[WSBARP] Foreclosure Surplus Funds and Homestead - City Abatement Lien

[Scott Russon]

Through code enforcement of local ordinances, a City abates code violations, obtains a money judgment for the costs of abatement and records a lien for these costs.  Thus, the City has a money Judgment and recorded Claim of Lien for abatement costs.  A year later the property is foreclosed by the mortgage company.  John Doe purchases the property at foreclosure sale leaving a surplus of funds that are deposited into the court registry ($24,000 - an amount that exceeds the City's judgment/lien).  Per RCW 61.24.080, it appears the City can file a motion to request payment of its judgment/lien from the surplus funds.  However, I look at the homestead statute and am now thinking the funds will all go to the homeowners since this was their residence and the surplus amount is less than the $125,000 homestead exemption.  None of the exceptions under RCW 6.13.080 appear to apply to the City's liens.  Am I correct?  I keep thinking that since this is a municipal lien, the homestead should not apply.  But I'm not seeing that in the statute.  Am I missing something?

Also, I assume the homeowner needs to file the motion to collect the surplus funds from the court registry.  But if the City files a motion for surplus funds first and the homeowner files no response, will the court enter an order to release funds if the homeowner fails to appear and/or fails to assert the homestead at or before the hearing?  Or would the City need to plead in its motion that the amounts they are seeking exceed the $125,000 homestead exemption in order to even get the a judge to release any funds.

Any thoughts would be appreciated.

Sincerely yours,

SCOTT E. RUSSON
Attorney at Law

Yates Marshall, PLLC
10000 N.E. 7th Avenue, Suite 200
Vancouver, WA 98685
Phone: (360) 449-6100
Fax:    (360) 449-6111

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