[WSBARP] liens/fines for code violations extinguished by property tax foreclosure?

Thu Sep 16 17:33:32 PDT 2021

Thank you! Yes, that is almost what happened—judgment entered for civil penalties, and a one-sentence addition “City can proceed to clean up and come back to get another judgment if we want.”

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of scott.glen.thomas at gmail.com
Sent: Thursday, September 16, 2021 5:19 PM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] liens/fines for code violations extinguished by property tax foreclosure?

When taxes are unpaid after 3 years, the county treasurer issues a certificate of delinquency to the county for unpaid taxes, interest, and costs.  RCW 84.64.050.  A certificate may also include any unpaid assessments the county treasurer is responsible for collecting.  Id.  The county prosecutor then obtains a judgment.  I am unaware of any statutory authority for a county to collect a city’s liens.

As a practical matter, few cities will incur costs to perform work on private property.  It is more common for a city to abate a nuisance through the courts, obtain a court order declaring a nuisance to exist and directing the nuisance be abated, and then use the court’s inherent powers to enforce its orders through contempt proceedings.  But it appears that is not what happened in your case.

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 Eric Nelsen
Sent: Thursday, September 16, 2021 4:56 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] liens/fines for code violations extinguished by property tax foreclosure?

Thank you John! So do you know, does the County add all this stuff into the minimum bid at sale? Or are the potential liens just hanging out there for the buyer to discover later?

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

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 John McCrady
Sent: Thursday, September 16, 2021 4:36 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] liens/fines for code violations extinguished by property tax foreclosure?

I forgot to add:

RCW 35.80.030<http://app.leg.wa.gov/RCW/default.aspx?cite=35.80.030>
Permissible ordinances—Appeal.
………………………………………………………..See the last line…..
.
(c) That if, after a preliminary investigation of any dwelling, building, structure, or premises, the board or officer finds that it is unfit for human habitation or other use, he or she shall cause to be served either personally or by certified mail, with return receipt requested, upon all persons having any interest therein, as shown upon the records of the auditor's office of the county in which such property is located, and shall post in a conspicuous place on such property, a complaint stating in what respects such dwelling, building, structure, or premises is unfit for human habitation or other use. If the whereabouts of any of such persons is unknown and the same cannot be ascertained by the board or officer in the exercise of reasonable diligence, and the board or officer makes an affidavit to that effect, then the serving of such complaint or order upon such persons may be made either by personal service or by mailing a copy of the complaint and order by certified mail, postage prepaid, return receipt requested, to each such person at the address of the building involved in the proceedings, and mailing a copy of the complaint and order by first-class mail to any address of each such person in the records of the county assessor or the county auditor for the county where the property is located. Such complaint shall contain a notice that a hearing will be held before the board or officer, at a place therein fixed, not less than ten days nor more than thirty days after the serving of the complaint; and that all parties in interest shall be given the right to file an answer to the complaint, to appear in person, or otherwise, and to give testimony at the time and place in the complaint. The rules of evidence prevailing in courts of law or equity shall not be controlling in hearings before the board or officer. A copy of such complaint shall also be filed with the auditor of the county in which the dwelling, building, structure, or premises is located, and such filing of the complaint or order shall have the same force and effect as other lis pendens notices provided by law.
(d) That the board or officer may determine that a dwelling, building, structure, or premises is unfit for human habitation or other use if it finds that conditions exist in such dwelling, building, structure, or premises which are dangerous or injurious to the health or safety of the occupants of such dwelling, building, structure, or premises, the occupants of neighboring dwellings, or other residents of such municipality. Such conditions may include the following, without limitations: Defects therein increasing the hazards of fire or accident; inadequate ventilation, light, or sanitary facilities, dilapidation, disrepair, structural defects, uncleanliness, overcrowding, or inadequate drainage. The ordinance shall state reasonable and minimum standards covering such conditions, including those contained in ordinances adopted in accordance with subsection (7)(a) of this section, to guide the board or the public officer and the agents and employees of either, in determining the fitness of a dwelling for human habitation, or building, structure, or premises for other use.
(e) That the determination of whether a dwelling, building, structure, or premises should be repaired or demolished, shall be based on specific stated standards on (i) the degree of structural deterioration of the dwelling, building, structure, or premises, or (ii) the relationship that the estimated cost of repair bears to the value of the dwelling, building, structure, or premises, with the method of determining this value to be specified in the ordinance.
(f) That if, after the required hearing, the board or officer determines that the dwelling is unfit for human habitation, or building or structure or premises is unfit for other use, it shall state in writing its findings of fact in support of such determination, and shall issue and cause to be served upon the owner or party in interest thereof, as is provided in (c) of this subsection, and shall post in a conspicuous place on the property, an order that (i) requires the owner or party in interest, within the time specified in the order, to repair, alter, or improve such dwelling, building, structure, or premises to render it fit for human habitation, or for other use, or to vacate and close the dwelling, building, structure, or premises, if such course of action is deemed proper on the basis of the standards set forth as required in (e) of this subsection; or (ii) requires the owner or party in interest, within the time specified in the order, to remove or demolish such dwelling, building, structure, or premises, if this course of action is deemed proper on the basis of those standards. If no appeal is filed, a copy of such order shall be filed with the auditor of the county in which the dwelling, building, structure, or premises is located.
(g) That the owner or any party in interest, within thirty days from the date of service upon the owner and posting of an order issued by the board under (c) of this subsection, may file an appeal with the appeals commission.
The local governing body of the municipality shall designate or establish a municipal agency to serve as the appeals commission. The local governing body shall also establish rules of procedure adequate to assure a prompt and thorough review of matters submitted to the appeals commission, and such rules of procedure shall include the following, without being limited thereto: (i) All matters submitted to the appeals commission must be resolved by the commission within sixty days from the date of filing therewith and (ii) a transcript of the findings of fact of the appeals commission shall be made available to the owner or other party in interest upon demand.
The findings and orders of the appeals commission shall be reported in the same manner and shall bear the same legal consequences as if issued by the board, and shall be subject to review only in the manner and to the extent provided in subsection (2) of this section.
If the owner or party in interest, following exhaustion of his or her rights to appeal, fails to comply with the final order to repair, alter, improve, vacate, close, remove, or demolish the dwelling, building, structure, or premises, the board or officer may direct or cause such dwelling, building, structure, or premises to be repaired, altered, improved, vacated, and closed, removed, or demolished.
(h) That the amount of the cost of such repairs, alterations or improvements; or vacating and closing; or removal or demolition by the board or officer, shall be assessed against the real property upon which such cost was incurred unless such amount is previously paid. For purposes of this subsection, the cost of vacating and closing shall include (i) the amount of relocation assistance payments that a property owner has not repaid to a municipality or other local government entity that has advanced relocation assistance payments to tenants under RCW 59.18.085<http://app.leg.wa.gov/RCW/default.aspx?cite=59.18.085> and (ii) all penalties and interest that accrue as a result of the failure of the property owner to timely repay the amount of these relocation assistance payments under RCW 59.18.085<http://app.leg.wa.gov/RCW/default.aspx?cite=59.18.085>. Upon certification to him or her by the treasurer of the municipality in cases arising out of the city or town or by the county improvement board or officer, in cases arising out of the county, of the assessment amount being due and owing, the county treasurer shall enter the amount of such assessment upon the tax rolls against the property for the current year and the same shall become a part of the general taxes for that year to be collected at the same time and with interest at such rates and in such manner as provided for in RCW 84.56.020<http://app.leg.wa.gov/RCW/default.aspx?cite=84.56.020> for delinquent taxes, and when collected to be deposited to the credit of the general fund of the municipality. If the dwelling, building, structure, or premises is removed or demolished by the board or officer, the board or officer shall, if possible, sell the materials of such dwelling, building, structure, or premises in accordance with procedures set forth in the ordinance, and shall credit the proceeds of such sale against the cost of the removal or demolition and if there be any balance remaining, it shall be paid to the parties entitled thereto, as determined by the board or officer, after deducting the costs incident thereto.
The assessment shall constitute a lien against the property which shall be of equal rank with state, county and municipal taxes.

John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98467
253-476-5721
j.mccrady at pstitle.com<mailto:j.mccrady at pstitle.com>
[Picture4]
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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 Eric Nelsen
Sent: Thursday, September 16, 2021 1:34 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] liens/fines for code violations extinguished by property tax foreclosure?

I didn’t get any replies but got some information from a retired colleague—the short version is, it’s unclear. Slightly longer version: see attached law review article, with the caveat that the statutes have been amended since it was published so its analysis may not hold completely true, but at least is a starting point.

Despite the early doctrine that a property tax foreclosure results in a brand-new title direct from the government free of all prior encumbrances, there is a statutory exception for easements and covenants which will remain on the property, and also some court-case carve-outs that appears to preserve LID and similar assessments, and “demolition liens” when the city/county incurs expenses removing a nuisance before the property is sold.

So, is a judgment grounded in civil fines for code violations (nuisance) removed by a property tax foreclosure? I dunno.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

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 Kaitlyn Jackson
Sent: Tuesday, September 14, 2021 3:14 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] liens/fines for code violations extinguished by property tax foreclosure?

Following...

On Tue, Sep 14, 2021 at 2:35 PM Eric Nelsen <eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>> wrote:
Are a City/County’s recorded lien for fines related to building code violations extinguished in a property tax foreclosure?

I know the general rule is that a property tax foreclosure results in “fresh title” free of all encumbrances except for appurtenant easements and restrictive covenants in place at the time the property tax accrued. City of Olympia v. Palzer, 107 Wn.2d 225, 728 P.2d 135 (1986); RCW 36.36.290<https://app.leg.wa.gov/RCW/default.aspx?cite=36.35&full=true#36.35.290>.

But is there an exception buried in the statutes somewhere, that allows governmental fines to survive the foreclosure? Or perhaps, do those fines get added to the minimum bid necessary to purchase at the tax foreclosure?

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis. Please direct mail and deliveries to the Seattle office.

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Kaitlyn R. Jackson | Attorney| DIMENSION LAW GROUP PLLC
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