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Washington State Hits the Halfway Point in its Legislative Session

Holly Chisa

By Holly Chisa, HPC Advocacy, UTA Washington State Lobbyist

March 8 represents an important cut off date for the Washington Legislature.  Bills must move from the House to the Senate or the Senate to the House by March 8 to be considered further – unless they impact the budget or have a large fiscal note.  Here are the bills the UTA is watching as we hit this critical deadline.

SB 5005 would implement the Uniform Partition of Heirs Property Act in Washington State.  The legislation is modeled on policy in other states and provides for co-tenants the right of first refusal (if another co-tenant seeks a forced sale) to inherit property after a death of the primary property owner when property is owned by multiple parties.  The bill is supported by The Uniform Law Commission and property law attorneys who have worked together to draft the legislation.  The bill was voted unanimously from the Senate and now waits for a vote in the House.

HB 1349 specifically addresses the Washington Foreclosure Fairness Act.  This bill is in many ways a repeat of legislation we’ve seen in previous years.  Again this year, the Washington Department of Commerce would like financial institutions to be charged for the funding of the program using numbers from 2019 foreclosure rates.  I believe this will be the final year that the Legislature will take this step to use the 2019 numbers as foreclosure rates return to “normal” levels.

The bill also includes language to provide for the Housing Assistance Fund (HAF).  Trustees would be required to continue a foreclosure sale for 30 days upon receipt of written notice that a borrower has applied to the HAF program on behalf of a borrower, an SII, or a person awarded title to the property.  The trustee must continue the sale an additional 30 days if the borrower or other party listed above has been deemed eligible to qualify for the HAF program.  The 30 day + 30 day continuance of the sale required as applications are made/accepted into the HAF program do not count against the 120 day timeline for the sale continuance.  If the contributions from the HAF program will cure the default, the foreclosure must be suspended pending payments.  If written documentation from HAF is provided that the application has been denied or that no funds will be paid, and that no further appeals are allowed, the sale may proceed.

The bill does change the timeline for referral to mediation.  The new timeline states that a borrower may be referred to mediation no later than 90 days before the date of sale listed in the NOTS, or 25 days listed in the amended NOTS.  This change was asked for by the advocates to address inconsistencies they were experiencing in mail delays to borrowers.  The bill also removes the home occupancy requirement for successors in interest.  This change was made to reflect other changes in law that allow for mediation for non-owner occupied homes.

Finally, the bill makes language modifications to clarify when a trustee’s deed may be transferred upon sale of a property at the trustee’s sale.  It also clarifies when a trustee’s sale may be declared void.

It is likely we will see further amendments to the bill in the Senate.  There is interest in further clarifying language for deceased borrowers and successors in interest, including identifying divorced individuals as SII’s.

HB 1636 requires that an association of unit owners in a common interest community (CIC) include with a notice of delinquency a notice of pre-foreclosure options for borrowers similar to the NOPFOs currently sent by financial institutions.  While CIC’s are still not affected by the Foreclosure Fairness Act, they will now have to inform borrowers of their rights for meeting with the CIC to attempt to negotiate the debt, including access to housing counselors.  The bill has passed the House and will be discussed further in the Senate.

SB 5399 attempts to define and regulate “future listing right purchase contracts”.  It creates a new statute defining them as a contract obligation of an owner of residential real estate to enter into a real estate listing agreement in the future relating to the sale of the real estate.  The legislation limits these agreements to a two-year period instead of the industry – requested 30 years.  Lawmakers are concerned that homeowners don’t understand these liens can remain on a property for 30 to 40 years, and title companies testified of their concern with clouded titles.  The companies currently offering these types of contracts remain opposed; the bill is scheduled to receive a hearing in the House in the coming weeks.

As we move into March, UTA members should expect to see budget language from both the House and Senate.  In previous years we’ve seen increases to fees and an expansion of the Washington real estate excise tax (REET); I expect to see that again this year.  While Washington’s budget outlook is solid, there are always programs lawmakers want to raise funds for.

Thanks to a lot of good work and effort during the 2022 interim, the 2023 Washington session isn’t nearly as challenging as it could have been.  We continue to meet with advocates and among UTA members to determine the best language for HB 1349 as negotiations continue on that bill.  And we anticipate work to be done in the budget to protect against new, excessive fees.  More to come as we work to Signe Die – the end of session – on April 23.

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