McGoon, we have a problem

Posted July 7th, 2008 by Joe Kaiser

So, no tax sales this year, Rob, no new trustees sales, and yet another unintended consequence of your office's new foreclosure law.

Dear Rob,

Yes, I know as the unintended consequences of HB 2791 start to add up, it gets more and more obvious that putting consumer protection attorneys in charge of drafting real estate law was a really bad idea.

The Email

How bad?

Here’s my recent email to county treasurers . . .

Dear County Treasurer,

Heads up . . .

As you may know, the Office of the Washington State Attorney General asked for a new “foreclosure rescue scam” law. The bill, HB 2791 was passed and signed into law earlier this year, becoming effective June 12, 2008.

I encourage you to read it, (a copy of which is attached). Kindly note pages two and three, particularly the following language which will be of interest to you:

(3) “Distressed home consultant” means a person who:

(b) Systematically contacts owners of property that court records, newspaper advertisements, or any other source demonstrate are in foreclosure or are in danger of foreclosure.

As such, the new law makes county treasurers “distressed home consultants.”

The law imposes certain obligations upon distressed home consultants, in particular fiduciary responsibilities. Here’s the pertinent part of that section of the new law:

Sec. 3. A distressed home consultant has a fiduciary relationship with the distressed homeowner, and each distressed home consultant is subject to all requirements for fiduciaries otherwise applicable under state law. A distressed home consultant’s fiduciary duties include, but are not limited to, the following:

(1) To act in the distressed homeowner’s best interest and in utmost good faith toward the distressed homeowner, and not compromise a distressed homeowner’s right or interest in favor of another’s right or interest, including a right or interest of the distressed home consultant;

Although an unintended consequence of the new law, you appear to be barred from holding tax sales and foreclosing on properties with delinquent taxes unless and until this law is changed.

Your fiduciary obligation to “not compromise a distressed homeowner’s right or interest” makes all tax foreclosures illegal in this state and any county treasurer ignoring the new law is subject to treble damages and potentially $100,000 in fines.

Here is that section:

(2) In a private right of action under chapter 19.86 RCW for a violation of this chapter, the court may double or triple the award of damages pursuant to RCW 19.86.090, subject to the statutory limit. If, however, the court determines that the defendant acted in bad faith, the limit for doubling or tripling the award of damages may be increased, but shall not exceed one hundred thousand dollars. Any claim for damages brought under this chapter must be commenced within four years after the date of the alleged violation.

I’ve reviewed the new law more than I care to admit, and although I am not an attorney, I’m confident my conclusions are sound and suggest you check it out for yourself.

Joe Kaiser

Just getting started here

And by the way, I’m convinced foreclosure trustees may no longer process trustee’s sales. Since they too systematically contact owners in danger for foreclosure, they are, by law, distressed property consultants and have HB 2791-defined fiduciary responsibilities that bar them from foreclosing.

So, no tax sales this year, Rob, no new trustees sales, and yet another unintended consequence of your office’s new foreclosure law.

In the arena,

Joe Kaiser

3 Responses to: “McGoon, we have a problem”

  1. Drew Hitt responds:
    Posted: July 7th, 2008 at 12:39 pm

    HAHAHAHHAHAHHAHAH! That’s so funny. Vague laws cause problems. And you think it’s people who are more litigious, maybe it’s the laws aren’t accurate enough and leave room for interpretation…

    Nice finding Joe. I’m sure that’s going to raise some eyebrows. There goes city attorneys’ costs for checking into this debacle all over the state.

  2. anemonehead responds:
    Posted: July 9th, 2008 at 12:40 am

    Hey Joe,

    Any response to this or the other email to the legislators?

  3. Warner responds:
    Posted: July 9th, 2008 at 8:40 pm


    Just finished reading Florida’s new law which goes into effect October 1, 2008. Here’s a link if you haven’t seen or heard of it yet.

    See the new law here.

    They got it a little better than the great state of Washington (just a little) but in reading the blogs, the attorneys and realtors are to put it lightly “concerned”.

    Yep, appears their lawmakers didn’t ask them for input either. As to foreclosure investors….they are left out in the cold…

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