[WSBARP] Judgment for Deed

[John McCrady]

Just my opinion, and I welcome any corrections:

Questions:          1).  If a traditional deed-in-lieu of foreclosure is done and the judgment 'vacated', wouldn't that mean that any junior lien holder essentially 're-appears' on title?

a)       You wouldn't "vacate" the judgment, only satisfy the judgment.

b)      The junior lien holders remain until the sheriff's deed is recorded.   They re-attach upon a redemption by the debtor, and  re-attach after the deed in lieu.
                                2).  Can you exchange a deed from the debtor in 'satisfaction' of the judgment instead and avoid the undesirable result of #1?  Again, remember that the debtor is willing to do this.

a)      The deed should be given in satisfaction of the judgment (in lieu of foreclosure).
                                3).  Is it even proper to do any sort of DIL when there is a Judgment - so an order from the Court - that says 'after foreclosure and sale' or does the judgment need to be modified first?

a)      The "foreclosure and sale" language does not forestall the parties from different resolutions of the matter.  The judgment creditor could levy on other properties, for instance, or garnish wages should the creditor not want to take title to the subject property.


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 Richard Holland
Sent: Tuesday, March 28, 2017 1:34 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Judgment for Deed

Ok, so this one can get you pretty far out in the weeds if you think about too long, as I have been, so I am hoping for some insight.

Situation:             Bank sues debtor and gets a judgment for balance owed etc. and that includes the order to judicially foreclose.
Bank wants to do a deed-in-lieu, presumably to avoid the 8 month redemption period, delays in getting to sale and getting the deed from the Sheriff after redemption and so on.  I have to assume the debtor is willing to cooperate.  Total guess but it seems likely it is a cash for keys or we won't destroy your credit sort of thing (again just guessing).
                                Title says, to them, the judgment already extinguished the DOT and other items on record below it.  I mean the title right now is squeaky clean (except for the judgment).

Questions:          1).  If a traditional deed-in-lieu of foreclosure is done and the judgment 'vacated', wouldn't that mean that any junior lien holder essentially 're-appears' on title?
                                2).  Can you exchange a deed from the debtor in 'satisfaction' of the judgment instead and avoid the undesirable result of #1?  Again, remember that the debtor is willing to do this.
                                3).  Is it even proper to do any sort of DIL when there is a Judgment - so an order from the Court - that says 'after foreclosure and sale' or does the judgment need to be modified first?

Sincerely,

Richard L. Holland

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