Performance Construction, App/cross-resp v. David Keene, Resp/cross-app

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
PERFORMANCE CONSTRUCTION, LLC,
No. 73808-9-
Appellant/Cross Respondent,
DIVISION ONE
v.
PUBLISHED OPINION
COLLETTE GLENN; COBALT
MORTGAGE, INC.; and MORTGAGE
ELECTRONIC REGISTRATION SYSTEM,
INC.,
en
Respondents,
23b
DAVID KEENE,
CD
Respondent/Cross Appellant. FILED: August 15, 2616 2C<-
Appelwick, J. — This is an appeal from summary judgment quieting title to
property in Glenn. Keene, on behalf of D & J Shires LLC, purchased foreclosure
property owned by Slighter LLC at a sheriff's sale. He then sought an assignment
of redemption rights from Slighter LLC. The assignment of redemption rights from
Slighter LLC to Keene was not done by deed and was ineffective. Therefore,
Slighter LLC remained a qualified redemptioner and the redemption period was
not extinguished. Because the redemption period had not expired when the
sheriff's deed issued, the trial court properly declared the sheriffs deed void.
Although the sheriff's deed was void, Shires held an inchoate interest in the
property at the time it sold the property to Glenn. No redemption of that interest
was made. Because Slighter LLC was not a person entitled to claim a homestead
in the property, RCW 6.23.120 did not apply to the property and Performance was
not entitled to invoke it to purchase the property from Glenn. Therefore, Glenn is
entitled to a sheriff's deed and to quiet title of the property. We affirm.
No. 73808-9-1/2
BACKGROUND
In Washington, the judgment debtor and certain lien creditors are granted
the statutory right to redeem property sold at a foreclosure sale. Fid. Mut. Sav.
Bank v. Mark, 112 Wash. 2d 47, 51, 767 P.2d 1382 (1989). Redemption is the
process of canceling and annulling a defeasible title, such as is created by a
mortgage, by paying the debt or fulfilling other conditions. kL Chapter 6.23 RCW
governs the statutory redemption of real property sold at a sheriff's sale. P.H.T.S.,
LLC v. Vantage Capital. LLC. 186 Wash. App. 281, 287, 345 P.3d 20 (2015). Real
property sold subject to redemption may be redeemed by the following persons or
their successors in interest:
(a) The judgment debtor, in the whole or any part of the
property separately sold.
(b) A creditor having a lien by judgment, decree, deed of trust,
or mortgage, on any portion of the property, or any portion of any part
thereof, separately sold, subsequent in priority to that on which the
property was sold. The persons mentioned in this subsection are
termed redemptioners.
RCW 6.23.010(1). Unless redemption rights have been precluded because the
mortgagor or his or her successor in interest has abandoned the property, the
judgment debtor or any redemptioner may redeem the property from the purchaser
at any time within one year after the date of the sale.1 RCW 6.23.020(1); RCW
61.12.093. To redeem the property from the purchaser, the judgment debtor must
pay (1) the amount bid at the sheriff's sale with interest, (2) any assessment or
1 Under RCW 6.23.020(1), the redemption period may be eight months if
the property is not used principally for agricultural or farming purposes and the
mortgage so declares, and the judgment creditor expressly waives any right to a
deficiency judgment in the complaint. It is otherwise one year. ]<±
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taxes paid by the purchaser with interest, and (3) any sum paid by the purchaser
on a prior lien or obligation secured by an interest in the property to the extent
payment was necessary to protect the judgment debtor or a redemptioner.2 RCW
6.23.020(2); Vantage, 186 Wash. App. at 287. The statute contemplates that there
may be multiple successive redemptions. See RCW 6.23.040 (stating that if
property is redeemed from the purchaser by a redemptioner, another redemptioner
may, within sixty days after the first redemption, redeem it from the first
redemptioner).
If no redemption is made within the redemption period, the purchaser or the
last redemptioner to redeem is entitled to a sheriff's deed at the end of the
redemption period. RCW 6.23.060. But, of relevance to this case, there is an
exception to this requirement—that entitles a third party to the property—outlined
in RCW 6.23.120:
(1) Except as provided in subsection (4) of this section, during the
period of redemption for any property that a person[3] would be
entitled to claim as a homestead, any licensed real estate broker
within the county in which the property is located may nonexclusively
list the property for sale whether or not there is a listing contract. If
the property is not redeemed by the judgment debtor and a sheriff's
deed is issued under RCW 6.12.120, then the property owner shall
accept the highest current qualifying offer upon tender of full cash
payment within two banking days after notice of the pending
acceptance is received by the offeror. If timely tender is not made,
such offer shall no longer be deemed to be current and the
opportunity shall pass to the next highest current qualifying offer, if
2 A redemptioner who redeems from the purchaser must pay the same
amounts as required of the judgment debtor plus the amount of any lien by
judgment, decree, deed of trust, or mortgage held by the purchaser that is prior in
time to the lien of the redemptioner who seeks to redeem.
3 "Person" is not defined in chapter 6.23 RCW nor in chapter 6.13 RCW,
which discusses homesteads.
No. 73808-9-1/4
any. Notice of pending acceptance shall be given for the first highest
current qualifying offer within five days after delivery of the sheriffs
deed under RCW 6.21.120 and for each subsequent highest current
qualifying offer within five days after the offer becoming the highest
current qualifying offer. An offer is qualifying if the offer is made
during the redemption period through a licensed real estate broker
listing the property and is at least equal to the sum of: (a) One
hundred twenty percent greater than the redemption amount
determined under RCW 6.23.020 and (b) the normal commission of
the real estate broker or agent handling the offer.
(2) The proceeds shall be divided at the time of closing with:
(a) One hundred twenty percent of the redemption amount
determined under RCW 6.23.020 paid to the property owner, (b) the
real estate broker's or agent's normal commission paid, and (c) any
excess paid to the judgment debtor.
(3) Notice, tender, payment, and closing shall be made
through the real estate broker or agent handling the offer.
(4) This section shall not apply to mortgage or deed of trust
foreclosures under chapter 61.12 or 61.24 RCW.
FACTS
On June 12, 2013, the Brookwood Place Condominium Association
(Brookwood) commenced a lien foreclosure action pursuant to chapter 61.12 RCW
and chapter 64.34 RCW against Slighter Property II LLC (Slighter LLC) and
Thomas Slighter and Bonnie Slighter. Brookwood filed the action, seeking to
judicially foreclose on the real property (the Property) owned by Slighter LLC for
failing to pay Brookwood's monthly condominium assessments.4 Greenpoint
4 Although Brookwood initiated the foreclosure action against Slighter LLC
and the Slighters, and although many other documents in the record imply that the
Property was owned by both Slighter LLC and the Slighters individually, the
Property was owned by only Slighter LLC at the time of the foreclosure action. On
June 26, 2007, the Slighters conveyed all right, title, and interest in the Property to
Slighter LLC via statutory warranty deed.
No. 73808-9-1/5
Mortgage Funding Inc. and Nationstar Mortgage LLC were also named as
defendants in the complaint, because they were both lienholders on the Property.
Nationstar and Greenpoint did not answer the complaint, and the trial court
entered a default order against them. Brookwood then moved for summary
judgment as to the Slighters and Slighter LLC. The trial court granted Brookwood's
motion. The trial court entered a personal judgment of $20,772.04 against the
Slighters and Slighter LLC and a decree of foreclosure as to all defendants. The
trial court's order declared the lien foreclosed and ordered the Snohomish County
Sheriff to sell the Property and apply the proceeds to the payment of the judgment
against the defendants. The order noted that the period of redemption would be
12 months and that the sheriff would be ordered to issue a sheriffs deed at the
termination of the 12 month period.
On November 1, 2013 the trial court entered an order of sale, commanding
the sheriff to sell the Property. Pursuant to the trial court's order, the sheriff sold
the Property at public sale on January 3, 2014. D &J Shires LLC (Shires) was the
highest bidder. It purchased the Property for $36,000. David Keene, a respondent
and the cross-appellant in this action, is a member of Shires.5 On January 30,
2014, the Slighters, on behalf of themselves individually and on behalf of Slighter
LLC, assigned all redemption rights in the Property to Keene. On January 31,
2014, the trial court confirmed the sheriff's sale.
5 John Stefanchik is also a member of Shires.
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On March 4, 2014—months before the January 5, 2015 expiration of the 12
month redemption period6—Keene filed a motion for an order directing the sheriff
to issue a sheriff's deed free and clear of any rights of redemption for the Property.
Keene's motion stated that because the Slighters and Slighter LLC assigned their
redemption rights to him and no longer possessed them, there were no
redemptioners who could exercise a right of redemption for the Property.7 Keene's
motion stated, "Here, since no eligible redemptioners exist, the Court should deem
that the period of redemption is expired and direct the ... Sheriff to issue a Sheriffs
Deed to Mr. Keene."
That same day, a commissioner entered an order directing the sheriff to
issue a sheriff's deed. The order stated that there are no qualified redemptioners
for the Property as defined in RCW 6.23.010. It directed the sheriff to issue Keene
6The parties appear to disagree as to whether the redemption period was
scheduled to end January 3, 2015 or January 5, 2015. The last day of a period of
time prescribed by an applicable statute shall not be included in the computation
of time if it is a Saturday or a Sunday. RCW 1.12.040. If the last day of a period
is one of these days, the period runs until the end of the next day which is neither
a Saturday nor a Sunday. See id January 3, 2015 was a Saturday. Here, the
next weekday was Monday, January 5, 2015.
7 In his motion, Keene asserted that defendant lenders Nationstar and
Greenpoint do not qualify as redemptioners, because their interests were inferior
to those of Brookwood and were foreclosed by the Brookwood action. Keene
supported this assertion by citing to Summerhill Vill. Homeowners Ass'n v.
Roughlev. 166 Wash. App. 625, 629, 270 P.3d 639, 289 P.3d 645 (2012). He noted
that a condominium association's liens for common expense assessments has a
priorityover deeds of trust before the lien arises—often termed "super priority." He
claimed that under RCW 6.23.010, the holder of a deed of trust encumbering a
condominium unit may not redeem the property after the foreclosure of a "super
priority" lien under RCW 64.34.364 if the lien created by the deed of trust was
acquired prior in time to when the "super priority" lien arose. Whether Nationstar
or Greenpoint were qualified redemptioners is not before us on appeal.
No. 73808-9-1/7
a sheriffs deed to the Property free and clear of any rights of redemption. On April
14, 2014, the sheriff issued the deed to Shires, not Keene.
In May 2014, Collette Glenn purchased the Property from Shires for
$175,000. Glenn purchased the Property by taking out a loan from Cobalt
Mortgage, Inc. (Cobalt) and paying the rest in cash. To secure repayment of her
loan, Glenn executed a deed of trust encumbering the Property. Shires conveyed
its interest in the Property to Glenn via a statutory warranty deed that was recorded
on May 6, 2014.8 Under the terms of the deed of trust, Cobalt was the lender and
Mortgage Electronic Registration System, Inc. (MERS) was designated as
beneficiary.
On January 3, 2015—two days before the statutory 12 month redemption
period would have ended—Performance Construction LLC delivered to Glenn an
offer to purchase the Property under RCW 6.23.120. Performance offered to pay
Glenn $92,500 for the Property. Glenn did not accept the offer.
Consequently, Performance commenced this action in January 2015
against Glenn, Cobalt, and MERS. Performance's complaint sought declaratory
relief, specific performance, damages, and quiet title. Performance sought, among
other things, a declaration that RCW 6.23.120 applied and that Performance made
the highest qualifying offer under the terms of the statute, a declaration that Glenn
is obligated to sell the Property to Performance under the terms of the offer, and a
declaration that the sheriffs deed was void.
8 Stefanchik signed the statutory warranty deed as a member of Shires.
No. 73808-9-1/8
On March 16, 2015, Slighter LLC conveyed and quit claimed all of its rights,
title, or interest in the Property to Performance.9 Specifically, the quit claim deed
noted that it was assigning any rights to excess proceeds under RCW
6.23.120(2)(c) to Performance.
On March 30, 2015, presumably because Performance sought to void the
sheriff's deed, it amended its complaint to add Keene as a defendant.10 Keene
had obtained the order for the sheriff's deed's issuance in his name.11 On April
17, 2015, Glenn answered Performance's complaint and filed a third party
complaint against Shires for breach of statutory warranties.
Thereafter, the parties filed cross motions for summary judgment. The trial
court entered an order granting respondents' motions for summary judgment. The
order also denied Performance's motion for summary judgment and dismissed
Performance's claims with prejudice. Most notably, the order on the cross motions
for summary judgment: (1) voided the order for issuance of the sheriffs deed; (2)
voided the sheriff's deed; (3) declared that Performance did not make a qualifying
offer under RCW 6.23.120 because the Property was not listed for sale as required
by the statute; and (4) declared that Glenn was a bona fide purchaser and was
entitled to have title to the Property quieted in her name. Performance filed a
9 The Slighters individually also quit claimed, "whatever right, title or
interest" they had in the Property and excess proceeds under RCW 6.23.120 to
Performance. But, the quit claim deed was not recorded until June 17, 2015.
10 We refer to Keene, Glenn, Cobalt and MERS collectively as
"respondents."
11 The sheriff's deed itself was issued to Shires.
No. 73808-9-1/9
motion for reconsideration on July 10, 2015. The trial court denied the motion on
July 28, 2015.
Performance appeals, asserting that the trial court ruled correctly as to the
first two issues, but erred in granting summary judgment as to the third and fourth
issues. Keene cross appeals, arguing that the trial court erred when it declared as
void the superior court's order to issue the sheriff's deed and the sheriff's deed
itself.
DISCUSSION
This court reviews summary judgment orders de novo. Hadlev v. Maxwell,
144 Wash. 2d 306, 310-11, 27 P.3d 600 (2001). Summary judgment is appropriate
only where there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law. CR 56(c); Peterson v. Groves, 111 Wn.
App. 306, 310, 44 P.3d 894 (2002). When considering the evidence, the court
draws reasonable inferences in the light most favorable to the nonmoving party.
Schaafv. Highfield, 127 Wash. 2d 17, 21, 896 P.2d 665 (1995). An appellate court
may affirm a trial court's disposition of a summary judgment motion on any basis
supported by the record. Davies v. Holy Family Hosp., 144 Wash. App. 483, 491,
183 P.3d 283 (2008). To the extent that the issues before the court raise questions
of statutory interpretation, these are questions of law we also review de novo.
Bostain v. Food Express, Inc., 159 Wash. 2d 700, 708, 153 P.3d 846 (2007).
We first address the validity of the sheriff's deed because it affects the
status of the parties and their interest in the Property at the time of the offer made
by Performance.
No. 73808-9-1/10
Keene sought an assignment of Slighter LLC and the Slighters' rights to
redeem the interest Shires purchased at the sheriff's sale. Slighter LLC and the
Slighters individually assigned their redemption rights to Keene. This assignment
was not in deed form. In his motion for an order directing issuance of the sheriffs
deed , Keene argued that the assignment together with the interest purchased at
the sheriffs sale extinguished any redemption rights and entitled him to take title
to the property by sheriff's deed without waiting for the expiration of the statutory
redemption period.
In Mark, the Washington Supreme Court held that a judgment debtor may
not transfer a right to redeem without also transferring the underlying interest in
the property's title. 112 Wash. 2d at 52-53. It reasoned that a judgment debtor-
mortgagor retains legal title to the property during the redemption period. \± at 52.
And, a sheriff's certificate of purchase does not pass title, but is only evidence of
an inchoate interest which may or may not ripen into title. ]d_. at 52-53. To allow
an assignee without an interest in the property's title to redeem would accomplish
nothing, because any redemption would inure to the benefit of the holder of legal
title—the judgment debtor-mortgagor. \± at 53. Consequently, the Mark court
held that an unacknowledged and unrecorded assignment of interest was
insufficient to convey the judgment-debtors' interest in the property. Id. It stated
the only way to convey title to real property is by a valid, acknowledged deed. \j±
And, consequently, the rights of redemption were not validly transferred. See jd.
Years later in Capital Investment Corporation of Washington v. King County, the
court, analogizing to Mark, held that a redemptioner whose lien is by judgment
10
No. 73808-9-1/11
(instead of by mortgage) can effectively transfer his or her right to redeem only if
he or she also transfers his or her underlying judgment. 112 Wash. App. 216, 228,
47 P.3d 161 (2002).
Here, the assignment of redemption rights from the Slighters and Slighter
LLC to Keene stated that the assignment was irrevocable and "includes any rights
in and to the above-described property available to the undersigned under RCW
6.23 et. seq or as acquired thereafter." (Capitalization omitted.) Keene asserts
that because the assignment was properly signed and notarized and recorded prior
to Keene's motion for issuance of the sheriff's deed and because it included any
rights in the property, it successfully conveyed all of the Slighters' and Slighter
LLC's interest in the property. Keene also cites to the language of the foreclosure
decree as evidence that the Slighters and Slighter LLC had only the right of
redemption after the sheriff's sale ("[A]ll right, title, claim, lien, estate, or interest of
[defendants i]s [ijnferior and subordinate to the aforementioned Lien and is hereby
foreclosed except only for the right of redemption allowed by law."). Consequently,
Keene argues that the Slighters and Slighter LLC withheld no rights to the property
when they made the assignment to him. He argues that this case is distinguishable
from both Mark and Capital because in Mark, the assignment failed because it had
not been made in deed form and was neither notarized nor recorded and in Capital,
the assignment was ineffective because the assignment was made through a
certificate of redemption.
Despite the minor factual differences, Mark and Capital clearly stand for the
proposition that title to real property can only be conveyed by a valid deed and a
11
No. 73808-9-1/12
valid transfer of an interest in the property's title is necessary to transfer the right
of redemption. Mark, 112 Wash. 2d at 52-53; Capital, 112 Wash. App. at 228. The
Slighters and Slighter LLC did not convey their interest in the Property to Keene
through a deed.12 We conclude that the language in the foreclosure decree and
in the assignment of redemption rights together do not remedy the fact that the
Slighters and Slighter LLC did not convey their interest in the property by deed.
Therefore, Slighter LLC—as judgment debtor13—was still an eligible redemptioner
at the time the sheriff issued the deed to the Property.
RCW 6.23.060 provides that if no redemption is made within the redemption
period, the purchaser is entitled to a sheriffs deed. Here, the sheriff issued the
deed before the end of the redemption period when there were still qualified
redemptioners. The execution of a deed after the time for redemption has expired
is a purely ministerial act. See RCW 6.21.120 (stating that it is the duty of the
sheriff to issue a deed upon request immediately after the time for redemption from
a sheriff's sale has expired); Diamond v. Turner etal.. 11 Wash. 189, 192-93, 39
P. 379 (1895). The sheriff has no independent nor statutory authority to issue a
sheriff's deed while redemption rights remain, nor may a court commissioner
confer such authority when it is not otherwise conferred by law. See Severson v.
12 In fact, later, the Slighters and Slighter LLC did convey their rights in the
underlying property to Performance through a quit claim deed.
13 The Slighters, individually, are also listed as judgment debtors in the trial
court's order granting summary judgment in the Brookwood foreclosure action.
But, the Property was owned by only Slighter LLC at the time this order was
entered. Therefore, only Slighter LLC was a judgment debtor. See Prince v.
Savage, 29 Wash. App. 201, 205, 627 P.2d 996 (1981) (stating that a judgment
debtor is the fee owner of the property).
12
No. 73808-9-1/13
Penski, 36 Wash. App. 740, 743-44, 677 P.2d 198 (1984) (affirming the trial court's
decision to void a sheriff's deed even though the issuance of the deed was ordered
by a county commissioner who misapplied the law). Here, the commissioner erred
by concluding there were no qualified redemption rights remaining. The
redemption period had not expired and the court commissioner lacked authority to
shorten the redemption period or to order the sheriff to issue the deed early. The
trial court correctly concluded that the sheriff's deed—issued prior to the end of the
statutory redemption period while redemption rights remained—was void.
In light of this conclusion, because the sheriff's deed was void, we turn to
consideration of the status and rights of the parties. First, although Shires was not
entitled to the sheriff's deed or absolute title prior to the expiration of the
redemption period, it—as the purchaser of the Property at the sheriffs sale—held
an inchoate interest in the Property. See W.T. Watts. I. v. Sherrer, 89 Wash. 2d 245,
248, 571 P.2d 203 (1977) (stating that the Washington Supreme Court has
recognized that a sheriffs certificate of purchase does not pass title but is only
evidence of an inchoate interest which may or may not ripen into absolute title).
Title is not absolute, because the interest of a sheriff's sale purchaser is subject to
the right of redemption. See jd_. This interest gives the purchaser the right to a
sheriffs deed only when redemption rights are extinguished. See RCW 6.21.120.
Here, during the one year redemption period, Slighter LLC—as judgment
debtor—and any eligible lienholders would have been entitled to redeem the
Property. See RCW 6.23.010. But, no parties sought to or redeemed the Property.
Therefore, at the end of the redemption period, Shires would have been entitled to
13
No. 73808-9-1/14
a sheriffs deed and absolute title of the Property. See RCW 6.21.120. Glenn
succeeded to Shires' interest in the Property. Glenn held that inchoate interest in
the Property at the end of the redemption period.14 She was therefore entitled to
the sheriffs deed unless Performance properly invoked the exception under RCW
6.23.120 as argued in its appeal.
Glenn asserts that RCW 6.23.120 does not apply here. RCW 6.23.120
applies to "any property that a person would be entitled to claim as a
homestead ... ." Glenn argues that at the time of the foreclosure sale, the
Property was not one that a person could claim as a homestead, because in the
foreclosure action, the trial court ordered that the Property " 'is not subject to the
homestead exemption.' "15 In other words, she reads the statutory language "any
property that a person would be entitled to claim as a homestead" as related to the
specific status of the property at issue in the foreclosure action. RCW 6.23.120.
By contrast, Performance argues that the statutory language means the nature of
the property generally. Performance asserts, "The condominium unit is a
14 That Shires purported to convey more interest in the land than it actually
had does not invalidate the conveyance of its inchoate interest in the Property. A
grantor conveying land by statutory warranty deed makes five covenants against
title defects. Mastro v. Kumakichi Corp., 90 Wash. App. 157, 162-63, 951 P.2d 817
(1998). One of the covenants is the warranty of seisin—a guarantee by the seller
that he or she holds the land in fee simple, jd. Where covenants under the
warranty deed are breached, an injured grantee is entitled to recover for damages
for lost property or diminution in property value, jd. at 163. Here, Glenn effectively
purchased the inchoate interest from Shires. The fact that Shires purported to
convey fee simple title to the Property to Glenn when Shires had only an inchoate
interest to convey provides Glenn the remedy of suing Shires for the diminution in
value.
15 In the foreclosure action, the trial court concluded—without further
explanation—that the real property is not subject to the homestead exemption
pursuant to RCW 64.34.364(2) and RCW 6.13.080(6).
14
No. 73808-9-1/15
residential property, i.e.[,] a property a person would be able to claim as a
homestead." (Boldface omitted.) Neither chapter 6.23 RCW nor chapter 6.13
RCW define "person."
The court's fundamental objective in construing a statute is to ascertain and
carry out the legislature's intent. Dep't of Ecology v. Campbell & Gwinn, LLC. 146
Wash. 2d 1, 9-10, 43 P.3d 4 (2002). Ifthe statute's meaning is plain on its face, then
the court must give effect to that plain meaning as an expression of legislative
intent, jd. Under this plain meaning rule, we look at both the wording of the statute
and the wording of related or other provisions of the same act. Pierce County v.
State, 144 Wash. App. 783, 806, 185 P.3d 594 (2008). If the statute remains
susceptible to more than one reasonable meaning after such an inquiry, the statute
is ambiguous and we resort to various statutory construction aides, jd.
Even without a statutory definition of "person," the legislature's intent is clear
when considering the statute as a whole and other related provisions. RCW
6.23.120 applies only when a third party has purchased the property at a sheriffs
sale and the judgment debtor is unable to redeem. See RCW 6.23.120(1). RCW
6.23.120(1) requires that a qualifying offer be at least equal to the sum of one
hundred twenty percent greater than the redemption amount and the normal
commission of the real estate broker or agent handling the offer. RCW 6.23.120(2)
then states that the proceeds from a qualifying offer made under the statute shall
be divided at the time of closing with a portion paid to the property owner, a portion
paid to the real estate broker, and any excess paid to the judgment debtor.
Therefore, the intent of the legislature was clearly to encourage more and higher
15
No. 73808-9-1/16
offers on a property in order to put money back in the hands of the judgment debtor.
Thus, the legislature sought to protect a judgment debtor who had just lost his or
her home through foreclosure and was unable to redeem.
RCW 6.13.010 discusses what constitutes a "homestead." The homestead
consists of real property that the owner uses as a residence. RCW 6.13.010. To
claim a residence as a homestead, the owner must either occupy the property as
a principal residence or intend to do so. RCW 6.13.040(3). In light of RCW
6.13.040(3), we read "owner" as applying solely to natural persons. A limited
liability company is not capable of occupying a property as its principal residence.
Based on the legislative intent behind RCW 6.23.120—to protect a
judgment debtor who had just lost his or her home—the legislature's deliberate
connection of the statute to homestead property is instructive. The legislature
sought to limit RCW 6.23.120's application to foreclosed properties where a
recently foreclosed judgment debtor—who relied on the property for shelter—could
obtain excess proceeds. Consequently, we hold that "any property that a person
would be entitled to claim as a homestead" relates to the specific homestead status
of the property at issue in the foreclosure action.
Here, because the Property was owned by Slighter LLC at the time of the
foreclosure, it was not property that the owner was using as a residence. See
RCW 6.13.010; RCW 6.13.040(3). Consequently, it was not property in which the
16
No. 73808-9-1/17
owner would be entitled to claim a homestead. We hold that RCW 6.23.120 does
not apply to the Property at issue here.16
Although the sheriff's deed to Shires was void, Glenn acquired the inchoate
interest under the sheriff's certificate of purchase at the time she purchased the
Property from Shires. She is entitled to receive a sheriff's deed. Because RCW
6.23.120 does not apply to the Property, Glenn is entitled to quiet title. The trial
court did not err when it granted summary judgment in favor of respondents.
Finally, Glenn asserts that she is entitled to an award of costs on appeal
under RAP 14.2 as the substantially prevailing party. Because Glenn is a
prevailing party here, we grant her request upon timely filing and serving of a cost
bill under RAP 14.4.
We affirm.
WE CONCUR:
16 Because we hold that RCW 6.23.120 does not apply, we need not decide
whether Performance made its offer to the proper party, whether Performance's
offer was a qualifying offer under the statute, or whether Glenn was a bona fide
purchaser. And, because we hold that respondents prevail in this action, we need
not address the other specific arguments raised in Keene's cross appeal.
17