Quitclaim Deed Rescinded

October 16, 2007 | Erin Herbold

In this case, the plaintiff decided to sell her home. Because she was unfamiliar with the process, she asked the defendant, a co-worker of her deceased husband to help. In the process of trying to get the house sold, an intimate relationship developed between the parties. During this three-year period, however, the plaintiff’s house never sold for the asking price of $90,000. Later, the defendant bought a home for $76,000. 

Before the defendant’s purchase of the new home, the defendant brought a shoe box full of $95,000 to the plaintiff and asked that she pose for a picture with the money, before he put it back in the box and left with it. The defendant told the plaintiff to move her belongings into the new home, so she did, and began to perform repair work on the home. The defendant showed the plaintiff a quitclaim deed for the new property with her name as the grantee and with consideration in the amount of $90,000. Despite his assurances, however, the defendant never recorded the deed to the new home in the plaintiff’s name. In addition, the defendant persuaded the plaintiff to execute a quitclaim deed to the defendant for her home. 

The plaintiff moved to the new home, but soon discovered the deed was never recorded in her name. The relationship unraveled and the plaintiff stopped making mortgage payments on the new home, though she continued to reside there. That’s when everything hit the fan. Both parties retained lawyers and the plaintiff obtained a domestic protective order against the defendant. 

The trial court rescinded the quitclaim deed and the appellate court affirmed, stating that the plaintiff was “clearly more believable” and that she justifiably relied on the defendant’s misrepresentations. Generally, a deed is presumed to be valid, but when a party is induced to enter into a transaction where the other party intentionally misrepresents the material facts, the deed may be rescinded.

The trial court also awarded the plaintiff punitive damages in the amount of 20,000. The appellate court affirmed, stating that the defendant’s conduct was outrageous and that punitive damages were appropriate to deter any future bad conduct by the defendant. The trial court awarded the plaintiff $4900 in attorney’s fees. The appellate court agreed, noting that the defendant’s actions were “aggravated by cruel and tyrannical motives” and that the plaintiff relied on the defendant’s words.

Finally, the court noted that the goal of rescission is to restore the parties to their “status quo.”  Accordingly, the court remanded the case to the trial court for a determination on the amounts owed by the parties to restore them to their position before the deed was executed.  Hoepner v. Hollayday, No. 7-362/06-1288, 2007 Iowa App. LEXIS 1064 (Iowa Ct. App., Oct. 12, 2007).