Washington State Short Sale Legislation

This year’s Washington State Legislature recently passed House Bill 2614 which creates new law and revises existing law with regard to short sales for owner-occupied properties.  Here a several important points:

• Upon its first written notice to the seller, the lender must provide notice that it either “waives” or “reserves” the right to collect the full amount of debt
• The statute of limitations for a lender to bring an action to collect any outstanding debt after releasing its security in the property is shortened to three years
• The Law of Real Estate Agency pamphlet must include a disclosure that requires a broker to give notice to the seller stating that a lender’s decision to release its security interest in the property does not automatically relieve the seller’s obligation to pay any debt

This legislation takes effect June 7, 2012 and the Northwest Multiple Listing Service will revise the forms needed to complete a short sale transaction by this date.