[WSBARP] Effect of Lender Foreclosure on Easement Agreement

Wed Feb 18 14:15:02 PST 2015

OK, for what it’s worth, I think my analysis is still correct because even though Parcel B is the dominant tenement (which, admittedly I missed before and was pointed out by Dustin), B still obligated himself with the duty to build the road.  

In other words, if I was the foreclosing bank and took the property over in foreclosure, I would say “Hey B, you made the promise to put in the road after I recorded my deed of trust.  No way that I, Mr. Bank, am obligated to make good your promise.”  It seems to me that the real question is did the bank (and subsequent owners) have the ability to wipe out the two page side agreement but leave the easement in place.  Let’s hope that whoever prepared the grant of easement and the two page separate agreement tied them together so that they stood together or fell together.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Ron Housh
Sent: Wednesday, February 18, 2015 1:00 PM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

Yes – the facts are a bit confusing [or my description is a bit confusing].

Correct – parcel B – the benefited parcel – was the subject of the foreclosure…in other words the encumbrance is on/against parcel A.

Parcel B “benefits” but there is no title encumbrance in the form of an easement on/against parcel B, but when the easement was recorded the parties also recorded a separate 2 page agreement [same recording as the easement] where the owner of B agreed to build a public road on the easement.

So even though the new owner of B is saying the easement was extinguished, I believe what he is really arguing is that any obligation to build a public road was either (1) an obligation that was personal to the former owner of parcel B and did not pass with title OR (2) was an obligation that was somehow extinguished as a result of the lender foreclosure.

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

Mount Vernon Office:

21411 Bluejay Place

Mount Vernon, WA 98274

Phone:  206-235-2459

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

From:  <mailto:wsbarp-bounces at lists.wsbarppt.com> wsbarp-bounces at lists.wsbarppt.com [ <mailto:wsbarp-bounces at lists.wsbarppt.com> mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Klinger, Dustin R.
Sent: Wednesday, February 18, 2015 11:52 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Effect of Lender Foreclosure on Easement Agreement

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:  <mailto:wsbarp-bounces at lists.wsbarppt.com> wsbarp-bounces at lists.wsbarppt.com [ <mailto:wsbarp-bounces at lists.wsbarppt.com> mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of  <mailto:swhite8893 at aol.com> swhite8893 at aol.com
Sent: Wednesday, February 18, 2015 11:04 AM
To:  <mailto:wsbarp at lists.wsbarppt.com> 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

Whitehouse & Nichols, LLP

Attorneys at Law

P.O. Box 1273

601 W. Railroad Ave.

Shelton, Wa. 98584

360-426-5885

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Dustin R. Klinger, P.C.

Partner

Miller Nash Graham & Dunn LLP

500 Broadway Street | Suite 400 | Vancouver, Washington 98660
Office: 360.699.4771 | Fax: 360.694.6413

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-----Original Message-----
From: John McCrady < <mailto:j.mccrady at pstitle.com> j.mccrady at pstitle.com>
To: WSBA Real Property Listserv < <mailto:wsbarp at lists.wsbarppt.com> 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:  <mailto:wsbarp-bounces at lists.wsbarppt.com> 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

Rodgers, Kee & Card

324 West Bay Drive NW, Suite 201

Olympia, Washington  98502

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

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

Mount Vernon Office:

21411 Bluejay Place

Mount Vernon, WA 98274

Phone:  206-235-2459

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

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