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Udall v. TD Escrow Services, Inc.

Washington Supreme Court
154 P.3d 882 (2007)
ELI5:

Sections

Rule of Law:

Under the Washington Deed of Trust Act, a trustee must deliver the deed to the purchaser following a nonjudicial foreclosure sale once the bid is accepted, provided there are no procedural irregularities that render the sale void; a unilateral mistake regarding the opening bid amount is not a procedural irregularity sufficient to void the sale.


Facts:

  • Borrowers defaulted on their home mortgage, and the lender, U.S. Bancorp, directed T.D. Escrow Services (T.D.) to commence nonjudicial foreclosure.
  • T.D. hired ABC Legal Services to conduct the auction and privately instructed them via telephone to open the bidding at $159,421.20.
  • At the auction, the ABC auctioneer mistakenly listed and announced the opening bid as $59,421.20, exactly $100,000 less than authorized.
  • William Udall placed a bid of $59,422.20, one dollar over the announced opening bid.
  • As there were no other bidders, the auctioneer announced the property sold, closed the sale, accepted Udall's payment, and issued a receipt.
  • When T.D. received the funds and discovered the auctioneer's error regarding the price, T.D. refused to issue the deed of trust to Udall and attempted to refund his money.
  • Udall rejected the refund and demanded the deed.

Procedural Posture:

  • Udall filed a quiet title action against T.D. Escrow Services and U.S. Bancorp in the trial court.
  • The trial court granted summary judgment in favor of Udall, quieting title in his name.
  • T.D. Escrow Services appealed the decision to the Court of Appeals.
  • The Court of Appeals reversed the trial court's ruling and entered summary judgment in favor of T.D. Escrow Services.
  • Udall petitioned the Supreme Court of Washington for review, which was granted.

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Issue:

Does RCW 61.24.050 mandate that a trustee deliver the deed of trust to a purchaser following the conclusion of a nonjudicial foreclosure sale where the auctioneer mistakenly announced a lower opening bid than authorized?


Opinions:

Majority - Justice Fairhurst

Yes, RCW 61.24.050 requires the trustee to deliver the deed to the high bidder once the auctioneer accepts the bid, unless a procedural flaw voids the entire process. The Court reasoned that the statutory phrase "When delivered to the purchaser" defines the moment title conveys, rather than creating a condition precedent for the existence of a contract. Under standard auction law, a contract is formed when the auctioneer announces "Sold" or lets the hammer fall. In this case, the auctioneer had apparent authority to conduct the sale; T.D.'s internal instructions regarding the price were unknown to the buyer, who reasonably relied on the auctioneer's conduct. Furthermore, a low price alone is not a sufficient ground to set aside a foreclosure sale; there must be distinct procedural irregularities or unfairness, which were not present here. The mistake was solely on the part of the trustee's agent.


Concurring - Justice Sanders

Yes, the statute mandates delivery of the deed. The concurrence agreed with the outcome but wrote separately to criticize the majority's method of statutory interpretation. Justice Sanders argued that because the statute's language was plain and unambiguous, the Court should not have looked to "context" or "related provisions" to discern meaning, but should have relied solely on the words of the statute itself.



Analysis:

This decision significantly reinforces the finality of nonjudicial foreclosure sales in Washington State. By ruling that a trustee's internal pricing error does not constitute a "procedural irregularity," the Court places the burden of accuracy squarely on trustees and their agents rather than on third-party purchasers. The ruling protects the stability of land titles and encourages participation in foreclosure auctions by assuring buyers that a "sold" announcement is binding, even if the bank made a mistake. It limits the equitable power of courts to undo sales based on price inadequacy alone, requiring some element of unfairness or deceptive conduct to void a transaction.

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