Legislative Fix of Summerhill Village HOA v. Roughley?

In a recent Washington Court of Appeals case, Summerhill Village Homeowner’s Association v. Roughley, a condo owner was delinquent in paying assessments, and the Association placed a lien and then moved to foreclose. The association named and served the lender, but the lender did not respond.

After the condo was sold as a result of the Association’s foreclosure, the lender attempted to intervene in the Association’s foreclosure case to protect their security interest. Unfortunately for the lender, the court upheld the Association’s foreclosure and further held that the lender was not a redemptioner under Washington’s statutes.

Under general property law, when a property sold at foreclosure, the former owner and holder’s of junior security interests have the right to repurchase the property for the foreclosure sale price, plus possibly some additional fees that may vary on a case by case basis. In Washington State, redemption is governed by the provisions of Chapter 6.23 RCW.

As a result of the Association’s foreclosure on the unit, the lender’s security interest in the condo were extinguished.

Under changes to the applicable statute resulting from SB 5541, if a lender is asleep at the wheel and fails to take action to intervene in the Association’s foreclosure, then a condo Association will continue to enjoy their “super priority” for 6 months worth of past due assessments, but now, the lender will no longer have to fear that their security interest will be wiped out in its entirety.

To sum it up, Associations should not be impacted by the revision.

 

 

This blog post is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Although I intend to keep this information current, I do not promise or guarantee that the information is correct, complete, or up-todate. You should not act or reply upon the information in this post without seeking the advice of an attorney.

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