Consumer Finance Insights
October 16, 2019

Real Estate Investment Company Forced to Dissolve Following Washington AG Suit

On October 16, 2019, the Washington Attorney General’s Office (Washington AG) announced that it had reached a settlement with a Kirkland- and Portland-based real estate investment company that requires the company to dissolve and pay up to $85,000 in fines and enforcement costs.

​The Washington AG initiated this action in May 2018, alleging violations of the Washington Consumer Protection Act, RCW 19.86.020.  According to the complaint, the company solicited Washington consumers who recently lost their homes to foreclosure to induce them to enter into agreements for the purpose of recovering “Surplus Funds.”​  When foreclosure sales bring in more money than is owed on the mortgage, the Surplus Funds are deposited with the county superior court so that homeowners can recover them through a relatively simple process.

According to the Washington AG, the company often approached consumers within days of foreclosure of their property (and before consumers knew that Surplus Funds were available to them).  The company also allegedly utilized various aggressive tactics to solicit consumers, such as initiating contact with consumers via unsolicited phone calls or by appearing at consumer residences without invitation or notice, and purportedly continued to do so even after consumers declined the company’s services.  The complaint further alleged that the company engaged in conduct intended to pressure consumer to enter into agreements with the company on the spot and without any exchange of consideration or review of the paperwork presented to them.  For example, in the course of solicitation​, the company allegedly made numerous misrepresentations to consumers, such as telling consumers that if they did not act right away, the Surplus Funds could end up being paid to another party.

Under the consent decree, the company must dissolve, amend any prior unlawful consumer contracts, ​​ensure all contracts with consumers charge no more than 5% of Surplus Funds, stop misleading consumers with respect to Surplus Funds, and stop any other acts or practices that violate the Washington Consumer Protection Act.  The company must also pay $50,000 in attorneys’ costs and fees and $35,000 in civil penalties, $27,500 of which is suspended as long as the company abides by the consent decree.

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