What are some ABSOLUTE "don'ts" in Washington??

18 Replies

Hello.

I've been searching around to learn more about Washington State-specific laws in relation to investing. I'm mostly focusing on wholesaling right now but these laws would most likely apply to any investor looking for a deal in this state I would imagine.

What I've found so far is to absolutely stay away from pre-foreclosures and foreclosures due to "equity skimming" laws (RCW 61.34).  Link: https://app.leg.wa.gov/rcw/default.aspx?cite=61.34

The second thing I've found is pertaining mostly to wholesalers in that an assignment is a much better way to close that a double-closing.

One question I have is regarding code violations or non-foreclosure evictions. Are there any RCW's related to investors approaching property owners in these situations? 

Would a property owner with pending code violations or back-taxes also fall under RCW 61.34 or their definition of a "distressed owner"?

Are there any other Washington-specific issues to know before proceeding to find and close deals in this state?

Thank you in advance!

Keywords: wholesaling Washington state legal laws RCW distressed lawyer attorney

Edit: specified non-forclosure evictions

Originally posted by @Brock Lile :

Hello.

I've been searching around to learn more about Washington State-specific laws in relation to investing. I'm mostly focusing on wholesaling right now but these laws would most likely apply to any investor looking for a deal in this state I would imagine.

What I've found so far is to absolutely stay away from pre-foreclosures and foreclosures due to "equity skimming" laws (RCW 61.34).  Link: https://app.leg.wa.gov/rcw/default.aspx?cite=61.34

The second thing I've found is pertaining mostly to wholesalers in that an assignment is a much better way to close that a double-closing.

One question I have is regarding code violations or evictions. Are there any RCW's related to investors approaching property owners in these situations? Would a property owner with pending code violations or back-taxes also fall under RCW 61.34 or their definition of a distressed owner?

Are there any other Washington-specific issues to know before proceeding to find and close deals in this state?

Thank you in advance!

Keywords: wholesaling Washington state legal laws RCW distressed lawyer attorney

 You are correct. Stay away from pre-foreclosures for the reason you state. Code violations are okay as long as they aren't also in pre-foreclosure. The law is interpreted as "anyone who THINKS he may go into foreclosure". How do you know if someone thinks that? It is very poorly written. 

There is a transfer tax of almost 2% of the sales amount every time a property is sold. This makes it even more difficult to flip or wholesale and that is why assigning makes sense.

Make sure you know what you are doing if you start wholesaling. Have the "intent and ability" to buy the property, be honest with the seller, document everything, use escrow to close. It would be a very good idea to have a lender set up before hand who will lend you money to buy a property if it's a great deal or if you need to. The attorney general will want to see you have the "ability to buy".

If you stay between Grand Mound and Longview you should be okay. If you get into Olympia, Tacoma or Vancouver the rules change. The laws are the same but enforcement gets nutty.

If you are going to wholesale why not just get your real estate license and find a broker that is okay with the practice and substantially reduce your risk?

@Mike M.   Mike just curious what you mean about the rules change and enforcement gets nutty ? 

in the for whatever its worth file.. I cant think of anything harder to do than try to start from scratch as a wholesaler unless you have a ton of dough..  Guys/gals that i know will spend 20 to 30k a month in marketing. and as you mention they have the ability to close.

I’m flipping in Centralia. Haven’t ran into anything weird.  If I do any marketing, it’s strictly targeted on a “driving for dollars” basis where I take a picture of some ones house, print that picture and ask if they are would consider selling.  It is pretty cheap and good response rate. Especially with a recent photo To personalize it.

Originally posted by @Jay Hinrichs :

@Mike M.  Mike just curious what you mean about the rules change and enforcement gets nutty ? 

in the for whatever its worth file.. I cant think of anything harder to do than try to start from scratch as a wholesaler unless you have a ton of dough..  Guys/gals that i know will spend 20 to 30k a month in marketing. and as you mention they have the ability to close.

Your Question: "just curious what you mean about the rules change and enforcement gets nutty ? In King Co.

 Most of my flips were in King Co. The "social justice" emphasis there plays a major role in how the attorneys and courts view a dispute. Lawsuits are filed in county court, so each county handles their own disputes. There are "social justice" pro bono groups in Seattle (King Co.) that love to take cases regarding real estate with no fee to the seller, because real estate investors are "wealthy" and they are scum and they *always* take advantage of minorities. The "pro bono" attorneys collect from the "wealthy" when the "wealthy" investor settles. If you take it to trial you face the possibility of treble damages from the Consumer Protection Act. You have to prove you are Innocent. It gets tedious, expensive and takes a lot of time. 

If they lose on the issue, they bring up some other obscure item and if they lose on that they try another. It's a tactic used to wear you down so that you will settle. I had one guy say he "never signed the deed". His attorney, pro bono of course, had no concern that the notary proved he did sign. They let the case continue, ignoring the obvious. It should have been dismissed. The case got transferred to another judge. The seller lied in his deposition that he had never filed bankruptcy. Where in fact he had filed 3 times. You can't hide something like that. The judge let the case continue. It should have been dismissed. The seller is a known liar and untrustworthy. The fact this guy was a known liar made no difference. I just think it is a system out of control. This would never happen in Cowlitz or Thuston. There are no "social justice" groups that would take the case pro bono.

If you review the decisions made by the judges and the complaints in the cases in King Co., it is very different than in Thurston or Cowlitz counties for the same activities. I've had transactions from Bellingham to Vancouver and from Yakima to Spokane Valley and also in the Tri-Cities. When I would get a call in Cowlitz Co. or Thuston Co. I would respond, answer their questions, fill out a form, (since I follow the law it was never a problem for me) and carry on doing business as usual. 

When I'd get a call in King Co., proof didn't matter. it was followed up by a complaint (law suit) signed by one of the pro bono groups, and the seller never had to put a penny in. He had nothing to lose and promises of a rich return, 2/3 rds of whatever they collected. This particular case was for $2,000,000 It's very scammy. I took it to trial of course and won. There were a total of 12 attorneys that worked on his side of the case over the course of the law suit. 

Many of the judges went to the same law schools in the area and know each other and support "social justice. It tends to be incestuous. You need only to look at who is on the Seattle City Council to get an idea. King County Council is the same. Birds of a feather, which is fine if you are not an investor.

Three attorneys I used at different times moved out of state because in their words "it isn't a question about rule of law in Seattle". It's something totally different.

I lived in an exclusive neighborhood in Seattle for 25 years and most of the people were attorneys and doctors. At Christmas parties, BBQs, other events there was a lot of conversation about law and politics, so you learn a lot about law and where people are coming from pretty quickly. 

@Mike M.   thanks for the detailed response..  I have done a lot of business in Clark some in Cowlitz and Wahkiakum.

Only did first position loans in Thurston..  

were these cases the results of the sellers claiming you induced them into selling and or unconscionable profit type situations. ??  I think a lot of the beginners on BP don't really understand that you don't need to have a RE license and as a so called Wholesaler you can be sued just as easy as an agent if a seller gets a burr and thinks you took to much of their equity.. or claimed you were a buyer when you really are not etc.  

I think this is a good discussion there probably are very few on this site that have the body of work in the distressed asset space and you and I.. I mean my dad took me to my first foreclosure in 1975 after that I bid on my own. 

I did well don't know how many but certainly over 100 foreclosure rescue sub too's in WA and OR  probably closer to 200 .and if I could not get them there we bought another 50 to 70 a year at courthouse steps.. So like you we had a pretty big target on our back so when that new equity skimming law was enacted in OR and WA we exited pre foreclosure work simply not worth the risk.. 

I did get turned into the WA AG onetime.. that was not fun.. Just photo copying all my WA transactions probably cost me a few thousand in copy fees  then ship it all up to them.. and they never responded.. My attorney says they will only respond if they are going to do something Nasty they wont send a letter and say hey we looked at it your fine.. so that's stressful.

Oregon is big time on to the unlicensed wholesalers assigning and advertising properties they don't own.. you get turned in your going to get a nice fine and a cease and desist..  Of course the how to wholesale guys never discuss those issues.

But I am sure your familiar with Joe Kaiser and you know what the state of WA will do if they get you in their sights. 

how are the micro greens going ?

Originally posted by @Jay Hinrichs :

@Mike M.  thanks for the detailed response..  I have done a lot of business in Clark some in Cowlitz and Wahkiakum.

Only did first position loans in Thurston..  

were these cases the results of the sellers claiming you induced them into selling and or unconscionable profit type situations. ??  I think a lot of the beginners on BP don't really understand that you don't need to have a RE license and as a so called Wholesaler you can be sued just as easy as an agent if a seller gets a burr and thinks you took to much of their equity.. or claimed you were a buyer when you really are not etc.  

I think this is a good discussion there probably are very few on this site that have the body of work in the distressed asset space and you and I.. I mean my dad took me to my first foreclosure in 1975 after that I bid on my own. 

I did well don't know how many but certainly over 100 foreclosure rescue sub too's in WA and OR  probably closer to 200 .and if I could not get them there we bought another 50 to 70 a year at courthouse steps.. So like you we had a pretty big target on our back so when that new equity skimming law was enacted in OR and WA we exited pre foreclosure work simply not worth the risk.. 

I did get turned into the WA AG onetime.. that was not fun.. Just photo copying all my WA transactions probably cost me a few thousand in copy fees  then ship it all up to them.. and they never responded.. My attorney says they will only respond if they are going to do something Nasty they wont send a letter and say hey we looked at it your fine.. so that's stressful.

Oregon is big time on to the unlicensed wholesalers assigning and advertising properties they don't own.. you get turned in your going to get a nice fine and a cease and desist..  Of course the how to wholesale guys never discuss those issues.

But I am sure your familiar with Joe Kaiser and you know what the state of WA will do if they get you in their sights. 

how are the micro greens going ?

 Your comment: "how are the micro greens going ?" Lol Spent some time with them today. Very serene. Low 80's kind of day.

I never wholesaled. I always kept them in personal inventory or fix & flipped. 

The issue was that the house had gone up significantly in value since I began rehabbing it and the market growth in general. He wanted that equity because "it was his", so he said.

I bought the house in August 2001. He filed his claim in Jan 2007. There is a 3 year statute of limitations for real estate contracts in Washington. He filed 5 1/2 years later or 2 1/2 years after the SOL ran. The judge allowed the case to continue. Say, WHAT?? I said. Yep it went forward. Terribly unfair.

During a court hearing one of the judges asked who had been making the mortgage payment all these years. He said he didn't know. The judge asked him if he thought it strange that he would have a claim against a property he wasn't making payments on? This judge finally dismissed the suit.

We went from King Co. court to Federal Court on appeal when I won at the state level. (The seller's pro bono attorneys filed the appeal obviously, not me.)

In the complaint in 2007 (lawsuit) he said he never signed the deed. In 2011 (yep, after 4 years of litigation and 10 years after I bought the property) in a filing to the federal judge on appeal he reversed himself and said he did indeed sign the deed. That was necessary because the pro bono attorneys had tried using a separate and distinctly different law. 

This obviously was perjury. You can't both have signed the deed and not have signed the deed. Nothing happened to him. The case dragged on. This is in Seattle remember. Turns out you can lie to federal judges in Seattle and nothing happens. 

In another instance we were at trial in front of a 2nd federal judge and my attorney asked the seller if he had ever filed bankruptcy. He said "no" he had never filed bankruptcy. The court clerk let out a "gasp" because the judge had pulled the cases where the seller had filed bankruptcy 3 times. A direct lie to a federal judge. Nothing happened to him. Turns out you can lie to federal judges in Seattle and nothing happens. 

That was enough. We moved to Arizona to get away from capricious law, to where the weather is better, the courts favor landlords and I can grow micro greens.

@Mike M. thanks for all the info. It sounds like you've been through the ringer in Washington State and I appreciate your information.

I plan on wholesaling the first couple deals and as I gain some confidence taking on my first flip I would love to do that.

I just got done talking to an attorney discussing with him all the things you stated. I guess I could have given you the $500 fee instead for your information. Haha.

@Spenser Harding have you tried the DealMachine app? I use it pretty often and it does what you describe. The postcards they use leave a lot to be desired, though.

@Brock Lile No.  I use an app called Home Snap. It is a GPS app so I get the address of the house just by taking a picture of it.  The direction of my phone indicates the house number. All those are saved so I can remember which ones were the best to target.  From that app I can also pull Zillow comp sales and if I remember the county info. I’m fairly small scale but when I drive for an hour or 2, I just  up and take a quick picture and all the info is saved. I had a police officer pull up next to me in a neighbor in Tacoma and ask why I was taking pictures.  I told him I am looking to rehab homes in the area.  He was impressed and drove me to an area that he thought would be good for business that I didn’t even plan on going too!

Originally posted by @Spenser Harding :

@Brock Lile No.  I use an app called Home Snap. It is a GPS app so I get the address of the house just by taking a picture of it.  The direction of my phone indicates the house number. All those are saved so I can remember which ones were the best to target.  From that app I can also pull Zillow comp sales and if I remember the county info. I’m fairly small scale but when I drive for an hour or 2, I just  up and take a quick picture and all the info is saved. I had a police officer pull up next to me in a neighbor in Tacoma and ask why I was taking pictures.  I told him I am looking to rehab homes in the area.  He was impressed and drove me to an area that he thought would be good for business that I didn’t even plan on going too!

have you guys tried Property radar its what we use.

Originally posted by @Spenser Harding :

@Jay Hinrichs is that an app?

I don't know an app from my rear end.. but I know my office uses it on their office computer and you can use it on your phone. so if that is an app yes. 

@Sean OToole   hey Sean some of the WA guys are looking for help.. I was trying to explain Property Radar but unclear if its an app.. or you use it on the computer which is how we use it.. but I think you can use it on the phone which then by default makes it an app right.  I mean I personally don't use the phone or apps.. so  not much help,  maybe you can explain your product.

@Spenser Harding   Sean who I tagged owns property radar lets let him explain it.. I will just butcher it.. but I can tell you it led me to one deal last year that no one was tracking and we will make well over 200k on that one deal.. so worth the few bucks a month in my mind.. its way more than just address's

Ps  OP  we have family in Castle rock  my wife sold real estate there and longview for years and was raised in cathlamet. :)

Hi @Jay Hinrichs , yes we call it an app. Actually 3 apps - web/desktop, Apple iOS, and Android. Pretty much the same features across all three, but the phone versions are great for driving for dollars, or pulling owner info on the spot. The desktop version is better for research, marketing campaigns etc. Thanks for the mention and for being a customer. :-)

Originally posted by @Sean OToole :

Hi @Jay Hinrichs, yes we call it an app. Actually 3 apps - web/desktop, Apple iOS, and Android. Pretty much the same features across all three, but the phone versions are great for driving for dollars, or pulling owner info on the spot. The desktop version is better for research, marketing campaigns etc. Thanks for the mention and for being a customer. :-)

I am a map guy as in the MFD is my friend I love situational awareness. so when you can implement google earth into your app and then all the plat maps overlaid its just awesome. but that's me I am a map guy..  next thing is you need the USGS maps for us country folks 

@Jay Hinrichs we've mostly got you covered on that front aerial, street, birds eye, street side, and overlaid parcel maps, that you can just tap to get all the details. Which USGS did you want? The topographical? Don't have that one yet, but I've been thinking about it.

Originally posted by @Sean OToole :

@Jay Hinrichs we've mostly got you covered on that front aerial, street, birds eye, street side, and overlaid parcel maps, that you can just tap to get all the details. Which USGS did you want? The topographical? Don't have that one yet, but I've been thinking about it.

 Not sure if there is a huge need for most of the investors for topos but yes I need those in my rural logging properties I need to know where the drainages are and how steep the property is.. that's one thing google earth no do.. does not give U any clue as to topo.. 

there is a topo app out there .  but it would be way cool for me personally to add that.. however I suspect its not worth it for the global user of PR..  Probably not a lot of loggers use it LOL. 

@Jay Henrichs I actually subscribe to @Sean O'Toole 's Property Radar. It's an amazing software. I like how the lists you create automatically update themselves. The other extremely useful tool is the USPS designated vacant house finder. Amazing. Although I'm just starting out I can definitely see how powerful of a tool it is.

Yes Castle Rock is a nice little town. I was born and raised here. I'm sure I've ran into your relatives at some point.

@Spencer Harding I've never heard of the app you use. What does it cost? Definitely going to check it out.

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