[WSBARP] 2nd DOT invalid?

Tue Mar 29 12:44:10 PDT 2022

To the collective:

1.  As to the direct question, I am not aware of any Washington law which would render the 2nd DOT invalid if executed before the grantor even held title to the subject property.  There could certainly be language in the 2nd DOT and presumably some promissory note which provided that the 2nd DOT would be recorded on the subject property if and when the grantor acquired ownership of the subject property.  And even if there wasn’t any such language, as the 2nd DOT wasn’t recorded until after the grantor/buyer acquired ownership of the subject property, it wasn’t a lien or cloud on title against the seller’s property.  Query whether the beneficiary under the 2nd DOT understood what the terms of the purchase price would be and that there would be a 1st DOT in favor of the seller?

2.  Doesn’t sound like there is a priority issue, assuming the facts as stated that the seller didn’t know of the executed 2nd DOT, and that it was recorded nine days after the closing (and presumably after recording of the 1st DOT.  This would technically satisfy the race/notice provision of RCW 65.08.070, and it’s irrelevant from that standpoint as to when the 2nd DOT was executed.  I think the more interesting question is what would have happened if the seller knew of the 2nd DOT before closing?  At the time of execution, the grantor under the 2nd DOT had no interest in the subject property, and could not have validly recorded the 2nd DOT.  So, does this knowledge kick in and put the 2nd DOT effectively in first position, if the seller went ahead and just closed and recorded the seller’s deed, followed immediately by the recording of the 1st DOT?  Of course, if the seller had notice, presumably the seller would never have closed on the sale without addressing this issue.

Best,

David Ambrose
drambrose at ambroselaw.com<mailto:drambrose at ambroselaw.com>

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Kary Krismer
Sent: Tuesday, March 29, 2022 11:49 AM
To: wsbarp at lists.wsbarppt.com
Subject: Re: [WSBARP] 2nd DOT invalid?

Assuming no knowledge of the 2nd DOT, wouldn't client be a BFP and thus take clear of the 2nd DOT?  If that's not the purpose of recording statutes, I don't know what is.

Did client have title insurance?  If so, that would cover the DOT even if it recorded a couple of hours or days before the deed.

Kary L. Krismer

206 723-2148
On 3/29/2022 11:41 AM, Douglas Scott wrote:
Client sells property to buyer securing the substantial balance of the payments by a 1st DOT.  Unknown to the client, 2 months before the sale, the buyer had signed a 2nd DOT which buyer then recorded 9 days after the sale closed.  Would executing the 2nd DOT 2 months before the buyer even bought the property render the 2nd DOT invalid?

DOUGLAS W. SCOTT
Rainier Legal Advocates|LLC

465 Rainier Blvd. N., Suite C
Issaquah, Washington 98027
425.392.8550 (tel)
425.392.2829 (fax)

www.rainieradvocates.com<http://www.rainieradvocates.com/>

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