2013 – April 2014 Real Estate Court Cases in Washington

2013-2014 REAL ESTATE CASES IN WA

Click on the above link for a summary of Washington case law from 2013 through April 2014 on topics such as residential and commercial foreclosures, condominium and homeowner associations, construction disputes, easements, adverse possession, residential and commercial landlord-tenant disputes, title insurance, and various other real estate related topics. If you have any questions about these or other legal issues, please do not hesitate to call Zeno Bakalian at 425-822-1511.

Gift Deeds With No Consideration Recited – Are They Valid?

This issue was addressed in Allison v. Bale, 173 Wn. App. 435 (Feb. 2013), reconsideration granted (Mar. 12, 2013). Here’s what happened in Bale: Bob owned a cabin.  He had two nephews (John and Robert).  Bob regularly took his nephews to the cabin.  Bob married Edna in 1971.  Edna had two adult sons (Dennis and Allen) who regularly used and made improvements to the cabin.  Edna disliked John and Bob, so from 1971 until Edna died in 1999 John and Robert stopped visiting the cabin.  In 2003 Bob executed a will, declaring his intent that the cabin be conveyed to Dennis and Allen on his death.  In 2008 Bob was diagnosed with lung cancer and invited John and Robert over for lunch.  During lunch Bob told John and Robert that he wanted them to have the cabin.  John then found a form quit claim deed online.  Bob filled it out, leaving the lines after “in consideration of” and “quit claims to” blank.  But he did put John and Robert’s names in the grantee section of the deed’s caption.  On the real estate excise tax form (and the supplemental statement, required for gift deeds) Bob also indicated there was no debt on the cabin and that he was gifting it to John and Robert.  The deed was recorded in December 2008.  Bob died in April 2009.  Dennis and Allen filed a lawsuit, contending the gift deed was unenforceable because it recited no consideration and, therefore, the will controlled.  The trial court agreed with Dennis and Allen.  The Court of Appeals reversed, concluding (1) a recital of consideration is not needed to gift real property, and (2) Bob’s will did not rebut the strong evidence of Bob’s intent, evidenced by the gift deed.  RCW 64.04.050 says “Quitclaim deeds may be in substance in the following form: …”  The statutory form includes a space to recite consideration.  But a quitclaim deed need not precisely match the statutory form to be enforceable. The Washington Supreme Court granted reconsideration in March 2013. We’ll have to wait-and-see if Washington’s top court agrees with the trial court or the Court of Appeals.

Buyer Beware – What Not To Do When An Inspection Reveals A Defect

Home buyers are not entitled to relief from sellers who knowingly sell them a mold-infested home, fraudulently concealing the mold with insulation and caulking, where buyers’ pre-purchase inspection shows potential water penetration. Douglas v. Visser, 173 Wn.App. 823 (Feb. 2013). In Douglas, buyers received sellers’ Form 17 Disclosure Statement. Sellers answered nearly every question “I don’t know.” Unsatisfied, buyers pressed back and asked for more thorough answers and a copy of sellers’ inspection report from when sellers purchased the home. Sellers did not provide the inspection report and provided more inadequate follow-up answers. Later but before closing, buyers and their inspector walked through the home. They noticed a small area of rot/decay near the roof line, along with some caulking that suggested a previous roof leak. Buyers did not discuss or disclose their inspector’s report with sellers. The transaction closed. Shortly thereafter buyers noticed a damp smell and potato bugs around the home’s exterior. They hired mold specialists, who determined the home was uninhabitable and that it would cost more to remove the mold than to tear down the house and build a new one. Buyers then sued the sellers for breach of contract, for fraudulently concealing the mold, and for violating Washington’s Consumer Protections Act (CPA). The trial court awarded buyers a judgment for approximately $200,000. Sellers appealed. On appeal, the Court reversed and held sellers were entitled to a judgment for the amount of their attorney’s fees because “[w]here an actual inspection demonstrates some evidence of water penetration, a buyer must make inquiries of the seller” unless doing so would be fruitless. Because buyers didn’t inquire further after their inspection, deciding instead to close the transaction, buyers’ claims were barred. Buyers “cannot succeed when the extent of the defect is greater than anticipated, even when it is magnitudes greater.” Lesson learned: when an inspection reveals defects, even ones appearing to be minor, consider doing a follow-up inspection to determine the true extent of the defect. Otherwise, the general rule is “buyer beware.”