Monday, June 16, 2008

Buyer Beware: Washington State's New Distressed Property Law

Buyers and their buyer agents need to be aware of a new controversial law that took effect on June 12th called the Distressed Property Law HB2791. In a nutshell, if an agent, broker, or buyer says or implies certain things to a distressed homeowner or systematically searches for distressed residential properties (1 - 4 units), then under the new law that agent, broker, or buyer would then become "distressed home consultants" and they would suddenly owe fiduciary duties to the distressed homeowner under the new law, which falls under the category of consumer protection laws. That a buyer could even fall prey to this new law is truly unbelievable.

According to legal sources, the Washington Association of Realtors is working with the WA State Attorney Generals Office to correct the language of the new law which was passed at the last minute without any public comment. However, in the meantime, we all have to be careful (including buyers) until these legislative revisions have taken place. This law only pertains to residential properties of 1 -4 units. Properties of 5+ units are exempt from this controversial new law. The association explains how this law came to be:

How was this law passed without the Washington REALTORS® intervention?

The Washington REALTORS® closely monitored the legislation as it was proposed by the Attorney General as the legislation progressed through the House and the Senate. Both the Washington REALTORS® and the AG were satisfied that the Bill, as proposed and intended by the AG, did not include the adverse language now causing the problems. However, after the Bill was passed in one form by the House and in a slightly different form by the Senate, it moved into a process that occurs outside the arena where public comment or influence are allowed. It was at that stage that the adverse language was added and the Bill was immediately voted out of the Legislature without any opportunity for the AG or the Washington REALTORS® to testify about the problem.

Source link: "What You Need to Know About Washington State's New Distressed Property Law HB2791"

No comments: