What you should know about title before bidding at a trustee sale in Washington

Prices at trustee auctions are discounted because the sales are cash-only, there is no legal opportunity to inspect the property prior to auction, and the sales are “as is”.  In other words, the trustee gives the buyer no representations or warranties as to the condition of title being conveyed.

A title report can be helpful in assessing the condition of title that was originally encumbered.  A title report may reveal the deed of trust encumbers clear title on an otherwise over-leveraged property.  But that is only step one.  It is the responsibility of the foreclosing trustee to give notice to all junior interests.  If the trustee fails to give notice to a junior interest, the interest is not affected by the foreclosure; it remains on title. RCW 61.24.040(11). 

The trustee’s noticing records are not public record. The records are the private records of the trustee.  The records need to be requested from the trustee to be inspected, and the trustee is not legally required to exchange them (although they might voluntarily do so).  Without confirming with the trustee that all junior interests were giving proper notice of the sale, a prospective purchaser cannot be 100% sure of the condition of title being conveyed at auction.  

Of course, title insurance may be available to a prospective purchaser, but that will be the subject of a different blog entry.