when this kind of deal arises. This cannot be that hard.

Public policy on this one is "off." Unless DSHS has a practice of NOT enforcing this kind of lien against good-faith buyers for FMV or "something." I'm all for exclusions for recorded interests, boundaries, all sorts of stuff. This one is fundamentally unfair to Washington buyers in good faith. It's a gap that can easily be filled.

Best, Josh


Joshua D. McKarcher

McKarcher Law PLLC

537 6th Street

Clarkston, WA 99403

(509) 758-3345

(509) 758-3314 (fax)

josh at mckarcherlaw.com<mailto:josh at mckarcherlaw.com>

www.mckarcherlaw.com<http://www.mckarcherlaw.com/>

________________________________
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Natalie Kuehler <nk at kuehlerlaw.com>
Sent: Wednesday, October 19, 2022 1:27:35 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale


Hi Josh,



Yes, I got a hold of the title insurance policy prior to closing, and it included the coverage exclusion. Smart for the title company to have done, but my clients didn’t understand the potential impact at the time they purchased the property. They recently for unrelated reasons did a title search and saw that the DSHS lien had been recorded – they were not independently provided with a copy of it.



The sale was by statutory warranty deed, for what it’s worth. So the recourse would be to go after the Seller and require him to clear the lien, but the Seller is pretty much destitute so that’s not an option here.



Definitely a lesson here to be very weary of LOPAs if the two-year creditor period hasn’t passed yet.



Natalie



Natalie N. Kuehler



CONFIDENTIALITY STATEMENT: This message contains information that may be confidential and protected by the attorney-client privilege. If you received this message in error, please notify the sender immediately and delete the message.





From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> on behalf of Joshua McKarcher <josh at mckarcherlaw.com>
Date: Wednesday, October 19, 2022 at 12:16 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale

This is probably worth absolutely nothing:



I follow this “mostly” but did the title commitment that buyer received prior to sale include this exclusion? And did buyer know any of this about lack of probate, etc.?



There is a missing piece here it seems to me: how was buyer to be made aware of the estate’s involvement and failure to probate, etc., unless it was disclosed in the commitment PRIOR to closing?



I have zero practical experience on this particular issue, but I guess I will be surprised somewhat if DSHS does not say: “Ah! Your warranty deed recorded before our lien. We will release the lien and go sue the seller. Good day!”



Or, if they do not, I guess I would connect every dot on what the title insurer disclosed and excluded BEFORE closing vs. in the final policy it mailed out 30 days after closing.



My glasses may be too rosy. If DSHS collects on its lien from buyer; and buyer has no title insurance coverage; and buyer had only nominal/minimal understanding that they were buying from a decedent’s estate, then there is a gap in our system if we allocate that risk in that equation to . . . the buyer. With no arm’s length, FMV, ordinary course or other such insolvency/bankruptcy/UCC-type defenses to the state’s lien? Just seems very odd to me as an American lawyer, honestly.



Like Diane, I’m very curious to understand how this plays out.



Best, Josh



From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Natalie Kuehler
Sent: Wednesday, October 19, 2022 12:49 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale



Thank you, Diane. I agree with the approach you outlined below; our next step will be finding out how much the lien is for and whether there is any way to negotiate a settlement. I’ll let you know how it goes!



The seller apparently is destitute, so there’s not much of a chance of recovery there.





Natalie



Natalie N. Kuehler



CONFIDENTIALITY STATEMENT: This message contains information that may be confidential and protected by the attorney-client privilege. If you received this message in error, please notify the sender immediately and delete the message.





From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> on behalf of Diane J. Kiepe <DJKiepe at depdslaw.com<mailto:DJKiepe at depdslaw.com>>
Date: Wednesday, October 19, 2022 at 11:20 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale

So the insurance company was wise to protect their interest by excluding wife’s creditor’s of her estate for claims that would have been disclosed.  This likely takes them off the hook.  Because no notice to creditor’s was given, I read the rights of DSHS running 2 years.  In essence, and off the cuff without more research, I would think your client’s have a cloud on title and that they may have a claim against seller if the property passed by warranty deed. As between DSHS and buyers, I am not sure if there is a bona fide purchaser defense, particularly since no probate took place.



>From a practice standpoint, I  would call DSHS and try to get the amount they are claiming as their lien.  Then, depending on the amount, you can make a plan moving forward.



I am so interested in knowing how this turns out.  If you can share with us the end result down the road, I sure would appreciate it.



Diane J. Kiepe



Diane J. Kiepe

Douglas Eden

717 W. Sprague Ave.

Suite 1500

Spokane, WA  99201

djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>

509-455-5300



From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Natalie Kuehler
Sent: Wednesday, October 19, 2022 10:56 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale



Thank you both! The title insurance policy has an exclusion for creditors of the predeceased wife’s estate that would have been disclosed if a probate action had been filed, so getting coverage for this might prove difficult.



Natalie



Natalie N. Kuehler



CONFIDENTIALITY STATEMENT: This message contains information that may be confidential and protected by the attorney-client privilege. If you received this message in error, please notify the sender immediately and delete the message.





From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> on behalf of Marcus J. Fry <mjf at witherspoonkelley.com<mailto:mjf at witherspoonkelley.com>>
Date: Wednesday, October 19, 2022 at 10:48 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale

Natalie:

Contact the title insurer because this should have been insured against fbo your clients.



Marcus J. Fry
Attorney | Witherspoon • Kelley
mjf at witherspoonkelley.com<mailto:mjf at witherspoonkelley.com> | Attorney Profile<https://www.witherspoonkelley.com/marcus-j-fry> | vCard<https://www.witherspoonkelley.com/s/mfj.vcf>



[cid:image001.png at 01D8E3BC.493BC400]

222 N. 3rd Street
Yakima, WA 98901
(509) 248-7220 (office)
(509) 575-1883 (fax)
witherspoonkelley.com

Confidentiality Notice: The information contained in this email and any accompanying attachment(s) is intended only for the use of the intended recipient and may be confidential and/or privileged. If any reader of this communication is not the intended recipient, unauthorized use, disclosure or copying is strictly prohibited, and may be unlawful. If you have received this communication in error, please immediately notify the sender by return email, and delete the original message and all copies from your system. Thank you.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Leighann Hansing
Sent: Wednesday, October 19, 2022 10:19 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale





RCW 41.05A.090 (6) A lien authorized under this section relates back to attach to any real property that the decedent had an ownership interest in immediately before death and is effective as of that date or date of recording, whichever is earlier.





From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Natalie Kuehler
Sent: Tuesday, October 18, 2022 1:07 PM
To: wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] DSHS Lien on Real Property Recorded After the Property's Sale



Hello all,



I have clients who purchased real property from a widower, with title insurance that was secured by the widower’s completion and filing of a lack of probate affidavit. No probate for the wife’s estate was ever opened, and the lack of probate affidavit confirmed that there were no outstanding debts or expenses arising from his wife’s last illness. After the sale closed, but within two years of the wife’s death, DSHS filed a Notice and Statement of Lien (Estate Recovery) for an undisclosed amount.



Can DSHS enforce the Lien against the real property even though the property was sold to my clients at market rate? Are there any deadlines for enforcement of a DSHS lien that is placed on property after the surviving spouse of the deceased debtor has sold it? The lien at this point is already over two years old, and the real property was transferred to my clients over three years ago.



Any thoughts (or referrals) would be appreciated.



Thank you!

Natalie



Natalie N. Kuehler

THE KUEHLER LAW FIRM PLLC

PO Box 3059 – 1112 State Route 20

Winthrop, WA 98862

o: (509) 996-2832 x1 – c (509) 557-5769

https://link.edgepilot.com/s/1b8f0a6b/v8iUpJp_u0yG0zNtfCbugA?u=http://www.kuehlerlaw.com/<https://link.edgepilot.com/s/01d1c2b6/2HB3JhrZtkm0uC0ux_9xlg?u=https://nam12.safelinks.protection.outlook.com/?url=http%253A%252F%252Fwww.kuehlerlaw.com%252F%26data=05%257C01%257C%257Cad2c0d27db2441aea99e08dab1459a7b%257C84df9e7fe9f640afb435aaaaaaaaaaaa%257C1%257C0%257C638017209764896031%257CUnknown%257CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%253D%257C3000%257C%257C%257C%26sdata=IgmuA10cUtxaVI6ScQtB1YDa%252FJ13nmfRKa2R8A41FZ8%253D%26reserved=0>



CONFIDENTIALITY STATEMENT: This message contains information that may be confidential and protected by the attorney-client privilege. If you received this message in error, please notify the sender immediately and delete the message.




Links contained in this email have been replaced by Link Protection. If you click on a link, it will be analyzed for known threats before allowing you to proceed.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20221019/878dfc06/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 7508 bytes
Desc: image001.png
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20221019/878dfc06/image001.png>