Washington Real Estate Law Blog : Washington Real Estate Lawyer & Attorney : Dickson Steinacker Law Firm : WA HOA, Building & Zoning Updates

This article outlines an interesting requirement that the Tacoma city council passed that will take place in October of this year.  In short, before any home can be sold or undergo significant remodeling, their must be an inspection of the sewer lines. 

The reason is outlined in this article from last week, and basically states that older private sewer systems are allowing rainwater to get into their lines (probably due to degradation).  As a result, the public sewer treatment systems get overloaded and can cause raw or almost-raw sewage to seep into the streets and sometimes directly into commencement bay. 

The natural consequence of this requirement is that that home sales will suffer.  Obviously, this is because in the current market buyers have most of the leverage.  If a seller finds there is a problem in the sewer line, he may have to repair it (likely a very costly endeavor), or may have to reduce the price on the home significantly.  Worst of all, the seller may simply lose the sale altogether. 

The real question is why now?  Does the City of data that shows this is an urgent need?  While we are all sensitive to environmental concerns, I would hope that the government is trying to also be sensitive to their constituency.  Given the current housing climate, significant requirements placed on home sales ought to be reserved until more robust times. 

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http://blog.seattlepi.com/seattlewaterfronthomes/archives/212793.asp?from=blog_last3

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One of the most depressing things to experience as a property owner, is the realization that your rights to property are junior to a third party's. 

In a few recent cases involving condominium parking, parties were locked into a dispute regarding who had rights to particular parking spaces.  To a casual observer, this may not see like a big deal, but to a condo-owner, parking spaces are vital to any future rental opportunities.  (Who wants to live in an apartment where you have no parking space?)

When developers complete condo construction projects, they usually draft and record covenants, conditions and restrictions (CC&Rs) that govern the units overall.  Contained within these document are usually tables that outline specific parking assignments.  However, often times the developers also reserve the right to change those parking assignments to meet the specific needs or wants of prospective property owners.  This allows for not only a degree of flexibility in establishing the parking, but it offers a way for the developer to sweeten the sale of a particular condo by offering specific (usually more convenient) parking spaces.  Once those units are sold, however, and a valid statutory warranty deed is transferred to the buyer of the property, those parking spaces become part of the ownership of that particular condo.  Therefore, any subsequent purchasers of the property cannot claim rights to those parking spaces, regardless of what is contained in the CC&Rs. 

In general, the way that you determine whether your title has superiority to another is twofold.  First, if your title was recorded before the other title was recorded, then you have priority.  Second, the transfer of the property MUST be valid!  In other words, even if you record your deed to the property, the property you receive must have been transferred to you from someone who has the actual ownership rights to do so. 

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Public and private construction projects are different in many respects, however chief among those differences is the party that owns the property subject to the contract.  In other words, when contractors enter into a contractor with a municipality (County, City, State, agency, etc.) any subcontractors, material suppliers, laborers, or mechanics to that project are at a disadvantage.  Why, you ask?  Because unlike private property, the law prohibits subcontractors, material suppliers, laborers, and mechanics from recording liens on public property.

This is important because these second-tier contract participants are therefore unable to protect themselves should the general contractor refuse to pay them for their services.  Unfortunetly, this puts them in an impossible position, as they cannot gain payment through a lien on public property, but there is often little to no amount left in the general contractor's construction bond that would satisfy what these subcontractors are owed. 

In response to this issue, Washington State enacted RCW 39.08, a statute which extends certain protections to subcontractors, laborers, material suppliers, and mechanics who do work for a general contractor on a public project.  Here is what it does:

RCW 39.08.10 -- Municipalities must require that general contractors to public projects have a "good and sufficient bond."  This bond is to be filed with the clerk or comptroller and is intended to stand as a surety in case the general neglects payment to all "laborers, mechanics, and subcontractors and material suppliers..."

RCW 39.08.15 -- If the bond is not present, or is insufficient, then the municipality becomes "liable to the [laborers, mechanics, and subcontractors and material suppliers] to the full extent and for the full amount of all such debts so contracted by such contractor."

The case law supports these protections --

Puget Sound Elec. Workers Health and Welfare Trust Fund v. Merit, 123 Wash. 2d 565, 870 P.2d 960 (1994) states that public works lien statutes require general contractors on public projects execute and deliver a bond to the public agency in order to protect all laborers, mechanics, subcontractors, and material suppliers performing the contract work.

National Sur. Co. v. Bratnober Lumber Co., 67 Wash. 601, 122 P. 337 (1912) states that statutory requirements for contractors on municipal improvements give bonds for payment of laborers and materialmen in order to secure claims not protected by lien laws.

Smith v. Town of Tukwila, 118 Wash. 266, 203 P. 369 (1922) also states that if the bond does not meet the statutory requirements, then it is insufficient and not a statutory bond (which by implication would satisfy the requirements outlined in RCW 39.08).

In short, if you are a subcontractor, laborer, material supplier, or mechanic doing work on a public job, and the general contractor refuses to pay your invoices, look to the contractor's bond.  If it is insufficient, then you may have a claim against the city/county/state is paying for the project. 

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In a recent case, I encountered an interesting issue regarding deposits held by landlords.  Specifically, what happens to a tenant's deposit once the landlord/tenant relationship has ended (either the tenant has moved out or abandoned the property, or, the landlord has removed him or her)?  In the Landlord-Tenant Act, RCW 59.18.280 outlines what needs to happen --

"Within fourteen days after the termination of the rental agreement and vacation of the premises or, if the tenant abandons the premises as defined in RCW 59.18.310, within fourteen days after the landlord learns of the abandonment, the landlord shall give a full and specific statement of the basis for retaining any of the deposit together with the payment of any refund due the tenant under the terms and conditions of the rental agreement. No portion of any deposit shall be withheld on account of wear resulting from ordinary use of the premises. The landlord complies with this section if the required statement or payment, or both, are deposited in the United States mail properly addressed with first-class postage prepaid within the fourteen days.

     The notice shall be delivered to the tenant personally or by mail to his last known address. If the landlord fails to give such statement together with any refund due the tenant within the time limits specified above he shall be liable to the tenant for the full amount of the deposit. The landlord is also barred in any action brought by the tenant to recover the deposit from asserting any claim or raising any defense for retaining any of the deposit unless the landlord shows that circumstances beyond the landlord's control prevented the landlord from providing the statement within the fourteen days or that the tenant abandoned the premises as defined in RCW 59.18.310. The court may in its discretion award up to two times the amount of the deposit for the intentional refusal of the landlord to give the statement or refund due. In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney's fee.

     Nothing in this chapter shall preclude the landlord from proceeding against, and the landlord shall have the right to proceed against a tenant to recover sums exceeding the amount of the tenant's damage or security deposit for damage to the property for which the tenant is responsible together with reasonable attorney's fees."

The important thing to remember is that the landlord has a mere 14 days to provide either an explanation of why the deposit has not been tendered (or to ask for more time).  After that 14-day window, the landlord is functionally barred from making any defenses to keeping the money and may actually have to pay more.  So, to all those landlords out there: be sure to take care of the deposit issue within that 14-day deadline.

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             For people experiencing severe financial difficulties and who are overwhelmed with debt, bankruptcy may be an important option. Whether difficult times are brought on by job loss, medical problems, family breakups, or even financial irresponsibility, bankruptcy can grant you much desired relief. Understanding some basic principles of consumer bankruptcy, however, is imperative in knowing which form of bankruptcy is appropriate.

Within bankruptcy law, there are several different “chapters.” Each “chapter” is specifically designed to help either individuals or businesses in eliminating, resolving, and/or repaying their debts. Selecting which bankruptcy chapter to proceed under, depends on the individual’s or business’s specific circumstances. For individuals (“consumers”) who are seeking relief through the bankruptcy process, two chapters are available: Chapter 7 and Chapter 13. These two bankruptcy chapters differ significantly and offer different results.

Chapter 7 Bankruptcy

             Chapter 7 is commonly referred to as “liquidation bankruptcy.” When an individual proceeds under Chapter 7, a trustee is appointed by the bankruptcy court. The trustee then gathers all of the individual’s property (except any property that is exempt), sells (“liquidates”) it, and distributes the proceeds of the sale to the individual’s creditors. At the end of this process, any outstanding debts are discharged (eliminated). The creditors then chalk-up their losses and move on, while the individual must start anew with very little assets leftover. The Chapter 7 process generally takes about four to six months.

             Not everyone is allowed to proceed under Chapter 7, however. To be eligible under Chapter 7, an individual must pass the “means test” (a mechanical formula that is used to determine who can and cannot repay some debt.) If it is determined by the court that the individual’s “current monthly income” is above a certain amount and the individual has the ability to repay some debt, the individual may be denied Chapter 7 relief and may be forced to proceed under Chapter 13. Most people who meet the eligibility requirements proceed under Chapter 7 because, unlike Chapter 13, Chapter 7 takes less time to complete and does not require the individual to pay back any portion of his or her debts.

Chapter 13 Bankruptcy

             Chapter 13 differs significantly from Chapter 7’s liquidation method. Commonly referred to as an “Adjustment of Debt” or “Wage Earner’s Plan,” Chapter 13 focuses on using the individual’s future earnings, rather than liquidated property, to pay creditors. When an individual files under Chapter 13, a court-approved plan allows the individual to keep all of his or her property, but the individual must pay a portion of all future income to the creditors. This payout plan lasts for three to five years, depending on the circumstances and the court-approved plan. When the individual has completed the agreed payout plan, any remaining obligations are discharged.

             Naturally, eligibility to proceed under Chapter 13 requires that an individual must prove that he or she is capable of paying a portion of his or her future monthly income to creditors for a period of three to five years. If the individual’s income is not regular or is too low, Chapter 13 may be denied. Likewise, if the individual’s total amount of debt is too high, the court may deny Chapter 13. Unlike Chapter 7, Chapter 13 takes much more time to complete. However, the major benefit of Chapter 13 is that the individual is allowed to keep his or her property.

             Understanding the main differences between Chapter 7 and Chapter 13 can assist you in knowing which form of bankruptcy will most likely work best for you. Keep in mind, however, that because the bankruptcy process is complex and oftentimes requires professional knowledge to be successful, seeking professional help is your best bet.

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The statute of limitations is the time within which you may bring a claim in court. In Washington, many of the statutes of limitations can be found in Chapter 4.16 RCW. For example, an action upon a written contract must be brought within six years; an action for trespass upon real property must be brought within three years; and a civil action for slander must be brought within two years. 

The statute of limitations for some claims can be found buried in the statute that creates the claim. For example, an action to foreclose on a materialmen’s lien must be commenced within eight months of recording of the lien. RCW 60.04.141.

Not all limitations periods begin to run upon the happening of some event. For example, the time within which to bring certain personal injury claims begins to run when the harm is “discovered” as opposed to when the harm actually occurred.

In order to preserve your right to bring a claim, consult with an attorney who can advise you of any statute of limitations, otherwise, the opportunity to bring your claim may pass you by.

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This past weekend my friends and I went river rafting at Flaming Geyser State Park. When we arrived the park was full so we parked a couple of blocks down the road. As we walked to the park we came upon a 2’ x 2’ hole in the ground approximately 3’ feet deep. One of my friends gleefully turned to me and asked, “could I sue and wins lots of money if I had fallen in?” My friends all looked to me waiting to hear a resounding “yes!” but instead they received a lawerly “it depends.” As dissatisfying as that answer was, it is true. Unfortunately, the law is not black and white. Rather, it is the many shades of gray in between.

My friends mistakenly believe that all legal questions can be looked up in some giant book of laws and the answers recited with definitiveness. Of course, if this were true then there would be no practicing of law, but merely the looking up of laws.  I began to explain to them that a proper analysis involves thorough fact finding: is this private or public property, are we invitees or trespassers, was the hole purposely or naturally created, does the owner know about the hole…..the list went on. It was at that point that my friends’ eyes glossed over and their interest faded away. 

I think their disappointment in my answer stems from our basic need for structure and consistency in the world in which we live our lives. The law made not be as certain as black and white, but utilizing past experience (cases) as our guide, and the similarities and differences between those experiences, outcomes can be predicted within a certain degree of probability. However, before this provides you any comfort, it is important to note that even with the best analysis, judges and juries are the one variable, the proverbial wrench, that are inevitably unpredictable. 

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One of my favorite websites I visit to keep a pulse on the Puget Sound residential real estate market is the Seattlebubbleblog. Its founder and editor is Seattle resident named Timothy Ellis who goes by the blog name “The Tim.” http://seattlebubble.com/blog/ 

The blog has daily posts which include some great graphs, charts and analysis of the Puget Sound real estate market.  What makes the posters on the Seattle Bubble Blog unique is their credibility.  They were one of a few vocal media sources in Washington State that consistently and loudly predicted the current real estate crash before it happened.  In addition to good posts and analysis by “The Tim,” the comment section provides a lively discussion about Puget Sound real estate issues.  *Be aware homeowner: many of the comments made are from bloggers who predict continued steep declines in the Puget Sound real estate - so the blog isn’t for the faint of heart. 

The effect of local and federal laws as they relate to the residential real estate market in the Puget Sound area are also frequently discussed by the blog posters and authors with links to news articles and additional resources.

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In Washington State, the attorney-client privilege is defined by RCW 5.60.060(2), which provides as follows: An attorney or counselor shall not, without the consent of his or her client, be examined as to any communication made by the client to him or her, or his or her advice given thereon in the course of professional employment. 

The purpose of the privilege is to encourage full and uninhibited communications between attorney and client. Thus, although the statute speaks only to whether the attorney may be questioned about communications with a client, the statute has been interpreted to restrict questioning of the client as well.  In a nutshell, the privilege bars evidence of communications between attorney and client only when the communications were intended as confidential. 

The client is the holder of the attorney-client privilege. That is to say that only the client may give consent for the attorney to divulge confidential communications. However, the client may waive the privilege in situations where they bring a third party into closed door conferences with the attorney, share the privileged communications with a third party, or confer with the attorney where the conversation may be heard in the open by the public. Other situations of waiver include the client commencing an action against the attorney, and in a criminal case, a plea of insanity or diminished capacity waives the attorney-client privilege.

A corollary to the attorney-client privilege is the ethical rule governing the confidential nature of the attorney-client relationship. The Rules of Professional Conduct (RPC) govern the attorney-client relationship. Once such a relationship has been formed, a lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is reasonably necessary to prevent reasonably certain death or substantial bodily harm, to prevent the client from committing a crime, to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud in furtherance of which the client has used the lawyer’s services, to secure legal advice regarding compliance with the rules, to establish a claim or defense on behalf of the lawyer in a controversy between the client and attorney, to comply with a court order, or to inform a tribunal about any client’s breach of fiduciary responsibility when the client is serving as a court-appointed fiduciary. RPC 1.16. 

Even where an attorney-client relationship has not yet been formed, but the prospective client discusses with a lawyer the possibility of forming such a relationship, a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation, with limited exceptions found in RPC 1.9. RPC 1.18.

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