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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

District of Columbia

Deed of Trust is used almost exclusively, although mortgages may also be used. Note: There is little or no law in the District of Columbia on the foreclosure of mortgages, so deeds of trust are strongly recommended.

SECURITY INSTRUMENT USED

Deed of trust must comply with all of the requirements of a deed, including notary acknowledgments of signatures, complete legal description, and the lot and square reference of the property; no witness for individuals. Corporations may only sign by (i)&nbsp;an attorney-in-fact appointed in the document for that purpose, or (ii)&nbsp;the president or vice president if also attested by the secretary or assistant secretary (and a corporate seal must be attached). The name and address of each party must be typed or printed above or below the signature of the party. The “Return to” mailing address must be legibly printed on every document brought for recording. All deeds and deeds of trust must be accompanied by a Real Property Recordation and Transfer Tax Form (FP7/C), residential deeds of trust and modifications must be accompanied by a Security Affidavit. Deeds of trust must be recorded within 30 days after execution. Recorder of Deeds is authorized to receive for recording electronic or digital documents meeting the standards of the Uniform Real Property Electronic Recording Act of 2005 (D.C. Code &sect;&nbsp;42-1231 et seq.).

RECORDING REQUIREMENTS

Waiver of trial by jury (bold and conspicuous type).

STATUTES TO BE WAIVED

See below for escrows; prepayment penalties prohibited on a residential loan if prepaid any time after 3 years from execution of the loan. Residential borrowers have a right to cure defaults and reinstate a loan at any time up to 5 business days prior to a foreclosure sale not more than once in any 2 consecutive calendar years. The provision regarding a general or specific power of attorney to authorize an attorney-in-fact to sell, grant, or release any interest in real property was repealed on February 23, 2023.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

All future advances are secured. Single family residential credit line deeds of trust must contain the following language on the front page of the deed of trust either capitalized or underlined: “THIS IS A HOME EQUITY CREDIT LINE DEED OF TRUST. DEFAULT ON PAYMENTS MAY RESULT IN THE LOSS OF YOUR HOME.” Priority is granted upon filing, however, non-mandatory advances made after notice received from a judgment creditor will not have priority. Mechanic's liens have priority over advances subsequent to filing of notice, but not over those filed prior to the notice of mechanics lien.

SECURING FUTURE ADVANCES

If deed of trust encumbers residential real property and down payment equals 20% or more of purchase price (for purchase) or appraisal shows borrower has 20% or more equity (for refinance), lender is not permitted to require advance payments (escrow) for taxes and insurance. However, there are broad exemptions to this provision for entities such as FNMA, FHLMC, and banks with offices in the District of Columbia.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

CORPORATE OR INDIVIDUAL

RESIDENCY REQUIRED

The District of Columbia recognizes both statutory (non-judicial pursuant to power of sale granted in deed of trust) and judicial foreclosure, but the majority of foreclosures are non-judicial. Foreclosure by power of sale: borrower defaults; lender accelerates note; notice including mediation and housing counseling information to borrower by certified mail return receipt; copy of notice sent and received by office of Recorder of Deeds; Affidavit of Non-Residential Mortgage Foreclosure (on District of Columbia promulgated form) filed with the office of Recorder of Deeds prior to or contemporaneously with notice of foreclosure; trustee advertises sale; public sale to occur no earlier than 30 days after the foreclosure notice is received by the Recorder of Deeds; public sale is often cried by a District of Columbia auctioneer (but is not legally required); successful bidder delivers purchase money to title company on closing date set forth in advertisement; deed delivered to buyer; upon delivery of deed, property is conveyed. There are no statutory advertising requirements. Advertising is set by the terms of the deed of trust and custom and practice (typically 5 times every other day for 2 weeks prior to the sale). Effective March 12, 2011, the District of Columbia enacted special foreclosure procedures related to deeds of trust encumbering 1-4-family dwellings. See Residential Foreclosures below.

BRIEF DESCRIPTION OF PROCEDURE FOR COMMERCIAL LOANS

Required to give at least 30 days' notice of the sale. Can advertise during this period. Typically 45 to 90 days (for residential foreclosures, commencing after completion of any required mediation).

TYPICAL LENGTH OF PROCEDURE

No statutory requirements. Set by terms of deed of trust, custom and practice.

FORECLOSURE BID REQUIREMENTS

There is no statutory right to redeem property after the completion of a foreclosure sale. There is a limited right to cure residential mortgage defaults up to 5 business days prior to commencement of bidding, provided that the Mortgagor is only allowed to cure 1 time in any 2 consecutive years.

REDEMPTION PERIOD AND PRICE

No redemption period following mortgage foreclosure.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

Judgment valid for 12 years. &nbsp;Action in equity. No “one action rule.”

DEFICIENCIES

Junior leases may be terminated with proper notice and reason whether or not lessee is made a party, unless lessee has “non disturbance” rights. Foreclosure advertisement usually sets terms. Notice to Tenant of foreclosure is not required, but the fee simple interest in the event of a foreclosure is taken subject to the tenancy of a residential tenant (other than a record life tenant, record remainderman, or record title holder or owner of possessory interest under an estate for life or lease or ground rent for a term of at least 30 years).

EFFECT OF FORECLOSURE UPON LEASES

Saving D.C. Homes from Foreclosure Act of 2010, as amended (“DC Foreclosure Act”), was enacted in response to the residential mortgage foreclosure crisis. Applies to all deeds of trust encumbering 1-4-family dwellings, including condominium and cooperative units, regardless of who occupies the dwellings. Requires that a Notice of Default on Residential Mortgage (the “Notice of Default) in the form prescribed by the Commissioner of the DC Department of Insurance, Securities and Banking (the “ISB”) and an offer of mediation be sent to each borrower subject to the deed of trust before a lender can foreclose. The Notice of Default must be filed with the ISB. The regulations implementing the DC Foreclosure Act govern the form, scope and time for mediation. Compliance with the mediation requirement is evidenced by a mediation certificate (the “Mediation Certificate”) issued by the Mediation Administrator in the ISB. The mediation may take up to 210 days to conclude. Only after filing of the Mediation Certificate with the Recorder of Deeds can the lender file the Notice of Intention to Foreclose a Residential Mortgage, which formally commences the foreclosure action. If a residential foreclosure occurs without the Mediation Certificate being filed of record prior to the commencement of the action the foreclosure is void as a matter of law. The Mediation Certificate filed of record “is conclusive evidence that all other provisions of the Act and implementing regulations have been complied with and can be relied upon by a bona fide purchaser and a bona fide purchaser's lender or assignees.” Notwithstanding the previous sentence, thought, there is still uncertainty among lenders and title insurance companies about whether a recorded Mediation Certificate will be sufficient to bar homeowners from bringing additional challenges to the foreclosure after the required mediation. Borrower retains the right to assert a claim for fraud or to pursue lender for monetary damages.

RESIDENTIAL FORECLOSURES

USURY CEILING

Any loan insured or guaranteed under the National Housing Act or if the interest rate is subject to regulation by an officer or agency of the federal government. Also loans to individuals or entities that are made for the purpose of acquiring or carrying on a business, professional, or commercial activity are exempt from usury ceiling.

USURY EXEMPTIONS

D.C. Recorder of Deeds (for both fixture filings and chattel filings). Online filing is also available.

LOCATIONS FOR FILING

Yes (provided, of course, that the security instrument meets the standard UCC requirements for use of a security instrument as a fixture filing (see D.C. Code &sect;&nbsp;28:9-502)).

SECURITY INSTRUMENT AS FIXTURE FILING

The District of Columbia has adopted UCC Revised Article&nbsp;9. The national UCC Article 9 forms provided by the IACA International Association of Commercial Administrators are the only versions that will be accepted for filing, effective July 1, 2023 (see OTR Tax Notice 2023-05).

REVISED UNIFORM COMMERCIAL CODE

None. Court rules permit confessed judgments without judicial approval only upon the filing of a praecipe signed by the defendant and a certification that the confessed judgment was executed by the defendant after the complaint was filed. Some case law holds that lender must first pursue the maker. Thus, automatic confession of judgment in note is not enforceable.

UNUSUAL PROVISIONS OR REQUIREMENTS

Trial by jury waived—bold face and conspicuous.

None. As noted above, there is no “one action rule” or similar limitation on secured party's enforcement rights.

SPECIAL PROBLEMS IN ENFORCEMENT

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

Recovery of land, 15 years; damages for an injury to real or personal property, 3 years.

STATUTE OF LIMITATION PERIOD

Certificate of satisfaction or deed of release.

REQUIREMENTS FOR RELEASE OF LIEN

None (except “homestead exemption” may provide partial tax relief from real property tax as to owner-occupied residential real estate).

HOMESTEAD ISSUES

Not a community property jurisdiction.

COMMUNITY PROPERTY

MORTGAGE TAX

DOCUMENTARY STAMP TAX

1.1% of sales price on residential property under $400,000, 1.45% on residential property $400,000 and above, as well as all non-residential property.

RECORDATION TAX

1.1% of sales price on residential property under $400,000, 1.45% on residential property $400,000 and above, as well as all non-residential property. On Foreclosure Sale: Trustee's deed—same. On Deed in Lieu of Foreclosure: Same—based upon consideration. The Recordation Tax is also due on deeds including a Trustee's deed or deed in lieu of foreclosure. Thus, on commercial transactions over $400,000, there is a total of 2.9% of the consideration due and commercial transactions over $2,000,000, there is a total of 5% of the consideration due, which is typically paid on a 50/50 basis by seller and buyer. Transfers of an “economic interest” in real property are subject to taxation in the amount of the combined Recordation and Transfer tax, i.e., 2.9% or 5%. A “transfer of economic interest” is the transfer of a controlling interest (by 1 or more persons in 1 or more transactions within any 12-month period) in an entity that, during the 12-month period prior to such transfer, (a)&nbsp;derives more than 50% of its gross receipts from the ownership or disposition of real property in the District, or (b)&nbsp;owns real property in the District comprising 80% or more of the value of the entity's tangible asset holdings. Such transfers are to be evidenced by recordation of an economic interest deed. A “controlling interest” is defined as a transfer of more than 50% of the interests in the entity. Multiple transfers during any 12-month period are aggregated. As of October 1, 2009, a transfer of an interest in a cooperative housing association in connection with the grant, transfer or assignment of a proprietary leasehold or other proprietary interest, in whole or in part, constitutes a “transfer of an economic interest”. Exemptions from the DC Deed Recordation Tax are set forth in D.C. Code &sect;&nbsp;42-1102 and include purchase money deeds of trust to the extent such deeds of trust are recorded simultaneously with the deed transferring the property and recordation tax is paid on the deed. (see D.C. Code &sect;&nbsp;42-1103, which allows the exemption so long as the purchase money deed of trust is recorded within 30 days after the recordation of the deed transferring the property). If existing debt is being refinanced, the recordation tax applies only to the principal amount of the new debt in excess of the principal balance due on the existing debt to the extent that such existing debt (including any prior debt that was previously refinanced by the existing debt) was (i)&nbsp;previously taxable and the tax thereon was timely and properly paid; or (ii)&nbsp;exempt under D.C. Code &sect;&nbsp;42-1102 or not otherwise taxable, including purchase money deeds of trust.

TRANSFER TAX

Yes, to the extent enforcement of specific provision(s) does not violate public policy.

ENFORCEABILITY OF AGREEMENT AS TO CHOICE OF LAW PROVISIONS

Appointment of receiver to safeguard tenants in rental housing accommodation upon petition to DC Superior Court by the Attorney General for the District of Columbia, or written request by majority of tenants to the Attorney General for the District of Columbia. Subject to discretion of the judge. Provisions in loan documents permitting appointment on an ex parte basis typically not enforced.

RECEIVERSHIP

Generally, cannot charge more than 1 point. Exceptions: “federally related” first mortgage home loan; certain business and instrument loans in excess of $1,000; and loans where borrower agrees “for the sole purpose of qualifying for and obtaining a loan . . . at a lower rate of interest than what otherwise would have been offered.”

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

The Home Loan Protection Act of 2002 imposes numerous requirements on high cost loans. Covered loans include first deeds of trust securing loans with an interest rate greater than 6% above the comparable treasury, second deeds of trust securing loans with an interest rate greater than 7% above the comparable treasury, and loans with origination/discount points exceeding 5% of the loan. Lenders making covered loans must send the borrower a Red Flag Warning Disclosure Notice and within 14 days of funding, the lender must send to the Mayor a package of closing documents including copies of the settlement statement and note. Covered loans may not include default interest, may not have prepayment fees and may not have negative amortization. In general, loans made or purchased by FNMA, FHLMC, or a bank, trust company, savings and loan association, or savings bank that is regulated and supervised by a supervising federal agency are exempted.

PREDATORY LENDING

Generally, a license from the Superintendent of the District of Columbia Office of Banking and Financial Institutions is required to engage in business as a mortgage lender in the District of Columbia. However, some are exempt from this requirement including, among others, the following: (a)&nbsp;any bank, trust company, savings bank, savings and loan association, or credit union incorporated or chartered under the laws of the United States, any state or territory of the United States, or the District of Columbia, and any other financial institution incorporated or chartered under the laws of the District of Columbia or of the United States, that accepts deposits and is regulated under Title 26 of the District of Columbia Official Code, (b)&nbsp;any insurance company authorized to do business in the District of Columbia, and (c)&nbsp;any corporate instrumentality of the United States government. (see D.C. Code &sect;&nbsp;26-1102) MODIFICATION - UNUSUAL PROVISIONS OR REQUIREMENTS FOR MODIFICATIONS OF EXISTING MORTGAGE LOANS: None.

LENDER QUALIFICATION AND/OR LICENSURE

None. LABOR AND MATERIALMEN'S LIEN CLAIMS (“L&M LIEN”) - PRIORITY ISSUES

ENVIRONMENTAL LIEN LAW ISSUES

L&M Liens are generally preferred to all encumbrances that attach or are recorded after commencement of work; except that such a lien shall not “affect the priority of a [purchase money] mortgage or deed of trust &hellip;, if the same be recorded within 10 days from the date of acknowledgment thereof.” The claimant must file a notice of intent during the construction or within 90 days after the earlier of completion or termination of work in order to perfect its L&M Lien. A valid notice of intent must meet several statutory criteria set forth in D.C. Code &sect;&nbsp;40-301.02. However, L&M Liens will have priority over construction loans only to the extent of advances made after the filing of a notice of L&M Lien. If (i) an action to enforce a mechanic's lien is not filed within 180 days from the date of recording a notice of lien and (ii) a notice of pendency of action is not recorded within 10 days of filing suit, the lien is deemed released. When such construction work is done by or for a tenant or a party having an equitable interest in the building or land on which it stands, L&M Lien shall only extend to and cover the estate of such tenant or equitable owner.

INCEPTION OF L&M LIEN (Priority of Deed of Trust or Mortgage)

L&M Lien includes “any engine, machinery, or other thing therein or in connection therewith so as to become a fixture, though capable of being detached.” Same perfection and priority rules discussed above are applicable.

PRIORITY AS TO REMOVABLE FIXTURES (Priority of Lien of Deed of Trust or Mortgage)

FORM USUALLY REQUIRED BY LENDER

All standard ALTA form endorsements including Comprehensive, Zoning, Usury, and Survey. Endorsements for L&M Lien are subject to negotiation with the title company. The District of Columbia is a filed-rate jurisdiction. &nbsp;

District of Columbia

Mortgage Law Summary

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Mortgage Law Summary for District of Columbia

District of Columbia

Mortgage Law Summary

Continue reading theMortgage Law Summary for District of Columbia

Continue reading the
Mortgage Law Summary for District of Columbia