§21.7 - Waiver of Grantor's Rights

• Jurisdiction: Washington

§21.7 WAIVER OF GRANTOR'S RIGHTS

This section discusses waiver of the rights of a grantor after a nonjudicial foreclosure.

(1) Judicial development

Prior to 2012, if the grantor had knowledge of a procedural defect or defense to the foreclosure and failed to exercise its statutory presale rights to enjoin the sale, the courts were loath to set aside the sale. Udall v. T.D. Escrow Servs., Inc., 159 Wn.2d 903, 909-12, 154 P.2d 882 (2001);Plein v. Lackey, 149 Wn.2d214,227,67 P.3d 1061 (2003);Brown v. Household Realty Corp., 146 Wn.App. 157,189 P.3d233 (2008); CHD, Inc. v. Boyles, 138 Wn.App. 131, 137, 157 P.3d 415 (2007); Amresco Independence Funding, Inc., v. SPS Props., Inc., 129 Wn.App. 532, 119 P.3d 884 (2005);Koegel v. Prudential Mut. Sav. Bank, 51 Wn.App. 108, 752 P2d 385, review denied, 111 Wn.2d 1004 (1988).

In 2012, the courts decided a line of cases that distinguished prior waiver cases, holding that waiver will only be applied when it is equitable under the circumstances and when it serves the goals of the Act. Klem v. Wash. Mutual Bank, 176 Wn.2d 771, 295 P.3d 1179 (2013); Albice v. Premier Mortg. Servs. of Wash., 174 Wn.2d 560, 570, 276 P.3d 1277 (2012); Rucker v. NovaStar Mortg., Inc., 177 Wn.App. 1, 311 P.3d 31 (2013); Bavand v. OneWest Bank, FSB, 176 Wn.App. 475, 309 P.3d 636 (2013).

Then in 2013, the court in Frizzell v. Murray, 179 Wn.2d 301, 313 P.3d 1171 (2013), distinguished the prior cases and reasserted the principles of waiver established in Plein, 149 Wn.2d 214. "[U]nder the waiver provision set forth in RCW 61.24.040(l)(f)(IX), a waiver of a postsale contest occurs when 'a party (1) received notice of the right to enjoin the sale, (2) had actual or constructive knowledge of a defense to foreclosure prior to the sale, and (3) failed to bring an action to obtain a court order enjoining the sale.'" Frizzell, 179 Wn.2d at 306-07 (citing Plein, 149 Wn.2d at 227). In Frizzell, the trial court granted a temporary restraining order (TRO) on the condition that the plaintiff pay the bond required under RCW 61.24.130. When the plaintiff failed to pay the bond, the court dissolved the TRO, and the property was sold at a trustee's sale. The trial court granted the purchaser's motion for summary judgment, finding the plaintiff had waived her claims to challenge the sale. The appellate court reversed, holding that waiver should not be strictly applied and was not equitable under the facts of the case. The Washington Supreme Court upheld the appellate court's ruling, holding the plaintiff had waived the right to contest the sale when she had knowledge of defenses to the foreclosure sale...