[WSBARP] Lien priority question

Tue Jan 8 13:02:22 PST 2019

A better case to review is MAHALKO v. ARCTIC TRADING CO.

99 Wn.2d 30, 659 P.2d 502 (1983)

Generally speaking, personal judgments become liens upon the real property
of the judgment debtor. RCW 4.56.190-.200. Such judgments do not become
liens upon real property to which the homestead exemption applies. RCW 6.12
does provide two means by which a creditor may execute against homestead
property. RCW 6.12.100 subjects the homestead to execution or forced sale
in satisfaction of judgments obtained on debts secured in various specified
manners, including "debts secured by ... mortgages on the premises,
executed and acknowledged by the husband and wife ..." RCW 6.12.100(2). The
homestead exemption does not apply to the types of secured creditors
covered by RCW 6.12.100. *See* RCW 6.12.045.

All other creditors may only reach the homestead property through the
excess value provisions of the statute. RCW 6.12.140-.280. These sections
set out the procedures by which an appraisement of the homestead property
may occur. If the value of the property exceeds the value of the homestead
exemption, an appraiser must determine if the property is divisible. RCW
6.12.200. If the property is indivisible, the court must make an order
directing the sale of the property under execution, RCW 6.12.230, with the
proceeds going first to the judgment debtor in the amount of the homestead
exemption; second, to satisfaction of the execution; and third, if there is
a remaining balance, to the judgment debtor. RCW 6.12.250.

 In Washington, a judgment lien usually attaches to the debtor's real
property in the trial court's county at the time the judgment is entered.
RCW 4.56.190. However, as long ago as 1898, this court stated in *Traders'
Nat'l Bank v. Schorr,* 20 Wn. 1, 8-9, 54 P. 543 (1898) that:
Provision is made by our statutes for reaching the excess in value of real
estate claimed as a homestead over the amount exempted, but it is not the
ordinary enforcement of the lien or a sale under execution. It is a special
mode of sale after an appraisement. We think it is apparent, from an
examination of the legislation creating and protecting the homestead in
this state, and the construction placed upon such statutes by this court,
that a general judgment lien does not operate upon, and does not attach to,
premises which constitute a homestead, and the view taken by counsel for
respondents that such lien may attach to the excess in value above the
homestead exemption is erroneous.

Mahalko contends the above language is dicta and does not have precedential
value. Lest there be any confusion about the effect of the above language
in the *Traders* case, we affirm it here. It is consistent with a line of
cases which enjoined the sale of homesteads under the general execution
statutes when a declaration of homestead was filed before the sale. *Security
Nat'l Bank v. Mason,* 117 Wn. 95, 200 P. 1097 (1921); *Kenyon v. Erskine,*
69 Wn. 110, 124 P. 392 (1912); *Snelling v. Butler,* 66 Wn. 165, 119 P. 3
(1911). Even where there is excess value upon which to execute, we hold the
creditor must proceed under the homestead act. *Kenyon,* at 111-12. The
language of *Traders* is also consistent with a long line of Washington
cases holding that when a homestead declaration occurs prior to a judgment,
the judgment does not become a lien upon the property except as provided by
RCW 6.12.100 (debts secured by mortgages, mechanic's and laborer's liens,
etc.). *Webster v. Rodrick,* 64 Wn.2d 814
<https://www.leagle.com/cite/64%20Wn.2d%20814>, 394 P.2d 689
<https://www.leagle.com/cite/394%20P.2d%20689> (1964); *Lien v. Hoffman,* 49
Wn.2d 642 <https://www.leagle.com/cite/49%20Wn.2d%20642>, 306 P.2d 240
<https://www.leagle.com/cite/306%20P.2d%20240> (1957); *Barouh v. Israel,* 46
Wn.2d 327 <https://www.leagle.com/cite/46%20Wn.2d%20327>, 281 P.2d 238
<https://www.leagle.com/cite/281%20P.2d%20238> (1955). While none of these
cases specifically addressed the question of whether a judgment becomes a
lien on the excess value of the homestead from the time the judgment is
entered, the policy reasons underlying the homestead act support the view
that such a lien does not attach.

On Tue, Jan 8, 2019 at 3:27 PM <nestor at pplsweb.com> wrote:

> I believe the question posed related to an existing judgment that attached
> prior to purchase through Seller or a prior owner, which in that event
> would have priority over the PMM.
>
>
>
> Did the judgment holder make a claim?
>
>
>
> Nestor Gorfinkel, Attorney at Law
>
> Licensed in Washington & Florida
>
> Florida Civil-Law (International) Notary
>
>
>
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> *From:* wsbarp-bounces at lists.wsbarppt.com <
> wsbarp-bounces at lists.wsbarppt.com> *On Behalf Of *John McCrady
> *Sent:* Tuesday, January 8, 2019 11:29 AM
> *To:* WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> *Subject:* Re: [WSBARP] Lien priority question
>
>
>
> As a purchase money mortgage, it takes priority against previously entered
> judgments against the purchaser.
>
> Sorry, I don’t have access to the authority for that statement right now
>
>
>
>
>
> John McCrady
>
> Counsel
>
> Puget Sound Title Company
>
> 5350 Orchard Street West
>
> University Place WA 98467
>
> 253-476-5721
>
> j.mccrady at pstitle.com
>
>
>
> *From:* wsbarp-bounces at lists.wsbarppt.com [
> mailto:wsbarp-bounces at lists.wsbarppt.com
> <wsbarp-bounces at lists.wsbarppt.com>] *On Behalf Of *Jay Goldstein
> *Sent:* Tuesday, January 08, 2019 9:32 AM
> *To:* WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> *Subject:* Re: [WSBARP] Lien priority question
>
>
>
>  First in time, first in right.
>
> See RCW 65.08.060(3) and
>
> 65.08.070
>
>
>
> J
>
>
> Sent from my iPad
>
>
>
> Goldstein Law Office
>
> Jay Goldstein
>
> 1800 Cooper Point Rd SW #8
>
> Olympia, WA 98502
>
> 360 352 1970
>
> Jay at jaglaw.net
>
> Jaglaw.net
>
>
> On Jan 7, 2019, at 4:11 PM, Patrick McDonald <
> pmcdonald at podymcdonaldlaw.com> wrote:
>
> Hi,
>
>
>
> I have a question regarding the relative priority of two liens encumbering
> a property.
>
>
>
> If a judgment is entered in the superior court in the county in which the
> property is located, it is a lien against that property. What if the
> property is purchased after the judgment is entered and there is a purchase
> money deed of trust recorded at the same time the property is purchased.
> Does the judgment that was entered previously take priority over the deed
> of trust that secures a purchase money loan?
>
>
>
> Thanks,
>
>
>
> Patrick McDonald
>
> *_______________________*
>
> *Pody & McDonald, PLLC*
>
> 1200 Fifth Avenue, Suite 1410
>
> Seattle, WA 98101-3106
>
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>
> F: 206-467-4489
>
>
>
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