2012 Legislative Updates

Posted by on Jul 10, 2012 in Memos | Comments Off on 2012 Legislative Updates



1.      Homeowners in Crisis (Engrossed Substitute House Bill 2614).

Effective June 7, 2012, a lender must provide written notice to a borrower if the lender intends to release its deed of trust or mortgage on the borrower’s owner-occupied real property for less than full payment of the debt.  Among other things, the notice must state that the lender is either waiving or reserving its right to collect full payment of the debt and that the lender’s right to collect the outstanding debt will be forfeited if the lender does not initiate an action to collect the outstanding debt within three years of the date the lender released its security interest. (RCW 64.04)

The statutorily required pamphlet that a real estate licensee provides to clients must now include a disclosure stating that the real estate licensee must notify a seller in writing that a short sale does not automatically relieve the seller of the obligation to pay any debt or costs remaining at closing (including the real estate licensee’s commission).  (RCW 18.86.120).

The Homeowners in Crisis Act incorporates the recent Foreclosure Fairness Act modifications.  (RCW 61.24).  The modifications include changes to the Meet and Confer provisions (for example, initial meeting between lender and borrower may now be by telephone unless borrower requests an in-person meeting), Referral to Mediation provisions (for example, borrower may no longer be referred to mediation during meet and confer period), Mediation provisions (for example, mediations must now be held within 70 days of the referral), and Time provisions (for example, time period between recording notice of trustee sale and actual sale is extended from 90 days to 120 days for some borrowers).  A full description of the recent modifications to the Foreclosure Fairness Act is attached.


2.      Carbon Monoxide Disclosures (Substitute Senate Bill 6472).

The Seller Disclosure Statements (Form 17) for both residential and commercial real property have been amended to include whether the property is equipped with carbon monoxide and smoke alarms (RCW 64.06.020; RCW 64.06.013). Licensed real estate brokers are not liable for any civil, administrative, or other proceeding for the failure of any seller or other property owner to comply with the requirements proscribed by statute or rules adopted by the State Building Code Council (RCW 19.57.530).  These changes only apply to real estate transactions for which a purchase and sale agreement is entered into after the effective date (June 7, 2012).


3.      Fair Tenant Screening (Substitute Senate Bill 6315).

Prior to screening a prospective tenant, and in order to charge the prospective tenant for that screening, a prospective landlord must first notify the prospective tenant in writing or by posting the following information:

  • What types of information will be accessed to conduct the tenant screening;
  • What criteria may result in the denial of the application;
  • The name and address of the consumer reporting agency, if used; and
  • The prospective tenant’s right to obtain a free copy of the consumer report in the event of a denial or other adverse action and to dispute the accuracy of the information in the consumer report.  (RCW 59.18.257).

If a prospective landlord takes an adverse action, the prospective landlord shall provide a written notice of the adverse action to the prospective tenant that states the reasons for the adverse action.  The Adverse Action Notice must be in a form substantially similar to the one prescribed by statute.  (RCW 59.18.257).


4.      Manufactured/Mobile Home Landlord/Tenant Act (Substitute House Bill 2194).

The Manufactured/Mobile Home Landlord Tenant Act (MMHLTA) now provides that the contents of a rental agreement must include a written description, picture, plan or map of the location of the tenant’s responsibility for utility hook-ups. (RCW 59.20.060)  Also, a landlord may no longer prohibit a tenant (although they can enforce reasonable restrictions) from posting on the tenant’s manufactured/mobile home or park model, or on the mobile home lot, a commercially reasonable “for sale” sign. (RCW 59.20.070).

A tenant who sells his or her manufactured/mobile home or park model and assigns his or her rental agreement must notify the purchaser of all taxes, rent, and reasonable expenses due on the manufactured/mobile home or park model and the mobile home lot.  (RCW 59.20.073)


5.       Common Interest Community Managers  (Substitute House Bill 6325).

The exemptions from license requirements for real estate brokers at RCW 18.85.151 are amended to exempt individuals who provide management or financial services in an advisory capacity to associations governed by the Horizontal Regimes Act, the Condominium Act, or the statutes regulating homeowners’ associations.  The exemption applies only to common interest community managers who do not promote the purchase, listing, sale, exchange, optioning, leasing, or renting of a specific real property interest.


6.     Escrow Licensing (SB 6218).

The escrow licensing provisions at RCW 18.44.021 are amended concerning the requirements for lawyers to be exempt from registration, including the requirements that lawyers are exempt if (a) the escrow transactions are performed by either the lawyer engaged in the practice of law or any employee under direct supervision of the lawyer; (b) all escrow transactions are performed under a legal entity that is operated as a law practice; and (c) all escrow funds are deposited to, and maintained in, and disbursed from a trust account in compliance with rules enacted by the Washington Supreme Court that regulates the conduct of lawyers.   (A legislative response to litigation brought by Washington Attorneys entitled Davidson, et al vs. Jarvis (DFI), Washington Supreme Ct. # 84601-4)


1.    Federal Housing Finance Agency issuing new guidance requiring servicers of Freddie Mac and Fannie Mae to speed responses to short sale requests (including HAFA).  Guidelines require:

    • Servicers acknowledge receipt of short sale purchase offers within 3 days;
    • Respond to short sale requests within 30 days (with a possible 30 day extension and, if so, weekly status updates to borrower during 30 day extension).
    • Make a final decision within 60 days of receiving purchase offers.  Effective: June 15, 2012.


2.    Effective June 1, 2012, per Making Home Affordable Directive issued March 9, 2012, HAFA extended to December 31, 2013 with significant expansion.

    • No longer occupancy  requirements for HAFA eligibility – applies now to residential tenancy individually owned (not LLC or other investment entity).
    • Relocation assistance of 3,000 now available for the residential tenant; and
    • Subordinate lenders now receive up to $8,500 ($6,000 was previous maximum) in exchange for lien release and full release of borrower liability.

The following articles are published for informational purposes and not for the purposes of providing legal advice. Please contact Galvin Realty Law Group at 425.248.2163 for a consultation about your specific needs and circumstances.