[WSBARP] Effect of Lender Foreclosure on Easement Agreement

Wed Feb 18 11:51:50 PST 2015

Ron-  Maybe I am not tracking here, but as I read your description, it is the benefited party/parcel that was subject to foreclosure, not the burdened parcel A.  Is that correct?

If no part of B was conveyed or encumbered, so I don't see how the burdening encumbrance on A could be extinguished by the foreclosure of B.  It was the dominant estate that was foreclosed, but maybe you really have more than an easement, so if it could be characterized as an encumbering burden on B, then maybe the arguments below fit.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of swhite8893 at aol.com
Sent: Wednesday, February 18, 2015 11:04 AM
To: wsbarp at lists.wsbarppt.com
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

I agree with John. The security interest created by the Deed of Trust is as to the unencumbered parcel, and that is what is foreclosed upon. But I think John makes an excellent point that the easement is only extinguished if the dominant estate is given notice.

Steve

Stephen Whitehouse
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-----Original Message-----
From: John McCrady <j.mccrady at pstitle.com<mailto:j.mccrady at pstitle.com>>
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Sent: Wed, Feb 18, 2015 9:52 am
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement
Sorry for coming in so late but I wonder if this is correct in all respects.
The deed of trust conveys to the trustee “all of Grantor’s right, title and interest in…” the property.  The Notice of Trustee’s Sale should be sent to, among others: 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;”  61.24.040 (1) (b) (iii)
It seems to me that an easement recorded subsequently to the foreclosing deed of trust would be treated like a junior mortgage.  If given notice of the Trustee’s Sale it would be wiped out by the Trustee’s Sale.

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> [mailto: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

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From: wsbarp-bounces at lists.wsbarppt.com<mailto: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

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