Daily Development for
Friday, August 21, 1998

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

TITLE; RECORDED INTERESTS; ENCUMBRANCES: A contract right to participate in proceeds of sale of the property creates no interest in the property itself, and a court will order the removal of such a contract from the land records in a quiet title action because it has the tendency to impair a property owner's ability to exercise his rights of ownership and to cloud title to the property.

Robinson v. Khan, 948 P.2d 1347 (Wash. App. Div. 1998).

In 1987, Robinson entered into an agreement with Khan in which Khan would provide consulting services for the development of Robinson's property. In return, upon the sale of property by Robinson, Khan was to receive fifteen percent (15%) of the net proceeds from the sale. The agreement contained a legal description of Robinson's property. It did not, however, convey any interest in the property. In 1991, without notifying Robinson, Khan recorded the agreement in the County Recorder's office. Four years later, upon discovering the recordation, Robinson filed suit requesting that the agreement be removed from the title. The trial court ruled that the agreement between the parties did not affect title to Robinson's property. The trial court refused to order the agreement's removal from title. The Washington Court of Appeals for Division 1 found that the agreement was not an encumbrance on title because it neither conveyed nor represented any right to, or interest in, Robinson's property.

Nonetheless, the Court of Appeals ordered that Khan remove the agreement from the record title of the Robinsons' property. The court of appeals found that the agreement was not the type of document a party has a recognized right to record. The RobinsonKhan agreement did not create a security interest or any other interest in the property that might affect the interest of a prospective purchaser. The Court of Appeals concluded that Khan's purpose in recording the agreement was to memorialize it, but it further stated that making a personal service contract known to the world is not an intended purposes of the Washington recording statutes.

The court that the recorded document was a cloud on Robinson's title because it had a tendency to impair a feesimple owner's ability to exercise the rights of ownership. The presence of the agreement on the record title was an unnecessary complication that would have to be explained to a prospective buyer.

Comment 1: Note that this was not a slander of title action. The only relief was the removal of the instrument not much of a sanction for those who might want to record such instruments in the future. The cost of a quiet title action is not one that many landowners faced with such recorded instruments are likely to undertake. But it may be that the court's ruling that the recording of such instruments is not within the stated purposes of the recording acts can be construed as justifying a slander of title action in the future.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 16, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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