§21.4 EFFECT OF NONJUDICIAL FORECLOSURE ON ALTERNATIVE REMEDIES
This section discusses rights to other remedies after a nonjudicial foreclosure of a deed of trust.
(1) Deficiency judgment
The general rule of the Act is that there are no rights to a deficiency judgment after a nonjudicial foreclosure. RCW 61.24.100(1). There are a few exceptions to this rule for deeds of trust securing commercial loans. If the fair value of the property sold at the trustee's sale is less than the unpaid balance of the debt, the beneficiary may obtain a deficiency judgment against a grantor in the limited circumstances of waste or misapplication of rents, insurance proceeds, or condemnation proceeds—provided that the deed of trust did not encumber the grantor's principal residence on the date of the sale, the secured obligation is a commercial loan, and the action is commenced within one year from the date of the sale. RCW 61.24.100(3)(a)(i), (4). If the beneficiary intends to seek a deficiency judgment against a guarantor, the trustee must provide the guarantor with statutory notices during the nonjudicial foreclosure process. RCW 61.24.042. When a guarantor is also a grantor under the deed of trust, the Act provides for a deficiency judgment against the guarantor to the extent a grantor would be subject to a deficiency judgment under RCW 61.24.100(3)(a)(i). RCW 61.24.100(5), (6). When the guarantor is not the grantor under the deed of trust, the Act provides an independent basis for a deficiency judgment against the guarantor after the trustee's sale without the limitations in RCW 61.24.100(3)(a) and (b). RCW 61.24.100(3)(c). There is a split between Division I and Division II of the Washington Court of Appeals on the interplay of RCW 61.24.100(3)(c) and RCW 61.24.100(10) and the extent to which a nonjudicial foreclosure of a deed of trust securing a guaranty precludes a subsequent action to collect or enforce the guaranty. Compare Wash. Fed. v. Gentry,___Wn. App.___, 319 P.3d 823 (2014), with First Citizens Bank v. Cornerstone, 178 Wn.App. 207, 314 P.3d 420 (2014). As stated above, the loan must be a commercial loan and the action must be commenced within one year from the date of the sale to obtain a deficiency judgment against a guarantor. RCW 61.24.100(4), (6). Additionally, "[i]f the deed of trust encumbers the guarantor's principal residence, the guarantor shall be entitled to receive an amount up to the homestead exemption set forth in RCW 6.13.030...."...
