Opinion ID: 2499181
Heading Depth: 1
Heading Rank: 9

Heading: Bona Fide Purchaser Doctrine

Text: ¶ 43 I also disagree with the majority's analysis of the bona fide purchaser doctrine. The breadth of circumstances the majority considers to conclude Dickinson was not a bona fide purchaser will make it very difficult for buyers at foreclosure sales to qualify for this status. ¶ 44 Building on Dickinson's real estate experience, the majority finds significance in Dickinson's brief conversation with Karen Tecca, during which he offered to buy the property and she insisted the foreclosure sale would not happen. From this exchange, which lasted about one minute, the majority draws the remarkable conclusion that Dickinson was on inquiry notice that the sale may have violated the forbearance agreement. The majority's implicit reasoning goes like this: Tecca's refusal to sell would suggest to the reasonably prudent person that Tecca intended to cure her default; a reasonable person, learning the property had come up for sale, would contact Tecca again to see if she had tried to cure the default; this conversation would likely reveal the forbearance agreement and its terms; and a reasonable person would then discern the fact that the sale was not in accordance with the agreement. ¶ 45 Not only does this chain of reasoning pile inference upon inference, it promotes a duty of inquiry previously unknown in this area of the law. Under the majority's view, a potential buyer must approach foreclosure proceedings with an inquisitiveness verging on the paranoid. He is no longer entitled to rely on the notice of sale as establishing default if the owner has said something that implies an intent to cure. If such a verbal statement puts a potential buyer on notice that the owner may not actually be in default, what about the owner's written statement of intent to make payments? After all, a trust deed grantor has promised to make timely payments to the beneficiary, so is the existence of a recorded trust deed a circumstance putting a reasonable person on notice to ask the grantor whether the default referred to in the notice of sale actually exists? Apparently so, because the majority holds that Dickinson was not entitled to rely on the deed recitals here. ¶ 46 As to the deed recitals, the majority acknowledges that a recital of statutory compliance constitutes prima facie evidence of such compliance, which is conclusive in favor of a bona fide purchaser. Majority at 1285 & n. 5; see RCW 61.24.040(7). However, the majority takes an unprecedented look at these recitals, questioning their adequacy in light of conclusory language stating that all legal requirements of the act are met. Majority at 1285 & n. 9. The majority insists the deed must set forth the facts supporting this statement, which apparently includes the existence of any forbearance agreement that might support an owner's claim that a default has been cured. But we have never required such an exacting standard and have previously accepted nearly identical conclusory recitals. See Glidden v. Mun. Auth. of Tacoma, 111 Wash.2d 341, 345, 347, 758 P.2d 487, 764 P.2d 647 (1988) (giving conclusive presumption where deed inaccurately stated that notice had been `transmitted by mail to all persons entitled thereto' and that `[a]ll legal requirements and all provisions of said Deed of Trust have been complied with, as to acts to be performed and notices to be given, as provided in Chapter 61.24 RCW' (quoting recitals)). ¶ 47 Moreover, the specific recitals in this deed follow the form set out in the real property desk book and undoubtedly repeated in countless deeds recorded in Washington. 4 Wash. State Bar Ass'n, Washington Real Property Deskbook § 47.11(16), at 39-40 (3d ed. Supp.2001). There is no precedent for the majority's conclusion that the drafters of deeds of trust fail to recite the facts showing [statutory compliance], RCW 61.24.040(7), when they use standard-form statements of statutory compliance. Majority at 1284 n. 9. The majority does not explain why conclusory recitals of fact are any less recitals of fact, and we have never before construed the statute in the way the majority would. Moreover, the majority is really complaining that the recitals in the deed of trust were inaccurate. Id. (noting the deed also misleadingly listed the sale date in the notice of trustee's sale as February 16, 2007, instead of the original sale date of September 8, 2006 and that it incorrectly states that the default was not cured). Such looking behind the face of the deed's factual recitals is precisely what the presumptive validity of the deed precludes. RCW 61.24.040(7). I fear that the majority's new-found scrutiny of deeds of trust will greatly unsettle reasonable expectations in land titles. ¶ 48 In sum, I depart from the majority's reasoning. I would reject the argument that a trustee's failure to strictly comply with the procedural requirements of the act invalidates a sale and opens the door to a postsale challenge. I would also be more circumspect in considering when a buyer at a foreclosure sale may rely on the recitals in a trust deed to claim the status of a bona fide purchaser. Instead, I would resolve this case on the narrow equitable ground that courts may invalidate an unfair foreclosure sale based on the combination of a grossly inadequate sale price and procedural irregularities. The combination of these circumstances cannot be known before the sale, and so it is appropriatein exceptional circumstancesfor a court to grant relief even after the sale has occurred. On this basis alone, I would affirm the Court of Appeals. WE CONCUR: MARY E. FAIRHURST, Justice.