Dirt Law at Ground Level

July 25-31, 2016

Horse shoes and hand grenades

By W. Christopher Barrier
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.

State appellate courts and federal courts publish their opinions as guide posts and reminders to lawyers and clients. The same may be said of the Arkansas Real Estate Review in that area of the law. ARER not only summarizes and analyzes the more important cases in the real estate area, it also contains insightful comments from members of its editorial board.

Nowhere are those teaching tools more important than in the area of creating and establishing interests in real estate, where specific factual targets must be hit (and not by glancing blows).

Peavler v. Bryant, decided in the spring of 2015, involved a fairly involved series of conveyances, of a life estate and also the remainder interests, by quitclaim deed and otherwise.

The eventual holder of the life interest had actual possession of the lot in question and made improvements over the course of seven years, the traditional required time period. He sued the eventual holders of the remainder interest, claiming fee title by adverse possession.

He got a lecture from the court of appeals stating an unyielding principle: while the claimant might seem to meet every one of the elements of adverse possession, his possession could not be considered adverse to the remaindermen until their interests vested due to the death of the original life tenant. Only then would the crucial seven-year period begin to run.

The case was further complicated by the failure of the life tenant to keep the taxes current, resulting in a forfeiture and sale. He nonetheless quitclaimed the property to a person who subsequently received a limited warranty deed from the State Land Commissioner.

However, the interest of the remainder holder was clear from the record and the Commissioner failed to give her notice of the proposed sale as an “interested party.” Hence, the sale was void.

The practical reminder: apparently, no one involved in these conveyances obtained a commitment for title insurance. Purchasing a property whose title is based on a tax deed is the last place you should do without such a commitment.

Class dismissed.

Chris Barrier is a Little Rock real estate lawyer.