[WSBARP] RPPT Executive Committee Legislative Update

[Rod Harmon]

Eric:
I didn't get the executive committee legislative update that you were responding to. Could you forward it to me?

Rod Harmon
rodharmon at msn.com

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Eric Nelsen
Sent: Thursday, September 28, 2023 2:08 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] RPPT Executive Committee Legislative Update

I’m in general agreement with Erik, though my gut says that a notary requirement for leases of more than six years would be good rather than ten, and I think that options/extensions should be added to the initial term for purposes of determining the total term of the lease (which is the current rule, but Erik would prefer options/extensions to not be counted).

Some additional comments, for what they’re worth:

I think the legislative note’s expressed concern about unscrupulous landlords exploiting innocent tenants by deliberately failing to have their signature acknowledged is overblown. An unacknowledged deed or mortgage (and by extension I would argue a lease) is valid between the parties. Skagit State Bank v. Rasmussen, 109 Wn.2d 377, 389, 745 P.2d 37 (1987). It’s primarily very old case law—literally a century old at least—that held to a strict rule invalidating leases with a lack of acknowledgment. Doctrines of part performance also apply where tenant has taken possession and made substantial improvements.

There is also existing public policy "The clear purpose and intent behind these statutes of frauds is the prevention of fraud. To apply these statutes in such a manner as to promote and encourage fraud would be to defeat the clear and unambiguous intent of the legislature in their enactment." Miller v. McCamish, 78 Wash.2d 821, 827, 479 P.2d 919 (1971); see also Ben Holt Industries, Inc. v. Milne, 36 Wn.App. 468, 475, 675 P.2d 1256 (1984). While Ben Holt cites that old case law regarding invalid leases, it also cites Miller and upholds a lease that has a defective acknowledgment.

I very much agree with Erik that longer-term leases really should be acknowledged, as a kind of ritual indicative of seriousness. People truly do hesitate more to sign before a notary compared to simply dashing off a signature on something.

Consistent with that, I think landlords in particular should recognize that options/extensions granted to a tenant are binding and they’re potentially stuck with that tenant for the entire run of term plus all extensions.

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>

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 erik at egmrealestate.com<mailto:erik at egmrealestate.com>
Sent: Thursday, September 28, 2023 12:32 PM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] RPPT Executive Committee Legislative Update

Nathan,

In regard to notarizing leases longer than one year, I would like to offer some thoughts.  As a matter of background, in my career I have been a commercial real estate attorney, commercial real estate broker, and an owner and operator of commercial real estate.  So I have seen this stuff from several relevant angles.

I support the proposed legislation, HOWEVER, I encourage a modification.  I would encourage a continuing requirement for notarization of leases that are longer than 10 years.  Here is my reasoning:


  1.  Consistency in Approach.  A lease of 99 years is not that different than a conveyance.  If we are going to require notarization in deeds, I think the same reasoning would result in the requirement for notarization of long-term leases.


  1.  Opportunity for Abuse.  I believe the reasoning behind our requirement for notarization of deeds is to (a) prevent fraud and (b) allow for more efficient resolution of disputes in the instance of alleged fraud.  If someone produces a copy of a 99 year lease 30 years after it was allegedly signed, and the purported lessor is deceased, it will be difficult for the parties to resolve whether or not the lease is in fact authentic.  This difficulty is compounded by the fact that leases are not customarily recorded. The opportunity for abuse is that an unscrupulous party can produce a 99 year lease with a signature of a deceased person, and cause all sorts of difficulty for the owners of the land affected by the lease.
Although I am not very familiar with the law around testamentary wills, I believe there is a similarity to long term leases, in that it is inherently likely in regard to both types of documents that the authenticity of the document may be called into question at a time that the signatory to the document is deceased.  In testamentary wills, witnesses are required.  For long term leases, a requirement for notarization would serve that role.  (I believe some states require witnesses for long term leases; but for consistency with the remainder of Washington’s real estate conveyance law and custom, using notaries for long term leases, rather than witnesses, is likely the right answer.)

  1.  Recording Laws.  Generally documents that are to be recorded must be notarized.  While a person could still get a lease notarized, it will cease to be custom to do so.  In my opinion it would be good if long-term leases remained in a form that could be recorded.
  2.  Minimal Unintended Effect.  If we require notarization of leases with a term longer than 10 years (and I would encourage an express statement that renewal or extension terms are to be disregarded in the calculation of the term for the purposes of the notarization requirement), it will affect only a very very small percentage of leases; and those lease that it does effect are serious ones with significant terms, where the minimal hurdle of notarization is probably a good thing in that it prevents the parties from rushing to signature.

I hope this input is helpful.

Erik


--
Erik G Marks
Attorney at Law
PO Box 16247
Seattle, WA 98116

(206) 612-8653
erik at egmrealestate.com<mailto:erik at egmrealestate.com>
Physical Office:
4220 SW Spokane St
Seattle, WA 98116



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