Deed of Trust Lien Priority in King County Washington Nonjudicial Foreclosures: What Actually Survives the Trustee's Sale

The $47,000 IRS Lien That Survived a King County Trustee Sale

An investor purchased a single-family home in Renton at the King County trustee sale for $389,000 in March 2023. The property had been foreclosed by a private lender holding a deed of trust recorded in 2019. The investor's title search showed several junior liens — a second mortgage, a judgment lien from a credit card lawsuit, and what appeared to be an old IRS federal tax lien recorded in 2021. The investor assumed, as many do, that the trustee sale would wipe all of these clean since they recorded after the foreclosing deed of trust.

Six weeks after closing, the investor received a notice from the IRS asserting a $47,200 lien against the property. The federal tax lien had survived the foreclosure entirely. The IRS had received proper notice of the trustee sale but had not been given the required 25-day redemption period under 26 U.S.C. § 7425(b). Because the trustee failed to provide notice at least 25 days before the sale, the federal tax lien remained attached to the property as if the foreclosure never happened.

This scenario — entirely preventable with proper pre-auction diligence — illustrates why lien priority analysis in King County nonjudicial foreclosures requires granular attention to both state and federal law.

Washington's Nonjudicial Foreclosure Framework Under RCW 61.24

Washington is a deed of trust state, and the vast majority of residential foreclosures proceed nonjudicially under Chapter 61.24 RCW. The deed of trust creates a three-party arrangement: the borrower (grantor), the lender (beneficiary), and a trustee who holds bare legal title as security. When the borrower defaults, the beneficiary directs the trustee to initiate foreclosure by recording a Notice of Default under RCW 61.24.030 and, after the requisite waiting periods, a Notice of Trustee Sale under RCW 61.24.040.

The trustee sale itself is conducted as a public auction, typically at the King County Courthouse in Seattle or at an alternative location designated in the notice. Under RCW 61.24.100, the trustee's deed conveys title "free and clear of all interests, liens, and encumbrances" — but this language is deceptively broad. The statute's protection applies only to interests that are junior to the deed of trust being foreclosed. Senior liens, certain statutory liens, and federally-protected interests survive intact.

The First-in-Time Rule and Its Exceptions

Washington follows the "first in time, first in right" doctrine codified in RCW 65.08.070. Recording priority is determined by the date and time a document is recorded with the King County Recorder's Office. A deed of trust recorded on January 15, 2020 at 10:32 AM has priority over one recorded on January 15, 2020 at 2:15 PM — the timestamp matters.

However, recording priority alone does not tell the complete story. Several categories of liens either enjoy statutory super-priority or fall outside the normal recording framework entirely.

Property Tax Liens

King County property taxes create a lien that is senior to all private encumbrances regardless of recording date. Under RCW 84.60.010, the property tax lien attaches on January 1 of each year and takes priority over "all other liens or encumbrances whatsoever." This means delinquent property taxes always survive a trustee sale.

In King County, the Assessor's records will show current-year and prior-year delinquencies. However, the total amount owed may include penalties, interest, and costs that are not immediately apparent from a simple parcel search. An investor purchasing at a trustee sale inherits all outstanding property tax obligations, which in King County can accumulate rapidly given the area's high assessed values. A property with $18,000 in assessed annual taxes that has gone unpaid for two years, including penalties and interest, might carry a $45,000 property tax burden that survives the foreclosure.

Special Assessment District Liens

King County contains numerous Local Improvement Districts (LIDs), Utility Local Improvement Districts (ULIDs), and other special assessment mechanisms. Under RCW 35.44.190 and related statutes, special assessment liens are generally coequal with property tax liens and take priority over all other encumbrances.

The City of Seattle, for example, levies LID assessments for street improvements, sidewalk repairs, and infrastructure projects. These assessments are recorded against the property and survive trustee sales. The King County Recorder's Office records LID certifications, but the assessment amounts themselves are tracked by the relevant municipality. An investor must check both the Recorder's records and the City of Seattle's LID database (or the equivalent for other King County municipalities) to identify outstanding assessments.

Federal Tax Liens

Federal tax liens present the most complex priority analysis. Under 26 U.S.C. § 6321, a federal tax lien arises when a tax assessment is made and the taxpayer fails to pay after demand. The lien attaches to all property belonging to the taxpayer. Under 26 U.S.C. § 6323(a), the lien is not valid against a purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until a Notice of Federal Tax Lien (NFTL) is filed in the appropriate office — which in King County is the County Recorder.

Here is where the analysis becomes critical: if the NFTL was recorded after the deed of trust being foreclosed, the federal tax lien is junior in priority. However, "junior in priority" does not automatically mean "extinguished at trustee sale."

Under 26 U.S.C. § 7425(b), a nonjudicial sale will not discharge a federal tax lien unless the IRS receives written notice of the sale at least 25 days before the sale date. The notice must be sent to the IRS office identified in IRS Publication 786 and must include specific information about the property, the sale, and the lienholder conducting the sale.

If proper notice is given, the IRS has a 120-day post-sale redemption right under 26 U.S.C. § 7425(d). During this period, the United States can redeem the property by paying the purchaser the sale price plus certain costs and interest. Only after the 120-day period expires without redemption is the federal tax lien truly extinguished.

If proper notice was not given — as in the Renton scenario described above — the federal tax lien survives the trustee sale entirely. The investor takes title subject to the lien, and the IRS can enforce it through its own foreclosure procedures.

Judgment Liens

Judgment liens in Washington are created by recording an Abstract of Judgment with the County Auditor under RCW 4.56.200. A judgment lien attaches to all real property owned by the judgment debtor in the county where the abstract is recorded. The lien's priority is determined by its recording date.

A judgment lien that was recorded after the foreclosing deed of trust is junior and will be extinguished by the trustee sale. However, a judgment lien recorded before the deed of trust will survive. This can occur when a borrower obtained a judgment against them, then later refinanced or took out a new mortgage. If the new lender failed to require payoff of the judgment as a condition of the loan, the judgment lien retained its senior priority.

King County Superior Court maintains the judgment database, and abstracts are recorded with the King County Recorder. Investors must check both the Recorder's grantor/grantee index and the Superior Court's judgment docket to identify all potential judgment liens.

Mechanics' Liens

Washington's mechanics' lien statute, RCW 60.04.021, creates a "relation back" priority that can disrupt normal recording rules. A mechanics' lien recorded after a deed of trust may nevertheless have priority over that deed of trust if the "commencement of labor or professional services or first delivery of materials or equipment" occurred before the deed of trust was recorded.

In practice, this means a contractor who began work on a property in December 2019, but did not record their lien until March 2020, may have priority over a deed of trust recorded in January 2020. The lien relates back to the commencement of work, not the recording date.

Foreclosure purchasers at trustee sales face significant risk from mechanics' liens because determining the actual commencement date requires investigation beyond the recorded documents. Permit records from the King County Department of Local Services or the City of Seattle Department of Construction and Inspections may provide clues, but the legal commencement date is a factual question that may require testimony from contractors, subcontractors, or material suppliers.

HOA and Condominium Assessments

Washington does not grant homeowners association liens the "super-lien" priority that some states provide. Under RCW 64.34.364 (for condominiums) and RCW 64.38.020 (for other HOAs), assessment liens are generally junior to recorded deeds of trust. A trustee sale by a first-position lender will typically extinguish HOA liens that recorded after the deed of trust.

However, there is an exception for condominiums under RCW 64.34.364(3): the association's lien for assessments that came due during the six months immediately preceding the foreclosure sale has priority over a first security interest recorded before the assessment delinquency. This limited super-lien means six months of condominium assessments will survive even a first-position trustee sale.

For a condominium in downtown Seattle with monthly assessments of $800, this represents a $4,800 liability that survives foreclosure. For luxury high-rises with assessments exceeding $2,000 monthly, the surviving amount can exceed $12,000.

Why Standard Title Searches Miss These Issues

Investors often rely on preliminary title reports or basic property searches before bidding at trustee sales. These searches have structural limitations that create blind spots.

A standard title search examines recorded documents in the chain of title. It will identify recorded liens, deeds of trust, judgments, and encumbrances. However, it typically will not:

• Verify whether the trustee provided proper 25-day notice to the IRS for federal tax liens
• Calculate the actual redemption period status for federal tax liens
• Determine the commencement date for mechanics' liens (only the recording date)
• Pull current property tax delinquency amounts with penalties and interest
• Check municipal LID assessment databases outside the Recorder's system
• Identify the six-month super-lien amount for condominium assessments
• Verify whether senior lienholders received proper notice under RCW 61.24.040

Moreover, title companies generally will not insure trustee sale purchases without significant exceptions. The standard ALTA policy exception for "matters which would be disclosed by an inspection and survey" and "rights of parties in possession" can swallow enormous liabilities.

What TitlePin Would Have Shown

A TitlePin report for a King County trustee sale property would have flagged the federal tax lien issue before the investor bid. The report identifies all recorded NFTLs, calculates the recording date relative to the foreclosing deed of trust, and cross-references the trustee sale timeline against the 25-day notice requirement.

For the Renton property, TitlePin would have shown:

• The federal tax lien recorded in 2021, junior to the 2019 deed of trust by recording priority
• The sale date of March 2023, with a notation that proper IRS notice would require mailing by late February 2023
• An alert indicating the investor should verify 25-day notice compliance before bidding, as failure to provide proper notice would result in lien survival

The report also aggregates property tax delinquencies, LID assessments, condominium super-lien amounts, and judgment liens into a single priority analysis. Rather than checking five separate county and municipal databases, the investor sees a consolidated lien stack showing exactly what survives the trustee sale and what extinguishes.

For mechanics' liens, TitlePin flags any recorded lien with a claimed commencement date that precedes the foreclosing deed of trust, alerting the investor to potential priority disputes even when the lien itself recorded later.

The Notice Requirements That Create Hidden Liability

Washington's nonjudicial foreclosure statute contains specific notice requirements that, if not followed, can invalidate the sale or leave liens intact that should have been extinguished.

Under RCW 61.24.040(1), the trustee must mail the Notice of Trustee Sale to "each person identified in RCW 61.24.030(10)" — which includes junior lienholders of record. If the trustee fails to provide proper notice to a junior lienholder, that lienholder's interest may not be extinguished by the sale.

This creates due diligence obligations for purchasers. An investor should review the recorded Notice of Trustee Sale, the trustee's affidavit of mailing, and the declaration of compliance to verify that all required notices were sent. If a junior lienholder was omitted, their lien may survive the sale even though it should have been extinguished by priority rules.

The King County Recorder's Office maintains these documents, but they must be specifically requested. A basic title search pulling only deeds and encumbrances will not include the trustee's procedural filings.

Lis Pendens and Pending Litigation

A lis pendens is a recorded notice that litigation is pending affecting title to the property. Under RCW 4.28.320, any person who acquires an interest in property after a lis pendens is recorded takes subject to the outcome of the litigation.

If litigation was filed challenging the deed of trust, the foreclosure process, or asserting an ownership claim, a recorded lis pendens puts all subsequent purchasers on notice. Even a trustee sale purchaser takes subject to the litigation outcome.

King County Superior Court filings and King County Recorder's lis pendens notices must be cross-referenced. A lis pendens recorded six months before the trustee sale, asserting that the deed of trust was procured by fraud, creates title uncertainty that the trustee sale does not resolve.

Boundary and Survey Issues That Survive Foreclosure

The trustee's deed conveys whatever interest the grantor had in the property. If the legal description in the deed of trust was defective, or if the property has boundary disputes, encroachments, or easement issues, those problems transfer to the foreclosure purchaser.

King County's varied topography — from Seattle's dense urban lots to rural parcels in the Cascade foothills — creates survey issues ranging from encroaching structures to disputed access easements. The trustee sale does not resolve these issues; it simply transfers them.

An investor who purchases a property where the previous owner's garage encroaches two feet onto the neighbor's lot inherits that encroachment problem. The foreclosure does not cure it.

Key Takeaways

• Federal tax liens survive King County trustee sales unless the IRS received proper 25-day pre-sale notice; verify notice compliance before bidding on any property with a recorded NFTL
• Property taxes and special assessment district liens always survive the trustee sale regardless of recording priority; calculate the full amount including penalties and interest
• Condominium association liens for the six months preceding foreclosure have statutory super-priority under RCW 64.34.364(3) and survive first-position trustee sales
• Mechanics' liens with commencement dates preceding the foreclosing deed of trust may have senior priority even when the lien recorded later; permit records and site investigation are essential
• Review the trustee's procedural filings — Notice of Trustee Sale, affidavit of mailing, declaration of compliance — to verify all required notices were sent; improperly noticed junior liens may survive

Sources

• RCW 61.24.030 — Notice of Default requirements
• RCW 61.24.040 — Notice of Trustee Sale requirements
• RCW 61.24.100 — Effect of trustee's deed
• RCW 65.08.070 — Recording priority ("first in time, first in right")
• RCW 84.60.010 — Property tax lien priority
• RCW 35.44.190 — Local improvement assessment lien priority
• RCW 60.04.021 — Mechanics' lien "relation back" priority
• RCW 64.34.364 — Condominium association lien priority and six-month super-lien
• RCW 64.38.020 — Homeowners association lien priority
• RCW 4.56.200 — Judgment lien creation and recording
• RCW 4.28.320 — Lis pendens effect
• 26 U.S.C. § 6321 — Federal tax lien creation
• 26 U.S.C. § 6323(a) — Federal tax lien validity against certain parties
• 26 U.S.C. § 7425(b) — Notice requirement for nonjudicial sales
• 26 U.S.C. § 7425(d) — 120-day federal redemption period
• IRS Publication 786 — Instructions for preparing notice to IRS
• King County Recorder's Office — Document recording and search
• King County Assessor's Office — Property tax and assessment data
• King County Superior Court — Judgment docket and case filings