Proceed With Caution When Foreclosing In Washington State: Split Decisions Regarding Deficiency Claims

Last week, the Washington Court of Appeals, Division One, ruled that, notwithstanding the anti-deficiency provision in the state's Deeds of Trust Act, a lender can pursue a deficiency judgment against a guarantor following a non-judicial foreclosure of the property securing the underlying borrower's obligation. The decision, Washington Federal v. Gentry, Case No. 70004-9-I, 2014 Wash. App. LEXIS 379 (Wash. Ct. App. Feb. 18, 2014), comes in the wake of a contrary decision by the Washington Court of Appeals, Division Two, less than three months ago. This Division One decision appears to be a triumph for lenders and creates a split among the divisions of the Washington Court of Appeals that may warrant consideration of the issue by the Washington Supreme Court.