[WSBARP] Interest in Property

[Patrick McDonald]

Many community association liens (e.g., condominium associations governed under RCW 64.34) are senior to mortgages/deeds of trust, but their priority is limited to a certain dollar amount. If a lender doesn’t satisfy the association’s lien priority prior to the association conducting a sheriff’s sale, the lender’s mortgage/deed of trust is eliminated. However, the lender would be a valid redemptioner. The redemption statute was specifically amended in 2013 or so to make sure lenders could redeem following a sheriff’s sale. See Summerhill Village Homeowners Association v. Roughley and BAC Home Loans Servicing LP v. Fulbright for more detailed analysis.

In my experience, condominium associations used to eliminate lenders’ deeds of trusts from properties somewhat regularly simply because lenders were incapable of timey responding after being served with process (probably due in part to the MERS system). But about 10 years ago lenders started getting much better at responding to lawsuits and paying off the associations’ lien priority to protect their deeds of trust.

Patrick McDonald
_______________________
Pody & McDonald, PLLC
1000 Second Avenue, Ste. 1605
Seattle, WA 98104
T: 206-467-1559
F: 206-467-4489

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Kary Krismer
Sent: January 20, 2023 11:02 AM
To: wsbarp at lists.wsbarppt.com
Subject: Re: [WSBARP] Interest in Property


There is a case from about 8-10 years ago where the HOA's foreclosure wiped out the mortgage debt, but that was due to an unintended quirk in the statutory language, such language having since been corrected.

Kary L. Krismer

206 723-2148
On 1/20/2023 9:36 AM, Joseph McIntosh wrote:
Yes, because PC’s interest acquired at HOA sale was encumbered w/ the mortgage.   PC stepped into the shoes of the homeowner.  PC did not acquire any greater interest.  A mortgage foreclosure may result in a redemption right, however.

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 Jimmy Garg
Sent: Friday, January 20, 2023 9:06 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com><mailto:wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Interest in Property

Listmates:

Does anyone have any experience with this question:

PC purchased debtor/homeowner’s interest at a Sheriff’s sale last year after the property was foreclosed on by the HOA for failure to pay HOA dues/late fees/interest.  Subsequent to that the first mortgage foreclosed on the property and sold the property to another party at a separate foreclosure sale.  Is PC’s interest in property wiped by the subsequent foreclosure by the primary mortgage?

Jimmy Garg, Esq.
Jimmy Garg, PLLC
300 Lenora Street # 1063
Seattle, WA 98121
206-580-3790 (p) 206-736-3218 (f)
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