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

Wed Feb 3 12:20:19 PST 2021

There's some cases in the state court pipeline challenging that Edmundson language below.  We are going to see it re-visited by Div 1 later this year, or early next.

The lender likely didn't foreclose because the secured debt was un-matured.  The Edmundson language below - effectively saying a bankruptcy discharge matures a secured debt - likely caught the lender off guard, as it has others.

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Samuel M. Meyler
Sent: Wednesday, February 03, 2021 8:38 AM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Release of Deed of Trust/Quiet Title?

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:  samuel at meylerlegal.com<mailto: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.

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 8:03 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 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' <wsbarp at lists.wsbarppt.com><mailto: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:  samuel at meylerlegal.com<mailto: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.

***Disclaimer: Please note that RPPT listserv participation is not restricted to practicing attorneys and may include non-practicing attorneys, law students, professionals working in related fields, and others.***

_______________________________________________

WSBARP mailing list

WSBARP at lists.wsbarppt.com<mailto:WSBARP at lists.wsbarppt.com>

http://mailman.fsr.com/mailman/listinfo/wsbarp

________________________________
[Image removed by sender. Avast logo]<https://www.avast.com/antivirus>

This email has been checked for viruses by Avast antivirus software.
www.avast.com<https://www.avast.com/antivirus>

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20210203/9c9aedcc/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.jpg
Type: image/jpeg
Size: 823 bytes
Desc: image001.jpg
URL: <http://mailman.fsr.com/pipermail/wsbarp/attachments/20210203/9c9aedcc/image001.jpg>