After the initial House Judiciary Committee Hearing on 2011.01.13, Assistant Minority Floor Leader Rep. Matt Shea (R) of Spokane’s 4th Legislative District offered Proposed Substitute HB 1026 – now SHB 1026. Its stated effects were as follows:

Changes the standard of evidence for adverse possession claims to “clear, cogent, and convincing evidence.” Requires adverse possession claimants to pay a defending title holder’s costs and reasonable attorney fees only when a factfinder determines such actions would be in the interest of justice. Clarifies when a claimant may be liable for property taxes paid by the losing title holder, or a successor property owner, that remain outstanding, and requires liability for such taxes only when it would be in the interest of justice. Makes a technical change.

My detailed look at the language emphasizes the following:

1. “[T]he person asserting the claim of adverse possession MAY be required to pay the costs and reasonable attorney fees of the party defending against the claim of adverse possession if, considering all the facts, the fact finder determines that such an award is appropriate in order to do justice between the parties.”
2. “A party who prevails on a claim of adverse possession … against the holder of record title at the time the action … was filed or against a subsequent purchaser from such holder MAY be required to: Reimburse … any taxes or assessments levied on the real property that are proven by competent evidence to have been paid … during the period that the prevailing party was in possession …”
3. “The fact finder shall determine what, if any, reimbursement and/or payment of taxes and assessments … is appropriate in order to do justice between the parties.“

Overall, this is a significant improvement over HB 1026. Instead of requiring the adverse possessor to pay legal fees and costs of the title holder, regardless of whether the title holder prevails or not, it instead acknowledges that to serve justice this MAY be appropriate. Unfortunately, the reverse situation remains unaddressed.

In other words, what happens when an adjacent purchaser comes in and disrupts long understood boundary lines that have been recognized by the seller and the adverse possessor. Presumably, the adverse posssessor would prevail on theories of both Adverse Possession and Mutual Recognition & Acquiescence. Under such a situation, shouldn’t the adverse possessor also be entitled to reasonable legal costs and fees?

I must say that, except for a single quibble, the language Rep. Shea has put in place with respect to how the Payment of Taxes should operate is quite exceptional. First, my read of this language suggests that it implicitly acknowledges that the title holder should not be able to use Tacking as a means to gain access to money that the title holder or the title holder’s successor – presumably after institution of a law suit – has paid. Instead, this right only accrues to the prevailing party to the lawsuit (or the title holder subsequent to initiation of the lawsuit).

[Note: The non-partisan House Judiciary Committee staff that wrote up the House Bill Report interprets the language DIFFERENTLY to mean: “A party who wins an adverse possession claim may be required to reimburse the losing title holder, or an immediate predecessor, for part or all of any taxes and assessments on the proprty those losing parties paid during the period of adverse possession by the winning party, if a judge or jury determines that such an allocation of taxes is in the interest of justice.” If this is the intended interpretation of the language, my approval wanes.]

At any rate, the language with regards to Reimbursement of Taxes either paid OR assessed and yet outstanding, must be “proven by competent evidence.” As a result, it would seem that one can not just assume that the square area of real estate is “X”; the disputed land is “Y”; and yearly Taxes are “Z”: ergo, [(X-Y)/X]Z = that Year’s Taxable Reimbursement. Instead, this would need to be proven.

However, my quibble with this language is that there is no time of cut-off. As a result, a title holder might attempt to make the adverse possessor pay Tax Reimbursements for several decades. The primary purpose, and a valid one at that, for the doctrine of Adverse Possession is to “cut-off” disputes. It is a doctrine largely with Statute of Limitation underpinnings!

Without similarly cutting-off the possible operation of this clause, it is not only possible, but likely, that disputants will further battle over attempts to prove this. As such, it would be wise to limit the potential for this type of superfluous battle to no more than the claimed Adverse Possession’s Statute of Limitations Period (i.e. 10 years under RCW 4.16.020 or 7 years per 7.28 RCW).

Now, let’s return to the question of justice and whether the operation of this statute can achieve this for people unjustly on both sides of Adverse Possession’s blade (i.e. both the wronged title holder and the wronged adverse possessor).

Rep. Shea seeks to allow the fact-finder to: “determine what, if any, reimbursement and/or payment of taxes and assessments … is appropriate to do justice between the parties.”

First, and here I readily admit that beyond public knowledge and that knowledge of Constitutional Law which I can still recall from my 2L year, I am somewhat concerned that the Courts are going to determine that the fact-finder does not have jurisdiction to determine what constitutes “justice.” Adverse Possession cases involve issues of mixed fact and law. This means that whereas the fact-finder is able to determine the facts, it is the job of Courts to determine how the law is to be applied to those facts.

As a result, I suspect that one of the first apellate cases that would arise after enactment of this law, if enacted as written, would regard whether the fact-finder has the Constitutional Jurisdiction to determine “justice.”

Beyond this though, there is no mechanism for the wronged adverse possessor to be awarded legal fees and costs if justice requires. As a result, if I had my druthers and in order of importance as I see it, I would seek to have the following changes yet made:

1. Remove the “clear, cogent, and convincing” language altogether in order to not sweep away the jurisprudence that has already been built up and instead add the element of Good Faith which should be defined both objectively and subjectively as it is in the UCC. (For more see A Good Faith Attack on Land Thieves).

2. Allow Courts, and not Fact-Finders, to award (instead of suggest) appropriate legal fees and costs to either the prevailing title holder OR adverse possessor as required to do justice.

3. Add the cut-off date to the Payment and/or Reimbursement of Taxes equal to the Statute of Limitations that is applicable for the adverse possession doctrine being used in the quiet title action.

4. Point to RCW 4.16.020 in the language of 7.28 RCW and indicate that the later is to take precedence. Here, I withdraw my previous suggestion of eliminating the adverse possession component of RCW 4.16.020. The reason for my retreat here is because Prescriptive Easements are also tied to this language and therefore its elimination may cause the untoward effect of unintentially eliminating this law.

Oddly, while I have been finalizing my research for this post, I notice a glarring error. It appears that the non-partisan House Judiciary Committee staff indicated in the House Bill Report that there were only two groups that testified: those for HB 1026 and those against it. This is inaccurate. There was a third group consisting of Michael A. Barrett, representing the WSBA’s Real Property, Probate & Trust Section and myself, who gave qualified support for HB 1026. I believe that my reflections in the previous [Red] sections on this topic adequately depicts events, but I would of course defer to the actual transcripts of testimony.

OK, so much for me in one day. What do you think? As it turns out we now have Substitute House Bill 1026 (SHB 1026) which was passed unanimously by the 13 members of the House Judiciary Committee. Moreover, as of 2011.01.25 SHB 1026 has had its second reading within the House Rules Committee.