Commentary on Washington State law and how it Relates to real Estate

Kevin Steinacker

Deeds in Washington

A deed is legal document that conveys in interest in real property from one person to another. Although there are many similarities, each state has different rules and requirements regarding deeds. Don’t rely on the description of possible deeds for another state if you want to convey property in Washington. By the same token, the information below will not be helpful if you’ve got property outside the Evergreen State.

The basic requirements for a deed in Washington are simple: it must be in writing, contain a legal description of the property, be signed by the grantor, and the grantor’s signature must be notarized. RCW 64.04.020. The legal description is a specific way of describing the property and distinguishing it from any other parcel of property. Washington law is very strict about the requirement of a legal description. An address is not sufficient, nor is a tax parcel number. To be enforceable, a deed must contain either a “metes and bounds” description (a description of the property prepared by a surveyor) or a “lot, block, and plat” description (a description of the property referring to a prior plat recorded in the county records). See Martin v. Seigel, 35 Wn.2d 223, 212 P.2d 107 (1950).

Although many types of deeds are possible, most conveyances in Washington are done with one of three deeds specified by statute:

Statutory Warranty Deed (or just Warranty Deed)
Under RCW 64.04.030, a statutory warranty deed conveys the property together with certain specified covenants from the grantor to the recipient. By using a this deed, the grantor promises the transferee (1) that he or she is the owner of the property and has the right to convey it, (2) that no one else is possessing the property, (3) that there are no encumbrances against the property, (4) that no one with a better claim to the property will interfere with the transferee’s rights, and (5) to defend certain claims regarding title to the property. Warranty deeds are commonly used in purchase transactions where the buyer wants assurances as to the title of the property.

Bargain and Sale Deed
A bargain and sale deed in Washington would be called a special warranty deed in many other states. By using a bargain and sale deed under RCW 64.04.040, the grantor makes some promises regarding title, but the covenants only relate to the period that the grantor owned the property. Thus, the grantor promises (1) that he or she is the owner of the property, (2) that there are no encumbrances against the property during the time the grantor owned it, and (3) that the grantor will not interfere with the transferee’s rights to the property. Bargain and sale deeds are commonly used by banks who have acquired property after foreclosure. A bargain and sale deed could also be used in other situations where the grantor is unwilling to make the broad covenants that go along with a warranty deed.

Quitclaim Deed
A quitclaim deed conveys title with no covenants at all. RCW 64.04.050. The grantor of a quitclaim deed does not even promise that he or she owns the property described in the deed or that he or she has the right to convey it. Quitclaim deeds are used for many purposes, including gifts of property, conveyances to correct prior deeds, and conveyances to settle a legal dispute. Quitclaim deeds are also used simply to confirm that the grantor does not claim any interest in the described property.

Once you have prepared the deed, it is always best to have it recorded in the county records. Recording a deed puts the rest of the world on notice that the transaction has occurred. In the event of a dispute between two grantees, Washington’s recording statute gives priority to the party who recorded first. Any conveyances of an interest in real property is potentially taxable in Washington, so in order to record a deed, the parties must also prepare and sign a real estate excise tax affidavit stating the purchase price or the grounds for any claimed exemption.

If you have additional questions about which deed is right for your situation, you should consult with an attorney licensed to practice law in the jurisdiction where the property is located.

Jury demands for civil lawsuits

A question arose from one of my law students regarding jury demands in a civil litigation setting. (In criminal trials, juries must be unanimous in their pronouncements of “guilty.“) In a civil setting, it is different. A jury may consist of six or 12 individuals and does not need to be unanimous in issuing a verdict. Rather, they must have a significant majority in order to issue a verdict: five out of six, or 10 out of 12.  RCW 4.44.380.

Civil Rule 38 provides that if a jury demand does not specify the number of injuries, it will be a six-member jury. Thus, you must specifically state that you would like 12 members of the jury in your jury demand, otherwise the default number is six.  Civil Rule 48 also allows for stipulation regarding a jury, which allows a certain degree of flexibility between the parties in order to arrange their own jury preference:

The parties may stipulate that the jury shall consist of any number less than 12 or that a verdict or a filing of a stated majority of the jurors shall be taken as the verdict or finding of the jury.

This image is public domain.

 

A Claim for Rescission Based on Misrepresentation Survives the Economic Loss Rule and Alejandre

Division Two of the Court of Appeals recently issued an opinion on yet another suit for negligent misrepresentation and fraud by the purchaser of a home against the seller. Jackowski v. Borchelt, 151 Wn. App. 1, 209 P.3d 514 (2009). With two notable exceptions, the opinion predictably follows the precedent established by the Supreme Court in Alejandre v. Bull, 159 Wn.2d 674, 153 P.3d 864 (2007).

Architecture_frameworkJackowski confirms that the economic loss rule holds a party to its contract remedies and affirmed dismissal of the purchaser’s negligence claim against the seller. The opinion further affirmed dismissal of the purchaser’s fraud claim for failure to disclose that the property was in a landslide area where a reasonable inspection prior to closing would have disclosed the landslide risk. Each of these results seems obvious based on Alejandre. The decision therefore underscores a purchaser’s need to either perform a thorough inspection prior to purchasing a home or to insist upon contractual terms detailing the seller’s responsibility for representations as to the condition of the home (or both).

Jackowski dealt with two issues that were not addressed in Alejandre, though: the purchaser’s claim for rescission and claims against the real estate agents involved in the transaction. Jackowski successfully argued that the economic loss rule applies to economic damages, not to equitable relief. Division Two ruled that although the economic loss rule bars recovery, rescission is avoidance of a contract, not recovery. Accordingly, the purchaser’s claim for rescission based on negligent misrepresentation was not barred as a matter of law, despiteAlejandre and the economic loss rule.

Similarly, the economic loss rule did not apply to bar the purchaser’s statutory and common law claims against the real estate agent. The economic loss rule bars tort claims for losses suffered as a result of a breach of duties assumed only by contract. Alejandre, 159 Wn.2d at 682. However, the real estate agent had duties to the purchaser based on common law and on statute (specifically, RCW 18.86), in addition to any duties assumed by contract. The statutory and common law claims were not barred by the economic loss rule, and those claims were improperly dismissed on summary judgment.

After Alejandre, the legal prospects for home buyers who had been the victims of negligent misrepresentation were bleak. The standard contracts used for the majority of residential sales provided no relief for issues with the condition of a home, and it is never easy to prove fraud or fraudulent concealment, even if there is some indication that it may have occurred. The opinion inJackowski might give buyers some hope. It is at least possible to ask for rescission of the contract, and there is a chance of recovery against real estate agents involved in the transaction. Of course, the best advice for buyers is still to take diligent steps prior to closing, rather than to rely on the tenuous claims that may be available to them post-closing.

Can You Lose the Right to Damages from a Nuisance if You Sell the Property Before Trial?

A recent opinion from the Court of Appeals address the issue of standing (“a party’s right to make a legal claim or seek judicial enforcement of a duty or right” according to Black’s).  Division Two handed down its decision in Vance v. XXXL Development, Inc., involving a property owner’s nuisance claim against a developer.  The developer had built a 25-foot high concrete block wall just two feet north of the homeowner’s property line.  The homeowner sold her home prior to trial, and claimed that the sale price was $100,000 lower due to the nuisance.  After the sale, the developer moved to dismiss the suit, claiming that the homeowner no longer had standing to sue.

IWallLincolnBeachViewNorthThe developer relied on RCW 7.48.020, which provides that a nuisance action “may be brought by any person whose property is … injuriously affected or whose personal enjoyment is lessened by the nuisance.” Because the statute describes the damages in the present tense, the developer argued that the homeowner lost standing when she sold the home (ie, at the time of trial, she wasn’t one who is injuriously affected or whose enjoyment is lessened).  The trial court agreed with the developer.

The homeowner argued that the statute was not meant to be read so narrowly.  For example, RCW 7.48.180 allows recovery of damages even after a nuisance has been abated.  Further, the homeowner pointed out that seemingly arbitrary outcomes could result: a homeowner who sold the day before trial cannot recover, but one who sells the day after trial can.  Also, the tortfeasor would have an incentive to drag out litigation and intensify the nuisance, hoping that the homeowner would be forced to move due to the noxious nuisance before trial.

Division Two agreed with the homeowner’s arguments.  It also noted that damages from the nuisance would be more definite if the property had been sold, and emphasized the rule that “the spirit or purpose of an enactment should prevail over express but inept wording.”

Although I agree that statutes generally should be interpreted to mean what they say, Division Two probably made the right decision in this case.  The homeowner here appears to have been damaged, and the purpose of the nuisance statutes is not frustrated by allowing her to recover for the damages incurred when she did own the home.  It also seems to be a stretch to argue, based solely on the use of the present tense, that the legislature intended to exclude as plaintiffs those who have sold their property after inception of the nuisance.  The unanswered question (and there are not enough facts in the opinion to speculate) is whether the developer’s retaining wall actually constitutes a nuisance for which the homeowner should recover.  But at least she has the right to argue her claim.