The Washington Court of Appeals recently issued its opinion in Rowe vs. Klein, which teaches that sellers of property in Washington should exercise caution before agreeing to give a deed with warranties of title, such as a statutory warranty deed.
Adverse Possession Results in Quiet Title Lawsuit, and Statutory Warranty Deed Results in Warranty Lawsuit against Seller.
In Rowe vs. Klein, one neighbor (Rowe) sued another (Klein). Rowe argued that he had acquired title to a portion of Klein’s property by virtue of adverse possession. Specifically, Rowe argued that he had adversely possessed the disputed land for a period of ten years from 1974 to 1984 – long before Klein bought the neighboring property. The trial court agreed and entered judgment in favor of Rowe. In response, Klein sued the person (Adams) who had sold Klein his property in 2008, arguing that Adams breached the warranties of title under the statutory warranty deed by not defending Klein in Rowe’s adverse possession lawsuit. Klein’s lawsuit against Adams was filed more than six years after the sale from Adams to Klein.
Warranty Lawsuit Not Barred by Six-Year Statute of Limitations.
Adams argued that Klein’s lawsuit was time-barred by the six-year statute of limitations that applies to written contracts in Washington. The Court of Appeals disagreed and allowed Klein’s lawsuit against Adams to move forward. In other words, Klein, as buyer, was allowed to sue Rowe, as seller, based on adverse possession by a neighbor that occurred more than 30 years before the lawsuit – all because Adams gave Klein a statutory warranty deed in a sale that closed more than six years before the lawsuit.
Statutory Warranty Deeds Can Have Long-Lasting, Unintended Consequences.
Many real estate professionals use statutory warranty deeds on a regular basis, often as a matter of habit. But as Rowe vs. Klein illustrates, statutory warranty deeds can have far-reaching, unintended consequences for sellers. Sellers should carefully consider with their attorney whether or not they should give the buyer a statutory warranty deed.