Since the Washington Supreme Court’s decision in Bain v. Metropolitan Mortgage Group, 175 Wn.2d 83, 285 P.3d 34 (2012), we have seen an increasing number of foreclosures-by-lawsuit (“judicial” foreclosures). The judicial foreclosure typically takes far longer to complete than the standard non-judicial foreclosure, in which a trustee goes through a notification process before selling the property without court involvement.
One main drawback of the judicial foreclosure is the delay caused by the “redemption” period following the sheriff’s sale. Redemption is the statutory right of the borrower or junior lienholder to reimburse the sheriff’s-sale purchaser for the amount the purchaser paid at the sale (“redeem”), thereby taking title to the property from the purchaser and giving it to such “redeeming” borrower or junior lienholder. In other words, redemption forces the purchaser at the sheriff’s sale to sell back the property to the redeemer at the purchase price. The time period in which a borrower or junior lienholder may redeem can be as much as one year after the sheriff’s sale. Redemption rights tend to reduce sale prices at sheriff’s sales because potential purchasers run the risk of a forced buy-back at any time during the redemption period.
Fortunately, Washington recently passed RCW 61.12.093, see full statute below, a new law which eliminates redemption rights in cases where the court finds the borrower has abandoned the property for six months or more. This new law will hasten the finality of judicial foreclosures in cases where the borrower has simply walked away from the property. It should also help increase sheriff’s sale prices in the case of abandoned property because those purchasers will no longer face the risk of forced buy-back.
Abandoned improved real estate — Purchaser takes free of redemption rights.
In actions to foreclose mortgages on real property improved by structure or structures, if the court finds that the mortgagor or his or her successor in interest has abandoned said property for six months or more, the purchaser at the sheriff’s sale shall take title in and to such property free from all redemption rights as provided for in RCW 6.23.010 et seq. upon confirmation of the sheriff’s sale by the court. Lack of occupancy by, or by authority of, the mortgagor or his or her successor in interest for a continuous period of six months or more prior to the date of the decree of foreclosure, coupled with failure to make payment upon the mortgage obligation within the said six month period, will be prima facie evidence of abandonment.