[WSBARP] Effect of Lender Foreclosure on Easement Agreement

Wed Feb 18 11:07:41 PST 2015

John,

I don’t see in Ron’s write up that the deed of trust was recorded before the easement was granted. But even if it was, I still don’t agree with your position or with Paul. Maybe there is something I am missing. 

So your thinking is that the easement is a transfer of beneficial interest under the DOT and requires lender approval? Do you have any case authority for your position or is it just that from a title perspective being counsel for a title company that you would want to see it done that way for it to be an insurable interest as opposed to an exception? 

Even if the easement creation is a violation of the DOT, I don’t think the easement is void – it is merely a reason the lender could accelerate and start foreclosure. Do you think the conveyance is void?

I wonder if the title company that issued the TSG on the foreclosure that Ron inquired about picked up the easement and showed it as an exception or not? 

Sincerely,

Tom

Thomas J. Westbrook

Attorney at Law

Rodgers, Kee & Card

324 West Bay Drive NW, Suite 201

Olympia, Washington  98502

Phone: 360-352-8311

Facsimile: 360-352-8501

Email: tjw at buddbaylaw.com

Skype: thomas.westbrook

www.buddbaylaw.com

The information contained in this email and attachment(s) are for the exclusive use of the addressee(s) and may contain private, privileged and/or confidential information.  If you are not the addressee, you are strictly prohibited from reading, photocopying, distributing or otherwise using this email or its contents in any way. If you have received this communication in error, please notify us immediately by telephone at 360-352-8311 or by e-mail to reception at buddbaylaw.com, and destroy the original message from your electronic files.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of John McCrady
Sent: Wednesday, February 18, 2015 10:32 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

Yes; I think that the lender should execute the easement (as lenders do on plats and BLR’s) or subordinate to the easement.

In practice though, I wonder how often a foreclosing lender would serve an intervening easement holder.

John McCrady

Counsel

Puget Sound Title Company

5350 Orchard Street West

University Place WA 98466

253-476-5721

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Paul Neumiller
Sent: Wednesday, February 18, 2015 10:09 AM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

Without doing any research, I am surprised if this answer is correct.  I believe that a nonjudicial foreclosure does wipe out an easement that was granted across the tenement estate subsequent in time to the deed of trust.  Just as with boundary line adjustments or anything that affects real property, I have always advised getting the lender’s approval first.  As an example, a party wanted an easement across a condo’s common area.  We were advised by the title company (and my own assumption) to get all of the owners’ approval AND their lenders for the easement to withstand a foreclosure by a condo owner’s lender.

As a lender, I would want to know the value of my security when I make the loan and when (and if) I need to foreclose.  Why would I accept security in property if a borrower were able to willy-nilly decrease the value of my security by granting all kinds of easements across the property?  

Once again, without doing research, I would answer that B is screwed and that life is unfair.  A and B should have gotten A’s lender’s permission before they entered into a deal that encumbered A’s property that was subject to his lender’s deed of trust.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Tom J. Westbrook
Sent: Tuesday, February 17, 2015 5:51 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

Hi Ron,

As you stated, if the easement is appurtenant to and runs with the land, no foreclosure would extinguish the easement. The foreclosing person (C) should have gotten title insurance when they elected to purchase at Trustee’s sale and if they did and it was not disclosed, then the title company may have a problem to C. If they didn’t, then too bad, it was a matter of public record. Not sure if the burden to build a public road was an easement requirement or a contractual agreement between two parties. You will need to research that – or at least, I would have to since I don’t know.

Sincerely,

Tom

Thomas J. Westbrook

Attorney at Law

Rodgers, Kee & Card

324 West Bay Drive NW, Suite 201

Olympia, Washington  98502

Phone: 360-352-8311

Facsimile: 360-352-8501

Email: tjw at buddbaylaw.com

Skype: thomas.westbrook

www.buddbaylaw.com

The information contained in this email and attachment(s) are for the exclusive use of the addressee(s) and may contain private, privileged and/or confidential information.  If you are not the addressee, you are strictly prohibited from reading, photocopying, distributing or otherwise using this email or its contents in any way. If you have received this communication in error, please notify us immediately by telephone at 360-352-8311 or by e-mail to reception at buddbaylaw.com, and destroy the original message from your electronic files.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Ron Housh
Sent: Tuesday, February 17, 2015 5:16 PM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

A grants B an easement across A’s land.

B agrees to develop a public road on the easement which road will then benefit both A and B who plan to separately develop their respective properties with single family homes.

B “goes under” and loses his property to a lender foreclosure.

C acquires B’s property from the lender.

C does not want the easement and when presented with the recorded easement says “the easement was extinguished at the time of the foreclosure.”  C obviously does not want to be burdened with having to build the public road.

1.        I don’t believe the easement is extinguished – in other words I do not believe foreclosures typically if ever extinguish easements.

2.       But – I am not sure about C’s obligation to build a public road.  C never assumed or agreed to assume that obligation.  Would the “run with the land” language in the recorded easement effectively pass the burden of building a public road to C?  

3.       Related question:  easement was recorded in 2007.  B actually did some work on the easement that was part of the public road construction process.  If the burden of building the public road does pass to C, when would a cause of action against B (and now C) accrue?  Wondering if there may be a statute of limitations issue? 

Thanks in advance for thoughts.

Ron 

I AM TYPICALLY IN THE SEATTLE OFFICE ON TUESDAY AND THURSDAY AND IN THE MOUNT VERNON OFFICE ON MONDAY, WEDNESDAY AND FRIDAY 

Ronald G. Housh, P.S.

Attorney at Law

Seattle Office:

1420 Fifth Avenue, Suite 3000

Seattle, WA 98101-2393

Phone:   206-381-1341

Fax:        206-464-0461

Email:    ron at housh.org <mailto:ron at housh.org> 

Mount Vernon Office:

21411 Bluejay Place

Mount Vernon, WA 98274

Phone:  206-235-2459

Email:   ron at housh.org <mailto:ron at housh.org> 

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