[WSBARP] New wrinkle on closings

Tue Nov 3 17:06:41 PST 2020

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> on behalf of David Daniel <ddaniel at demcolaw.com>
Sent: Tuesday, November 3, 2020 4:39:59 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] New wrinkle on closings

This addendum language came out of our office. It came about in response to a recent notice from King County (a number of weeks back) that recordings may be delayed by several days or more. We had word that other counties were experiencing similar issues as well. Given our understanding that title and casualty insurers are generally willing to insure the gap period, we came up with this addendum to address the concern of the parties becoming out of contract if the transaction did not "close" on time.

I appreciate the thoughtful commentary offered by Craig and Kary. Here would be my thoughts in response:

What if the county rejects the recording and requires one of the parties to re-sign something and that party now refuses?
I don't think either party would have a basis to refuse, and both parties would be bound by the duty of good faith and fair dealing to complete the act of recording. As between Buyer and Seller, the transaction would be closed as of the "Submission Date" (which is defined earlier in form to be the date on which the closing docs are submitted to the county for recording, regardless of whether they are actually recorded that day). As such the parties would not be out of contract or free to walk away, but rather would be closed as between the two of them, but with the surviving need/obligation to record the documents, which essentially would be a ministerial act at that point, but not one which either party would be entitled to avoid. I suppose if the seller just disappeared then a court could be petitioned for an order to complete the recording.

I am concerned about an insurable interest in the event of a casualty.
The Buyer would have an insurable interest due to the change in definition of "closing", and as paragraph 3 says, both parties should ensure that they have adequate coverage from the point of closing to the point of recording.

I believe (but do not know for sure) that NWMLS will be addressing this issue in an upcoming round of forms revisions.

David C. Daniel, Attorney

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 DEMCO LAW FIRM, P.S.
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Office | (206) 203-6000
Email | ddaniel at demcolaw.com<mailto:ddaniel at demcolaw.com>

5224 Wilson Ave. S., Suite 200

Seattle, WA 98118

On Tue, Nov 3, 2020 at 3:13 PM Kary Krismer <Krismer at comcast.net<mailto:Krismer at comcast.net>> wrote:

The state-wide forms people are apparently working on this issue and apparently finding a number of different issues necessary to resolve. So caution is probably indicated.

I've heard they've discounted the casualty insurance issue, which I consider to be the major issue.  I think paragraph 3 should probably provide that both parties should maintain insurance until recorded if you're willing to take the risk on that issue.  But with that paragraph 1 language changing the definition of closing seemingly the buyer would have an insurable interest, unlike the standard state-wide forms.

I'd not have thought too much about the county rejecting documents prepared by a professional escrow in a normal purchase-sale transaction.  Has anyone seen that?  There is typically limited power of attorney language to correct mistakes as part of the escrow instructions, so maybe that would deal with it where the document didn't need to be completely redrawn.  But what about a valuation issue holding things up?

Kary L. Krismer
206 723-2148

On 11/3/2020 3:02 PM, Craig Gourley wrote:

Listmates,  I just received an addendum on a Purchase and Sale we are closing and it has my antenna’s up.

I have seen gap insurance in limited cases when something unusual happens and title will insure as of a specific date even though a deed has not recorded but it is typically with the consent of the lender.  Given the propensity of the County recording office to play Jr lawyer and reject recordings for any number of stupid reasons I am reluctant to follow this addendum.   What if the county rejects the recording and requires one of the parties to re-sign something and that party now refuses?  I am concerned about an insurable interest in the event of a casualty.  I am sure given a minute I can come up with additional participants in the potential parade of horrors.   Thoughts? Comments? Am I being overly concerned about nothing? The addendum is below.

[cid:1759084dee34cff311]

Gourley Law Group

Snohomish Escrow

The Exchange Connection

1002 10th Street / PO Box 1091

Snohomish, WA 98291

360.568.5065

360.568.8092  fax

Craig at glgmail.com<mailto:Craig at glgmail.com>

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