Conklin v. Davi: Adverse Possession and Marketable Titles

Real Estate Adverse Possession Title

Real Estate

Huddleston Tax Weekly will continue to examine legal cases which involve real estate because such cases can be of substantial value to our readers who are either current or future property owners. When engaging in real estate transactions, it is always best to draw up a contract which captures every conceivable detail of the exchange. Developing a thoroughly detailed contract will help to avoid the possibility of any legal disputes. The case of Conklin v. Davi (1978) is an interesting example of a dispute which could have been avoided if the parties had created a more detailed contract.

Facts

Conklin (the plaintiff) sold real estate to Davi (the defendant). A section of the property was acquired through adverse possession. Adverse possession is the process through which real property may be obtained without a monetary transaction; adverse possession occurs when an individual actively and openly “possesses” land for a specified period of time. The contract between the parties omitted reference to the fact that a portion of the land was acquired through adverse possession. Davi wished to obtain a title which was wholly “marketable” so that the land could be sold again in the future without complication. Davi believed that a marketable title could not be gained through the transaction due to the fact that a piece of the land had been acquired through adverse possession. Based on this belief, Davi refused to conclude the transaction. Conklin sued for specific performance and Davi counterclaimed for rescission of the contract.

Law

The critical issue before the court was whether land acquired through adverse possession can have a marketable title when transferred via sale. The answer is yes: provided that the seller shows proof that the land was acquired legally through adverse possession, the buyer is capable of obtaining a title which is wholly marketable.

Ruling

The court (the Supreme Court of New Jersey) ruled in favor of the plaintiff (Conklin). The defendant could have procured a marketable title to the entire land as long as the plaintiff provided proof of ownership through adverse possession. The court ordered the plaintiff to provide such proof before suing the defendant for specific performance.

As Conklin v. Davi shows, land acquired through adverse possession can yield a wholly marketable title. The issue was that the plaintiff did not provide proof of ownership when the contract was formed; another issue was that the parties were unaware that adverse possession could produce a marketable title. The lesson is clear: before selling or buying real estate, be sure to conduct research and develop a sufficiently detailed contract!

Image credit: Emmanuel Ku

To learn more about the tax benefits of real estate ownership view the following webcast

Be Sociable, Share!

johnAbout john
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

Huddleston Tax CPAs of Seattle & Bellevue
Certified Public Accountants Focused on Small Business

(800) 376-1785
40 Lake Bellevue Suite 100, Bellevue, WA 98005

Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.