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Washington Court of Appeals Confirms Lenders’ Right to Obtain Deficiency Judgments Against Guarantors Following Nonjudicial Foreclosure of Commonly Used Form of Deed of Trust



by Lane Powell PC - Seattle Office

March 11, 2014

Previously published on February 28, 2014

The Deed of Trust Act generally bars a lender from seeking a deficiency judgment against a borrower following nonjudicial foreclosure of a deed of trust securing the borrower's loan. The Act contains some exceptions in the case of a commercial loan and i t expressly permits a lender to seek a deficiency judgment against a guarantor of a foreclosed loan, subject to the guarantor's right to challenge the fair value paid for the property at the trustee's sale. RCW 61.24.100(3)(c), (5). In Washington Federal v. Gentry, --- P.3d ---, 2014 WL 627817 (Wash. App. Feb. 18, 2014), a case argued by Lane Powell, Division One of the Washing ton State Court of Appeals held that the lender's right to seek a deficiency judgment against a guarantor exists even where the foreclosed deed of trust secures both the borrower's loan and the guarantor's guaranty.


 

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