Case Law Update: ENCROACHMENTS - THE LIABILITY RULE
Posted Friday, April 10, 2020 by Christopher L. Thayer
In Riley v. Valaer, the Court of Appeals, Division II (52687-5-II, April 7, 2020) recently addressed a concept in real estate law known as the “Liability Rule”, which arises in the context of an encroachment. In this case, the Rileys owned two lots (east lot and west lot), one contained a home, an attached garage and a patio (east lot), while the other lot was vacant (west lot). Rileys sold the east lot to the Hunters, who were aware at the time of purchase the garage and patio encroached onto the west lot. Rileys then sued Hunters seeking to require Hunters to remove the encroachments. The trial court, invoking the Liability Rule, determined it would be inequitable to require Hunters to remove the encroachment and instead quieted title to the encroaching area to the Hunters – and required the Hunters to pay Rileys for the strip of land.
Generally, courts will order an encroacher to remove encroaching structures, even though removal is extraordinary relief. Arnold v. Melani, 75 Wn.2d 143, 152, 437 P.2d 908, 449 P.2d 880, 450 P.2d 815 (1968); Proctor v. Huntington, 169 Wn.2d 491, 496, 238 P.3d 1117 (2010). However, the liability rule provides an exception where ordering the removal of the structure would be oppressive.
Under this exception, an injunction to compel the removal of the encroachment can be withheld if: (1) [t]he encroacher did not simply take a calculated risk, act in bad faith, or negligently, willfully, or indifferently locate the encroaching structure; (2) the damage to the landowner was slight and the benefit of removal equally small; (3) there was ample remaining room for a structure suitable for the area and no real limitation on the property’s future use; (4) it is impractical to move the structure as built; and (5) there is an enormous disparity in the resulting hardships.
Arnold at 152. Each of these elements must be proved by clear and convincing evidence. Garcia v. Henley, 190 Wn.2d 539, 545, 415 P.3d 241 (2018). It should be noted this is a very high standard of proof for a civil case, and should be thought of as a quantum of proof just slightly less than the “beyond a reasonable doubt” standard for criminal matters.
If all the elements are satisfied, the trial court may adjust the boundary of the disputed property and require the encroaching party to compensate the other party for the land containing the encroachment. This is grounded on the general power of a trial court to grant equitable relief. Because this rule requires payment in exchange for maintaining an encroachment, the rule is known as the “Liability Rule”.
The Washington Supreme Court has emphasized “a court-ordered conveyance of property from a rightful owner to an encroacher is an exceptional relief for exceptional cases.” In a lengthy and very fact-intensive analysis, the court in Riley determined the Hunters satisfied all of the elements to qualify for application of the Liability Rule, and it was appropriate for the trial court to decline to require the Hunters to remove the encroachments. This decision has a good road map for the application of this rarely used rule.
If you have an issue with an encroachment on your property and want to know whether or not this rule applies to your situation or if you have any related questions, please feel free to contact attorney Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com.