[WSBARP] Priority of Future Advances Not for Construction

[Paul Neumiller]

Dwight, thank you for the heads up on this case.


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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Dwight Bickel
Sent: Friday, June 17, 2022 1:12 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Priority of Future Advances Not for Construction


Yesterday the WA Supreme Court resolved an argument that has needed a legislative solution since 1973 [Nat'l Bank of Wash. v. Equity Inv'rs, 81
Wn.2d 886] and the predecessor statute 60.04.226. Despite the consistent plea of lenders to read that statute more broadly, the now settled law is that future advances that are not construction loan advances are only entitled to priority over intervening encumbrances if the advance is considered to be obligatory.

This opinion does not reference, but does follow, the only prior judicial opinion that clearly limited 60.04.226 to construction loan advances. In 2002 a 9th Circuit Bankruptcy Appellate Panel
suggested in dicta that RCW 60.04.226 was limited to construction loan priority against mechanic's liens, and that optional advances would lose priority [In re: Stanton].

Dwight A. Bickel
Real Property Title Advisor
Washington Title Professional
Dwight at DwightBickel.com<mailto:Dwight at DwightBickel.com>
https:/dwightbickel.com
206-484-1976

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