Real estate investors in Washington State are always on the lookout for good deals, and distressed properties can be an attractive option. However, navigating the legal complexities of distressed properties can be challenging for even the most experienced investor. That’s where a distressed property lawyer in the Seattle metro area can help, severing clients throughout Washington State. In this article, we’ll explore how a real estate investor can work with a distressed property attorney to leverage the knowledge of a Washington state real estate attorney without having to provide legal services or advise on possible options to homeowners which could end up as a violation of the Washington State Distressed Property Law RCW 61.34.
Most real estate investors that I talk to, want to do things the right way and want to do right by distressed homeowners. This means abiding by the law in Washington State. There is no problem with offering to purchase a house that is distressed in Washington state in most situations, but the problem is the homeowners are dealing with numerous other issues, such as potential foreclosure, not knowing where they are going to move to, inherited properties etc. Under the Washington State Distressed Property Law, providing options as an unlicensed attorney or real estate broker could be seen as a violation of the Washington State Distressed Property Law which could end up in a lawsuit or fine from the Washington State Attorney General or otherwise.
The main point of the law is to protect distressed homeowners from “equity skimming” or from investors stealing equity from the distressed homeowner. The law does carve out exceptions for homeowners working with licensed real estate brokers or attorneys to protect their best interest and negotiate and go over their options on their behalf. I would advise outsources all advice and options other than making an offer on the home to protect against being in violation of the distressed property law.
I discussed how heal estate investors can work with a distressed property lawyer on 1150am KKNW radio and you can listen to that segment here:
What is a Distressed Property?
Before we delve into how a distressed property attorney can help, let’s define what we mean by “distressed property.” The Washington State Distressed Property Law RCW 61.34.020 defines a distressed property as (a) A dwelling that is in danger of foreclosure or at risk of loss due to nonpayment of taxes; or (b) A dwelling that is in danger of foreclosure or that is in the process of being foreclosed due to a default under the terms of a mortgage. These properties are often sold at a discount given the homeowners situation, but they also come with additional legal and financial risks.
How a Distressed Property Attorney Can Help Real Estate Investors or a Distressed Homeowner
1. Legal Advice: A distressed property attorney can provide legal advice on the various aspects of the real estate investment, such as the purchase agreement, title search, zoning regulations, and other potential legal issues that can arise. They can also review the terms of the agreement to ensure that the investor’s interests are protected and help the investor navigate any legal disputes that may arise during the transaction.
2. Due Diligence: A distressed property attorney can conduct due diligence on the property to ensure that the investor is aware of any potential legal issues or liabilities. They can also review a title report to verify ownership, identify any liens or encumbrances, and ensure that the property can be transferred without any legal hurdles.
3. Negotiation: A distressed property attorney can represent the investor or distressed property owner in negotiating the terms of the transaction, such as purchase price, closing date, and other contingencies. They can also negotiate with another attorney to ensure that all interests are protected and that any necessary repairs or other contingencies are included in the purchase agreement.
4. Foreclosure Defense: If the property is in foreclosure, a distressed property attorney can provide foreclosure defense services to a homeowner to help the investor and homeowner from losing the property. They can represent the distressed homeowner in court, file legal motions, and negotiate with the lender to try to find a resolution that is in the investor and homeowners’ best interests. Often times the best solution is to file a chapter 13 bankruptcy in order to stop a foreclosure sale which can by two weeks or longer to work out a deal. Other options are Washington State foreclosure fairness mediation to stop a foreclosure or negotiating a debt settlement with a creditor with a creditor to be able to close on a deal.
5. Probate Services: A distressed property attorney can also provide Probate services in Washington state to the family who may own a distressed property. Often times the family will not be able to sell a distressed property unless somebody from the family is appointed as the personal representative who has authority to sell the property. Anybody who had at least $100,000 of assets when they passed away may have to go through the probate process in Washington State.
6. Short Sale Negotiations, Creative Financing or MLS listing: If the homeowner owes their mortgage company more on the property than the property is worth, you could try to get a short sale approved by their lender. Typically, this would require the homeowner to list on the MLS to solicit the best offers. A distressed property attorney may also be able to assist with creative financing such as seller financing.
7: Surplus Funds Recovery from Foreclosure Sale: If all else has failed and the distressed homeowner has not sold their property before a foreclosure sale, then it’s possible that homeowner may have surplus funds waiting for them in the superior court where their home was sold if somebody purchased the home at auction for more than the house was worth. A distressed property attorney can assist the former homeowner in claiming the surplus funds the court.
Working with a distressed property lawyer can be invaluable for real estate investors who are looking to purchase distressed properties in Washington State and who are looking to actually help distressed homeowners with options and a way forward. Having a trusted attorney who understands the goals of the real estate investor and distressed property owner can give you the leverage a real investor needs to win the deal. The attorney can provide legal advice, conduct due diligence, negotiate the terms of the transaction, provide foreclosure defense services, and provide probate services as well as provide referrals to other professionals such as movers or estate liquidators who can help facilitate the moveout by a homeowner. By working with an experienced attorney, investors can avoid legal pitfalls, protect their interests, and maximize their investment returns.
If you are a real estate investor or distressed property owner and need assistance throughout Washington State or have questions, give Symmes Law Group a call at 206-682-7975 or contact us to get the counsel you need.