Distressed Property Law Getting Stressful

When I first wrote about the new distressed property law last month, there were grumblings within the industry about the ancillary affects to Realtors. Judging from yesterday's article in the Seattle Times, there is room for debate on the specifics of the new law.

When I first wrote about the new distressed property law last month, there were grumblings within the industry about the ancillary affects to Realtors. Judging from yesterday’s article in the Seattle Times, there is  room for debate on the specifics of the new law.

It adds rules for transactions involving distressed residential property, places restrictions on foreclosure-rescue efforts and outlines damages for those who break the rules.

While some say the law benefits the real-estate industry by helping homeowners in trouble, others say it discourages deals involving distressed property because the law creates more paperwork, exposes agents to more potential lawsuits, and obligates buyers and their agents to act in the best interests of distressed homeowners rather than in their own best interests.

Even some involved in the drafting of the original bill concede some changes are appropriate.

Melissa Huelsman, a consumer-protection lawyer in Seattle who has represented victims of foreclosure-rescue scams, said the law resembles those passed in 10 other states.

Huelsman said lawmakers sought her help in drafting the bill and in discussions about it after it passed.

She said some modifications — including adding condominiums to the types of property the law addresses — might be appropriate.

But she doesn’t think it’s necessary to remove real-estate agents from the list of “distressed property consultants” described by the bill.

The Real Estate Association of Puget Sound (REAPS) plans to hire a lobbyist to push the Legislature to modify the law. Members of the group blame the law for decreases in prospective-buyer-traffic and a new reluctance by investors to consider distressed properties.

Read the entire bill: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2791