[Note: This post was drafted by Litigation Partner Jill Bowman]
The DCPA, chapter 61.34 RCW, is a remedial consumer protection statute intended to protect homeowners who, because they are in desperate circumstances, may be vulnerable to predatory schemes designed to deprive them of their equity interests. The statute’s procedural safeguards are afforded to transactions involving “distressed homes” or “distressed homeowners.” Under the statute, “distressed homes” are dwellings that are either (1) “in danger of foreclosure or at risk of loss due to nonpayment of taxes” or (2) “in danger of foreclosure or … in the process of being foreclosed due to a default under the terms of a mortgage.”
In Jametsky v. Olsen, the Washington Supreme Court interpreted the phrase “at risk of loss due to nonpayment of taxes.” Finding it unambiguous, the Court unanimously held that the DCPA does not require issuance of a certificate of delinquency for unpaid property taxes before a property can be considered a “distressed home.” Instead, determining whether a property qualifies as a distressed home because it is “at risk of loss” requires a factual assessment of such factors as (1) the total amount owed to the county, including all fees and other costs, (2) the total number of payments the delinquency represents and when foreclosure could occur, (3) the financial ability of the homeowner to meet or cure the obligation at the time of the challenged transaction, and (4) any discrepancy between the sale price and the fair market value of the property. The Court explained that trial courts should view these questions as a “starting point” for determining whether the protections of the DCPA should apply to the transaction in question.