Normally, the priority of an interest in real property is determined according to the date when the interest was recorded in the Recorder's Office of the county in which the property is located. The first interest recorded has first priority. When an interest is satisfied, junior interests are elevated to the next priority level. If a landowner is forced to sell the property to satisfy a debt through foreclosure, the priority of interests determines the order for distributing sale proceeds. Equitable subrogation is a remedy whereby a court gives a subsequent interest holder priority over a prior recorded interest because the subsequent interest replaces a senior lien. This leap in priority may effectively deny the intervening lienor the opportunity to foreclose and be paid for the lien. When a court decides whether or not to apply equitable subrogation, it is forced to apply an all-or-nothing remedy when better alternatives exist. In Kim v. Lee, the Washington State Supreme Court adopted the Restatement (Third) of Property's rule for applying equitable subrogation but failed to apply the accompanying remedy of bifurcation. This Note argues that the Washington Supreme Court should have bifurcated the lien priorities of the refinance lender and intervening lienor. This Note concludes that bifurcation is a superior remedy because it strikes the appropriate balance between the legal framework that determines lien priority and the need for equitable remedies.
Brad A. Goergen,
Notes and Comments,
The Error of Kim v. Lee and Equitable Subrogation: Why Birfucating Lien Priorities Is a Better Remedy,
77 Wash. L. Rev.
Available at: https://digitalcommons.law.uw.edu/wlr/vol77/iss1/6