The Washington Supreme Court Affirms No Bonafide Purchaser Exists For a Failure to Comply with Statutory Requirements of a Non-Judicial Foreclosure Sale

The Washington Supreme Court Affirms No Bonafide Purchaser Exists For a Failure to Comply with Statutory Requirements of a Non-Judicial Foreclosure Sale

By Daniel Edstrom
DTC Systems, Inc.

Thanks to Charles Cox for this one.

Excerpt

The trial court ruled that despite procedural noncompliance, the purchaser was a BFP under the statute and quieted title in the purchaser. The Court of Appeals reversed, holding that failure to comply with the statutory requirements was reason to set the sale aside and that factually, the purchaser did not qualify as a BFP.  We affirm the Court of Appeals ruling.

Here were the issues the Supreme Court was looking at:

  1. Whether a trustee’s sale taking place beyond the 120 days permitted by RCW 61.24.040(6) warrants invalidating the sale.
  2. Whether, under the circumstances of this case, a borrower waives the right to bring a postsale challenge for failing to utilize the presale remedies under RCW 61.24.130.
  3. Whether a bona fide purchaser can prevail despite an otherwise invalid sale.

Conclusion

The nonjudicial foreclosure proceedings here were marred by repeated statutory noncompliance. The financial institution acting as the lender also appeared to be acting as the trustee under a different name; the lender repeatedly accepted late payments and, at its sole discretion, rejected only the final late payment that would have cured the default; and the trustee conducted a sale without statutory authority. Equity cannot support waiver given these procedural defects and the purchaser’s status as a sophisticated real estate investor or buyer who had constructive knowledge of the defects in the sale.

We conclude the trustee sale was invalid. We affirm the Court of Appeals and remand to the trial court to enter an order declaring the sale invalid and quieting title in Tecca as against Dickinson. We also affirm the Court of Appeals’ decision reversing the trial court’s judgments for rent, costs, and statutory attorney fees in favor of Dickinson.

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Download the ruling here: http://dtc-systems.net/wp-content/uploads/2012/05/WA-Supreme-Ruling-Albice-v-PremierMortgage.pdf