Introduction:

In this article, we will explore statutes of limitations as they apply to “quiet title actions.”

In real estate disputes, the concept of “quiet title” refers to a legal action taken to establish one’s ownership rights to a property and remove any competing claims. However, it is essential to understand the statute of limitations and how it applies to quiet title actions. In this article, we will explore the key rules and principles derived from relevant case law, including Muktarian v. Barmby, Ankoanda v. Walker-Smith, and Eleanor Licensing LLC v. Classic Recreations LLC. Please note that this article focuses solely on the statute of limitations and does not cover analysis related to adverse possession.

Disclaimer:

This article is intended to provide general information and understanding of the statute of limitations in quiet title actions. It is not legal advice, and specific cases should be discussed with a qualified attorney. The outcome of any legal case depends on various factors, including the discretion of the court and the unique facts and circumstances involved. This article specifically excludes analysis of “adverse possession” claims which may change the outcome. For the purpose of this blog article, “adverse possession” is ignored as a legal concept.

Hypothetical Scenario:

In our hypothetical scenario, Jane and John received a piece of land in Bakersfield, Kern County, California, from their late parents in the year before their parents’ deaths. It is a three-bedroom, two-bathroom single family residence constructed in 2001 on the Northwest side of town (Rosedale). John and Jane each received a copy of the grant deed, and their parents asked John to make sure that a copy of the deed was properly recorded. However, John modified the deed before recording it and removed Jane’s name from the list of grantees. He records the modified deed immediately without notifying Jane or his parents of the modifications.

Jane, unaware of this modification, has been residing on the property for the past fifteen years, maintaining exclusive and undisputed possession. John has resided in a different state. After a period of fifteen years, John claimed ownership of the land and threatened to sell it to a third party. In response, Jane decides to file a quiet title action against John to establish her ownership rights using a duplicate of the original, unrecorded deed as her evidence.

Issue:

Jane has filed a quiet title action to have the court correct John’s fraudulent deed. John wants to have Jane’s case decided against her because it was filed more than three years after he allegedly perpetrated a fraud against her. The court will need to decide: Does the statute of limitations bar Jane’s claim against John?

Rule #1: Exclusive and Undisputed Possession:

One crucial rule derived from Muktarian v. Barmby (and successor cases) is that Plaintiffs in a quiet title action are not required to bring a lawsuit during the period they had actual or legal possession of the property that was “exclusive and undisputed” of the Defendants’ possession. (Muktarian v. Barmby (1965) 63 Cal.2d 558, 560 [statute of limitations do not run against a person in possession with respect to quiet title actions]; Ankoanda v. Walker-Smith (1996) 44 Cal.App.4th 610, 612–614 [the Muktarian rule requires “exclusive and undisputed” possession and does not apply where the Plaintiff shared legal possession with the Defendant.]; Crestmar Owners Assn. v. Stapakis (2007) 157 Cal.App.4th 1223, 1228 [despite exclusive possession, statutes of limitations begin to run when a potential defendant asserts an adverse claim to ownership]; Id. at 1230 [Unless the title grants legal possession through co-owners, “title does not equal possession.”]; Eleanor Licensing LLC v. Classic Recreations LLC (2018) 21 Cal.App.5th 599, 612–614 [Muktarian and Ankoanda apply in personal property disputes as well as real property disputes. Reasserts that title does not equal possession.].)

Rule #2: Joint Ownership and Adverse Claims:

In situations where joint ownership gives Plaintiff and Defendant equal rights to possession, the statute of limitations begins to run when either party makes their adverse claim to ownership—and their intent to enforce it—known to the other owner. (Ankoanda v. Walker-Smith, supra, 44 Cal.App.4th 610, 612–614 [Statute of limitations began in July 1989 when Ankoanda became aware of the adverse claim to her joint ownership.]; Eleanor Licensing LLC v. Classic Recreations LLC, supra, 21 Cal.App.5th 599, 612–614 [Statute of limitations did not begin to run until Classic Recreations removed the car identified as “Eleanor 1” from Eleanor Licensing LLC’s possession, making their intent to enforce an adverse claim known.])

Analysis:

Jane does not have “exclusive and undisputed possession.”

Jane will not likely be able to claim that she had “exclusive and undisputed” possession of the real estate, because she has filed a claim saying that John is a joint owner. Under Ankoanda and subsequent cases, this destroys her claim to “exclusive and undisputed possession” by the nature of the joint ownership.

Because Jane cannot claim “exclusive and undisputed possession,” the 3-year statute of limitations of fraud claims in quiet title actions will be applied to her from the date that she had notice of the fraud.

The Cause of Action Accrued when John Threatened to Sell the Real Estate

Under situations where joint ownership applies, the cause of action begins to run when the Plaintiff becomes aware of the Defendant’s fraud or intent to make an adverse claim. John will attempt to get the court to set the date in 2001 so that the court will be forced to rule in his favor and dismiss Jane’s case for being filed too late.

John will likely argue that she had notice of his adverse claim when he filed the deed at the recorder’s office, because all people are generally deemed to have notice documents of public record. John will also argue that his act in recording the deed was an affirmative action establishing his rights against Jane, giving her notice of his intent to hold an adverse claim against her. If they had joint ownership as she claims, then those two acts should have given her the notice of his intent to hold an adverse claim against her.

Jane will argue against John and claim that she had no reason to inspect the public record because of the physical copy that she held in her possession. In cases of joint ownership, courts have often held that notice between co-owners of an adverse intent must be raised to a higher standard such that it is actual notice. Because Jane’s case relies upon the claim of co-ownership, the court can initially evaluate the merits of this argument in her favor, which gets Jane passed an initial demur (an attempt to kick a case that has no chance at winning based upon the alleged facts). However, whether or not the court finds actual joint ownership existed based upon the nature of the acts occurring at the time of transfer, will determine whether Jane can rely upon this higher standard of notice.

If Jane fails to convince the court that there was joint ownership, then she will be responsible for all types of notice, not just actual notice. Under one legal theory (“constructive notice”), Jane is held responsible for awareness of John’s adverse claim as of the date he recorded the fraudulent deed (15 years ago). If the court finds that this theory applies, then Jane’s case is 12 years too late, and it will be forced to rule in favor of John.

For her case to survive, Jane will need to give the court good reason not to hold her responsible for constructive notice. She should show the court the copy of the deed that was in her possession and claim that having the physical copy of the original deed gave her reason to believe her rights were secured and that John must be held to a higher standard. She should point to cases like Muktarian, Ankoanda, and Crestmar, and explain that she did not have notice until John gave her actual notice that he intended to enforce a claim against hers, which was when he threatened to sell the real estate without her permission.

Additionally, based upon her evidence of the original and unmodified deed, the court will likely find that her claims to joint ownership are valid, which will give her the benefit of being able to rely upon actual notice throughout the entire litigation process.

Although Muktarian, Ankoanda, and Crestmar are not directly on point, they do raise a good case as to the legal reasoning behind the idea that a person in possession should not need to expend money defending their rights until pressed, and that a joint owner is not threatened until actual notice is provided of the adverse claim.

Predicted Outcome:

Jane has a reasonably good chance at surviving the demur, and she should win this case. Much of how things unfold will depend upon the evidence at trial regarding her right to joint ownership before the fraudulent act and the failure of John to give her actual notice until the three-year period immediately before she filed her claim against him. Jane’s claims can be strengthened by adding another cause of action; I’ll discuss this further in the next sectoin.

Alternative Strategy:

In the beginning of the blog article, I noted that I would ignore adverse possession claims. By doing that, I was able to simplify the analysis and focus only on the rules created by Muktarian and subsequent case-law, which was the point of this article. Before we conclude, it’s important to point out that Jane’s approach to quieting title in this instance may be the wrong one. Here’s why: adverse possession.

Adverse possession is a legal theory that permits a person to essentially “steal” property from another person who has abandoned it. Each state differs on the rules they apply. California requires five years of continuous, open, notorious, and hostile possession for an adverse possession claim. Where the claim regards transfer of title (as compared to just claiming the right to use land a certain way), California also requires that the taxes be paid by the person making the claim for the entire period.

During the 15-years, John had a public record that admitted he was sole owner. If John is the sole owner on title, Jane’s burden of providing notice to John about her adverse possession is reduced. During the time that she lived there, she can claim that John did not give her permission to reside there, that he was aware she lived there, and that he claimed to be sole owner during that period. By filing a deed that excluded Jane, John gave Jane permission to claim that her possession over the fifteen year period was “open, notorious, exclusive, and adverse” to John’s interest and thus gave her a cause of action for “adverse possession” and a chance to take 100% of the property for herself.

In order to defend against Jane’s adverse possession claim, John will have to establish either that she lived there as a tenant, that she lived there by permission, or that Jane was a co-owner and thus could not establish an adverse claim without actual notice of the claim. Interestingly, to defend using this last argument, John must admit that he is not the sole owner, which supports Jane’s claim to quiet title. John will not be able to establish a lease agreement, and the issue will boil down to whether Jane’s possession was adverse to John or permissive.

Jane can use her copy of the deed as evidence of her initial belief that she was a co-owner. She can then point to the recorded deed and explain that John gave her notice that their interests were adverse by recording his deed. She can demonstrate through witness testimony, utlitiy bills, and tax payments that the occupation was not merely by John’s permission.

If framed in this fashion, the case is much more likely to result in a “win” for Jane. Jane only wanted her 50% interest. If the adverse possession claim fails, the facts and arguments are set up in such a way that John will need to concede some points that will help her settle the quiet title action. While it still isn’t a conclusive win for Jane, this case is much stronger and more likely to get her at least 50% ownership (and possibly more).

Conclusion:

The law is complex and no lawyer can guarantee results. Above, we see some of the comlexities that go into deciding whether a plaintiff should bring a case. You also see how a lawyer can take two claims and leverage them against eachother for a better position. If you are faced with a situation where you need to correct an ownership issue, contact Coleman & Horowitt, LLP, at 661-325-1300 to schedule a consultation.