[WSBARP] Short sale in a probate - Is lender approval required?

[Roger Hawkes]

Let us know the outcome please.  .my bet is the practical outcome is the mortgage holder can refuse a release or reconveyance until satisfied

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Jon Fritzler
Sent: Tuesday, February 20, 2024 10:32 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>; WSBARP at lists.wsbarppt.com
Subject: [WSBARP] Short sale in a probate - Is lender approval required?

Listmates,

Is it required that the lender approve a short sale in the context of a probate?  represent a PR who does not have nonintervention powers. The PR accepted an offer for 90% of the appraised value, contingent on court approval.

However, because the net proceeds will not fully pay off the balance on the mortgage the realtor said that the lender would need to approve the sale. The lender then obtained its own appraisal, which came back higher than the estate's appraisal.  Based on its appraisal and its own requirement that the net proceeds be at least 88% of its appraisal, the lender says it will not approve the sale.  The property has a HUD mortgage on it and the lender also says that in a short sale the costs of administering the estate cannot be paid from the proceeds.  This is contrary to RCW 11.76.110, which states that the costs of administration are to be paid prior to all other debts.

The lender has already referred the  property to foreclosure.  In a foreclosure, the expenses of administering the estate will not have priority over the mortgage and therefore will not get paid. In re Estate of Patton, 405 P.3d 205 (Wash. App. 2017).  I am considering filing a motion to approve the sale, setting it for hearing, and giving the lender notice. Does the lender really have the ability to block the sale if the PR has followed all the statutory procedures and the court approves it?


Sincerely,
Jon M. Fritzler
Attorney at Law
717 E. 22nd St.
Vancouver, WA 98663
Tel. 360.818.4431

Eml fritzlerlaw at outlook.com<mailto:fritzlerlaw at outlook.com>
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