Which Liens Survive a County Tax Foreclosure in Washington State?

 Which Liens Survive a County Tax Foreclosure in Washington State?

With many of the Washington Tax Foreclosures coming soon, we thought we would do a little blog liens that survive a tax foreclosure in Washington State (this is informational only and not legal advice - please consult your attorney if you wish to purchase at an auction). 

When a property goes through a county tax foreclosure in Washington, most people assume the foreclosure wipes out all liens. But that’s not the whole story. While many liens are cleared, several important categories survive the tax sale — and buyers need to know exactly what they may still be responsible for.

Below is a clear breakdown of which liens are wiped out and which continue to encumber the property after foreclosure.

Liens That Survive a County Tax Foreclosure

1. Federal IRS Tax Liens (When Not Properly Noticed)

A tax foreclosure does not automatically extinguish federal tax liens. Under federal law (26 U.S.C. § 7425):

• The county must send proper written notice to the IRS.

• If the IRS doesn’t receive lawful notice, the lien survives the sale.

• Even if extinguished, the IRS gets 120 days to redeem the property after the sale.

This is one of the most common lingering liens encountered after tax sales.

2. Utility Liens (Water, Sewer, Stormwater)

Many municipal utility charges in Washington run with the land, not the owner. These are statutory super-priority liens created under RCW 35.21, RCW 35.67, RCW 36.94, and related laws.

These can include unpaid:

• Water bills

• Sewer charges

• Storm drainage fees

• Irrigation district assessments

Because they are statutory liens, they are not wiped out by a general tax foreclosure.

3. Local Improvement District (LID / ULID) Assessments

Local Improvement District and Utility Local Improvement District assessments remain attached to the property unless:

• The foreclosure itself was based on the LID delinquency.

If the tax foreclosure was for general property taxes, the LID/ULID assessments survive and remain due after the sale.

These assessments can be significant and often surprise investors who expected a “clean slate.”

4. Environmental Liens (State and Federal)

Environmental cleanup obligations are another category of liens that do not get extinguished. These include:

• Washington MTCA (Model Toxics Control Act) liens

• EPA CERCLA Superfund liens

• Hazardous waste cleanup obligations

Environmental liabilities are considered super-priority and remain attached to the land regardless of ownership changes.

5. Certain Government Fines and Municipal Assessments

Some government-imposed obligations are not traditional liens but still survive foreclosure if the authorizing statute states that the charge runs with the land.

These may include:

• Nuisance abatement costs

• Weed or brush clearing charges

• Building code enforcement assessments

• Solid waste cleanup charges

• Health department orders

If the law says the obligation attaches to the property, then tax foreclosure does not remove it.

Liens That Are Usually Wiped Out

While several liens survive, most private liens do not. A Washington tax foreclosure generally removes:

• Mortgages and deeds of trust

• Judgment liens

• Mechanic’s/construction liens

• HOA liens (for amounts owed before the sale)

• Lis pendens (other than condemnation actions)

These lienholders typically lose their security interest entirely once the county completes the foreclosure process.

Bottom Line

A county tax foreclosure in Washington is not a clean-slate event. While many liens are extinguished, several major categories — including federal tax liens (under certain conditions), utility liens, LID/ULID assessments, environmental liens, and some municipal assessments — can remain attached to the property.

Anyone buying at a tax foreclosure sale should perform careful due diligence to determine:

• Whether the IRS was properly noticed

• Whether utility or LID liens are outstanding

• Whether any environmental actions are pending

• Whether the county is foreclosing on general taxes or an improvement district assessment

Failing to check these items can mean unexpected costs after purchase.

Our investment branch Snohocap.com can help you are looking at purchasing at a tax foreclosure or simply looking to invest in Commercial Real Estate. 

Our Contact: 

Weitz Commercial 

Scott@weitzcommercial.com

T: 206-306-4034

Foreclosures Spike in October - Concerning?

According to CNBC, foreclosure filings are increasing in the US. Our summary and thoughts below. 

CNBC Article 

After years of unusually low foreclosure activity, new data show that U.S. homeowners are beginning to feel strain — and the housing market may be showing fresh signs of distress.

Key Takeaways

• U.S. foreclosure filings surged by about 20 % year-over-year in October 2025, according to property-data provider ATTOM. 

• While still far below the levels seen during the 2008 financial crisis, this uptick signals borrower stress is rising. 

• Areas hit hardest include states where home-values have pulled back and cost burdens are rising — particularly in parts of Florida and Texas. 

What’s Driving the Rise?

• High mortgage rates (the 30-year fixed rate remains above 6 %) make refinancing or moving more expensive for many homeowners. 

• Inflation, rising homeowner-insurance premiums, high property taxes and other cost pressures are squeezing household budgets. 

• Earlier-buyers in high-cost markets are now finding themselves in negative-equity or near-problem situations as some home-prices decline or stall. 

Why It Matters

• The housing market has been one of the more resilient parts of the U.S. economy post-COVID, but higher foreclosure activity suggests the cracks may be widening.

• For real estate investors, fund managers (including those in commercial property), and stakeholders in distressed assets, rising foreclosure activity is a signal worth monitoring — it may foreshadow broader weakness in household finances and real-estate fundamentals.

• While this isn’t yet a systemic crisis, rising defaults and foreclosures raise risk for lenders, servicers and investors in residential real estate, especially in markets with softer home-price trends.

What to Watch Going Forward

• Whether foreclosure filings continue to rise (or accelerate) in coming months as economic pressures persist.

• Regional markets where home-price declines, high unemployment, or high mortgage-rate burdens coincide — these may be hotspots for real-estate distress.

• Impact on supply: more distressed sales and foreclosed properties entering the market could weigh on prices and rental markets in some areas.

Weitz Take: 

This one pretty much speaks for itself. I would say that a 20% increase is certainly notable, but this is very market to market driven at this point. It will be interesting to see if this makes it way to your area. 

National wide market shift according to Zillow

 A recent market overview put out by Zillow. The tide is changing. 

More than half of US homes lost value in the past year

What the data shows: 

• As of October 2025, about 53 % of U.S. homes had lost value over the past year, based on Zillow’s home-value estimates.
• This is the largest share of homes in decline since April 2012.
• Crucially: only around 4.1 % of homes are now worth less than their last sale price, so although many homes are down from peak, most owners still have equity.
• The decline is geographically uneven — certain metros and regions are faring worse than others.

Why it matters

For homeowners, buyers and real-estate investors this trend signals a cooler market — not necessarily a crash, but definitely a shift away from the frenzied appreciation seen in recent years.

• With over half of homes down, the “seller’s market” advantage is fading.
• For those looking to buy or invest: there may be more negotiating leverage and more cautious pricing to account for.
• For owners and sellers: it means longer holds, tighter margins, or reconsidering the exit timing.
• For lenders and credit risk: the fact that only 4.1 % of homes are below sale price is reassuring, but the uptick in value-loss calls for careful monitoring.

Context & caveats

• The metric is about homes that lost value in the past year, not about how many sold at a loss or were foreclosed.
• The fact that so few homes are below their last sale price suggests distress is still limited.
• Local markets matter a lot: national averages mask big regional differences. Some areas are seeing steeper declines, others less so.
• For real-estate fund managers or investors (particularly in distressed or value-add plays) this could indicate opportunity — but it also emphasizes the need for location-specific underwriting, careful stress-testing, and understanding the tail risk in weaker sub-markets.

Weitz Take: 

Ya don't say?..... Obviously this is not a surprise if you'd read this blog. 

The Zillow data illustrate a meaningful shift in the U.S. housing landscape: more than half of homeowners saw their property values decline in the past year. While the widespread panic of a full crash hasn’t hit (yet), the market is clearly moving toward more modest, cautious territory. For real-estate investors and fund managers, this means a mixed bag of risk and opportunity — the winners will be those who stay disciplined, localized, and forward-thinking in their underwriting.

If you have any questions on questions on investing in Snohomish County Real Estate, we'd love to help. 

Scott Weitz

Weitz Commercial

Scott@WeitzCommercial.com

T: 206.306.4034