Washington Appellate Court Holds Title Insurance Company Not Liable Under Survey Exception

The Court of Appeals of Washington recently found that a purchaser of property was not entitled to coverage from his title insurance company after he discovered that the prior owner of the property abandoned an easement, because an accurate survey would have shown the abandonment.  See Haley v. Hume, 448 P.3d 803 (Wash. Ct. App. 2019).  The property at issue in this action (“Lot B”) had an easement along a neighboring property (“Tract A”).  The easement was not necessary to access Lot B, but it was necessary to access two other properties beyond Lot B (“Lots C and D”).  Persons accessing those properties would need to use both the easement on Tract A and a portion of the Lot B driveway to access Lots C and D.  In 2001, the owner of Tract A and Lot D reconfigured his properties so that Lots C and D could be accessed by another driveway that solely crossed Tract A and did not affect Lot B’s driveway.  The owner then contacted the owner of Lot B (“Seller”), who agreed to abandon her easement on Tract A with the understanding that people accessing Lots C and D would no longer need to use her driveway.  In 2005, Seller sold Lot B to the plaintiff in this matter (“Purchaser”).  Purchaser obtained a title insurance policy at this time.  In 2012, Purchaser sought to expand his driveway into the easement on Tract A, but was informed by the neighbor that Seller had abandoned the easement.  Purchaser then brought an action against his neighbor seeking access to the easement and tendered a defense to the title insurance company.  The title insurance company denied the claim.  After Purchaser lost his lawsuit against the neighbor, he sued the title insurance company and Seller.  The title insurance company and Seller moved for summary judgment, and the trial court granted their motions. 

On appeal, the Court affirmed.  First, the Court found that the limitations period had run on any claims against the Seller for breaching the warranties in Seller’s deed to Purchaser.  The Court held that there is a six-year limitations period for such claims and that Purchaser’s claim was untimely.  Second, the Court found that the title insurance company had no duty to defend Purchaser here.  The policy contained an exception stating that ““[t]his policy does not insure against loss or damage by reason of . . . other matters which would be disclosed by an accurate survey or inspection of the premises.”  The Court found that, if Purchaser obtained a survey in 2005, “the survey would have noted the evidence of [the neighbor’s] possession, noted that the easement was not observable at the time the survey was made, noted that there was evidence of use by someone other than [Seller], and noted that there was a stream in the middle of the easement area. All of these would have indicated that the condition of the easement area in 2005 was inconsistent with the use of the easement that [Purchaser] believed he was acquiring. As such, a survey would have disclosed the loss that [Purchaser] now asserts.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Anthony Lombardo at alombardo@riker.com.