A Tale Of Two Tails: Lingering Claims Under Statutory Warranty Deeds
Not all deeds are created equal. For example, in the case of a quit claim deed, the grantor makes no warranty that they even own the property being conveyed. Rather, the grantor merely transfers whatever the transferor actually owns. But in the case of a statutory warranty deed, the grantor makes certain promises which give the grantee a higher level of protection against potential title defects. Those promises, or “warranties,” include: (1) that the grantor owned fee title to the property (i.e., the warranty of “seisin”); (2) that the grantor had a right to convey the property (warranty of right to convey); (3) that title was free of encumbrances (warranty against encumbrances); (4) that the grantee and the grantee’s heirs and assigns will have quiet possession (warranty of quiet possession/enjoyment); and (5) that the grantor will defend the grantee’s title (warranty to defend). When a grantor breaches the terms of a contract, including a statutory warranty deed, the statute of limitations for an aggrieved party to file a claim is six years. But because of the nature of the five different warranties under a statutory warranty deed, the statute of limitations will not start running for a particular warranty until that particular warranty has been breached. For example, where a neighbor has an existing encroachment or has otherwise excluded the owner/occupant of the conveyed parcel, the grantor has breached the warranties of seisin, warranty against encumbrances, and the warranty of right to convey. By contrast, the warranties of quiet possession/enjoyment and to defend are typically covenants breached in the future after closing of the transaction. Recent Washington cases have held that the statute of limitations on these last two covenants are breached “when a third party asserts a claim to the property.”
Thus, a statutory warranty deed leaves at least two “tails” of potential liability for the grantor in its wake. Some warranties are ordinarily breached at the time of the conveyance, while others do not arise until much later. The net effect of that case law is that a lawsuit from a buyer/grantee against a seller/grantor, based upon a statutory warranty deed, can be timely far beyond six years after a transaction has closed.
Whether you are an aggrieved buyer searching for potential recourse following a sale, or you are a seller in need of counseling to defend or mitigate against potential liability, the lawyers at Beresford Both possess a wealth of experience in real property matters. We counsel clients in the transactional, pre-litigation, and litigation contexts. We would be happy to assist you with your real estate transactional or litigation needs.