Bogus Land Sale (Pioneer Insurance v. Spokane County)

Imagine that you are living comfortably in your house, paying your mortgage, when you receive a letter from the state telling you to get off of THEIR property. Imagine being stuck with your mortgage and no property.

This happened for real. In 1979, Bradley Derr purchased a duplex in Spokane County. In 1981, the state told him that he didn’t own the land.

The state was right. The county had sold the state land in 1964 for back taxes. Of course, the state doesn’t have to pay taxes to the county, so the sale was bogus. In 1956, the state had acquired the land and clearly made notice of that to Spokane County. The state didn’t notice their land had been sold until 1981.

Fortunately for the Bradley Derr, he had acquired title insurance from Pioneer Insurance, who was now stuck with a large bill (the mortgage). Pioneer Insurance was not pleased and filed suit against Spokane County claiming negligence. The county had been informed that the land was state owned, and the county’s SNAFU had resulted in the sale.

Who won the suit? The county did.

I was stunned when I first read the decision. In fact, I am still stunned. The county sells land that they don’t own and shouldn’t collect taxes from, and they get off. No financial consequences. How do they do it?

Legally speaking, the county cannot be responsible for the titles for private land that they have to cease for back taxes. It should be the responsibility of those purchasing the title from the county to fully investigate the land. Usually land ceased for tax purposes comes with numerous problems, and some liens that have to be settled.

But that is not the case here. Here, Spokane County ceased land that they had no business ceasing. This land was sold wrongfully for back taxes. Spokane County made the error, and as a result Mr. Derr would later take out a mortgage and purchase land from someone who they believed owned the land, but in reality the state owned it.

Spokane County was shielded by a court created legal concept known as the “Public Duty Doctrine.” It immunizes all government agencies from most forms of accountability for mistakes. It has some exceptions. For example, if “mistakes” are made with malice or intent, but for the most part government gets off. There are many stories like this: Botched permits, bad building inspections, and in this case, a bogus land sale. These government screws ups cost folks big bucks, but the government gets off.

In my view, justice would have been served if the Spokane County had been required to purchase the land back at fair market value and return it the state.

While I am shocked at the behavior of the courts, I am more shocked at the behavior of the elected officials. There is nothing that requires us elected officials to buy into the “Public Duty Doctrine”. Spokane County council members could and should have intervened.

As an elected official, I believe government must be accountable for its mistakes; otherwise, government looses the trust and faith of the public it serves. The “public duty doctrine” can only breed distrust between government and the public if it continues to exist.