Deed Reformation

The petitioners in this case purchased an apartment building and decided to remodel the second floor and attach an enclosed staircase resting on the roof of a garage located behind the apartment building. The petitioners assumed that they were entitled to use the garage, because the prior owners had used it. Unfortunately, the garage encroached onto the property of the respondents- adjacent landowners to the south. 

At the time the garage was built, both properties were owned by the same landowner.  But, the respondents bought the lot to the south in 2001 and used it as a parking lot for their business. The real estate contract for that lot stated that the grantor reserved a permanent easement for ingress and egress over twenty feet of the lot and that the real estate and “improvements thereon” were being sold “as is” with no express or implied warranties. The only improvement on the lot was the encroaching garage. Since the property was surveyed before the sale to the respondents, the respondents knew that the garage encroached upon their property when they purchased it. The warranty deed conveyed the lot subject to any easements of record, but the legal description included the encroaching garage. 

The petitioners filed suit, asking the court to reform the legal description in the respondents’ deed to reflect the “actual agreement between the parties,” or alternatively, to grant them an implied easement for use of the garage. At trial, the prior owner testified that he believed he was selling the respondents the gravel parking area and not the garage attached to the apartment building.  However, the trial court ruled that the petitioners did not have standing to bring a claim against the respondents, divesting them of the portion of the lot where the garage encroached. According to the court, the petitioners could not establish that the respondents’ predecessor in title ever intended a staircase to be built on the room and that the roof was not continuously used by the petitioners’ predecessors. The trial court also refused to grant an implied easement in the petitioners’ favor, stating that they were unwilling to divest the respondents of their property. 

On appeal, the court affirmed on the basis that the petitioners were not “in privity” with the respondents and that reformation of a real estate contract may only be made by the original parties to the agreement. The court was not willing to order reformation at the expense of prejudice to a “innocent” third persons- the respondents. Bessine, et al. v. Shockley, No. 1-426/10-1596 (Iowa Ct. App. Aug. 24, 2011).