May 01, 2018 Substantive Law

You Can’t Lock the Doors! Are Lenders Powerless to Stop Zombie Properties in Lien Theory States? Part 4

By Timothy M. Harris

Reprinted with permission from Real Property, Trust and Estate Law Journal, Fall 2017 (52:2) at 223–227. ©2017 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

This is the fourth and final excerpt from this article that will appear in GPSolo eReport.

VI. What States Can Do About It: A Simple Legislative Fix

Under the majority opinion in Jordan, a lender may not enter property to maintain its value.193 A lender may request a receivership to address waste on the property subject to foreclosure; however, this is a costly and time-consuming process. While the Jordan court stated that receivership is not the only option,194 it is not clear what other options are sanctioned by the court apart from consent from the borrower. The answer to this conundrum lies in a legislative fiat expressly allowing lenders to enter-but not occupy-vacant property in default. RCW section 7.28.230 already provides an exception for lenders or others who have been assigned rent proceeds to enter the property for collection.195 Simple amendatory language in this section would allow lenders to engage in self-help to maintain property for which they hold a mortgage.

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