State CRE Guide

Washington Commercial Real Estate Loans: REET & C-PACER

What changes for a commercial property loan in Washington: graduated REET up to 3% plus local REET, entity transfers, trustee’s sale foreclosure and C-PACER.

By BestLoanUSA Updated October 10, 2026 4 min read

Washington at a glance for commercial property loans
What	Washington	Source
State real estate excise tax (REET)	Graduated by selling price: 1.1% on the portion up to $525,000, 1.28% from $525,000.01 to $1,525,000, 2.75% from $1,525,000.01 to $3,025,000 and 3% above that (thresholds in effect since January 1, 2023). Agricultural land and timberland pay a flat 1.28%. The seller usually pays; the buyer is liable if it goes unpaid.	Washington Department of Revenue — Real estate excise tax (RCW 82.45.060)
Next threshold change	The thresholds are adjusted every four years. From January 1, 2027 the tiers become $551,000 (1.1%), $1,551,000 (1.28%) and $3,051,000 (2.75%), with 3% above that.	Washington Department of Revenue — Real estate excise tax (RCW 82.45.060)
Local REET	Cities and counties add a local REET on top of the state tax, at 0.25% or 0.50% in most locations, by the location code in the Department of Revenue’s local rate table (rates effective May 1, 2026). San Juan County is 2.00%.	Washington Department of Revenue — Local Real Estate Excise Tax Rates, effective May 1, 2026
Controlling-interest transfers	Transferring or acquiring a controlling interest — 50% or more of an entity that owns Washington real property — within a 36-month period is a taxable sale of that property, taxed on its true and fair value. The return is due within five days of the completed transfer.	Washington Department of Revenue — Real estate excise tax, controlling interest transfers (WAC 458-61A-101)
Foreclosure process	A deed of trust can be foreclosed without a lawsuit by trustee’s sale under the Deeds of Trust Act. The notice of default goes out at least 30 days before the notice of sale, and the notice of sale is recorded at least 90 days before the sale; on a commercial loan it is titled “Notice of Trustee’s Sale of Commercial Loan(s).”	RCW 61.24.030 and 61.24.040
Deficiency after a trustee’s sale	No deficiency judgment is allowed after a trustee’s sale except on deeds of trust securing commercial loans. On a commercial loan the lender can seek a deficiency against a guarantor who was given the notices required by RCW 61.24.042, and the action must be started within one year after the sale.	RCW 61.24.100
C-PACER law and programs	Chapter 36.165 RCW (2020) lets each county adopt a commercial property assessed clean energy and resiliency (C-PACER) program, repaid through an assessment on the property. Existing mortgage holders must consent in writing, and the C-PACER lien then ranks ahead of all other liens except taxes. Clark, Pierce, Snohomish and Whatcom counties are among those that have adopted programs.	RCW 36.165.070; Clark County C-PACER program
Clean Buildings Performance Standard	Tier 1 buildings — more than 50,000 sq ft of nonresidential, hotel, motel and dormitory floor area — must meet the state energy standard by June 1, 2026 (more than 220,000 sq ft), June 1, 2027 (90,001–220,000 sq ft) or June 1, 2028 (50,001–90,000 sq ft).	Washington Department of Commerce — Clean Buildings, Tier 1 compliance (RCW 19.27A.210)

Checked 2026-10-10. Rates and rules change — your title company and closing attorney confirm the figures for a specific deal.

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Commercial property loans in Washington use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What Washington changes is a graduated excise tax on the sale that climbs to 3% at the top and also reaches sales of the entity that owns the building; a foreclosure process that runs out of court but, on a commercial loan, still leaves a guarantor exposed; and county C-PACER programs alongside a statewide energy standard for large buildings.

A graduated excise tax on the sale

Washington's real estate excise tax (REET) is figured in tiers, like an income tax bracket: 1.1% on the part of the selling price up to $525,000, 1.28% on the next $1,000,000, 2.75% from $1,525,000.01 to $3,025,000 and 3% on anything above. Cities and counties then add a local REET on the whole price — 0.25% or 0.50% in most locations, and 2.00% in San Juan County. The seller usually pays; if it goes unpaid, the buyer is liable. The tax is measured by the selling price, so the size of the loan does not change it.

Example: a $2,000,000 building bought with a $1,400,000 loan.

State REET: $525,000 × 1.1% = $5,775; $1,000,000 × 1.28% = $12,800; $475,000 × 2.75% = $13,062.50 — $31,637.50
Local REET at 0.50%: $10,000 ($5,000 at 0.25%)
Total: $41,637.50 — or $36,637.50 where the local rate is 0.25%

At the 0.50% local rate, the $41,637.50 total is about twice Florida's $21,700 and more than four times Minnesota's $9,820. The tiers move on January 1, 2027, to $551,000, $1,551,000 and $3,051,000; on the same $2,000,000 sale the state portion then falls to $31,208.50. Because the seller pays, the tax shows up in the price a seller will accept more than in the buyer's closing costs.

Washington also taxes a change of control. Transferring or acquiring 50% or more of an entity that owns Washington real property within a 36-month window counts as a sale of the property, taxed on its true and fair value, with the return due within five days. If you plan to bring in an equity partner, recapitalize or buy out a co-owner, count every transfer in the window before you sign.

Trustee's sale foreclosure — and the guaranty after it

Most Washington commercial loans are secured by a deed of trust, which a trustee can foreclose without going to court under the Deeds of Trust Act (chapter 61.24 RCW). The trustee sends a notice of default, waits at least 30 days, then records a notice of sale at least 90 days before the sale; on a commercial loan the notice is titled "Notice of Trustee's Sale of Commercial Loan(s)." That gives a borrower in default about four months from the first notice to cure, refinance or sell.

What matters most for a business owner is what happens after the sale. RCW 61.24.100 bars deficiency judgments after a trustee's sale, but makes an exception for deeds of trust that secure commercial loans: the lender can pursue a guarantor for the shortfall — provided the guarantor was given the notices required by RCW 61.24.042 — and has one year after the sale to start that action. So the personal guarantee you sign on a Washington commercial loan is a real exposure even when the building is sold out of court. On a non-recourse loan, read the carve-outs that would turn recourse back on.

C-PACER and the Clean Buildings standard

Chapter 36.165 RCW, passed in 2020, lets each county adopt a C-PACER program — commercial property assessed clean energy and resiliency — under which a private capital provider funds energy, water or resiliency work and the owner repays through an assessment on the property. Counties opt in one at a time; Clark, Pierce, Snohomish and Whatcom are among those with programs. Existing mortgage holders must consent in writing, and once they do, the C-PACER lien ranks ahead of all other liens except taxes. C-PACE Desk, a BestLoanUSA site, tracks Washington's C-PACE status. Bring your current lender in early — without its consent the financing can't close.

The reason many owners look at C-PACER is the state's Clean Buildings Performance Standard. Tier 1 buildings — more than 50,000 square feet of nonresidential, hotel, motel and dormitory space — must meet the state energy standard on a schedule set by size: June 1, 2026 for buildings over 220,000 square feet, June 1, 2027 for 90,001–220,000, and June 1, 2028 for 50,001–90,000. A lender underwriting a building in that range will want to know where it stands, because the upgrade cost comes ahead of the deadline.

Where to start

Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and work the excise tax into the price you offer. Size the loan with the commercial mortgage calculator. For financing that isn't tied to real estate, the Washington business loan guide covers SBA offices and state programs.

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Sources: Washington Department of Revenue, Real estate excise tax (RCW 82.45.060; controlling interest, WAC 458-61A-101) and Local Real Estate Excise Tax Rates effective May 1, 2026; RCW 61.24.030, 61.24.040, 61.24.042, 61.24.100; chapter 36.165 RCW (RCW 36.165.070) and Clark County C-PACER program; Washington Department of Commerce, Clean Buildings Performance Standard, Tier 1 compliance (RCW 19.27A.210). Checked 2026-10-10.

The bottom line

Washington’s real estate excise tax is graduated, so a $2,000,000 building carries about $31,600 of state tax before the local 0.25%–0.50% that applies in most locations — budget roughly $36,600 to $41,600, and remember it reaches entity sales of 50% or more too. The tax is the seller’s, but it shapes the price on both sides. Foreclosure usually runs out of court through a trustee’s sale, and on a commercial loan a lender can still pursue a guarantor afterwards, so read the guaranty as closely as the note. For an upgrade, ask whether your county has adopted C-PACER and whether your building faces a Clean Buildings deadline.

Commercial loan rates and terms in Washington

Rates and leverage come from the lender, the property and the borrower, so they are the same national ranges in Washington as elsewhere — what changes here are the closing costs and rules in the table above. Typical terms as of September 2026:

Program	Rate	Max LTV / LTC	Term
Bank / credit union	6.5–8%	65–75% (80% multifamily)	5–10 yr
SBA 504	6.25–7.25%	Up to 90%	10–25 yr
SBA 7(a)	8.5–11.5%	Up to 90%	Up to 25 yr
DSCR	6.75–8.75%	Up to 75–80%	5–30 yr
CMBS	7–8%	Up to 75%	5–10 yr
Bridge	6.25–8.25%	65–80%	12–36 mo
Construction	6.75–10.5%	65–80% LTC	12–24 mo

How each range is built: commercial real estate loan rates by type.

Washington commercial real estate loan FAQ

What are commercial mortgage rates in Washington?

Commercial lenders price a loan on the property and the borrower rather than the state, so Washington rates follow national ranges: about 6.5–8% for a bank loan, 6.25–7.25% for SBA 504, 6.75–8.75% for a DSCR loan and 6.25–8.25% for a bank or debt-fund bridge loan (benchmarks as of September 2026).

How much down payment do I need for a commercial property in Washington?

Typically 25–35% for a bank loan and 20–25% for a DSCR loan. An owner-occupied building can qualify for SBA 504 with 10% down (15% for a business under two years old or a special-purpose building, 20% if both).

What does Washington charge in tax on a commercial property sale?

The real estate excise tax, which is graduated: 1.1% up to $525,000, 1.28% to $1,525,000, 2.75% to $3,025,000 and 3% above, plus a local 0.25% or 0.50% in most locations (2.00% in San Juan County). On a $2,000,000 sale the state portion is $31,637.50, and $41,637.50 with a 0.50% local rate. The seller usually pays.

Does selling an LLC that owns Washington property trigger the excise tax?

It can. A transfer or acquisition of 50% or more of an entity that owns Washington real property within 36 months is treated as a sale of the property, taxed on its true and fair value, and the return is due within five days of the completed transfer.

Can a Washington lender pursue a guarantor after a trustee’s sale?

On a commercial loan, yes, if the guarantor was given the notices the statute requires. Washington bars deficiency judgments after a trustee’s sale except on deeds of trust securing commercial loans; there the lender can seek a deficiency against a guarantor who received those notices, and must start that action within one year after the sale.