The Distressed Property Law, enacted in March 2008, was designed to protect the distressed homebuyer, but in the process the Washington real estate professional was affected. If you work in the real estate industry or are pursing a career as a salesperson or broker, you need to understand this important legislation.

The law protects people facing foreclosure from being taken advantage of by other people looking to profit from their misfortune.

For example, some individuals advertise that they can help people avoid foreclosure by buying their house and renting it back to them, with a promise that the house can be re-purchased at a later date. However, the fine print actually makes it nearly impossible for distressed homeowners to re-buy their house. Thus, the dishonest people get the house for a bargain and eventually make a profit.

The law protects homeowners from this predatory practice, but it also unwittingly includes the practices of honest real estate salespeople. If a seller is facing foreclosure and selling their house with a Washington real estate agent, the agent falls under this law as a “Distressed Home Consultant.” As a salesperson or real estate broker, this makes your job much more involved. As a Washington real estate salesperson, you need to treat these clients differently, not only protecting their best interests, but yours as well. For one, you must provide sellers with additional paperwork, which indicates if the property is in foreclosure or if foreclosure is expected within the next four months. These forms will protect you from suspicion of predatory practices.

This legislation, designed to protect the distressed homeowner, has its proponents and opponents. With your Washington real estate licensein hand, the best advice is to proceed with care when dealing with foreclosures and distressed properties. The law is up for review in April 2009 – watch for any changes it may have on your Washington real estate career.