Judicial foreclosure

Key Takeaways

• Judicial foreclosure runs through superior court: the lender sues, the court enters a decree, and under RCW 61.12.060 the court orders the mortgaged premises sold to satisfy the mortgage and the costs of the action.
• Washington is a deed of trust state, so most residential defaults here end in a nonjudicial trustee's sale under chapter 61.24 RCW rather than a court case.
• A judicial foreclosure can carry a deficiency judgment under RCW 61.12.070 unless the lender expressly waived it in the complaint; RCW 61.24.100 generally bars a deficiency after a trustee's sale.
• Redemption follows the judicial route. RCW 6.23.020 gives eight months or one year to redeem after a judicial sale, while RCW 61.24.050 allows no redemption after a trustee's sale.

What It Means

Judicial foreclosure is the court version of foreclosure. The lender files a lawsuit in superior court, names the borrower and the junior lienholders, proves the default and the amount owed, and asks the judge to order the property sold. The result is a decree of foreclosure and a court ordered sale, with the proceeds applied to the debt and the costs of the action.

It is slower and more expensive than the alternative, and it exists for a reason. A court case creates a record. Junior liens are dealt with on that record, the amount owed is fixed by a judgment, and the borrower gets a chance to contest the numbers in front of a judge before anything is sold.

Which route a lender takes is not a preference. It follows the Security Instrument the borrower signed. A mortgage names only a lender and a borrower, with nobody holding a power of sale, so enforcing it takes a court. A Deed Of Trust adds a third party, the Trustee, who holds the power to sell the property without a lawsuit. That single structural difference is why one loan ends up in a courtroom and an identical loan across the street does not.

How It Works in Washington

Washington keeps both routes on the books. Chapter 61.12 RCW governs judicial foreclosure of mortgages. Under RCW 61.12.060, in rendering judgment of foreclosure the court shall order the mortgaged premises, or so much thereof as may be necessary, to be sold to satisfy the mortgage and costs of the action. Chapter 61.24 RCW, the Deed of Trust Act, governs the nonjudicial trustee's sale that handles most Washington residential defaults, which is why a broker can work here for years without seeing a courtroom foreclosure.

The differences that matter fall in two places. First, the Deficiency Judgment. RCW 61.12.070 says the decree shall direct that any balance remaining unsatisfied after the sale be satisfied from other property of the mortgage debtor, unless the lender expressly waived the right to a deficiency judgment in the complaint. RCW 61.24.100 runs the other way: except as permitted for deeds of trust securing commercial loans, a deficiency judgment shall not be obtained against a borrower, grantor, or guarantor after a trustee's sale.

Second, redemption. After a judicial sale, RCW 6.23.020 sets eight months to redeem where the mortgage was executed after June 30, 1961, declares in its terms that the property is not used principally for agricultural or farming purposes, and the judgment creditor expressly waived a deficiency judgment in the complaint, and one year after the date of sale otherwise. After a trustee's sale, RCW 61.24.050 is blunt: no person shall have any right, by statute or otherwise, to redeem the property sold at the trustee's sale. Distressed sellers who want to avoid either path usually look at a Washington short sale first.

Example

Northgate Credit Union holds a $340,000 loan on an Everett duplex owned by Ray and Lena Ford, secured by a mortgage rather than a deed of trust. The Fords stop paying in March, and by October the balance with interest, advanced taxes, and costs is $358,400.

Because the security is a mortgage, the credit union files in Snohomish County Superior Court and names a $22,000 contractor's lien holder as a junior party. The court enters a decree and orders the sale, and the duplex brings $312,000. That leaves $46,400 unpaid. The credit union did not waive a deficiency in its complaint, so under RCW 61.12.070 the decree can direct that the shortfall be satisfied from other property of the Fords, and under RCW 6.23.020 the Fords get one year rather than eight months to redeem. Run the same loan on a deed of trust and foreclose it nonjudicially instead: the lender takes its $312,000, RCW 61.24.100 blocks the $46,400 deficiency, and the Fords have no redemption right at all.

Common Mistakes and Exam Traps

• Washington allows judicial foreclosure but rarely uses it on homes. The default residential route is the nonjudicial trustee's sale under the Deed of Trust Act.
• Deficiency is the giveaway. A judicial foreclosure can produce a deficiency judgment; a residential nonjudicial trustee's sale generally cannot.
• Redemption belongs to the judicial route. RCW 61.24.050 states that after a trustee's sale no person has any right to redeem the property sold.
• The document picks the route, not the lender's mood. A mortgage carries no power of sale, so it takes a court; a deed of trust carries one, so it does not.