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Washington: COA Super-Liens & Redemption after Sheriff Sale

Posted By USFN, Tuesday, May 7, 2013
Updated: Monday, November 30, 2015

May 7, 2013


by Brian Sommer
RCO Legal, P.S. – USFN Member (Alaska, Oregon, Washington)

On April 23, 2013, Washington State Governor Inslee signed into law Senate Bill 5541. The bill — a one-word amendment — clarifies who qualifies as a redemptioner. The redemption statute enacted in 1899 (codified under RCW 6.23.010) states that only a lien holder “subsequent in time” qualified as a redemptioner. The bill clarifies that a lien holder “subsequent in priority” can redeem. The reason for the bill stems from a 2012 published decision by the Washington Court of Appeals. [Summerhill Village Homeowners Ass’n v. Roughley, 166 Wash. App. 625 (Feb. 21, 2012)].

In Summerhill, the mortgage was recorded in 2006. The unit owner defaulted on her condominium association assessments in 2008. Washington law provides a condominium association (COA) with a super-priority lien senior to each mortgage for an amount equal to six months of assessments. The mortgagee did not defend the COA collection lawsuit or pay the six-month super-priority lien prior to the sheriff sale. A third party purchased the condominium for $10,302 at the sheriff sale, and the $191,800 mortgage was foreclosed.

The mortgagee then attempted triage by exercising the one-year right of redemption. The sheriff sale purchaser successfully argued that the mortgagee did not qualify as a redemptioner under RCW 6.23.010 because the 2006 mortgage was not subsequent in time to the 2008 COA super-priority lien. The purchaser asserted that the plain meaning of the word “time” controls, and the 2006 mortgage was not “subsequent in time” to the 2008 COA delinquency; therefore, the mortgagee did not qualify as a redemptioner under RCW 6.23.010(1)(b).

In response to Summerhill, the legislature amended and clarified RCW 6.23.010 to ensure that a mortgagee foreclosed by a COA super-priority lien qualifies as a redemptioner.

Once SB 5541 goes into effect on July 28, 2013, it supersedes the Summerhill opinion. A pending appeal of Summerhill will decide whether SB 5541 should be retroactively applied. The appeal also challenges the reasoning in the judicial decision.

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