Daily Development for
Friday, February 18, 2000
By: Patrick A. Randolph,
Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu
LANDOWNER LIABILITY;
INSTALLMENT LAND CONTRACT: Since, under an installment land contract, the
purchaser becomes the equitable owner even though legal title is in the seller,
the seller has no liability for injuries to third parties arising out of
"ownership." property.
Graham v. Claypool, 978
P.2d 298 (Kan.App. 1999).
Claypool executed a
contract to convey real estate to Photographic. The contract provided a payment
schedule and gave the purchaser the immediate right to possession of the
property, with delivery of the deed (placed in escrow) upon completion of
payment. (In the Midwest, these contracts are called "contracts for
deed," but in other parts of the country they are referred to as "installment
land contracts" or by some other name. A few months later, there was a
fire on the property and Graham, one of the tenants on the property, suffered
personal injury and loss of personalty. It appeared that the conditions causing
the fire existed prior to the time that Claypool and Photographic entered into
the contract.
Graham sued Claypool and
the Photographic for his losses. Claypool moved for summary judgment, arguing
that she had conveyed the property prior to the fire and, therefore, was not
liable for any of Graham's injuries. The trial court granted summary judgment
in favor of Claypool.
On appeal, the Kansas
Court of Appeals agreed with Claypool and affirmed the trial court's grant of
summary judgment. Kansas recognizes the doctrine of equitable conversion under
these circumstances. Where an installment land contract is used, the purchaser
is the equitable owner and seller retains a security interest in the property,
regardless of the legal title remaining in the seller. Although the specific
issue of the seller's liability was a matter of first impression in Kansas, and
the court could only find one other case on point (in Wyoming), the court
concluded that summary judgment for Claypool was appropriate. It reasoned that
Claypool could not be liable as the owner of the property since the contract
for deed was executed prior to the fire and Claypool was no longer the owner or
possessor.
Comment: A party who sells
real estate may still be liable for injury caused by conditions on the property
known to the seller has not disclosed to the buyer and the buyer (either
through latency of the condition or deliberate concealment by the seller) has
not had a reasonable opportunity to identify and cure. The court acknowledges
this exception to the general immunity from liability of land sellers, and
notes that there was no basis in the present case for imposing liability on
this theory of hidden defects.
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DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors. DIRT has a WebPage at: http://www.umkc.edu/dirt/