[WSBARP] Release of Deed of Trust/Quiet Title?

Wed Feb 3 08:31:38 PST 2021

Correction. 8+ years, not 18+ years, since discharge and missed payments.
Slip of the finger! 

Thanks, Joseph.  I was previously aware that the statute of limitations
accrues for each installment at the time that the installment is due on the
note but I am no bankruptcy guru and had to research the interplay with
bankruptcy law.  From what I gather, the bankruptcy code does not
discharge/eliminate the lien/security but under Washington law, the statute
of limitations to foreclose on the lien/security accrued at the time of the
first missed payment because no installment could become due after that
point as a result of the discharge.  Edmundson v. Bank of Am., 194 Wn. App.
920, 378 P.3d 272 (2016).  The lender could have foreclosed on their 2nd
position DOT within 6 years but it has been more than 8 years.  The lender
likely chose to forego spending money and time foreclosing because of the
fact that they were in 2nd position.  

Edmundson provides that.

Loan servicer's action to foreclose on deed of trust that secured promissory
note accrued, and six-year limitations period governing action to foreclose
began to run, each month in which borrowers' defaulted on installment note
and deed of trust by failing to make monthly payment, until borrowers'
personal liability on note was discharged in chapter 13.  Edmundson v. Bank
of Am., 194 Wn. App. 920, 378 P.3d 272 (2016) ("Correspondingly, the statute
of limitations for each subsequent monthly payment accrued on the first day
of each month after November 1, 2008 until the Edmundsons no longer had
personal liability under the note. They no longer had such liability as of
the date of their bankruptcy discharge, December 31, 2013. Thus, from
December 1, 2008 through December 1, 2013, the statute of limitations
accrued for each monthly payment under the terms of the note as each payment
became due.")

The ruling in Edmundson has been followed and upheld by both state and
federal courts since that time.  "The Washington State Court of Appeals
expressly stated in Edmundson that the statute of limitations on enforcement
of a deed of trust payable in installments accrues when the last installment
payment is due prior to discharge of a borrower's personal liability on the
corresponding promissory note. 378 P.3d at 277."  Hernandez v. Franklin
Credit Mgmt. Corp., BR 18-01159-TWD, 2019 WL 3804138, at *3 (W.D. Wash. Aug.
13, 2019), aff'd sub nom. In re Hernandez, 820 Fed. Appx. 593 (9th Cir.
2020)

"Every federal court that has addressed this specific statute of limitations
issue has also adopted the holding in Edmundson. See, e.g., Jarvis, Case No.
C16-5194-RBL, Dkt. No. 47 at 6. Further, the Court does not see any reason
to conclude that the Washington State Supreme Court would reach a contrary
decision. Thus, the Bankruptcy Court, as a federal court applying Washington
law, was required to apply the rule announced in Edmundson. See Gravquick
A/S, 323 F.3d at 1222. Regardless of the potential policy implications it
identified, the Bankruptcy Court erred by treating the relevant portion of
the Edmundson decision as dicta."  Id.

Samuel M. Meyler

Meyler Legal, PLLC 

1700 Westlake Ave. N., Ste. 200

Seattle, Washington 98109

Tel:  206.876.7770

Fax:  206.876.7771

Email:   <mailto:samuel at meylerlegal.com> samuel at meylerlegal.com

NOTICE:

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com>
On Behalf Of Joseph McIntosh
Sent: Wednesday, February 3, 2021 8:03 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Release of Deed of Trust/Quiet Title?

I don't think SOL matters.  If you're a lender, and you want ample time for
full performance, you negotiate a lengthy maturity.  On loans that have gone
unpaid and not seen action for years, the fine print will probably disclose
a lengthy maturity. 

From: wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com>
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Roger Hawkes
Sent: Wednesday, February 03, 2021 7:57 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com
<mailto:wsbarp at lists.wsbarppt.com> >
Subject: Re: [WSBARP] Release of Deed of Trust/Quiet Title?

I haven't thought of this for a while; but, why don't lenders modify their
contracts to refer to a state that has really long sols?

From: wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com>
<wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com> > On Behalf Of Joseph McIntosh
Sent: Wednesday, February 3, 2021 7:43 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com
<mailto:wsbarp at lists.wsbarppt.com> >
Subject: Re: [WSBARP] Release of Deed of Trust/Quiet Title?

A bankruptcy discharge does not eliminate a secured debt, or its repayment
schedule, it just eliminates a remedy - personal recourse.  There's a couple
discharge provisions in the code address this.

If there have been 18 years of missed payments, some would be currently time
barred by the state's 6 yr statute for enforcement of written contracts, but
some not.  The lien still is still intact as to some missed payments that
have not yet expired under the statute, and others if they have not yet come
due.

From: wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com>
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Kary Krismer
Sent: Wednesday, February 03, 2021 7:14 AM
To: wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> 
Subject: Re: [WSBARP] Release of Deed of Trust/Quiet Title?

I'm not familiar with those appellate court cases, but if the statute of
limitations argument is based on due date of periodic payments I have a hard
time seeing how due date for a periodic payment could be after it was
discharged.  So seemingly the  bankruptcy discharge date would be the latest
date for the statute of limitations for all the payments.  But if so,
doesn't that line of cases presumably work in favor of the OP's client since
all the payments would have been due over 18 years ago?

Also, to the extent that the Bankruptcy Act does have applicable language,
it would presumably say that the creditor's claim was the full amount, not
just those payments prior to bankruptcy.  I don't see, however, how such
provisions would affect a states law SOL.

Kary L. Krismer
206 723-2148

On 2/3/2021 5:58 AM, Joseph McIntosh wrote:

A quiet title can be maintained if the statute of limitations for
enforcement of the lien is expired.   Commencement of the statue typically
depends on when rights contractually accrue, so you would have to look at
the contract, and particularly, it's maturity.  If it's an installment
thirty year mortgage, there might be some payments that have not yet come
due (and rights to enforce that have not accrued), unless there was an event
of acceleration.  

There is some goofy language from a recent WA appellate court that says a
bankruptcy discharge matures a secured loan, although that language has been
pretty widely panned, and there's a couple cases in the pipeline seeking
correction of that language.  Nothing from the bankruptcy code says a
personal discharge matures or accelerates secured debt.  

From: wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com>
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Samuel M. Meyler
Sent: Tuesday, February 2, 2021 7:41 PM
To: 'WSBA Real Property Listserv'  <mailto:wsbarp at lists.wsbarppt.com>
<wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Release of Deed of Trust/Quiet Title?

Listmates,

Property owner has a 1st and 2nd position mortgage/deeds of trust
encumbering the property.  Owner files for bankruptcy in 2012.  Standard
Order of Discharge enters.  Owner works out a loan modification with the 1st
position lender but does not with the 2nd.  2nd DOT continues to appear on
title now that the property is being sold.  It has now been over 18 years
since the discharge.  What are the options here?  Has anyone ever had
success in getting a lender in this position to release/reconvey?  Should
the 2nd DOT be removed via quiet title action?  Thanks for your input.

Samuel M. Meyler

Meyler Legal, PLLC 

1700 Westlake Ave. N., Ste. 200

Seattle, Washington 98109

Tel:  206.876.7770

Fax:  206.876.7771

Email:   <mailto:samuel at meylerlegal.com> samuel at meylerlegal.com

NOTICE:

This electronic message contains information which may be Confidential or
Privileged and constitutes an electronic communication within the meaning of
the Electronic Communications Privacy Act 18 USC 2510. The information is
intended to be for the use of the individual or entity named above.  If you
are not the intended recipient, please be aware that any disclosure,
copying, distribution or use of the contents of this information is
prohibited.  If you received this transmission in error, please notify the
sender and delete the copy you received together with any attachments.
Thank you.

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