Charles Boyd Olson and Janine Olson v. Unison Agreement Corporation

Seattle, Washington consumer credit lawyers represented the Plaintiffs who sued on a Washington Consumer Protection Act Violation theory.



The Olsons have resided in their home in Kent, Washington, since their

marriage in 1990. In early 2019, at a time when they were experiencing financial

difficulties, the Olsons received a flyer in the mail from Unison that offered a way

to obtain needed cash. The flyer stated, in relevant part (footnotes and emphasis

omitted):



Great news! You're pre-approved to access the equity

locked in your home.



With Unison, you can receive $79,850 and use that money

for any purpose you choose—with no monthly payments and

no interest. Yes, you read that correctly. It's almost too good

to be true.



This offer is possible because Unison invests in your

home—with you. We pay you a percent of your home's

current value. You make no payments to us until you sell. If

the value of your home increases from its current value, when

you sell, Unison will share in a portion of the increase and

make a profit. If the value decreases, we incur a loss. It's that

simple.



It's quick and easy. Unison can provide the funds you

need without the burden of additional debt. Contact us today!

In three side boxes, the flyer also stated: (1) "NO INTEREST CHARGES Unlike

a home equity loan or home equity lines of credit, you'll pay no interest with

Unison.”; (2) "NO MONTHLY PAYMENTS Use the money now, for up to 30

years, and pay nothing until you decide to sell.”; and (3) "NO ADDED DEBT By

partnering with Unison you do not take on any additional debt.”

After inquiring about the offer, the Olsons signed a "HomeOwner

Agreement” with Unison, as well as other related documents, on March 26, 2019.



Under the terms of the amount of $64,750 in exchange for "an option to purchase,” in the future, an

undivided "70.00% ownership” of the Olsons' home (which was then valued at

$370,000) for another payment of $194,250.1 The Olsons were also required to

pay $2,525 in fees to complete the transaction and obtain the funds. Unison's

rights under the contract, and the Olsons' obligations, are secured by a deed of

trust recorded on the property.



Unison's option can be exercised upon the following triggering events:

(1) the expiration date of the contract in 30 years, (2) the sale of the property,

(3) the death of the last surviving owner, or (4) "following a material and uncured

event of Owner default.” If the triggering event is expiration of the contract or

death of the owners, then upon exercise of the option and recording of Union's

70% interest as a co-owner, the property is to be promptly sold in order to pay

Unison the value of its 70% interest in the property and any other amounts due to

it. If the triggering event is an uncured default, then Unison can either conduct a

nonjudicial foreclosure sale or, with the Olsons' agreement, elect to conduct an

"orderly market sale.” The agreement thus contemplates that, upon exercise of the

option, the property in all events would be promptly sold and Unison would be

paid what was owed to it. In the event of a sale, all expenses and closing costs

would be paid entirely from any sales proceeds owed to the Olsons and not those

owed to Unison.



Because exercising the option would give Unison a percentage interest in the

property and not a fixed sum, the actual amount due to Unison after an exercise of

the option and a sale could vary. A table provided to the Olsons showed some of

the possible scenarios. For example, if the appraised value at the time the option

was exercised was $518,000, a 70% equity interest would equal $362,600, and by

purchasing that equity interest for $194,250, Unison would earn $168,350 in net

proceeds, which would amount to a $103,600 gain on its initial payment of

$64,750. But if the home was still worth only $370,000, a 70% equity interest

would be $259,000, and Unison's payment of $194,250 would net $64,750, which

would mean a $0 return on its then-recouped initial payment. But because the

decision to exercise the option would rationally depend on the marginal value of

exercising it, Unison would be expected to do so unless and until the value of its

70% share dropped below the marginal option exercise price of $194,250. That

could occur only if the value of the house dropped by more than 25%, i.e., to less

than $277,500; at that point, a 70% interest would be worth $277,500 x 70%,

which equals $194,250.5



The agreement stated that Unison's product "is not designed for use as short-

term financing,” and it therefore provided that if the Olsons decided to sell the

house within three years and the house value has declined, the Olsons would have

to pay Unison back its initial $64,750 payment and any unpaid owner obligations.



After the third anniversary of the HomeOwner Agreement, the Olsons can

terminate the contract, without a sale, only by paying a "Special Termination

Price” that would be the greater of (1) the sum of Unison's initial $64,750

payment and any additional owner obligations that had accrued; or (2) the amount

that Unison would obtain if the house were to be sold at that time. Thus, unless

and until a triggering event occurred, the Olsons could get out of the agreement

only by paying back the full $64,750 plus Unison's share of any increase in the

home's value. In other words, so long as the Olsons wished to stay in their home,

they could only cancel the agreement by paying Unison back the full $64,750 they

had received (plus, possibly, more).



In 2021, the Olsons thought about selling their home, but they realized that,

in light of the HomeOwner Agreement and their pre-existing conventional

mortgage, "they would receive almost nothing from the sale” of the property. In

December 2022, the Olsons brought a class action complaint in state court against

Unison, alleging that "Unison's HomeOwner Agreement product meets nearly all

of the criteria for a reverse mortgage loan and functions as a reverse mortgage6

and is therefore "subject to Washington law regulating such loans.” The complaint

asserted that, by failing to comply with such laws, and by engaging in unfair and

fraudulent practices, Unison had violated the WCPA.

The district court granted Unison’s motion to dismiss, holding that Unison’s HomeOwner Agreement was not a “loan” and that all of the Olsons’ WCPA claims failed.



Reversed