Non-Judicial Foreclosure of a Deed of Trust
A deed of trust is a security instrument whereby legal title to real estate is transferred to a trustee, who holds title as security for a loan (debt) between a borrower and lender. The borrower is referred to as the grantor and the lender is referred to as the beneficiary.
In the event a borrower defaults on the loan and fails to remedy the default, the trustee has the power to sell the property at a “trustee’s sale” to satisfy the debt owing to the lender.
The prerequisites to a trustee’s sale differ for residential and commercial property. Generally speaking, there are more procedural steps necessary to conduct a trustee’s sale of owner-occupied residential real estate than in circumstances where the deed of trust secures a commercial loan.
In Washington, before a lender may issue a notice of default regarding owner-occupied residential real estate, the lender must meet specific due dilligence requirements, including telephone calls and written notices to the borrower. See RCW 61.24.031. If the borrower responds to the lender’s communications, the lender is required to discuss the borrower’s financial ability to repay the debt owed the lender and options available to facilitate that repayment. Alternatively, the borrower can designate a certified housing consulting agency, attorney, or other advisor to meet with the lender. In some circumstances, the lender may be required to participate in a mediation program and comply with specific requirements under RCW 61.24.163.
After the foregoing due diligence requirements are met, a notice of sale is recorded in the county where the property is located, with a copy of the notice provided to the borrower. The trustee’s sale then proceeds in accordance with a specific statutory timeline.
The detailed procedural steps necessary to conduct a trustee’s sale present many pitfalls for creditors attempting to collect a debt. The attorneys at Wolff, Hislop & Crockett are well-versed at collecting debts, recovering assets, and representing creditors in bankruptcy cases. Contact us today for a consultation.