Washington States "Distressed Property Law". Have No Fear. Go about your business...

I wanted to write this post in response to some of the comments in Lenns blog about the danger of certain real estate related activity. Specifically in the State of Washington since one comment mentioned how silly our new law is...

Without going into the details of the law and all the chaos it created, here's the skinny in a nut shell.

Washington State's "Distressed Property Law" RCW 61.34 was enacted to grant the State enforcement powers to stop "Equity Skimming" scams during the legislative session of 2008. It was signed into law on March 30th and took affect on June 12, 2008.

After it's enactment many brokerage's stopped listing properties that fell into the laws definition of a "Distressed Home" for fear of agents becoming "Distressed Home Consultants" which by the language of the new law created a completely new set of "Fiduciary" duties that did not exist under our current "Agency Law". In Washington State we owe NO "Fiduciary" duties. That level of duty is strictly for Attorneys. Our duties as licensees fall under Washington States "Agency Law". The State legislature in all it's glory failed to recognize the contradictory language that created ambiguity between the old and new laws. It also created a situation where a buyer became a "Distressed Home Consultant" if they purchased a distressed home within 20 days of a scheduled foreclosure sale.

The Northwest Multiple Listing Service changed all our listing forms, many purchase and sale documents and the sellers disclosure statement to accommodate the new 2008 law. They hired translators and printed all new listing forms in every possible language because the 2008 law required that contracts be in the homeowners "first Language" and in the absence of clear communication the brokerage/agent had to hire a translator to assure the sellers understood the implications of the new law. It created chaos.

In March of 2009 the Washington State legislature amended the Distressed Property law to exempt Real Estate Agents. Currently, only under a very narrow set of circumstances could a licensee be considered a "Distressed Home Consultant". One of which is providing services during or participating in a "Distressed Home Conveyance". A sale that allows the seller to rent or leases back a home after the sale of a "Distressed Home" for the purposes of skimming equity.

After the 2009 amendment to the "Distressed Property Law" all the forms were again changed, old ones replaced with new ones and sanity was once again restored to the real estate world.

Gene