United States: Deed Of Trust Provisions Allowing Lenders/Servicers To Enter, Maintain, And Secure Encumbered Properties May Be Unenforceable Under Washington Statute

Last Updated: September 6 2016
Article by Daniel J. Dunne and Ryan Wooten

On July 7, 2016, the Supreme Court of the State of Washington issued its opinion in Jordan v. Nationstar Mortgage, LLC, which, prior to foreclosure, may prevent servicers from securing property after a default or, at least, require heightened inquiry and investigation to ensure that the property has been abandoned or that notice of the anticipated entry has been provided to the borrower. The Court answered two questions certified by the U.S. District Court for the Eastern District of Washington in the negative:

  1. Under Washington's lien theory of mortgages and RCW 7.28.230(1), can a borrower and lender enter into a contractual agreement prior to default that allows the lender to enter, maintain, and secure the encumbered property prior to foreclosure?
  2. Does chapter 7.60 RCW, Washington's statutory receivership scheme, provide the exclusive remedy, absent post-default consent by the borrower, for a lender to gain access to an encumbered property prior to foreclosure?

In Jordan, Nationstar serviced a residential mortgage loan owned by Fannie Mae, secured by Fannie's standard form deed of trust. Two months after the borrower defaulted on her home loan, Nationstar sent a vendor to secure Jordan's encumbered property by changing the locks on the front door. The front door was the only means of egress into the residence. Nationstar believed its conduct was authorized by a provision in the standard form deed of trust that allowed the lender to secure the property after the borrower defaults or abandons the property. In case it had not been abandoned, the vendor left a notice informing Jordan that the home was vacant and that she could obtain a key to the new lock by calling a designated number. The borrower returned from work, called, and obtained a key to the new lock, but then immediately removed all of her belongings. Subsequently, she filed a complaint alleging trespass, breach of contract, and violations of Washington and federal debt collection laws on behalf of herself and a class (later certified) of 3600 Washington homeowners who were allegedly locked out of their homes pursuant to similar deed of trust provisions enforced by Nationstar. In motion practice, the borrower argued that the property was occupied despite Nationstar's representations that a pre-entry inspection revealed otherwise. The parties, however, agreed that Nationstar did not provide advance notice of its intention to inspect and secure the home.

Under the relevant deed of trust, either default or abandonment triggered Nationstar's right to entry. Since the vacancy of the property was disputed by the parties, the Court assumed the property was occupied and analyzed whether Nationstar's entry on the premises constituted "possession". Drawing from the Restatement, real property, tort, and landlord-tenant law, the Court reasoned that the key element of "possession" was control and that Nationstar's conduct—changing the locks to secure the property—was an exercise of control that resulted in its possession of the property in violation of the statute. The Court dismissed Nationstar's argument that it did not possess the property because it provided the borrower immediate access and a key.

The majority held that Nationstar's post-default/pre-foreclosure entry by changing the lock constituted an exercise of possession prohibited by the statute, and that Fannie's standard form deed of trust provision to the contrary was unenforceable. The Court found that the standard form deed of trust provision that allowed the lender to enter the property post-default conflicted with the statute prohibiting a lienholder from taking possession of the property pre-foreclosure.

Despite its rejection of the entirety of Nationstar's arguments, the Court intimated that its holding may be limited to borrowers who can establish some or all of the following factors:

  1. The lender did not provide advance notice of its intention to change the locks;
  2. The property was not abandoned;
  3. The borrower's only means of entry and egress in the property were controlled, in any way, by the servicer; and/or
  4. The deed of trust provides that default, in itself, allows lender entry.

The majority's comment about alternative provisions based solely on default and potential limitation of its holding to the facts in Jordan is underscored by its answer to the second certified question, which declared that judicial receivership is not the only way for a lender to access post-default/pre-foreclosure property. In other words, the majority left open the possibility that a non-judicial entry, like the one in Jordan, could fall short of "possession" and thus not fall within the prohibition found in RCW 7.28.230(1). Perhaps the non-occurrence of one or more of the above factors would have been enough in Jordan.

The dissent portends potential limitations of the decision. There, Justice Stephens referenced Washington case law prohibiting the limitation of express contract terms in the name of public policy. Justice Stephens also disagreed with the majority's conflation of entry with possession to reach its conclusion. According to the dissent, Nationstar's right to "make reasonable entries upon and inspections of the properties" did not exclude the borrower from possession, and therefore did not constitute possession. Further, the dissent attacked the majority's resort to the Restatement and related areas of law to derive the meaning of "possession" because, according to Justice Stephens, those bodies of law only consider actual possession (and exclusion of the borrower) as opposed to the mutual possession Nationstar afforded to the borrower. Justice Stephens added that abandonment, which she thought was supported by the facts, was an exception to the general prohibition against a lender's pre-foreclosure possession of the property.

The decision in Jordan calls for servicers to adopt a more cautious approach to preserving post-default/pre-foreclosure properties in Washington, and possibly in other states that may have similar statutes. Servicers and lienholders should consider the following:

  1. Analysis of deed of trust and mortgage forms to determine whether property entry/preservation provisions require investigation, notice, and abandonment;
  2. Increased investigation and confirmation efforts (i.e. additional door knocks and property inspections, postings, letters, email and phone calls etc.) to confirm abandonment prior to entry to secure premises;
  3. Advance notice of the servicer's intention to enter the property to change locks.

Owners and servicers should also be aware of the following:

  1. Consumer groups and borrowers in other states have applauded Jordan, so servicers and lienholders in other states may face challenges and follow-on class action lawsuits similar to Jordan; and
  2. Additional disclosures about the risks of securing and maintaining abandoned properties should be considered for securitizations involving properties in the state of Washington.

We look forward to discussing the case and any questions you may have regarding these issues.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.