2013 – April 2014 Real Estate Court Cases in Washington


Click on the above link for a summary of Washington case law from 2013 through April 2014 on topics such as residential and commercial foreclosures, condominium and homeowner associations, construction disputes, easements, adverse possession, residential and commercial landlord-tenant disputes, title insurance, and various other real estate related topics. If you have any questions about these or other legal issues, please do not hesitate to call Zeno Bakalian at 425-822-1511.


Is A Commercial Loan Guarantor’s Liability Erased By Foreclosing A Deed of Trust That Secures The Promissory Note And The Guaranty?

So far the answer depends on which division of the Washington Court of Appeals you’re in.  In December 2013, Division 2 held a nonjudicial foreclosure of a deed of trust securing a commercial loan wiped out the guarantors’ liability under their guaranty.  First-Citizens Bank & Trust Co. v. Cornerstone Homes & Development, LLC, 2013 WL 6237466 (Wn. App. Div. 2).  There, the Court focused on the definitions of “indebtedness” and “related documents” in the various loan documents to conclude the deed of trust secured/cross-collateralized the borrower’s promissory note and the guarantors’ guaranty.  Citing RCW 61.24.100(10), Division 2 dismissed lender’s deficiency claims against the guarantors, holding lenders can only obtain a deficiency judgment against guarantors if the guaranty was not secured by the deed of trust.  Division 1 disagrees.  In February 2014, Division 1 interpreted RCW 61.24.100(10) differently, concluding it is a permissive statute.  Washington Fed. v. Gentry, 2014 WL 627817 (Wn. App. Div. 1, 2014).  In other words, in Gentry the Court held RCW 61.24.100(10) allows deficiency judgments against guarantors following a nonjudicial foreclosure even when the deed of trust secures the promissory note and guaranty.  RCW 61.24.100(10) reads: “A trustee’s sale under a deed of trust securing a commercial loan does not preclude an action to collect or enforce any obligation of a borrower or guarantor if that obligation, or the substantial equivalent of that obligation, was not secured by the deed of trust.”  Stay tuned to see how future courts, potentially the Washington Supreme Court, interprets this statute.